By Marchant H.B. No. 1543
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of banking and of entities under the
1-3 jurisdiction of state banking regulatory officials; providing
1-4 administrative and criminal penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Banking Act is enacted to read as
1-7 follows:
1-8 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
1-9 SAVINGS AND LOAN DEPARTMENT
1-10 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
1-11 Sec. 1.001. SHORT TITLE ....................................... 2
1-12 Sec. 1.002. DEFINITIONS ....................................... 2
1-13 Sec. 1.003. FINANCE COMMISSION ................................ 16
1-14 Sec. 1.004. QUALIFICATIONS OF MEMBERS ......................... 17
1-15 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES ..................... 18
1-16 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS .............. 19
1-17 Sec. 1.007. DISQUALIFICATION OF MEMBERS ....................... 20
1-18 Sec. 1.008. MEETINGS .......................................... 20
1-19 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE ........... 21
1-20 Sec. 1.010. PRESIDING OFFICER ................................. 21
1-21 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES ................ 22
1-22 Sec. 1.012. BANKING RULES ..................................... 24
1-23 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
1-24 REGULATIONS ..................................... 25
2-1 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS ............. 26
2-2 Sec. 1.015. SUNSET PROVISION .................................. 26
2-3 (Sections 1.016-1.100 reserved for expansion)
2-4 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
2-5 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER ..................... 26
2-6 Sec. 1.102. DEPUTY COMMISSIONERS .............................. 27
2-7 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT .......... 27
2-8 Sec. 1.104. OATH OF OFFICE .................................... 28
2-9 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER ................. 28
2-10 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT ............... 28
2-11 Sec. 1.107. CONFLICTS OF LAW .................................. 29
2-12 Sec. 1.108. CONFLICTS OF INTEREST ............................. 29
2-13 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS ............... 30
2-14 Sec. 1.110. SUNSET PROVISION .................................. 31
2-15 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
2-16 SAVINGS AND LOAN DEPARTMENT
2-17 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
2-18 Sec. 1.001. SHORT TITLE. This Act may be cited as the Texas
2-19 Banking Act.
2-20 Sec. 1.002. DEFINITIONS. (a) In this Act:
2-21 (1) "Affiliate" means a company that directly or
2-22 indirectly controls, is controlled by, or is under common control
2-23 with a bank or other company.
2-24 (2) "Bank" means a state or national bank.
2-25 (3) "Bank holding company" has the meaning assigned by
2-26 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
2-27 seq.) or a successor to that act.
3-1 (4) "Banking" means the performance of the exclusive
3-2 depository institution functions of accepting deposits and
3-3 discounting loans and the performance of related activities that
3-4 are not exclusive to banks or other depository institutions,
3-5 including paying drafts or checks, lending money, and providing
3-6 related financial services authorized by this Act.
3-7 (5) "Banking association" means a state bank that is
3-8 organized as a banking association, authorized to issue shares of
3-9 stock, and controlled by its shareholders.
3-10 (6) "Banking commissioner" means the banking
3-11 commissioner of Texas or a person designated by the banking
3-12 commissioner and acting under the banking commissioner's direction
3-13 and authority.
3-14 (7) "Board" means the board of directors, managers, or
3-15 managing participants of, or a person or group of persons acting in
3-16 a comparable capacity for, a state bank or other entity.
3-17 (8) "Branch" means a location of a bank, other than
3-18 the bank's home office, at which the bank engages in the business
3-19 of banking. The term does not include:
3-20 (A) a drive-in facility located not more than
3-21 2,000 feet from the nearest wall of the home office or an approved
3-22 branch office of the bank;
3-23 (B) a night depository;
3-24 (C) an electronic terminal subject to Section
3-25 3.204 of this Act;
3-26 (D) a loan production office subject to Section
3-27 3.205 of this Act;
4-1 (E) a state or federally licensed armored car
4-2 service or other courier service transporting items for deposit or
4-3 payment, unless:
4-4 (i) the risk of loss of items in the
4-5 custody of the service is borne by the employing bank; or
4-6 (ii) the items in the custody of the
4-7 service are considered to be in customer accounts at the employing
4-8 bank or federally insured through the employing bank;
4-9 (F) a bank acting as an agent for a depository
4-10 institution affiliate as provided by Section 8.009(a) of this Act;
4-11 or
4-12 (G) other offices as determined by rule.
4-13 (9) "Capital" means:
4-14 (A) the sum of:
4-15 (i) the par value of all shares or
4-16 participation shares of the state bank having a par value that have
4-17 been issued;
4-18 (ii) the consideration fixed by the board
4-19 in the manner provided by the Texas Business Corporation Act for
4-20 all shares or participation shares of the state bank without par
4-21 value that have been issued, except a part of that consideration
4-22 that:
4-23 (a) has been actually received;
4-24 (b) is less than all of that
4-25 consideration; and
4-26 (c) the board, by resolution adopted
4-27 not later than the 60th day after the date of issuance of those
5-1 shares, has allocated to surplus with the prior approval of the
5-2 banking commissioner; and
5-3 (iii) an amount not included in
5-4 Subparagraphs (i) and (ii) that has been transferred to capital of
5-5 the state bank, on the payment of a share dividend or on adoption
5-6 by the board of a resolution directing that all or part of surplus
5-7 be transferred to capital, minus each reduction made as permitted
5-8 by law; less
5-9 (B) all amounts otherwise included in Paragraphs
5-10 (A)(i) and (ii) of this subdivision that are attributable to the
5-11 issuance of securities by the state bank and that the banking
5-12 commissioner determines, after notice and an opportunity for
5-13 hearing, should be classified as debt rather than equity
5-14 securities.
5-15 (10) "Certified surplus" means the part of surplus
5-16 designated by a vote of the board of a state bank under Section
5-17 4.104(b) of this Act and recorded in the board minutes as
5-18 certified.
5-19 (11) "Company" includes a bank, trust company,
5-20 corporation, partnership, association, business trust, or another
5-21 trust.
5-22 (12) "Conservator" means the banking commissioner or
5-23 an agent of the banking commissioner exercising the powers and
5-24 duties provided by Subchapter B, Chapter 6, of this Act.
5-25 (13) "Control" means:
5-26 (A) the ownership of or ability or power to
5-27 vote, directly, acting through one or more other persons, or
6-1 otherwise indirectly, 25 percent or more of the outstanding shares
6-2 of a class of voting securities of a bank or other company;
6-3 (B) the ability to control the election of a
6-4 majority of the board of a bank or other company;
6-5 (C) the power to exercise, directly or
6-6 indirectly, a controlling influence over the management or policies
6-7 of the bank or other company as determined by the banking
6-8 commissioner after notice and an opportunity for hearing; or
6-9 (D) the conditioning of the transfer of 25
6-10 percent or more of the outstanding shares or participation shares
6-11 of a class of voting securities of a bank or other company on the
6-12 transfer of 25 percent or more of the outstanding shares of a class
6-13 of voting securities of another bank or other company.
6-14 (14) "Department" means the Texas Department of
6-15 Banking.
6-16 (15) "Deposit" means the establishment of a
6-17 debtor-creditor relationship represented by the agreement of the
6-18 deposit debtor to act as a holding, paying, or disbursing agent for
6-19 the deposit creditor. The term:
6-20 (A) includes:
6-21 (i) an unpaid balance of money received by
6-22 the deposit debtor in the usual course of business in exchange for
6-23 conditional or unconditional credit to a commercial, checking,
6-24 savings, or time account of the deposit creditor or the creditor's
6-25 designee, or that is evidenced by a certificate of deposit or
6-26 similar instrument, a certified check or draft drawn against a
6-27 deposit account, or a letter of credit or a traveler's check on
7-1 which the deposit debtor is primarily liable, but excluding an
7-2 obligation arising under The Sale of Checks Act (Article 489d,
7-3 Vernon's Texas Civil Statutes);
7-4 (ii) money or credit given for money
7-5 received by the deposit debtor in the usual course of business for
7-6 a special purpose, including money:
7-7 (a) held as escrow funds, as
7-8 security for an obligation due to the deposit debtor or another
7-9 person, or as security for a loan;
7-10 (b) left with a deposit debtor by a
7-11 deposit creditor to meet maturing obligations that are not yet due;
7-12 and
7-13 (c) held by the deposit debtor to
7-14 meet an acceptance or letter of credit;
7-15 (iii) an outstanding draft, cashier's
7-16 check, money order, or other officer's check issued by the deposit
7-17 debtor in the usual course of business for any purpose, including
7-18 payment for services, dividends, or purchases; and
7-19 (iv) an obligation that the finance
7-20 commission by rule defines as a deposit liability, except that the
7-21 term may not include money received for immediate application to
7-22 reduction of an indebtedness; and
7-23 (B) does not include an obligation that this Act
7-24 or finance commission rule determines not to be a deposit
7-25 liability.
7-26 (16) "Depository institution" means an entity with the
7-27 power to accept deposits under applicable law.
8-1 (17) "Discount" means the retention by a lender of
8-2 advance interest from loan proceeds. The term does not include the
8-3 purchase of a promissory note or similar instrument at less than
8-4 its face value unless the party selling the note is liable on the
8-5 note as a maker, endorser, or guarantor.
8-6 (18) "Drive-in facility" means a facility offering one
8-7 or more banking services other than originating or establishing a
8-8 lending or deposit relationship solely to persons who remain
8-9 outside the facility.
8-10 (19) "Electronic terminal" means an electronic device,
8-11 other than a telephone or modem operated by a customer of a
8-12 depository institution, through which a person may initiate an
8-13 electronic fund transfer, as defined in 15 U.S.C. Section 1693a(6).
8-14 The term includes a point-of-sale terminal, automated teller
8-15 machine, or cash dispensing machine.
8-16 (20) "Equity capital" means the amount by which the
8-17 total assets of a state bank exceed the total liabilities of the
8-18 bank.
8-19 (21) "Equity security" means:
8-20 (A) stock, other than adjustable rate preferred
8-21 stock and money market (auction rate) preferred stock;
8-22 (B) a certificate of interest or participation
8-23 in a profit-sharing agreement, collateral-trust certificate,
8-24 preorganization certificate or subscription, transferable share or
8-25 participation share, investment contract, voting-trust certificate,
8-26 or partnership interest;
8-27 (C) a security immediately convertible at the
9-1 option of the holder without payment of substantial additional
9-2 consideration into a security described by this subdivision;
9-3 (D) a security carrying a warrant or right to
9-4 subscribe to or purchase a security described by this subdivision;
9-5 and
9-6 (E) a certificate of interest or participation
9-7 in, temporary or interim certificate for, or receipt for a security
9-8 described by this subdivision that evidences an existing or
9-9 contingent equity ownership interest.
9-10 (22) "Federal savings association" means a savings and
9-11 loan association organized under federal law.
9-12 (23) "Federal savings bank" means a savings bank
9-13 organized under federal law.
9-14 (24) "Finance commission" means the Finance Commission
9-15 of Texas.
9-16 (25) "Financial institution" means a bank, savings
9-17 association, or savings bank maintaining an office, branch, or
9-18 agency office in this state.
9-19 (26) "Foreign bank agency" means an agency established
9-20 and operating under Chapter 9 of this Act by a foreign bank
9-21 corporation.
9-22 (27) "Foreign bank corporation" means a banking
9-23 corporation or association incorporated or organized under the laws
9-24 of a jurisdiction other than the United States or a state,
9-25 territory, commonwealth, or other political subdivision of the
9-26 United States.
9-27 (28) "Full liability participant" means a participant
10-1 that agrees under the terms of a participation agreement to be
10-2 liable under a judgment, decree, or order of court for the entire
10-3 amount of all debts, obligations, or liabilities of a limited
10-4 banking association.
10-5 (29) "Hazardous condition" means:
10-6 (A) a refusal by a state bank to permit
10-7 examination of its books, papers, accounts, records, or affairs by
10-8 the banking commissioner;
10-9 (B) a circumstance or condition in which an
10-10 unreasonable risk of substantial loss is threatened to the
10-11 depositors, creditors, shareholders, or participants of a state
10-12 bank, including a circumstance or condition in which a state bank:
10-13 (i) has inadequate equity capital, or the
10-14 adequacy of its equity capital is threatened;
10-15 (ii) has concentrated an excessive or
10-16 unreasonable portion of its assets in a type or character of loan
10-17 or investment;
10-18 (iii) violates or refuses to comply with
10-19 this Act, another statute or rule applicable to state banks, or a
10-20 final and enforceable order of the banking commissioner;
10-21 (iv) is in a condition that renders the
10-22 continuation of a particular business practice hazardous to the
10-23 public or to its depositors and creditors;
10-24 (v) conducts business in an unsafe and
10-25 unsound manner; or
10-26 (vi) is insolvent; or
10-27 (C) a violation by a state bank of a condition
11-1 of its chartering or an agreement entered into between the bank and
11-2 the banking commissioner or the department.
11-3 (30) "Home office" means a location registered with
11-4 the banking commissioner as the bank's home office at which:
11-5 (A) the bank does business with the public;
11-6 (B) the bank keeps its corporate books and
11-7 records; and
11-8 (C) at least one officer of the bank maintains
11-9 an office.
11-10 (31) "Insolvent" means a circumstance or condition in
11-11 which a state bank:
11-12 (A) is unable or lacks the means to meet its
11-13 current obligations as they come due in the regular and ordinary
11-14 course of business, even if the value of its assets exceeds its
11-15 liabilities;
11-16 (B) has equity capital equal to two percent or
11-17 less of its assets, as determined under regulatory accounting
11-18 principles;
11-19 (C) fails to maintain deposit insurance with the
11-20 Federal Deposit Insurance Corporation or its successor if the
11-21 banking commissioner determines that deposit insurance is necessary
11-22 for the safe and sound operation of the bank;
11-23 (D) sells or attempts to sell substantially all
11-24 of its assets or merges or attempts to merge substantially all of
11-25 its assets or business with another entity other than as provided
11-26 by Chapter 3 of this Act; or
11-27 (E) attempts to dissolve or liquidate other than
12-1 as provided by Chapter 7 of this Act.
12-2 (32) "Investment security" means a marketable
12-3 obligation evidencing indebtedness of a person in the form of a
12-4 bond, note, debenture, or other debt instrument not otherwise
12-5 classified as a loan or extension of credit.
12-6 (33) "Limited banking association" means a state bank
12-7 that is organized as a limited banking association, authorized to
12-8 issue participation shares, and controlled by its participants.
12-9 (34) "Loans and extensions of credit" means direct or
12-10 indirect advances of funds by a state bank to a person that are
12-11 conditioned on the obligation of the person to repay the funds or
12-12 that are repayable from specific property pledged by or on behalf
12-13 of the person. The term includes a contractual liability of a
12-14 state bank to advance funds to or on behalf of a person,
12-15 indebtedness evidenced by a lease financing transaction in which
12-16 the bank is lessor, an overdraft funded by the bank on behalf of a
12-17 person except for an intra-day or daylight overdraft, or another
12-18 indebtedness not otherwise classified as an investment security.
12-19 The term does not include accrued and unpaid interest or discounted
12-20 interest.
12-21 (35) "Manager" means a person elected to the board of
12-22 a limited banking association.
12-23 (36) "Managing participant" means a participant in a
12-24 limited banking association in which management has been retained
12-25 by the participants.
12-26 (37) "National bank" means a banking association
12-27 organized under 12 U.S.C. Section 21.
13-1 (38) "Officer" means the presiding officer of the
13-2 board, the principal executive officer, or another officer
13-3 appointed by the board of a state bank or other company, or a
13-4 person or group of persons acting in a comparable capacity for the
13-5 state bank or other company.
13-6 (39) "Operating subsidiary" means a company for which
13-7 a state bank has the ownership, ability, or power to vote,
13-8 directly, acting through one or more other persons, or otherwise
13-9 indirectly, more than 50 percent of the outstanding shares of each
13-10 class of voting securities or its equivalent of the company.
13-11 (40) "Participant" means an owner of a participation
13-12 share in a limited banking association.
13-13 (41) "Participant-transferee" means a transferee of a
13-14 participation share who has not received the unanimous consent of
13-15 all participants to be a participant, or who becomes a
13-16 participant-transferee under Subchapter C, Chapter 4, of this Act.
13-17 (42) "Participation agreement" means the instrument
13-18 stating the agreement among the participants of a limited banking
13-19 association relating to the rights and duties of the participants
13-20 and participant-transferees, including allocations of income, loss,
13-21 deduction, credit, distributions, liquidation rights, redemption
13-22 rights, liabilities of participants, priority rights of
13-23 participant-transferees to transfer participation shares, rights of
13-24 participants to purchase participation shares of
13-25 participant-transferees, the procedures for elections and voting by
13-26 participants, and any other matter not prohibited by or
13-27 inconsistent with this Act.
14-1 (43) "Participation shares" means the units into which
14-2 the proprietary interests of a limited banking association are
14-3 divided or subdivided by means of classes, series, relative rights,
14-4 or preferences.
14-5 (44) "Person" means an individual or any legal entity.
14-6 (45) "Principal shareholder" means a person who owns
14-7 or has the ability or power to vote, directly, acting through one
14-8 or more other persons, or otherwise indirectly, 10 percent or more
14-9 of the outstanding shares or participation shares of any class of
14-10 voting securities of a bank or other company.
14-11 (46) "Regulatory accounting principles" means
14-12 generally accepted accounting principles as modified by rules
14-13 adopted under this Act or an applicable federal statute or
14-14 regulation.
14-15 (47) "Savings association" means a state or federal
14-16 savings association.
14-17 (48) "Savings bank" means a state or federal savings
14-18 bank.
14-19 (49) "Shareholder" means an owner of a share in a
14-20 banking association.
14-21 (50) "Shares" means the units into which the
14-22 proprietary interests of a banking association are divided or
14-23 subdivided by means of classes, series, relative rights, or
14-24 preferences.
14-25 (51) "State bank" means a banking association or
14-26 limited banking association organized or reorganized under this
14-27 Act, including an association organized under the laws of this
15-1 state before the effective date of this Act, with the express power
15-2 to receive and accept deposits and possessing other rights and
15-3 powers granted by this Act expressly or by implication. The term
15-4 does not include a savings association, savings bank, or credit
15-5 union.
15-6 (52) "State savings association" means a savings and
15-7 loan association organized under the laws of this state.
15-8 (53) "State savings bank" means a savings bank
15-9 organized under or subject to the Texas Savings Bank Act (Article
15-10 489e, Vernon's Texas Civil Statutes).
15-11 (54) "Subsidiary" means a bank or company that is
15-12 controlled by another person. The term includes a subsidiary of a
15-13 subsidiary.
15-14 (55) "Supervisor" means the banking commissioner or an
15-15 agent of the banking commissioner exercising the powers and duties
15-16 specified in Subchapter B, Chapter 6, of this Act.
15-17 (56) "Surplus" means the amount by which the assets of
15-18 a state bank exceed its liabilities, capital, and undivided
15-19 profits.
15-20 (57) "Unauthorized activity" means an act or practice
15-21 within this state by a person without a charter, license, permit,
15-22 registration, or other authority issued or granted by the banking
15-23 commissioner or other appropriate regulatory authority for which
15-24 such a charter, license, permit, registration, or other authority
15-25 is required.
15-26 (58) "Undivided profits" means the part of equity
15-27 capital of a state bank equal to the balance of its net profits,
16-1 income, gains, and losses since the date of its formation, minus
16-2 subsequent distributions to shareholders or participants and
16-3 transfers to surplus or capital under share dividends or
16-4 appropriate board resolutions. The term includes amounts allocated
16-5 to undivided profits as a result of a merger.
16-6 (59) "Voting security" means a share, participation
16-7 share, or other evidence of proprietary interest in a state bank or
16-8 other company that has as an attribute the right to vote or
16-9 participate in the election of the board of the state bank or other
16-10 company, regardless of whether the right is limited to the election
16-11 of fewer than all of the board members. The term includes a
16-12 security that is convertible or exchangeable into a voting security
16-13 and a nonvoting participation share of a managing participant.
16-14 (b) The definitions shall be liberally construed to
16-15 accomplish the purposes of this Act.
16-16 (c) The finance commission by rule may adopt other
16-17 definitions to accomplish the purposes of this Act.
16-18 Sec. 1.003. FINANCE COMMISSION. (a) The Finance Commission
16-19 of Texas is composed of nine members appointed by the governor with
16-20 the advice and consent of the senate.
16-21 (b) Members of the finance commission serve staggered terms
16-22 of six years with the terms of one-third of the members expiring on
16-23 February 1 of each even-numbered year.
16-24 (c) An appointment to the finance commission must be made
16-25 without regard to the race, color, age, sex, religion, disability,
16-26 or national origin of the appointee.
16-27 (d) On taking office a member of the finance commission
17-1 shall take an oath of office to discharge faithfully the duties of
17-2 the finance commission and uphold the constitution and laws of this
17-3 state and the United States.
17-4 Sec. 1.004. QUALIFICATIONS OF MEMBERS. (a) A member of the
17-5 finance commission must be a resident and registered voter of this
17-6 state. Not more than two members may be residents of the same
17-7 state senatorial district.
17-8 (b) Two members of the finance commission must be banking
17-9 executives and two members of the finance commission must be
17-10 savings executives.
17-11 (c) The five members of the finance commission who are not
17-12 banking executives or savings executives must be selected by the
17-13 governor on the basis of recognized business ability. Those
17-14 members may not be banking executives, savings executives, or
17-15 controlling shareholders in a bank, savings association, or savings
17-16 bank. At least one of those members must be a certified public
17-17 accountant.
17-18 (d) A member or employee of the finance commission may not
17-19 be:
17-20 (1) an officer, employee, or paid consultant of a
17-21 trade association representing an industry regulated by the finance
17-22 commission, the banking commissioner, the savings and loan
17-23 commissioner, or the consumer credit commissioner;
17-24 (2) a person required to register as a lobbyist under
17-25 Chapter 305, Government Code, because of activities for a member of
17-26 an industry described by Subdivision (1) of this subsection; or
17-27 (3) related within the second degree by affinity or
18-1 consanguinity, as determined under Chapter 573, Government Code, to
18-2 a person who is an officer, employee, or paid consultant of a trade
18-3 association representing an industry described by Subdivision (1)
18-4 of this subsection.
18-5 (e) For the purposes of this section:
18-6 (1) "Banking executive" means a person who:
18-7 (A) has had five years' or more executive
18-8 experience in a bank during the seven-year period preceding the
18-9 person's appointment; and
18-10 (B) at the time of the person's appointment is
18-11 an officer of a state bank.
18-12 (2) "Savings executive" means a person who:
18-13 (A) has had five years' or more executive
18-14 experience in a savings association or savings bank during the
18-15 seven-year period preceding the person's appointment; and
18-16 (B) at the time of the person's appointment is
18-17 an officer of a state savings association or savings bank.
18-18 (f) Experience as banking commissioner, deputy banking
18-19 commissioner, examiner, or supervisor of examiners for a state or
18-20 federal banking regulatory agency satisfies the executive
18-21 experience requirement of Subsection (e)(1)(A) of this section.
18-22 Experience as savings and loan commissioner, deputy savings and
18-23 loan commissioner, examiner, or supervisor of examiners for a state
18-24 or federal savings and loan regulatory agency satisfies the
18-25 executive experience requirement of Subsection (e)(2)(A) of this
18-26 section.
18-27 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES. (a) A ground
19-1 for removal from the finance commission exists if a member:
19-2 (1) did not have at the time of appointment the
19-3 qualifications required by Section 1.004 of this Act for
19-4 appointment to the finance commission;
19-5 (2) does not maintain the qualifications required by
19-6 Section 1.004 of this Act during service on the finance commission;
19-7 (3) violates a prohibition established by Section
19-8 1.007 of this Act;
19-9 (4) cannot discharge the member's duties for a
19-10 substantial part of the term for which the member is appointed
19-11 because of illness or disability; or
19-12 (5) is absent from more than half of the regularly
19-13 scheduled finance commission meetings that the member is eligible
19-14 to attend during a calendar year unless the absence is excused by
19-15 majority vote of the finance commission.
19-16 (b) If a vacancy occurs on the finance commission for any
19-17 cause, the governor shall appoint a qualified person to fill the
19-18 unexpired term.
19-19 (c) If the executive director of the finance commission has
19-20 knowledge that a potential ground for removal exists, the executive
19-21 director shall notify the presiding officer of the finance
19-22 commission of the ground. The presiding officer shall then notify
19-23 the governor that a potential ground for removal exists.
19-24 (d) The validity of an action of the finance commission is
19-25 not affected by the fact that it was taken when a ground for
19-26 removal of a member of the finance commission existed.
19-27 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS. A member
20-1 of the finance commission is entitled to:
20-2 (1) reimbursement for reasonable and necessary
20-3 expenses incidental to travel incurred in connection with the
20-4 performance of official duties; and
20-5 (2) per diem as set by legislative appropriation for
20-6 each day that the member engages in the business of the finance
20-7 commission.
20-8 Sec. 1.007. DISQUALIFICATION OF MEMBERS. A member of the
20-9 finance commission may not act or participate in the portion of a
20-10 finance commission meeting during which the matter under
20-11 consideration specifically relates to an entity of which the member
20-12 or the member's spouse is an officer, director, stockholder,
20-13 shareholder, manager, participant, participant-transferee, owner,
20-14 or otherwise financially interested.
20-15 Sec. 1.008. MEETINGS. (a) The finance commission shall
20-16 hold at least six regular public meetings during each calendar year
20-17 on dates set by the finance commission. The presiding officer or
20-18 three members of the finance commission may call special public
20-19 meetings of the finance commission. A majority of the members of
20-20 the finance commission constitutes a quorum for the purpose of
20-21 transacting any business coming before the finance commission.
20-22 (b) The finance commission may hold an open or closed
20-23 meeting by telephone conference call if:
20-24 (1) the meeting is a special called meeting and
20-25 immediate action is required;
20-26 (2) the convening at one location of a quorum of the
20-27 finance commission is difficult or impossible;
21-1 (3) notice is given for the telephone conference call
21-2 meeting as for other meetings, specifying a location for the
21-3 meeting at which the public may attend;
21-4 (4) each part of the telephone conference call meeting
21-5 that is required to be open to the public is audible to the public
21-6 at the location specified in the notice of the meeting; and
21-7 (5) the telephone conference call meeting is tape
21-8 recorded and the tape recording of each portion of the meeting that
21-9 is required to be open to the public is made available to the
21-10 public.
21-11 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. (a)
21-12 The finance commission is subject to Chapters 551 and 2001,
21-13 Government Code.
21-14 (b) Notwithstanding Subsection (a) of this section, the
21-15 finance commission is not required to conduct an open meeting to
21-16 deliberate a matter made confidential by law.
21-17 Sec. 1.010. PRESIDING OFFICER. The governor shall appoint a
21-18 member of the finance commission as presiding officer of the
21-19 finance commission. The presiding officer serves at the will of
21-20 the governor. Subject to Section 1.007 of this Act, the presiding
21-21 officer is entitled to vote on all matters. The presiding officer
21-22 shall preside at all public meetings of the finance commission and
21-23 provide for the keeping of minutes of the proceedings of those
21-24 meetings. The presiding officer may:
21-25 (1) adopt rules and procedures of the finance
21-26 commission as the presiding officer considers necessary for the
21-27 orderly operation of the finance commission and for communication
22-1 among the finance commission, the department, the Savings and Loan
22-2 Department, and the Office of Consumer Credit Commissioner;
22-3 (2) adopt internal procedures governing the time and
22-4 place of meetings, the character of notice of special public
22-5 meetings, the manner in which public meetings are to be conducted,
22-6 and other similar matters; and
22-7 (3) appoint committees composed of finance commission
22-8 members as the presiding officer considers necessary to carry out
22-9 the finance commission's business.
22-10 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES. (a) The
22-11 finance commission may designate the banking commissioner, the
22-12 savings and loan commissioner, the consumer credit commissioner, or
22-13 another person to serve full-time or part-time as executive
22-14 director of the finance commission to facilitate its oversight of
22-15 the department, Savings and Loan Department, and Office of Consumer
22-16 Credit Commissioner. The executive director serves as executive
22-17 director at the pleasure of the finance commission, is responsible
22-18 for staff supervision, support, and coordination, and may be
22-19 separately compensated for those duties. The executive director
22-20 shall:
22-21 (1) develop the agenda for finance commission meetings
22-22 and supervise arrangements for the meetings;
22-23 (2) respond or coordinate responses to finance
22-24 commission requests for information and reports;
22-25 (3) coordinate the activities of committees of the
22-26 finance commission;
22-27 (4) supervise and evaluate the performance of staff
23-1 employed under this section; and
23-2 (5) maintain the permanent record of all finance
23-3 commission meetings and actions.
23-4 (b) The finance commission may employ a hearings officer and
23-5 an internal auditor to provide services to and facilitate finance
23-6 commission oversight and control over the department, Savings and
23-7 Loan Department, and Office of Consumer Credit Commissioner. For
23-8 the purposes of Section 2003.021, Government Code, a hearings
23-9 officer employed under this section is considered to be an employee
23-10 of each agency for which hearing services are provided and whose
23-11 only duty is to preside over matters related to contested cases
23-12 before the agency.
23-13 (c) The executive director, the hearings officer, the
23-14 internal auditor, and any other staff employed under this section
23-15 are not subject to direction by the department, Savings and Loan
23-16 Department, or Office of Consumer Credit Commissioner.
23-17 (d) The finance commission shall reduce administrative costs
23-18 through the sharing of support staff, equipment, and facilities
23-19 among the department, Savings and Loan Department, and Office of
23-20 Consumer Credit Commissioner to the extent that the sharing
23-21 contributes to cost efficiency without detracting from the staff
23-22 expertise needed for individual areas of agency responsibility.
23-23 The finance commission may employ staff and purchase equipment and
23-24 facilities to meet these objectives and fund its activities through
23-25 appropriations or as provided by Chapter 771, Government Code.
23-26 (e) An interagency agreement regarding shared staff must
23-27 provide that the fully allocated cost of each member of shared
24-1 staff other than the executive director will be charged to the
24-2 department, Savings and Loan Department, and Office of Consumer
24-3 Credit Commissioner in proportion to the amount of time devoted to
24-4 each agency's business. The cost of the executive director and the
24-5 unallocated cost of operation of the finance commission must be
24-6 shared by the department, Savings and Loan Department, and Office
24-7 of Consumer Credit Commissioner in proportion to the amount of cash
24-8 receipts of each of those agencies.
24-9 Sec. 1.012. BANKING RULES. (a) The finance commission may
24-10 adopt rules to accomplish the purposes of this Act, including rules
24-11 necessary or reasonable to:
24-12 (1) implement and clarify this Act;
24-13 (2) preserve or protect the safety and soundness of
24-14 state banks;
24-15 (3) grant the same rights and privileges to state
24-16 banks that are or may be granted to national banks domiciled in
24-17 this state;
24-18 (4) provide for recovery of the cost of maintenance
24-19 and operation of the department and the cost of enforcing this Act
24-20 through the imposition and collection of ratable and equitable fees
24-21 for notices, applications, and examinations; and
24-22 (5) facilitate the fair hearing and adjudication of
24-23 matters before the banking commissioner and the finance commission.
24-24 (b) In adopting the rules, the finance commission shall
24-25 consider the need to:
24-26 (1) promote a stable banking environment;
24-27 (2) provide the public with convenient, safe, and
25-1 competitive banking services;
25-2 (3) preserve and promote the competitive parity of
25-3 state banks with national banks and other depository institutions
25-4 in this state consistent with the safety and soundness of state
25-5 banks and the state bank system; and
25-6 (4) allow for economic development within this state.
25-7 (c) The presence or absence in this Act of a specific
25-8 reference to rules regarding a particular subject does not enlarge
25-9 or diminish the rulemaking authority conferred by this section.
25-10 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
25-11 REGULATIONS. (a) The finance commission may adopt rules
25-12 applicable to state savings associations or to savings banks and
25-13 may authorize state savings associations and savings banks to
25-14 invest their funds in any manner permitted for a federal savings
25-15 association or federal savings bank domiciled in this state. This
25-16 authority may not be construed to confer authority to abridge,
25-17 diminish, or limit a right or power specifically given to state
25-18 savings associations or savings banks by state law.
25-19 (b) The finance commission may also adopt rules to:
25-20 (1) prevent state savings associations or savings
25-21 banks from concentrating an excessive or unreasonable portion of
25-22 their resources in a type or character of loan or security
25-23 authorized by the Texas Savings and Loan Act (Article 852a,
25-24 Vernon's Texas Civil Statutes) or the Texas Savings Bank Act
25-25 (Article 489e, Vernon's Texas Civil Statutes); and
25-26 (2) establish standards for investments by state
25-27 savings associations or savings banks, including limits on the
26-1 amount that a state savings association or savings bank may invest
26-2 in a type or character of investment to an amount or percentage of
26-3 the savings association's or savings bank's assets or net worth.
26-4 (c) Information regarding the financial condition of a state
26-5 savings association or savings bank obtained through examination or
26-6 otherwise may not be disclosed to a member of the finance
26-7 commission, except that the savings and loan commissioner may
26-8 disclose to the finance commission a file or record pertinent to a
26-9 hearing or matter pending before the finance commission.
26-10 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS. The
26-11 finance commission may adopt rules necessary for supervising the
26-12 consumer credit commissioner and for ensuring compliance with Title
26-13 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
26-14 Civil Statutes).
26-15 Sec. 1.015. SUNSET PROVISION. The finance commission is
26-16 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
26-17 continued in existence as provided by that chapter, the commission
26-18 is abolished September 1, 2001.
26-19 (Sections 1.016-1.100 reserved for expansion)
26-20 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
26-21 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. The finance
26-22 commission, by at least five affirmative votes, shall appoint a
26-23 savings and loan commissioner, who serves at the pleasure of the
26-24 finance commission, as an employee of the commission, and subject
26-25 to its orders and direction. The savings and loan commissioner is
26-26 the chief executive officer of the Savings and Loan Department.
26-27 The savings and loan commissioner must have not less than seven
27-1 years' experience in the executive management of a savings
27-2 association or savings bank or in savings association or savings
27-3 bank supervision. The finance commission shall set the
27-4 compensation of the savings and loan commissioner, which shall be
27-5 paid from funds of the Savings and Loan Department.
27-6 Sec. 1.102. DEPUTY COMMISSIONERS. The savings and loan
27-7 commissioner shall appoint one or more deputy savings and loan
27-8 commissioners. One deputy savings and loan commissioner must have
27-9 the qualifications required of the savings and loan commissioner.
27-10 That deputy savings and loan commissioner has the powers and shall
27-11 perform the duties of the savings and loan commissioner during the
27-12 absence or inability of the savings and loan commissioner. The
27-13 savings and loan commissioner shall also appoint savings
27-14 association and savings bank examiners.
27-15 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
27-16 Subject to Subsection (b) of this section, each officer and
27-17 employee of the Savings and Loan Department is entitled to
27-18 compensation fixed by the finance commission, which shall be paid
27-19 from the funds of the Savings and Loan Department.
27-20 (b) Chapter 654, Government Code, applies to a position of
27-21 the Savings and Loan Department only if it is classified in salary
27-22 groups 1-10 under the General Appropriations Act. The legislature
27-23 in the General Appropriations Act may determine the total amount
27-24 appropriated to the Savings and Loan Department but may not
27-25 determine the number or salaries of employees other than the
27-26 positions specifically subject to Chapter 654, Government Code, as
27-27 provided by this section. The finance commission, subject to the
28-1 limits provided by this section, shall otherwise determine the
28-2 number of employees of the Savings and Loan Department and the
28-3 salaries of those employees. The Savings and Loan Department may
28-4 use funds appropriated to it for any purpose to pay the salaries
28-5 determined by the finance commission.
28-6 Sec. 1.104. OATH OF OFFICE. Before assuming the duties of
28-7 office, the savings and loan commissioner, each deputy savings and
28-8 loan commissioner, examiner, assistant examiner, conservator,
28-9 supervisor, and special agent, and each other officer or employee
28-10 specified by the savings and loan commissioner must take an oath of
28-11 office to discharge faithfully the duties assigned and uphold the
28-12 constitution and laws of this state and the United States.
28-13 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. The savings
28-14 and loan commissioner shall:
28-15 (1) supervise and regulate the organization,
28-16 operation, and liquidation of state savings associations, as
28-17 provided by the Texas Savings and Loan Act (Article 852a, Vernon's
28-18 Texas Civil Statutes), and state savings banks, as provided by the
28-19 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
28-20 Statutes); and
28-21 (2) enforce those acts in person or through a deputy
28-22 savings and loan commissioner, examiner, supervisor, conservator,
28-23 or other agent.
28-24 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a) The
28-25 savings and loan commissioner and the finance commission shall
28-26 establish reasonable and necessary fees for the administration of
28-27 the Texas Savings and Loan Act (Article 852a, Vernon's Texas Civil
29-1 Statutes) and the Texas Savings Bank Act (Article 489e, Vernon's
29-2 Texas Civil Statutes) and for the support of the finance commission
29-3 as provided by Section 1.011 of this Act.
29-4 (b) The savings and loan commissioner shall collect all
29-5 fees, penalties, charges, and revenues required to be paid by state
29-6 savings associations and savings banks and shall from time to time,
29-7 as directed by the finance commission, submit to the commission a
29-8 full and complete report of the receipts and expenditures of the
29-9 Savings and Loan Department.
29-10 (c) The financial transactions of the Savings and Loan
29-11 Department are subject to audit by the state auditor as provided by
29-12 Chapter 321, Government Code, and the actual costs of any audit
29-13 shall be paid to the state auditor from the funds of the Savings
29-14 and Loan Department.
29-15 (d) All money paid to the Savings and Loan Department from
29-16 all sources shall be deposited in the state treasury to the credit
29-17 of the Savings and Loan Department expense fund, which may be used
29-18 only for the expenses incurred by the Savings and Loan Department
29-19 and finance commission. All expenses incurred by the Savings and
29-20 Loan Department shall be paid only from the fund.
29-21 Sec. 1.107. CONFLICTS OF LAW. If this subchapter conflicts
29-22 with the Texas Savings and Loan Act (Article 852a, Vernon's Texas
29-23 Civil Statutes) or the Texas Savings Bank Act (Article 489e,
29-24 Vernon's Texas Civil Statutes), this subchapter controls.
29-25 Sec. 1.108. CONFLICTS OF INTEREST. (a) An officer or
29-26 employee of the Savings and Loan Department may not be an officer,
29-27 employee, or paid consultant of a trade association in the savings
30-1 association industry or the savings bank industry.
30-2 (b) An officer or employee of the Savings and Loan
30-3 Department may not be related within the second degree by affinity
30-4 or consanguinity, as determined under Chapter 573, Government Code,
30-5 to a person who is an officer, employee, or paid consultant of a
30-6 trade association in the savings association industry or the
30-7 savings bank industry.
30-8 (c) Before the 11th day after the date on which an employee
30-9 begins employment with the Savings and Loan Department, the
30-10 employee shall read the conflict-of-interest statutes applicable to
30-11 employees of the Savings and Loan Department and sign a notarized
30-12 affidavit stating that the employee has read those statutes.
30-13 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS. (a) The
30-14 savings and loan commissioner shall prepare information of consumer
30-15 interest describing the regulatory functions of the Savings and
30-16 Loan Department and describing the procedures by which consumer
30-17 complaints are filed with and resolved by the Savings and Loan
30-18 Department. The information must be made available to the general
30-19 public and appropriate state agencies.
30-20 (b) The Savings and Loan Department shall keep an
30-21 information file about each filed complaint relating to a state
30-22 savings association or savings bank.
30-23 (c) If a written complaint is filed with the Savings and
30-24 Loan Department relating to a state savings association or savings
30-25 bank, at least as frequently as quarterly and until final
30-26 disposition of the complaint, the Savings and Loan Department shall
30-27 notify the parties to the complaint of the status of the complaint
31-1 unless the notice would jeopardize an undercover investigation.
31-2 Sec. 1.110. SUNSET PROVISION. The office of savings and
31-3 loan commissioner and the Savings and Loan Department are subject
31-4 to Chapter 325, Government Code (Texas Sunset Act). Unless
31-5 continued in existence as provided by that chapter, the office and
31-6 department are abolished September 1, 2001.
31-7 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
31-8 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
31-9 Sec. 2.001. BANKING COMMISSIONER .............................. 32
31-10 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT ............... 32
31-11 Sec. 2.003. DEPUTY BANKING COMMISSIONER ....................... 33
31-12 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS ........... 33
31-13 Sec. 2.005. DUTIES OF BANKING COMMISSIONER .................... 33
31-14 Sec. 2.006. AUDITS; FEES AND REVENUES ......................... 33
31-15 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS .............. 34
31-16 Sec. 2.008. EXAMINATION ....................................... 35
31-17 Sec. 2.009. CALL REPORTS ...................................... 37
31-18 Sec. 2.010. LIABILITIES ....................................... 37
31-19 Sec. 2.011. OFFENSES .......................................... 38
31-20 Sec. 2.012. CONFLICT OF INTEREST .............................. 39
31-21 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS ............... 39
31-22 Sec. 2.014. SUNSET PROVISION .................................. 40
31-23 (Sections 2.015-2.100 reserved for expansion)
31-24 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
31-25 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED ............... 40
31-26 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION .................. 41
31-27 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES ...................... 41
32-1 Sec. 2.104. OTHER DISCLOSURE PROHIBITED ....................... 42
32-2 Sec. 2.105. CIVIL DISCOVERY ................................... 42
32-3 Sec. 2.106. INVESTIGATIVE INFORMATION ......................... 43
32-4 Sec. 2.107. EMPLOYMENT INFORMATION ............................ 43
32-5 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS ..................... 43
32-6 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
32-7 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
32-8 Sec. 2.001. BANKING COMMISSIONER. The finance commission,
32-9 by at least five affirmative votes, shall appoint a banking
32-10 commissioner who serves at the pleasure of the finance commission,
32-11 as an employee of the finance commission, and subject to the
32-12 finance commission's orders and directions. The banking
32-13 commissioner must have not less than seven years' experience in
32-14 banking or bank supervision and shall serve as the chief executive
32-15 officer of the Texas Department of Banking. The finance commission
32-16 shall set the compensation of the banking commissioner, which shall
32-17 be paid from funds of the department.
32-18 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Chapter
32-19 654, Government Code, applies to a position of the department only
32-20 if it is classified in salary groups 1-10 under the currently
32-21 effective General Appropriations Act. The legislature in the
32-22 General Appropriations Act may determine the total amount
32-23 appropriated to the department but may not determine the number or
32-24 salaries of employees of the department other than positions
32-25 subject to Chapter 654, Government Code. The finance commission,
32-26 subject to the limits provided by this section, shall otherwise
32-27 determine the number of employees of the department and the
33-1 salaries of those employees. The department may use funds
33-2 appropriated to it for any purpose to pay the salaries determined
33-3 by the finance commission.
33-4 Sec. 2.003. DEPUTY BANKING COMMISSIONER. The banking
33-5 commissioner shall appoint a deputy banking commissioner who must
33-6 have the qualifications required of the banking commissioner.
33-7 During the absence or inability of the banking commissioner, the
33-8 deputy banking commissioner has the powers and shall perform the
33-9 duties of the banking commissioner.
33-10 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS. Before
33-11 assuming the duties of office, the banking commissioner, the deputy
33-12 banking commissioner, and each examiner, assistant examiner,
33-13 conservator, supervisor, special agent, and other officer or
33-14 employee specified by the banking commissioner must take an oath of
33-15 office to discharge faithfully the duties assigned and uphold the
33-16 constitution and laws of this state and of the United States.
33-17 Sec. 2.005. DUTIES OF BANKING COMMISSIONER. The banking
33-18 commissioner shall:
33-19 (1) supervise and regulate, as provided by this Act,
33-20 state banks, trust companies, and state-licensed foreign bank
33-21 agencies;
33-22 (2) administer and enforce this Act in person or
33-23 through the deputy banking commissioner or an examiner, supervisor,
33-24 conservator, or other agent; and
33-25 (3) administer and enforce laws other than this Act as
33-26 directed by the legislature.
33-27 Sec. 2.006. AUDITS; FEES AND REVENUES. (a) The department
34-1 is subject to audit by the state auditor as provided by Chapter
34-2 321, Government Code, and the actual costs of an audit shall be
34-3 paid to the state auditor from the funds of the department.
34-4 (b) The finance commission shall establish reasonable and
34-5 necessary fees for the administration of this Act.
34-6 (c) All money paid to the department under this Act shall be
34-7 deposited in the state treasury to the credit of the Department of
34-8 Banking expense fund and may be used only for the administration of
34-9 the statutory duties of the department and finance commission under
34-10 this Act. All expenses incurred by the department in administering
34-11 this Act shall be paid only from the fund.
34-12 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
34-13 banking commissioner may issue interpretive statements containing
34-14 matters of general policy for the guidance of state banks. The
34-15 banking commissioner shall file the statements for publication in
34-16 the Texas Register. The banking commissioner may amend or repeal a
34-17 published interpretive statement by issuing an amended statement or
34-18 notice of repeal of a statement and filing the statement or notice
34-19 for publication in the Texas Register. The secretary of state
34-20 shall publish the filed statements and notices in the Texas
34-21 Register and in a designated chapter of the Texas Administrative
34-22 Code.
34-23 (b) The banking commissioner may issue opinions in response
34-24 to specific requests from members of the public or the banking
34-25 industry directly or through the deputy banking commissioner or the
34-26 department's attorneys. If the banking commissioner determines
34-27 that the opinion is useful for the general guidance of state banks
35-1 or trust companies, the banking commissioner may file the opinion
35-2 for publication in the Texas Register. A published opinion must be
35-3 redacted in a manner that preserves the confidentiality of the
35-4 requesting party, unless the requesting party consents to be
35-5 identified in the published opinion. The banking commissioner may
35-6 amend or repeal a published opinion by issuing an amended opinion
35-7 or notice of repeal of an opinion and filing the opinion or notice
35-8 for publication in the Texas Register, except that the requesting
35-9 party may rely on the original opinion if all material facts were
35-10 originally disclosed to the banking commissioner, considerations of
35-11 safety and soundness of the affected bank are not implicated with
35-12 respect to further and prospective reliance on the original
35-13 opinion, and the text and interpretation of relevant, governing
35-14 provisions of this Act have not been changed by legislative or
35-15 judicial action. The secretary of state shall publish the filed
35-16 opinions and notices in the Texas Register and a designated chapter
35-17 of the Texas Administrative Code.
35-18 (c) An interpretive statement or opinion issued under this
35-19 section does not have the force of law and is not a rule for the
35-20 purposes of Chapter 2001, Government Code, unless adopted by the
35-21 finance commission as provided by Chapter 2001, Government Code.
35-22 An interpretive statement or opinion is an administrative
35-23 construction of this Act entitled to great weight if the
35-24 construction is reasonable and does not conflict with this Act.
35-25 Sec. 2.008. EXAMINATION. (a) The banking commissioner
35-26 shall examine each state bank annually or more often as the banking
35-27 commissioner considers necessary to safeguard the interests of
36-1 depositors, creditors, shareholders, participants, and
36-2 participant-transferees and to enforce this Act. The banking
36-3 commissioner may defer an examination for not more than six months
36-4 if the banking commissioner considers the deferment necessary for
36-5 the efficient enforcement of this Act. The banking commissioner
36-6 may accept examinations of a state bank by a federal or other
36-7 governmental agency in lieu of an examination under this section or
36-8 may conduct examinations of a state bank jointly with a federal or
36-9 other governmental agency.
36-10 (b) Each state bank shall pay the cost of examination, the
36-11 equitable or proportionate cost of maintenance and operation of the
36-12 department, and the cost of enforcement of this Act through the
36-13 imposition and collection of fees established by the finance
36-14 commission under Section 1.012(a)(4) of this Act.
36-15 (c) The performance of data processing, electronic fund
36-16 transfers, or other bank services on behalf of a state bank by a
36-17 third-party contractor, other than a national bank, and the
36-18 activities of a state bank affiliate are subject to regulation and
36-19 examination by the banking commissioner to the same extent as if
36-20 the services or activities were performed by that state bank on its
36-21 own premises. The banking commissioner may collect a fee from an
36-22 examined contractor or affiliate in connection with each
36-23 examination to cover the cost of the examination or may collect
36-24 that fee from the state banks using the third-party contractor.
36-25 For purposes of this subsection, a state bank affiliate does not
36-26 include a company in which ownership or membership is limited to
36-27 individuals and conditioned by law on the existence and maintenance
37-1 of professional licensing.
37-2 (d) The banking commissioner may administer oaths and
37-3 examine persons under oath on any subject that the banking
37-4 commissioner considers pertinent to the financial condition or the
37-5 safety and soundness of the activities of a state bank.
37-6 Sec. 2.009. CALL REPORTS. (a) Except as provided by
37-7 Subsection (b) of this section, each state bank shall periodically
37-8 file with the banking commissioner a copy of its call report
37-9 stating the bank's financial condition and results of operation.
37-10 (b) The finance commission may by rule:
37-11 (1) specify the form of a call report, including
37-12 specified confidential and public information to be in the call
37-13 report;
37-14 (2) require public information in call reports of
37-15 state banks to be published at the times and in the publications
37-16 and locations the finance commission determines; and
37-17 (3) require call reports to be filed with the banking
37-18 commissioner at the intervals the finance commission determines.
37-19 (c) A state bank that fails to timely file its call report
37-20 as required by this section is subject to a penalty not exceeding
37-21 $500 a day to be collected by suit by the attorney general on
37-22 behalf of the banking commissioner.
37-23 Sec. 2.010. LIABILITIES. (a) The banking commissioner,
37-24 each member of the finance commission, the deputy banking
37-25 commissioner, or an examiner, assistant examiner, supervisor,
37-26 conservator, agent, or other officer or employee of the department
37-27 is not personally liable for damages arising from the person's
38-1 official act or omission, unless the act or omission is corrupt or
38-2 malicious.
38-3 (b) The attorney general shall defend an action brought
38-4 against a person because of an official act or omission under
38-5 Subsection (a) of this section, regardless of whether the defendant
38-6 has terminated service with the department before the action
38-7 commences.
38-8 Sec. 2.011. OFFENSES. (a) The banking commissioner or an
38-9 officer or employee of the department commits an offense if the
38-10 person knowingly:
38-11 (1) discloses information or permits access to a file
38-12 or record of the department in violation of Subchapter B of this
38-13 chapter;
38-14 (2) becomes directly or indirectly indebted to, or
38-15 financially interested in, a state bank, foreign bank agency, or
38-16 trust company; or
38-17 (3) purchases an asset owned by a state bank or trust
38-18 company in the possession of the banking commissioner or other
38-19 receiver for purposes of liquidation.
38-20 (b) An offense under this section is a Class A misdemeanor.
38-21 (c) A department employee, other than the banking
38-22 commissioner and deputy banking commissioner, does not commit an
38-23 offense under Subsection (a)(2) solely because the spouse of or
38-24 other person related to the officer or employee is employed by a
38-25 state bank and participates in an employee benefit plan, including
38-26 an employee stock option, bonus, or ownership plan, or other plan
38-27 the sole purpose of which is to compensate employees of the bank
39-1 for services rendered with an ownership interest in the bank.
39-2 (d) The banking commissioner shall adopt a policy requiring
39-3 each employee of the department to notify the banking commissioner
39-4 in writing of an employment relationship described by Subsection
39-5 (c) of this section and to be recused from all matters affecting
39-6 the employing bank until the employment relationship is terminated
39-7 or the spouse or related person no longer owns equity securities
39-8 issued by the bank. Not later than one year after the date the
39-9 employment relationship described by Subsection (c) of this section
39-10 ends, the spouse or related person must divest ownership of equity
39-11 securities issued by the bank.
39-12 Sec. 2.012. CONFLICT OF INTEREST. (a) An officer or
39-13 employee of the department may not be an officer, employee, or paid
39-14 consultant of a trade association in an industry regulated by the
39-15 department.
39-16 (b) An officer or employee of the department may not be
39-17 related within the second degree by affinity or consanguinity, as
39-18 determined under Chapter 573, Government Code, to a person who is
39-19 an officer, employee, or paid consultant of a trade association in
39-20 an industry regulated by the department.
39-21 (c) Before the 11th day after the date on which an employee
39-22 begins employment with the department, the employee shall read the
39-23 conflict of interest statutes applicable to employees of the
39-24 department and sign a notarized affidavit stating that the employee
39-25 has read those statutes.
39-26 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a) The
39-27 banking commissioner shall prepare information of consumer interest
40-1 describing the regulatory functions of the department and
40-2 describing the department's procedures by which consumer complaints
40-3 are filed with and resolved by the department. The banking
40-4 commissioner shall make the information available to the general
40-5 public and appropriate state agencies.
40-6 (b) The banking commissioner shall keep an information file
40-7 about each complaint filed with the banking commissioner relating
40-8 to any entity regulated by the department.
40-9 (c) If a written complaint is filed with the banking
40-10 commissioner relating to any entity regulated by the department,
40-11 the banking commissioner, at least as frequently as quarterly and
40-12 until final disposition of the complaint, shall notify the parties
40-13 to the complaint of the status of the complaint unless the notice
40-14 would jeopardize an undercover investigation.
40-15 Sec. 2.014. SUNSET PROVISION. The office of banking
40-16 commissioner is subject to Chapter 325, Government Code (Texas
40-17 Sunset Act). Unless continued in existence as provided by that
40-18 chapter, the office is abolished September 1, 2001.
40-19 (Sections 2.015-2.100 reserved for expansion)
40-20 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
40-21 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
40-22 (a) Information obtained directly or indirectly by the department
40-23 relative to the financial condition or business affairs of a
40-24 financial institution, or a present, former, or prospective
40-25 shareholder, participant, officer, director, manager, affiliate, or
40-26 service provider of a financial institution, other than the public
40-27 portions of call reports and profit and loss statements, whether
41-1 obtained through application, examination, or otherwise, except
41-2 published statements, and all related files and records of the
41-3 department are confidential and may not be disclosed by the banking
41-4 commissioner or an employee of the department except as expressly
41-5 provided otherwise by this Act or rules adopted under this Act.
41-6 (b) Information obtained by the department from a federal or
41-7 state regulatory agency that is confidential under federal or state
41-8 law may not be disclosed except as provided by federal or state
41-9 law.
41-10 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
41-11 information may not be disclosed to a member of the finance
41-12 commission, and a member of the finance commission may not be given
41-13 access to the files and records of the department except that the
41-14 banking commissioner may disclose to the finance commission
41-15 information, files, and records pertinent to a hearing or matter
41-16 pending before the finance commission.
41-17 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
41-18 and execution of an appropriate confidentiality agreement approved
41-19 by the banking commissioner, the banking commissioner may disclose
41-20 to a federal banking regulatory agency confidential information
41-21 relative to a financial institution within the agency's
41-22 jurisdiction, or an affiliate or service provider of the financial
41-23 institution, and may permit the agency access to files and records
41-24 or reports relating to the financial institution or its affiliate
41-25 or service provider.
41-26 (b) The banking commissioner may, if the banking
41-27 commissioner considers it necessary or proper to the enforcement of
42-1 the laws of this state, another state, the United States, or a
42-2 foreign sovereign state, or to the best interest of the public,
42-3 disclose or authorize release of confidential information to
42-4 another department of this state, another state, the United States,
42-5 a foreign sovereign state, or any related agency or
42-6 instrumentality.
42-7 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
42-8 information that is provided to a financial institution, affiliate,
42-9 or service provider of a financial institution, whether in the form
42-10 of a report of examination or otherwise, is the confidential
42-11 property of the department. The information may not be made public
42-12 or disclosed by the recipient or by its officers, directors,
42-13 managers, employees, or agents to a person not officially connected
42-14 to the recipient as officer, director, employee, attorney, auditor,
42-15 or independent auditor except as authorized by rules adopted under
42-16 this Act. A disclosure or use of the information in violation of
42-17 this section is an offense punishable as provided for an offense
42-18 under Section 37.10, Penal Code.
42-19 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
42-20 information from a person subject to this subchapter pursuant to
42-21 subpoena or other legal process must comply with rules adopted
42-22 under this Act and other applicable law. The rules may restrict
42-23 release of confidential information to solely that portion directly
42-24 relevant to the legal dispute at issue and may require that a
42-25 protective order, in form and under circumstances specified by the
42-26 rules, be issued by a court of competent jurisdiction before
42-27 release of the confidential information.
43-1 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
43-2 other law, the banking commissioner may refuse to release
43-3 information or records in the custody of the department if, in the
43-4 opinion of the banking commissioner, release of the information or
43-5 records might jeopardize an ongoing investigation of potentially
43-6 unlawful activities.
43-7 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
43-8 employment information to a financial institution or to a person
43-9 providing employment information to a financial institution
43-10 concerning the known or suspected involvement of a present or
43-11 former employee, officer, or director in a violation of any state
43-12 or federal law, rule, or regulation that has been reported to
43-13 appropriate state or federal authorities. The person may not be
43-14 held liable for providing that information unless the information
43-15 provided is false and the person provided the information with
43-16 disregard for the truth.
43-17 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
43-18 Notwithstanding Article 2.44, Texas Business Corporation Act, a
43-19 shareholder or participant of a state bank may not examine:
43-20 (1) a report of examination or other confidential
43-21 property of the department that is in the possession of the state
43-22 bank; or
43-23 (2) a book or record of the state bank that directly
43-24 or indirectly pertains to financial or other information maintained
43-25 by the bank on behalf of its customers, including a specific item
43-26 in the minutes of the board or a committee of the board regarding
43-27 loan review and approval or a loan delinquency report that would
44-1 tend to identify the bank's customer.
44-2 (b) This section does not affect the rights of a shareholder
44-3 or participant of a state bank when acting in another capacity.
44-4 CHAPTER 3. POWERS; ORGANIZATION AND
44-5 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
44-6 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
44-7 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS ............ 46
44-8 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK ............. 47
44-9 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER ................ 49
44-10 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER
44-11 APPLICATION ..................................... 50
44-12 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION ....... 51
44-13 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY .............. 52
44-14 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL
44-15 BUSINESS CORPORATIONS ........................... 53
44-16 Sec. 3.008. BANKING COMMISSIONER HEARINGS ..................... 54
44-17 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS .............. 54
44-18 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS ........... 56
44-19 (Sections 3.011-3.100 reserved for expansion)
44-20 SUBCHAPTER B. AMENDMENT OF ARTICLES;
44-21 CHANGES IN CAPITAL AND SURPLUS
44-22 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
44-23 OF ASSOCIATION .................................. 59
44-24 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR
44-25 PARTICIPATION SHARES ............................ 61
44-26 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS ......... 62
44-27 Sec. 3.104. CAPITAL NOTES OR DEBENTURES ....................... 62
45-1 (Sections 3.105-3.200 reserved for expansion)
45-2 SUBCHAPTER C. BANK OFFICES
45-3 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING ............... 63
45-4 Sec. 3.202. HOME OFFICE ....................................... 64
45-5 Sec. 3.203. BRANCH OFFICES .................................... 65
45-6 Sec. 3.204. ELECTRONIC TERMINALS .............................. 66
45-7 Sec. 3.205. LOAN PRODUCTION OFFICES ........................... 67
45-8 (Sections 3.206-3.300 reserved for expansion)
45-9 SUBCHAPTER D. MERGER
45-10 Sec. 3.301. MERGER AUTHORITY .................................. 67
45-11 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER .................. 68
45-12 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER .................... 70
45-13 (Sections 3.304-3.400 reserved for expansion)
45-14 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
45-15 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
45-16 FINANCIAL INSTITUTION ........................... 70
45-17 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT .............. 70
45-18 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION ................ 71
45-19 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS ............... 72
45-20 Sec. 3.405. SALE OF ASSETS .................................... 72
45-21 (Sections 3.406-3.500 reserved for expansion)
45-22 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
45-23 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
45-24 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
45-25 BANK INTO NATIONAL BANK OR SAVINGS BANK OR
45-26 SAVINGS ASSOCIATION ............................. 73
45-27 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
46-1 BANK ............................................ 75
46-2 CHAPTER 3. POWERS; ORGANIZATION AND
46-3 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
46-4 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
46-5 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
46-6 One or more persons, a majority of whom are residents of this
46-7 state, may organize a state bank as a banking association or a
46-8 limited banking association. A state bank may:
46-9 (1) receive and pay deposits with or without interest,
46-10 discount and negotiate promissory notes, borrow or lend money with
46-11 or without security or interest, invest and deal in securities, buy
46-12 and sell exchange, coin, and bullion and exercise incidental powers
46-13 as necessary to carry on the business of banking as provided by
46-14 this Act;
46-15 (2) act as agent, including a fiscal agent, registrar,
46-16 or transfer agent and, in that capacity, receive and disburse money
46-17 and transfer securities;
46-18 (3) act in a fiduciary capacity, without giving bond,
46-19 as guardian, receiver, executor, administrator, or trustee,
46-20 including a mortgage or indenture trustee; and
46-21 (4) engage in any other activity, directly or through
46-22 a subsidiary, authorized by this Act or rules adopted under this
46-23 Act or determined by the banking commissioner to be closely related
46-24 to banking.
46-25 (b) Subject to Section 3.007 of this Act, a state bank may
46-26 exercise the powers of a Texas business corporation reasonably
46-27 necessary to enable exercise of its specific powers under this Act.
47-1 (c) A state bank may contribute to community funds, or to
47-2 charitable, philanthropic, or benevolent instrumentalities
47-3 conducive to public welfare, amounts that its board considers
47-4 expedient and in the interests of the bank.
47-5 (d) A state bank may be organized or reorganized as a
47-6 community development financial institution, as defined by the
47-7 Riegle Community Development and Regulatory Improvement Act of
47-8 1994.
47-9 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. The
47-10 articles of association of a state bank must be signed and
47-11 acknowledged by each organizer and must contain:
47-12 (1) the name of the state bank, except that the
47-13 banking commissioner may determine that a proposed bank name is
47-14 potentially misleading to the public and require the organizers to
47-15 select a different name;
47-16 (2) the period of its duration, which may be
47-17 perpetual, except that a state bank, other than a private bank,
47-18 organized before August 31, 1993, is considered to have perpetual
47-19 existence, notwithstanding a contrary statement in its articles of
47-20 association, unless after the effective date of this Act the bank
47-21 amends its articles of association to reaffirm its limited
47-22 duration;
47-23 (3) the powers of the state bank, which may be stated
47-24 as:
47-25 (A) all powers granted by law to a state bank;
47-26 or
47-27 (B) a list of the specific powers under Section
48-1 3.001 of this Act that the state bank chooses to exercise;
48-2 (4) the aggregate number of shares or participation
48-3 shares that the bank will be authorized to issue, the number of
48-4 classes of shares or participation shares, which may be one or
48-5 more, the number of shares or participation shares of each class if
48-6 more than one class, and a statement of the par value of the shares
48-7 or participation shares of each class or that the shares or
48-8 participation shares are to be without par value;
48-9 (5) if the shares or participation shares are to be
48-10 divided into classes, the designation of each class and statement
48-11 of the preferences, limitations, and relative rights of the shares
48-12 or participation shares of each class, which in the case of a
48-13 limited banking association may be more fully set forth in the
48-14 participation agreement;
48-15 (6) any provision limiting or denying to shareholders
48-16 or participants the preemptive right to acquire additional or
48-17 treasury shares or participation shares of the bank;
48-18 (7) any provision granting the right of shareholders
48-19 or participants to cumulative voting in the election of directors
48-20 or managers;
48-21 (8) the aggregate amount of consideration to be
48-22 received for all shares or participation shares initially issued by
48-23 the bank, and a statement that all authorized shares or
48-24 participation shares have been subscribed and that all
48-25 subscriptions received provide for the consideration to be fully
48-26 paid in cash before issuance of the charter;
48-27 (9) any provision consistent with law that the
49-1 organizers elect to set forth in the articles of association for
49-2 the regulation of the internal affairs of the bank or that is
49-3 otherwise required by this Act to be set forth in the articles of
49-4 association;
49-5 (10) the street address of the bank's initial home
49-6 office required to be maintained under Section 3.202 of this Act;
49-7 and
49-8 (11) the number of directors or managers constituting
49-9 the initial board, which may be no fewer than five or more than 25,
49-10 and the names and street addresses of the persons who are to serve
49-11 as directors or managers until the first annual meeting of
49-12 shareholders or participants or until successor directors or
49-13 managers have been elected and qualified; or, at the option of the
49-14 organizers of a limited banking association that will have no fewer
49-15 than five or more than 25 participants, a statement that management
49-16 is vested in a board composed of all participants, with management
49-17 authority vested in each participant in proportion to the
49-18 participant's contribution to capital as adjusted from time to time
49-19 to properly reflect any additional contribution, and the names and
49-20 street addresses of the persons who are to be managing
49-21 participants.
49-22 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a) An
49-23 application for a state bank charter must be made under oath and in
49-24 the form required by the banking commissioner, who shall inquire
49-25 fully into the identity and character of each proposed director,
49-26 manager, officer, managing participant, and principal shareholder
49-27 or participant. The application must be accompanied by all charter
50-1 fees and deposits required by law or regulation.
50-2 (b) The banking commissioner shall grant a state bank
50-3 charter only if the commissioner determines that the organizers
50-4 have established that:
50-5 (1) a public necessity exists for the proposed state
50-6 bank;
50-7 (2) the proposed organizational and capital structure
50-8 and amount of initial capitalization is adequate for the proposed
50-9 business and location;
50-10 (3) the anticipated volume of business indicates
50-11 profitable operation;
50-12 (4) the proposed officers, directors, and managers, or
50-13 managing participants, as a group have sufficient banking
50-14 experience, ability, standing, competence, trustworthiness, and
50-15 integrity to justify a belief that the proposed state bank will
50-16 operate in compliance with law and that success of the proposed
50-17 state bank is probable;
50-18 (5) each principal shareholder or participant has
50-19 sufficient experience, ability, standing, competence,
50-20 trustworthiness, and integrity to justify a belief that the
50-21 proposed state bank will be free from improper or unlawful
50-22 influence or interference with respect to the bank's operation in
50-23 compliance with law; and
50-24 (6) the organizers are acting in good faith.
50-25 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
50-26 (a) The banking commissioner shall notify the organizers when the
50-27 application is complete and accepted for filing and all required
51-1 fees and deposits have been paid. Promptly after this notification
51-2 the organizers shall publish notice of the application and solicit
51-3 comments and protests, in the form specified by the banking
51-4 commissioner, in a newspaper of general circulation in the county
51-5 where the proposed state bank is to be located.
51-6 (b) At the expense of the organizers, the banking
51-7 commissioner shall thoroughly investigate the application. The
51-8 banking commissioner shall prepare a written report of the
51-9 investigation, and any person, other than a person protesting under
51-10 Section 3.005 of this Act, may request a copy of the
51-11 nonconfidential portions of the application and written report as
51-12 provided by Chapter 552, Government Code. Rules adopted under
51-13 this Act may specify the confidential or nonconfidential character
51-14 of information obtained by the department under this chapter.
51-15 Except as provided by Subchapter B, Chapter 2, of this Act or in
51-16 rules regarding confidential information, the financial statement
51-17 of a proposed officer, director, manager, or managing participant
51-18 is confidential and not subject to public disclosure.
51-19 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
51-20 (a) Any person may file a protest to an application.
51-21 (b) If a protest of the application is not filed before the
51-22 15th day after the date the organizers publish notice under Section
51-23 3.004(a) of this Act, the banking commissioner may immediately
51-24 determine whether the necessary conditions set forth in Section
51-25 3.003(b) of this Act have been established, based on the
51-26 application and investigation. The banking commissioner shall
51-27 approve the application for charter or set the charter application
52-1 for hearing.
52-2 (c) If a protest of the application is timely filed,
52-3 accompanied by the fees and deposits required by statute or rules,
52-4 or if the banking commissioner sets a hearing, the banking
52-5 commissioner shall conduct a public hearing and one or more
52-6 prehearing conferences and opportunities for discovery as the
52-7 banking commissioner considers advisable and consistent with the
52-8 applicable statutes and rules. A person protesting the application
52-9 is entitled to the confidential portion of the application, subject
52-10 to a protective order that restricts the use of confidential
52-11 information to the charter proceedings.
52-12 (d) Based on the record of the hearing, the banking
52-13 commissioner shall determine whether the application meets the
52-14 requirements of Section 3.003(b) of this Act and shall enter an
52-15 order granting or denying the charter.
52-16 (e) The banking commissioner may make approval of an
52-17 application conditional. The banking commissioner shall include
52-18 any conditions in the order approving the application.
52-19 (f) Chapter 2001, Government Code, does not apply to a
52-20 charter application filed for the purpose of assuming the assets
52-21 and liabilities of a financial institution considered by the
52-22 banking commissioner to be in hazardous condition.
52-23 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) A
52-24 state bank may not engage in the business of banking until it
52-25 receives a certificate of authority from the banking commissioner.
52-26 The banking commissioner may not deliver the certificate of
52-27 authority until the bank has:
53-1 (1) received cash for the issuance of all authorized
53-2 shares or participation shares in the full amount subscribed;
53-3 (2) elected or qualified the initial officers and
53-4 directors or managers, as appropriate, named in the application for
53-5 charter or other officers and directors or managers approved by the
53-6 banking commissioner; and
53-7 (3) complied with all the other requirements of this
53-8 Act relating to the organization of state banks.
53-9 (b) If the state bank does not open and engage in the
53-10 business of banking within six months after the date of the
53-11 granting of its charter, the banking commissioner may forfeit the
53-12 charter or cancel the conditional approval of application for
53-13 charter without judicial action.
53-14 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
53-15 CORPORATIONS. (a) The Texas Business Corporation Act and the
53-16 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
53-17 seq., Vernon's Texas Civil Statutes) apply to a state bank to the
53-18 extent not inconsistent with this Act or the proper business of a
53-19 state bank, except that:
53-20 (1) a reference in those Acts to the secretary of
53-21 state means the banking commissioner unless the context requires
53-22 otherwise; and
53-23 (2) the right of shareholders or participants to
53-24 cumulative voting in the election of directors or managers exists
53-25 only if granted by the state bank's articles of association.
53-26 (b) The finance commission may adopt rules to limit or
53-27 refine the applicability of Subsection (a) of this section to a
54-1 state bank or to alter or supplement the procedures and
54-2 requirements of the Texas Business Corporation Act applicable to an
54-3 action taken under this chapter.
54-4 (c) Unless expressly authorized by this Act or a rule
54-5 adopted under this Act, a state bank may not take an action
54-6 authorized by the Texas Business Corporation Act regarding its
54-7 corporate status, capital structure, or a matter of corporate
54-8 governance, of the type for which the Texas Business Corporation
54-9 Act would require a filing with the secretary of state if the bank
54-10 were a business corporation, without submitting the filing to the
54-11 banking commissioner and obtaining the banking commissioner's prior
54-12 written approval of the action.
54-13 Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) This
54-14 section does not grant a right to hearing to a person that is not
54-15 otherwise granted by governing law.
54-16 (b) The banking commissioner may convene a hearing to
54-17 receive evidence and argument regarding any matter before the
54-18 banking commissioner for decision or review under this Act. The
54-19 hearing must be conducted under Chapter 2001, Government Code.
54-20 (c) A hearing before the banking commissioner that is
54-21 required or authorized by law may be conducted by a hearing officer
54-22 on behalf of the banking commissioner. A matter made confidential
54-23 by law must be considered by the banking commissioner in a closed
54-24 hearing.
54-25 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
54-26 Except as expressly provided otherwise by this Act, a decision or
54-27 order of the banking commissioner made under this Act after hearing
55-1 may be appealed directly to the District Court of Travis County as
55-2 provided by Subsection (c) of this section or, at the option of the
55-3 appellant, to the finance commission for review.
55-4 (b) The finance commission shall consider the questions
55-5 raised by the application for review and may also consider
55-6 additional matters pertinent to the appeal. An order of the
55-7 banking commissioner continues in effect pending review unless the
55-8 order is stayed by the finance commission. The finance commission
55-9 may impose any condition before granting a stay of the appealed
55-10 order. The finance commission may not be required to accept
55-11 additional evidence or hold an evidentiary hearing if a hearing was
55-12 held and a record made before the banking commissioner. The
55-13 finance commission shall remand the proceeding to the banking
55-14 commissioner for the purpose of receiving any additional evidence
55-15 the finance commission chooses to consider. A hearing before the
55-16 finance commission that is required or authorized by law may be
55-17 conducted by a hearing officer on behalf of the finance commission.
55-18 A matter made confidential by law must be considered by the finance
55-19 commission in a closed hearing.
55-20 (c) A person affected by a final order of the banking
55-21 commissioner that elects to appeal directly to district court, or a
55-22 person affected by a final order of the finance commission under
55-23 this section, may appeal the final order by filing a petition for
55-24 judicial review under the substantial evidence rule in the District
55-25 Court of Travis County as provided by Chapter 2001, Government
55-26 Code. A petition for appeal filed in the district court does not
55-27 stay or vacate the appealed order unless the court, after notice
56-1 and hearing, expressly stays or vacates the order.
56-2 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS.
56-3 (a) Section 16(a), Article XVI, Texas Constitution, empowers the
56-4 legislature to authorize the incorporation of state banks and
56-5 provide for a system of state regulation and control of state banks
56-6 that will adequately protect and secure depositors and creditors.
56-7 Section 16(c), Article XVI, Texas Constitution, grants to state
56-8 banks, created by virtue of the power vested in the legislature by
56-9 Section 16(a) of that article, the same rights and privileges that
56-10 are or may be granted to national banks domiciled in this state.
56-11 The legislature finds that Section 16(c) of that article does not
56-12 restrict the legislature's power to provide a system of state
56-13 regulation pursuant to Section 16(a) of that article that differs
56-14 from the regulatory scheme imposed on national banks under federal
56-15 law or prevent the finance commission, acting under authority
56-16 granted by the legislature for the purpose of implementing this
56-17 Act, from adopting rules that differ from federal statutes and
56-18 regulations or that reasonably regulate the method or manner by
56-19 which a state bank exercises its rights and privileges, if the
56-20 rules are adopted after due consideration of the factors listed in
56-21 Section 1.012(b) of this Act. The legislature further finds that
56-22 Section 16(c) does not diminish or limit any rights or powers
56-23 specifically given to state banks by the laws of this state.
56-24 (b) A state bank that intends to exercise a right or
56-25 privilege granted to national banks that is not authorized for
56-26 state banks under the statutes and rules of this state shall submit
56-27 a letter to the banking commissioner, describing in detail the
57-1 activity in which the state bank intends to engage and the specific
57-2 authority of a national bank that authorizes the activity for a
57-3 national bank and shall attach copies, if available, of relevant
57-4 federal law, regulations, and interpretive letters. The bank may
57-5 begin to perform the proposed activity after the 30th day after the
57-6 date the banking commissioner receives the bank's letter unless the
57-7 banking commissioner specifies an earlier or later date or
57-8 prohibits the activity. The banking commissioner may prohibit the
57-9 state bank from performing the activity only if the banking
57-10 commissioner finds that:
57-11 (1) a national bank domiciled in this state does not
57-12 possess the specific right or privilege to perform the activity the
57-13 state bank seeks to perform; or
57-14 (2) the performance of the activity by the state bank
57-15 would adversely affect the safety and soundness of the requesting
57-16 state bank.
57-17 (c) The banking commissioner may extend the 30-day period
57-18 under Subsection (b) of this section if the banking commissioner
57-19 determines that the bank's letter raises issues requiring
57-20 additional information or additional time for analysis. If the
57-21 30-day period is extended, the bank may perform the proposed
57-22 activity only on prior written approval by the banking
57-23 commissioner, except that the banking commissioner must approve or
57-24 prohibit the proposed activity or convene a hearing under Section
57-25 3.008 of this Act not later than the 60th day after the date the
57-26 commissioner receives the bank's letter. If a hearing is convened
57-27 under Section 3.008 of this Act, the banking commissioner must
58-1 approve or prohibit the proposed activity not later than the 30th
58-2 day after the date the hearing is completed.
58-3 (d) A state bank that is denied the requested right or
58-4 privilege to engage in an activity by the banking commissioner
58-5 under this section may appeal as provided by Section 3.009 of this
58-6 Act or may resubmit a letter under this subsection with additional
58-7 information or authority relevant to the banking commissioner's
58-8 determination. A denial is immediately final for purposes of
58-9 appeal.
58-10 (e) To effectuate the Texas Constitution, the finance
58-11 commission may adopt rules implementing the method or manner in
58-12 which a state bank exercises specific rights and privileges granted
58-13 pursuant to Section 16(c), Article XVI, Texas Constitution,
58-14 including rules regarding the exercise of rights and privileges
58-15 that would be prohibited to state banks but for Section 16(c). The
58-16 finance commission may not adopt rules under this subsection unless
58-17 it considers the factors listed in Section 1.012(b) of this Act and
58-18 finds that:
58-19 (1) national banks domiciled in this state possess the
58-20 rights or privileges to perform activities the rule would permit
58-21 state banks to perform; and
58-22 (2) the rules contain adequate safeguards and
58-23 controls, consistent with safety and soundness, to address the
58-24 concern of the legislature evidenced by the state law the rules
58-25 would impact.
58-26 (f) The exercise of rights and privileges by a state bank in
58-27 compliance with and in the manner authorized by this section is not
59-1 a violation of any statute of this state.
59-2 (Sections 3.011-3.100 reserved for expansion)
59-3 SUBCHAPTER B. AMENDMENT OF ARTICLES;
59-4 CHANGES IN CAPITAL AND SURPLUS
59-5 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
59-6 OF ASSOCIATION. (a) A state bank that has been granted a
59-7 certificate of authority under Section 3.006 of this Act may amend
59-8 or restate its articles of association for any lawful purpose,
59-9 including the creation of authorized but unissued shares or
59-10 participation shares in one or more classes or series.
59-11 (b) An amendment authorizing the issuance of shares or
59-12 participation shares in series must contain:
59-13 (1) the designation of each series and a statement of
59-14 any variations in the preferences, limitations, and relative rights
59-15 among series to the extent that the preferences, limitations, and
59-16 relative rights are to be established in the articles of
59-17 association; and
59-18 (2) a statement of any authority to be vested in the
59-19 board to establish series and determine the preferences,
59-20 limitations, and relative rights of each series.
59-21 (c) A limited banking association may not amend its articles
59-22 of association to extend its period of existence for a perpetual
59-23 period or for any period of years, unless the period of existence
59-24 is expressly contingent on those events resulting in dissolution of
59-25 the limited banking association under Section 4.207 of this Act.
59-26 (d) Amendment or restatement of the articles of association
59-27 of a state bank and approval of the board and shareholders or
60-1 participants must be made or obtained in accordance with provisions
60-2 of the Texas Business Corporation Act for the amendment or
60-3 restatement of articles of incorporation except as otherwise
60-4 provided by this Act or rules adopted under this Act. The original
60-5 and one copy of the articles of amendment or restated articles of
60-6 association must be filed with the banking commissioner for
60-7 approval. Unless the submission presents novel or unusual
60-8 questions, the banking commissioner shall approve or reject the
60-9 amendment or restatement not later than the 31st day after the date
60-10 the banking commissioner considers the submission informationally
60-11 complete and accepted for filing. The banking commissioner may
60-12 require the submission of additional information as considered
60-13 necessary to an informed decision to approve or reject any
60-14 amendment or restatement of articles of association under this
60-15 section. If the banking commissioner finds that the amendment or
60-16 restatement conforms to law and any conditions imposed by the
60-17 banking commissioner, and any required filing fee has been paid,
60-18 the banking commissioner shall:
60-19 (1) endorse the face of the original and copy of the
60-20 amendment or restatement with the date of approval and the word
60-21 "Approved";
60-22 (2) file the original of the amendment or restatement
60-23 in the department's records; and
60-24 (3) deliver a certified copy of the amendment or
60-25 restatement to the state bank.
60-26 (e) An amendment or restatement, if approved, takes effect
60-27 on the date of approval, unless the amendment or restatement
61-1 provides for a different effective date.
61-2 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
61-3 SHARES. (a) If the articles of association expressly give the
61-4 board authority to establish series and determine the preferences,
61-5 limitations, and relative rights of each series, the board may do
61-6 so only on compliance with this section and any rules adopted under
61-7 this Act.
61-8 (b) A series of shares or participation shares may be
61-9 established in the manner provided by the Texas Business
61-10 Corporation Act as if the state bank were a domestic corporation,
61-11 but the shares or participation shares of the series may not be
61-12 issued and sold without the prior written approval of the banking
61-13 commissioner under Section 3.103 of this Act. The state bank shall
61-14 file the original and one copy of the statement of action required
61-15 by the Texas Business Corporation Act with the banking
61-16 commissioner. Unless the submission presents novel or unusual
61-17 questions, the banking commissioner shall approve or reject the
61-18 series not later than the 31st day after the date the banking
61-19 commissioner considers the submission informationally complete and
61-20 accepted for filing. The banking commissioner may require the
61-21 submission of additional information as considered necessary to an
61-22 informed decision to approve or reject a proposed series under this
61-23 section. If the banking commissioner finds that the interests of
61-24 depositors and creditors will not be adversely affected by the
61-25 series, that the series conforms to law and any conditions imposed
61-26 by the banking commissioner, and that any required filing fee has
61-27 been paid, the banking commissioner shall:
62-1 (1) endorse the face of the original and copy of the
62-2 statement with the date of approval and the word "Approved";
62-3 (2) file the original of the statement in the
62-4 department's records; and
62-5 (3) deliver a certified copy of the statement to the
62-6 state bank.
62-7 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
62-8 A state bank may not reduce or increase its outstanding capital and
62-9 surplus through dividend, redemption, issuance of shares or
62-10 participation shares, or otherwise, without the prior written
62-11 approval of the banking commissioner, except as permitted by this
62-12 section or rules adopted under this Act.
62-13 (b) Unless otherwise restricted by rules, prior written
62-14 approval is not required for an increase in capital and surplus
62-15 accomplished through:
62-16 (1) issuance of shares of common stock or their
62-17 equivalent in participation shares for cash;
62-18 (2) declaration and payment of pro rata share
62-19 dividends as defined in the Texas Business Corporation Act; or
62-20 (3) adoption by the board of a resolution directing
62-21 that all or part of undivided profits be transferred to capital or
62-22 surplus.
62-23 (c) Prior approval is not required for a decrease in capital
62-24 or surplus caused by losses in excess of undivided profits.
62-25 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
62-26 prior written approval of the banking commissioner a state bank
62-27 may, at any time, through action of its board, and without
63-1 requiring action of its shareholders or participants, issue and
63-2 sell its capital notes or debentures, which must be subordinate to
63-3 the claims of depositors and may be subordinate to other claims,
63-4 including the claims of other creditors or the shareholders or
63-5 participants.
63-6 (b) Capital notes or debentures may be convertible into
63-7 shares or participation shares of any class or series. The
63-8 issuance and sale of convertible capital notes or debentures are
63-9 subject to satisfaction of preemptive rights, if any, to the extent
63-10 provided by law.
63-11 (c) Without the prior written approval of the banking
63-12 commissioner, interest due or principal repayable on outstanding
63-13 capital notes or debentures may not be paid by a state bank at a
63-14 time when the bank is in hazardous condition or is insolvent, or to
63-15 the extent that payment will cause the bank to be in hazardous
63-16 condition or insolvent, as determined by the banking commissioner.
63-17 (d) The amount of any outstanding capital notes or
63-18 debentures that meet the requirements of this section and that are
63-19 subordinated to unsecured creditors of the bank may be included in
63-20 equity capital of the bank for purposes of determining hazardous
63-21 condition or insolvency and for other purposes provided by rules
63-22 adopted under this Act.
63-23 (Sections 3.105-3.200 reserved for expansion)
63-24 SUBCHAPTER C. BANK OFFICES
63-25 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
63-26 state bank may engage in the banking business at its home office,
63-27 at an approved branch office location, and through electronic
64-1 terminals. A drive-in facility must be approved as a branch if it
64-2 is more than 2,000 feet from the nearest wall of the bank's home
64-3 office or another approved branch office.
64-4 (b) A function of a state bank that does not involve banking
64-5 contact with the public may be conducted at any location without
64-6 prior written approval of the banking commissioner. The finance
64-7 commission may adopt rules further defining functions of a state
64-8 bank that are not required to be conducted at an approved location.
64-9 (c) Under Section 3.010 of this Act the finance commission
64-10 may by rule authorize a new form of banking facility. The banking
64-11 commissioner may approve a new form of banking facility other than
64-12 as provided in this subchapter if the banking commissioner does not
64-13 have a significant supervisory or regulatory concern regarding the
64-14 proposed facility.
64-15 Sec. 3.202. HOME OFFICE. (a) Each state bank must have and
64-16 continuously maintain in this state a home office, which must be a
64-17 location at which the bank does business with the public and keeps
64-18 its corporate books and records. At least one officer of the bank
64-19 must maintain an office at the home office and each officer at the
64-20 home office is an agent for service of process for the bank.
64-21 (b) A state bank may change its home office to one of its
64-22 previously established branch locations within this state, if the
64-23 location that is the home office before the change is to remain as
64-24 a branch of the bank, by filing a written notice with the banking
64-25 commissioner setting forth the name of the state bank, the street
64-26 address of its home office before the change, the street address of
64-27 the location to which the home office is to be changed, and a copy
65-1 of the resolution adopted by the board authorizing the change. The
65-2 change of home office takes effect on the 31st day after the date
65-3 the banking commissioner receives the notice unless the banking
65-4 commissioner consents to a different effective date.
65-5 (c) A state bank may change its home office to any location
65-6 within this state, other than as permitted by Subsection (b) of
65-7 this section, on prior written approval of the banking
65-8 commissioner. The banking commissioner shall grant an application
65-9 under this subsection if the banking commissioner does not have a
65-10 significant supervisory or regulatory concern regarding the
65-11 proposed banking facility, the applicant, or an affiliate of the
65-12 applicant. Any standard established by the banking commissioner or
65-13 the finance commission regarding the establishment of a branch
65-14 under Section 3.203 of this Act applies to an application for a
65-15 change of home office that is subject to this subsection, except as
65-16 otherwise provided by rules adopted under this Act.
65-17 (d) If the proposed relocation of the bank's home office
65-18 would effect an abandonment of all or part of the community served
65-19 by the bank, the bank must also establish to the satisfaction of
65-20 the banking commissioner that the abandonment is consistent with
65-21 the original determination of public necessity for the
65-22 establishment of a bank at that location.
65-23 Sec. 3.203. BRANCH OFFICES. A state bank may establish and
65-24 maintain branch offices at any location on prior written approval
65-25 of the banking commissioner. If the banking commissioner does not
65-26 have a significant supervisory or regulatory concern regarding the
65-27 proposed branch, the applicant, or an affiliate, the banking
66-1 commissioner shall approve the application. The finance commission
66-2 may adopt rules establishing additional standards for the approval
66-3 of branch offices.
66-4 Sec. 3.204. ELECTRONIC TERMINALS. (a) A person or group of
66-5 persons, for the convenience of customers of depository
66-6 institutions, may install, maintain, and operate one or more
66-7 electronic terminals at any location within this state.
66-8 (b) Depository institutions may agree in writing to share in
66-9 the use of an electronic terminal on a reasonable,
66-10 nondiscriminatory basis and on the condition that a depository
66-11 institution using one or more electronic terminals may be required
66-12 to meet necessary and reasonable technical standards and to pay
66-13 charges for the use of the electronic terminal. The standards or
66-14 charges imposed must be reasonable, fair, equitable, and
66-15 nondiscriminatory among the depository institutions. Any charges
66-16 imposed must:
66-17 (1) not exceed an equitable proportion of the cost of
66-18 establishing the electronic terminal, including provisions for
66-19 amortization of development costs and capital expenditures over a
66-20 reasonable period, and the cost of operation and maintenance of the
66-21 electronic terminal, plus a reasonable return on those costs; and
66-22 (2) be related to the services provided to the
66-23 depository institution or its customers.
66-24 (c) This section does not apply to:
66-25 (1) an electronic terminal located at the domicile or
66-26 home office or a branch of a depository institution; or
66-27 (2) the use by a person of an electronic terminal,
67-1 regardless of location, solely to withdraw cash, make account
67-2 balance inquiries, or make transfers among the person's accounts
67-3 within the same depository institution.
67-4 Sec. 3.205. LOAN PRODUCTION OFFICES. (a) A state bank may
67-5 establish one or more loan production offices solely for the
67-6 purpose of soliciting loans, accepting loan applications, and
67-7 performing ministerial duties related to consummating a granted
67-8 loan such as execution of loan documents and dispensing of loan
67-9 proceeds by draft or check, including a certified or cashier's
67-10 check, but not by cash. A credit decision, commitment to make a
67-11 loan, and preparation of a check or draft to dispense loan proceeds
67-12 must occur at the bank's home office or a branch office and may not
67-13 occur at a loan production office.
67-14 (b) The bank shall notify the banking commissioner in
67-15 writing before the 31st day preceding the date of establishment of
67-16 a loan production office, except that the banking commissioner may
67-17 waive or shorten the period if the banking commissioner does not
67-18 have a significant supervisory or regulatory concern regarding the
67-19 bank or its planned loan production office.
67-20 (Sections 3.206-3.300 reserved for expansion)
67-21 SUBCHAPTER D. MERGER
67-22 Sec. 3.301. MERGER AUTHORITY. (a) Two or more financial
67-23 institutions, corporations, or other entities with all requisite
67-24 legal authority to participate in a merger, at least one of which
67-25 is a state bank, may adopt and implement a plan of merger in
67-26 accordance with this section. The merger may not be made without
67-27 the prior written approval of the banking commissioner if any
68-1 surviving, new, or acquiring entity that is a party to the merger
68-2 or created by the terms of the merger is a state bank or is not a
68-3 financial institution.
68-4 (b) Implementation of the merger by the parties and approval
68-5 of the board, shareholders, participants, or owners of the parties
68-6 must be made or obtained in accordance with the Texas Business
68-7 Corporation Act as if the state bank were a domestic corporation
68-8 and all other parties to the merger were foreign corporations and
68-9 other entities, except as may be otherwise provided by applicable
68-10 rules.
68-11 (c) A consummated merger has the effect provided by the
68-12 Texas Business Corporation Act. A separate application is not
68-13 required to relocate the home office of a surviving state bank or
68-14 to grant authority to a surviving bank to operate new branch
68-15 offices that previously existed as part of a merging financial
68-16 institution if the intent of the surviving bank is clearly stated
68-17 as part of the plan of merger.
68-18 (d) A merger under this subchapter does not confer
68-19 additional powers on a state bank beyond the powers conferred by
68-20 other provisions of this Act.
68-21 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) If the
68-22 transaction is subject to the prior written approval of the banking
68-23 commissioner, the original articles of merger and a number of
68-24 copies of the articles equal to the number of surviving, new, and
68-25 acquiring entities must be filed with the banking commissioner. On
68-26 this filing, the banking commissioner shall investigate the
68-27 condition of the merging parties. The banking commissioner may
69-1 require the submission of additional information the banking
69-2 commissioner determines necessary to an informed decision to
69-3 approve or reject a merger under this subchapter.
69-4 (b) The banking commissioner shall approve the merger only
69-5 if:
69-6 (1) each resulting state bank will be solvent and have
69-7 adequate capitalization for its business and location;
69-8 (2) each resulting state bank has in all respects
69-9 complied with the laws of this state relative to the organization
69-10 and operation of state banks;
69-11 (3) all deposit and other liabilities of every state
69-12 bank that is a party to the merger have been properly discharged or
69-13 otherwise assumed or retained by a financial institution;
69-14 (4) each surviving, new, or acquiring entity that is
69-15 not a depository institution will not be engaged in the
69-16 unauthorized business of banking, and each state bank will not be
69-17 engaged in a business other than banking or a business incidental
69-18 to banking;
69-19 (5) the parties have in all respects complied with the
69-20 laws of this state; and
69-21 (6) all conditions imposed by the banking commissioner
69-22 have been satisfied or otherwise resolved.
69-23 (c) If the banking commissioner approves the merger and
69-24 finds that all required filing fees and investigative costs have
69-25 been paid, the banking commissioner shall:
69-26 (1) endorse the face of the original and each copy
69-27 with the date of approval and the word "Approved";
70-1 (2) file the original of the articles of merger in the
70-2 department's records; and
70-3 (3) deliver a certified copy of the articles of merger
70-4 to each surviving, new, or acquiring entity.
70-5 (d) An approved merger takes effect on the date of approval,
70-6 unless the merger agreement provides for a different effective
70-7 date.
70-8 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
70-9 participant, or participant-transferee may dissent from the merger
70-10 to the extent and by following the procedure provided by the Texas
70-11 Business Corporation Act or any rules adopted under this Act.
70-12 (Sections 3.304-3.400 reserved for expansion)
70-13 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
70-14 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
70-15 FINANCIAL INSTITUTION. A state bank with the prior written
70-16 approval of the banking commissioner may purchase all or
70-17 substantially all of the assets of another financial institution.
70-18 Except as otherwise expressly provided by another statute, the
70-19 purchase of all or part of the assets of the selling institution
70-20 does not make the purchasing bank responsible for any liability or
70-21 obligation of the selling institution that the purchasing bank does
70-22 not expressly assume. Except as otherwise provided by this Act,
70-23 this subchapter does not govern or prohibit the purchase by a state
70-24 bank of all or part of the assets of a corporation or other entity
70-25 that is not a financial institution.
70-26 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
70-27 purchasing bank may hold the purchase price and any additional
71-1 funds delivered to it by the selling institution in trust for, or
71-2 as a deposit to the credit of, the selling institution and may act
71-3 as agent of the selling institution in disbursing those funds in
71-4 trust or on deposit by paying the depositors and creditors of the
71-5 selling institution. If the purchasing bank acts under written
71-6 contract of agency approved by the banking commissioner that
71-7 specifically names each depositor and creditor and the amount to be
71-8 paid each, and if the agency is limited to the purely ministerial
71-9 act of paying those depositors and creditors the amounts due them
71-10 as determined by the selling institution and reflected in the
71-11 contract of agency and does not involve discretionary duties or
71-12 authority other than the identification of the depositors and
71-13 creditors named, the purchasing bank:
71-14 (1) may rely on the contract of agency and the
71-15 instructions included in it; and
71-16 (2) is not responsible for:
71-17 (A) any error made by the selling institution in
71-18 determining its liabilities, the depositors and creditors to whom
71-19 the liabilities are due, or the amounts due the depositors and
71-20 creditors; or
71-21 (B) any preference that results from the
71-22 payments made under the contract of agency and the instructions
71-23 included in it.
71-24 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
71-25 selling financial institution is at any time after the sale of
71-26 assets voluntarily or involuntarily closed for liquidation by a
71-27 state or federal regulatory agency, the purchasing bank shall pay
72-1 to the receiver of the selling institution the balance of the funds
72-2 held by it in trust or on deposit for the selling institution and
72-3 not yet paid to the depositors and creditors of the selling
72-4 institution. Without further action the purchasing bank is
72-5 discharged of all responsibilities to the selling institution, its
72-6 receiver, or its depositors, creditors, shareholders, participants,
72-7 or participant-transferees.
72-8 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Payment to
72-9 a depositor or creditor of the selling institution of the amount to
72-10 be paid the person under the terms of the contract of agency may be
72-11 made by the purchasing bank by opening an account in the name of
72-12 the depositor or creditor, crediting the account with the amount to
72-13 be paid the depositor or creditor under the terms of the agency
72-14 contract, and mailing or personally delivering a duplicate deposit
72-15 ticket evidencing the credit to the depositor or creditor at the
72-16 person's address shown in the records of the selling institution.
72-17 The relationship between the purchasing bank and the depositor or
72-18 creditor is that of debtor to creditor only to the extent of the
72-19 credit reflected by the deposit ticket.
72-20 Sec. 3.405. SALE OF ASSETS. (a) The board of a state bank,
72-21 with the prior written approval of the banking commissioner, may
72-22 cause a bank to sell all or substantially all of its assets without
72-23 shareholder or participant approval if:
72-24 (1) the banking commissioner finds the interests of
72-25 depositors and creditors are jeopardized because of insolvency or
72-26 imminent insolvency and that the sale is in their best interest;
72-27 and
73-1 (2) the Federal Deposit Insurance Corporation or its
73-2 successor approves the transaction and agrees to provide assistance
73-3 to the prospective buyer under 12 U.S.C. Section 1823(c) or a
73-4 comparable law unless the deposits of the bank are not insured.
73-5 (b) A sale under this section must include an assumption and
73-6 promise by the buyer to pay or otherwise discharge:
73-7 (1) all of the bank's liabilities to depositors;
73-8 (2) all of the bank's liabilities for salaries of the
73-9 bank's employees incurred before the date of the sale;
73-10 (3) obligations incurred by the banking commissioner
73-11 arising out of the supervision or sale of the bank; and
73-12 (4) fees and assessments due the department.
73-13 (c) This section does not affect the banking commissioner's
73-14 right to take action under another law. The sale by a state bank
73-15 of all or substantially all of its assets with shareholder or
73-16 participant approval is considered a voluntary dissolution and
73-17 liquidation and is governed by Subchapter B, Chapter 7, of this
73-18 Act.
73-19 (Sections 3.406-3.500 reserved for expansion)
73-20 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
73-21 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
73-22 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
73-23 BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS ASSOCIATION.
73-24 (a) A state bank may act as necessary under the laws of the United
73-25 States or this state to merge, reorganize, or convert into a
73-26 national bank, state or federal savings bank, or state or federal
73-27 savings association.
74-1 (b) The merger, reorganization, or conversion by the state
74-2 bank must be made and approval of its board, shareholders, or
74-3 participants must be obtained in accordance with the Texas Business
74-4 Corporation Act as if the state bank were a domestic corporation
74-5 and all other parties to the transaction, if any, were foreign
74-6 corporations and other entities, except as may be otherwise
74-7 provided by rules. For purposes of this subsection, a conversion
74-8 is considered a merger into the successor form of financial
74-9 institution.
74-10 (c) The state bank does not cease to be a state bank subject
74-11 to the supervision of the banking commissioner unless:
74-12 (1) the banking commissioner has been given written
74-13 notice of the intention to merge, reorganize, or convert before the
74-14 31st day preceding the date of the proposed transaction;
74-15 (2) the bank has published notice of the transaction,
74-16 in the form and frequency specified by the banking commissioner, in
74-17 a newspaper of general circulation published in the county of its
74-18 home office or, if such a newspaper is not published in the county,
74-19 in an adjacent county and in other locations that the banking
74-20 commissioner considers appropriate;
74-21 (3) the bank has filed with the banking commissioner:
74-22 (A) a copy of the application filed with the
74-23 successor regulatory authority, including a copy of each contract
74-24 evidencing or implementing the merger, reorganization, or
74-25 conversion, or other documents sufficient to show compliance with
74-26 applicable law;
74-27 (B) a certified copy of all minutes of board
75-1 meetings and shareholder or participant meetings at which action
75-2 was taken regarding the merger, reorganization, or conversion; and
75-3 (C) a publisher's certificate showing
75-4 publication of the required notice;
75-5 (4) the banking commissioner determines that:
75-6 (A) all deposit and other liabilities of the
75-7 state bank are fully discharged, assumed, or otherwise retained by
75-8 the successor form of financial institution;
75-9 (B) any conditions imposed by the banking
75-10 commissioner for the protection of depositors and creditors have
75-11 been met or otherwise resolved; and
75-12 (C) any required filing fees have been paid; and
75-13 (5) the bank has received a certificate of authority
75-14 to do business as a national bank, state or federal savings bank,
75-15 or state or federal savings association.
75-16 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
75-17 BANK. (a) A financial institution may apply to the banking
75-18 commissioner for conversion into a state bank on a form prescribed
75-19 by the banking commissioner accompanied by any required fee, if the
75-20 institution follows the procedures prescribed by the laws of the
75-21 United States or this state governing the exit of the institution
75-22 for the purpose of conversion into a state bank from the regulatory
75-23 system applicable before the conversion. A banking association or
75-24 limited banking association may convert its organizational form
75-25 under this section.
75-26 (b) An institution applying to convert into a state bank may
75-27 receive a certificate of authority to do business as a state bank
76-1 if the banking commissioner finds that:
76-2 (1) the institution is not engaging in a pattern or
76-3 practice of unsafe and unsound banking practices;
76-4 (2) the institution has adequate capitalization for a
76-5 state bank to engage in business at the same locations as the
76-6 institution is engaged in business before the conversion;
76-7 (3) the institution can be expected to operate
76-8 profitably after the conversion;
76-9 (4) the officers, directors, managers, and managing
76-10 participants of the institution as a group have sufficient banking
76-11 experience, ability, standing, competence, trustworthiness, and
76-12 integrity to justify a belief that the institution will operate in
76-13 compliance with law; and
76-14 (5) each principal shareholder or participant has
76-15 sufficient experience, ability, standing, competence,
76-16 trustworthiness, and integrity to justify a belief that the
76-17 institution will be free from improper or unlawful influence or
76-18 interference with respect to the institution's operation in
76-19 compliance with law.
76-20 (c) The banking commissioner may:
76-21 (1) request additional or supplemental information
76-22 considered necessary to an informed decision under this section;
76-23 (2) perform an examination of the converting
76-24 institution at the expense of the converting institution; and
76-25 (3) require that examination fees be paid before a
76-26 certificate of authority is issued.
76-27 (d) In connection with the application, the converting
77-1 institution must submit a statement of the law governing the exit
77-2 of the institution from the regulatory system applicable before the
77-3 conversion and the terms of the transition into a state bank. The
77-4 financial institution must also demonstrate that all applicable law
77-5 has been fully satisfied.
77-6 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
77-7 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
77-8 SUBCHAPTER A. TRANSFER OF OWNERSHIP
77-9 INTERESTS IN STATE BANK
77-10 Sec. 4.001. ACQUISITION OF CONTROL ............................ 78
77-11 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL ...... 79
77-12 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL .... 80
77-13 Sec. 4.004. APPEAL FROM ADVERSE DECISION ...................... 82
77-14 Sec. 4.005. EXEMPTIONS ........................................ 83
77-15 Sec. 4.006. OBJECTION TO OTHER TRANSFER ....................... 84
77-16 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES ............. 84
77-17 (Sections 4.008-4.100 reserved for expansion)
77-18 SUBCHAPTER B. BOARD AND OFFICERS
77-19 Sec. 4.101. VOTING SECURITIES HELD BY BANK .................... 84
77-20 Sec. 4.102. BYLAWS ............................................ 85
77-21 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
77-22 PARTICIPANTS .................................... 85
77-23 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS ................... 88
77-24 Sec. 4.105. OFFICERS .......................................... 88
77-25 Sec. 4.106. CERTAIN CRIMINAL OFFENSES ......................... 89
77-26 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES ....... 90
77-27 (Sections 4.108-4.200 reserved for expansion)
78-1 SUBCHAPTER C. SPECIAL PROVISIONS
78-2 FOR LIMITED BANKING ASSOCIATIONS
78-3 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY ................ 90
78-4 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS ............ 91
78-5 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS ................. 92
78-6 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION ......... 92
78-7 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
78-8 CONTRIBUTION TO CAPITAL ......................... 93
78-9 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
78-10 TRANSFERABILITY OF INTEREST ..................... 94
78-11 Sec. 4.207. DISSOLUTION ....................................... 94
78-12 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES .................. 96
78-13 Sec. 4.209. DISTRIBUTIONS ..................................... 96
78-14 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
78-15 ASSOCIATIONS .................................... 96
78-16 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
78-17 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
78-18 SUBCHAPTER A. TRANSFER OF OWNERSHIP
78-19 INTERESTS IN STATE BANK
78-20 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
78-21 expressly otherwise permitted by this Act, a person may not without
78-22 the prior written approval of the banking commissioner directly or
78-23 indirectly acquire a legal or beneficial interest in voting
78-24 securities of a state bank or a corporation or other entity owning
78-25 voting securities of a state bank if, after the acquisition, the
78-26 person would control the state bank. For purposes of this
78-27 subchapter and except as otherwise provided by rules adopted under
79-1 this Act, the principal shareholder or principal participant of a
79-2 state bank that directly or indirectly owns or has the power to
79-3 vote a greater percentage of voting securities of the bank than any
79-4 other shareholder or participant is considered to control the state
79-5 bank.
79-6 (b) This subchapter does not prohibit a person from
79-7 negotiating to acquire, but not acquiring, control of a state bank
79-8 or a person that controls a state bank.
79-9 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
79-10 (a) An application for approval to acquire control of a state bank
79-11 or a person that controls a state bank must be filed under oath by
79-12 the proposed transferee on a form prescribed by the banking
79-13 commissioner and accompanied by any filing fee required by statute
79-14 or rule. The application must contain all information required by
79-15 rules adopted under this Act or that the banking commissioner
79-16 requires in a particular application as necessary to an informed
79-17 decision to approve or reject the proposed acquisition.
79-18 (b) If a person or proposed transferee proposing to acquire
79-19 voting securities subject to this section includes any group of
79-20 individuals or entities acting in concert, the information required
79-21 by the banking commissioner may be required of each member of the
79-22 group.
79-23 (c) Information obtained by the banking commissioner under
79-24 this section is confidential and may not be disclosed by the
79-25 banking commissioner or any employee of the department except as
79-26 provided by Subchapter B, Chapter 2, of this Act.
79-27 (d) The applicants shall publish notice of the application,
80-1 its date of filing, and the identity of each applicant, in the form
80-2 specified by the banking commissioner, in a newspaper of general
80-3 circulation in the county where the bank's home office is located,
80-4 promptly after the applicants are notified by the banking
80-5 commissioner that the application is complete and accepted for
80-6 filing. Publication of notice of an application filed in
80-7 contemplation of a public tender offer subject to the requirements
80-8 of 15 U.S.C. Section 78n(d)(1) may be deferred for not more than 34
80-9 days after the date the application is filed if:
80-10 (1) the applicant requests confidential treatment and
80-11 represents that a public announcement of the tender offer and the
80-12 filing of appropriate forms with the Securities and Exchange
80-13 Commission or the appropriate federal banking agency, as
80-14 applicable, will occur within the period of deferral; and
80-15 (2) the banking commissioner determines that the
80-16 public interest will not be harmed by the requested confidential
80-17 treatment.
80-18 (e) The banking commissioner may waive the requirement that
80-19 a notice be published or permit delayed publication on a
80-20 determination that waiver or delay is in the public interest. If
80-21 publication of notice is waived under this subsection, the
80-22 information that would be contained in a published notice becomes
80-23 public information under Chapter 552, Government Code, on the 35th
80-24 day after the date the application is filed.
80-25 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
80-26 (a) Not later than the 60th day after the date the notice is
80-27 published, the banking commissioner shall approve the application
81-1 or set the application for hearing. If the banking commissioner
81-2 sets a hearing, the department shall participate as the opposing
81-3 party and the banking commissioner shall conduct a hearing and one
81-4 or more prehearing conferences and opportunities for discovery as
81-5 the banking commissioner considers advisable and consistent with
81-6 governing statutes and rules. A hearing held under this section is
81-7 confidential and closed to the public.
81-8 (b) Based on the record, the banking commissioner may issue
81-9 an order denying an application if:
81-10 (1) the acquisition would substantially lessen
81-11 competition, be in restraint of trade, result in a monopoly, or be
81-12 in furtherance of a combination or conspiracy to monopolize or
81-13 attempt to monopolize the banking industry in any part of this
81-14 state, unless:
81-15 (A) the anticompetitive effects of the proposed
81-16 acquisition are clearly outweighed in the public interest by the
81-17 probable effect of acquisition in meeting the convenience and needs
81-18 of the community to be served; and
81-19 (B) the proposed acquisition is not in violation
81-20 of law of this state or the United States;
81-21 (2) the financial condition of the proposed
81-22 transferee, or any member of a group comprising the proposed
81-23 transferee, might jeopardize the financial stability of the bank
81-24 being acquired;
81-25 (3) plans or proposals to operate, liquidate, or sell
81-26 the bank or its assets are not in the best interests of the bank;
81-27 (4) the experience, ability, standing, competence,
82-1 trustworthiness, and integrity of the proposed transferee, or any
82-2 member of a group comprising the proposed transferee, are
82-3 insufficient to justify a belief that the bank will be free from
82-4 improper or unlawful influence or interference with respect to the
82-5 bank's operation in compliance with law;
82-6 (5) the bank will not be solvent, have adequate
82-7 capitalization, or be in compliance with the laws of this state
82-8 after the acquisition;
82-9 (6) the proposed transferee has failed to furnish all
82-10 information pertinent to the application reasonably required by the
82-11 banking commissioner; or
82-12 (7) the proposed transferee is not acting in good
82-13 faith.
82-14 (c) If an application filed under this section is approved
82-15 by the banking commissioner, the transaction may be consummated.
82-16 Any written commitment from the proposed transferee offered to and
82-17 accepted by the banking commissioner as a condition that the
82-18 application will be approved is enforceable against the bank and
82-19 the transferee and is considered for all purposes an agreement
82-20 under this Act.
82-21 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
82-22 has been held, the banking commissioner has entered an order
82-23 denying the application, and the order has become final, the
82-24 proposed transferee may appeal the final order by filing a petition
82-25 for judicial review under the substantial evidence rule in the
82-26 District Court of Travis County as provided by Chapter 2001,
82-27 Government Code.
83-1 (b) The filing of an appeal under this section does not stay
83-2 the order of the banking commissioner.
83-3 Sec. 4.005. EXEMPTIONS. The following acquisitions are
83-4 exempt from Section 4.001 of this Act:
83-5 (1) the acquisition of securities in connection with
83-6 the exercise of a security interest or otherwise in full or partial
83-7 satisfaction of a debt previously contracted for in good faith if
83-8 the acquiring person files written notice of acquisition with the
83-9 banking commissioner before the person votes the securities
83-10 acquired;
83-11 (2) the acquisition of voting securities in any class
83-12 or series by a controlling person who has previously complied with
83-13 and received approval under this subchapter or who was identified
83-14 as a controlling person in a prior application filed with and
83-15 approved by the banking commissioner;
83-16 (3) an acquisition or transfer by operation of law,
83-17 will, or intestate succession if the acquiring person files written
83-18 notice of acquisition with the banking commissioner before the
83-19 person votes the securities acquired;
83-20 (4) a transaction subject to Subchapter D, Chapter 8,
83-21 of this Act; or
83-22 (5) a transaction exempted by the banking commissioner
83-23 or by rules adopted under this Act because the transaction is not
83-24 within the purposes of this subchapter or the regulation of which
83-25 is not necessary or appropriate to achieve the objectives of this
83-26 subchapter.
83-27 Sec. 4.006. OBJECTION TO OTHER TRANSFER. This subchapter
84-1 may not be construed to prevent the banking commissioner from
84-2 investigating, commenting on, or seeking to enjoin or set aside a
84-3 transfer of voting securities that evidence a direct or indirect
84-4 interest in a state bank, regardless of whether the transfer is
84-5 included within this subchapter, if the banking commissioner
84-6 considers the transfer to be against the public interest.
84-7 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
84-8 the banking commissioner believes that a person has committed or is
84-9 about to commit a violation of this subchapter or a rule or order
84-10 of the banking commissioner pertaining to this subchapter, the
84-11 attorney general on behalf of the banking commissioner may apply to
84-12 the District Court of Travis County for an order enjoining the
84-13 violation and for other equitable relief the nature of the case
84-14 requires.
84-15 (b) A person who knowingly fails or refuses to file the
84-16 application required by Section 4.002 of this Act commits an
84-17 offense. An offense under this subsection is a Class A
84-18 misdemeanor.
84-19 (Sections 4.008-4.100 reserved for expansion)
84-20 SUBCHAPTER B. BOARD AND OFFICERS
84-21 Sec. 4.101. VOTING SECURITIES HELD BY BANK. (a) Voting
84-22 securities of a state bank held by the state bank in a fiduciary
84-23 capacity under a will or trust, whether registered in its own name
84-24 or in the name of its nominee, may not be voted in the election of
84-25 directors or managers or on a matter affecting the compensation of
84-26 directors, managers, officers, or employees of the bank in that
84-27 capacity, unless:
85-1 (1) under the terms of the will or trust, the manner
85-2 in which the voting securities are to be voted may be determined by
85-3 a donor or beneficiary of the will or trust and the donor or
85-4 beneficiary actually makes the determination in the matter at
85-5 issue;
85-6 (2) the terms of the will or trust expressly direct
85-7 the manner in which the securities must be voted to the extent that
85-8 no discretion is vested in the bank as fiduciary; or
85-9 (3) the securities are voted solely by a cofiduciary
85-10 that is not an affiliate of the bank, as if the cofiduciary were
85-11 the sole fiduciary.
85-12 (b) Voting securities of a state bank that cannot be voted
85-13 under this section are considered to be authorized but unissued for
85-14 purposes of determining the procedures for and results of the
85-15 affected vote.
85-16 Sec. 4.102. BYLAWS. (a) Each state bank shall adopt bylaws
85-17 and may amend its bylaws from time to time for the purposes and in
85-18 accordance with the procedures set forth in the Texas Business
85-19 Corporation Act.
85-20 (b) A limited banking association in which management is
85-21 retained by the participants is not required to adopt bylaws if
85-22 provisions required by law to be contained in the bylaws are
85-23 contained in the articles of association or the participation
85-24 agreement.
85-25 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
85-26 PARTICIPANTS. (a) The board of a state bank must consist of not
85-27 fewer than five or more than 25 directors, managers, or managing
86-1 participants, the majority of whom must be residents of this state.
86-2 Except for a limited banking association in which management has
86-3 been retained by its participants, the principal executive officer
86-4 of the bank is a member of the board. The principal executive
86-5 officer acting in the capacity of board member is the board's
86-6 presiding officer unless the board elects a different presiding
86-7 officer to perform the duties as designated by the board.
86-8 (b) Unless the banking commissioner consents otherwise in
86-9 writing, a person may not serve as director, manager, or managing
86-10 participant of a state bank if:
86-11 (1) the bank incurs an unreimbursed loss attributable
86-12 to a charged-off obligation of or holds a judgment against the
86-13 person or an entity that was controlled by the person at the time
86-14 of funding and at the time of default on the loan that gave rise to
86-15 the judgment or charged-off obligation; or
86-16 (2) the person has been convicted of a felony.
86-17 (c) If a state bank other than a limited banking association
86-18 operated by managing participants does not elect directors or
86-19 managers before the 61st day after the date of its regular annual
86-20 meeting, the banking commissioner may appoint a conservator under
86-21 Chapter 6 of this Act to operate the bank and elect directors or
86-22 managers, as appropriate. If the conservator is unable to locate
86-23 or elect persons willing and able to serve as directors or
86-24 managers, the banking commissioner may close the bank for
86-25 liquidation.
86-26 (d) A vacancy on the board that reduces the number of
86-27 directors, managers, or managing participants to fewer than five
87-1 must be filled not later than the 30th day after the date the
87-2 vacancy occurs. A limited banking association with fewer than five
87-3 managing participants must add one or more new participants or
87-4 elect a board of managers of not fewer than five persons to resolve
87-5 the vacancy. After 30 days after the date the vacancy occurs, the
87-6 banking commissioner may appoint a conservator under Chapter 6 of
87-7 this Act to operate the bank and elect a board of not fewer than
87-8 five persons to resolve the vacancy. If the conservator is unable
87-9 to locate or elect five persons willing and able to serve as
87-10 directors or managers, the banking commissioner may close the bank
87-11 for liquidation.
87-12 (e) Before each term to which a person is elected to serve
87-13 as a director or manager of a state bank, or annually for a person
87-14 who is a managing participant, the person shall submit an affidavit
87-15 for filing in the minutes of the bank stating that the person, to
87-16 the extent applicable:
87-17 (1) accepts the position and is not disqualified from
87-18 serving in the position;
87-19 (2) will not violate or knowingly permit an officer,
87-20 director, manager, managing participant, or employee of the bank to
87-21 violate any law applicable to the conduct of business of the bank;
87-22 and
87-23 (3) will diligently perform the duties of the
87-24 position.
87-25 (f) An advisory director or manager is not considered a
87-26 director if the advisory director or manager:
87-27 (1) is not elected by the shareholders or participants
88-1 of the bank;
88-2 (2) does not vote on matters before the board or a
88-3 committee of the board and is not counted for purposes of
88-4 determining a quorum of the board or committee; and
88-5 (3) provides solely general policy advice to the
88-6 board.
88-7 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) The board
88-8 of a state bank shall hold at least one regular meeting each month.
88-9 At each regular meeting the board shall review and approve the
88-10 minutes of the prior meeting and review the operations, activities,
88-11 and financial condition of the bank. The board may designate
88-12 committees from among its members to perform these duties and
88-13 approve or disapprove the committees' reports at each regular
88-14 meeting. All actions of the board must be recorded in its minutes.
88-15 (b) Periodically the board may vote to designate and record
88-16 the amount of certified surplus in its minutes. Except to absorb
88-17 losses in excess of undivided profits and uncertified surplus,
88-18 certified surplus may not be reduced without the prior written
88-19 approval of the banking commissioner.
88-20 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
88-21 the officers of the bank, who serve at the pleasure of the board.
88-22 The bank must have a principal executive officer primarily
88-23 responsible for the execution of board policies and operation of
88-24 the bank and an officer responsible for the maintenance and storage
88-25 of all corporate books and records of the bank and for required
88-26 attestation of signatures. These positions may not be held by the
88-27 same person. The board may appoint other officers of the bank as
89-1 the board considers necessary.
89-2 (b) Unless expressly authorized by a resolution of the board
89-3 recorded in its minutes, an officer or employee may not create or
89-4 dispose of a bank asset or create or incur a liability on behalf of
89-5 the bank.
89-6 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
89-7 director, manager, managing participant, employee, shareholder, or
89-8 participant of a state bank commits an offense if the person
89-9 knowingly:
89-10 (1) conceals information or a fact or removes,
89-11 destroys, or conceals a book or record of the bank for the purpose
89-12 of concealing information or a fact from the banking commissioner
89-13 or an agent of the banking commissioner; or
89-14 (2) removes, destroys, or conceals any book or record
89-15 of the bank that is material to a pending or anticipated legal or
89-16 administrative proceeding.
89-17 (b) An officer, director, manager, managing participant, or
89-18 employee of a state bank commits an offense if the person:
89-19 (1) knowingly makes a false entry in the books or
89-20 records or in any report or statement of the bank; or
89-21 (2) violates or knowingly participates in or permits
89-22 another of the bank's officers, directors, managers, managing
89-23 participants, or employees to violate the prohibition on lending
89-24 trust funds under Section 113.052, Property Code.
89-25 (c) An offense under this section is a felony of the third
89-26 degree.
89-27 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
90-1 (a) Without the prior approval of a disinterested majority of the
90-2 board recorded in the minutes, or if a disinterested majority
90-3 cannot be obtained the prior written approval of the banking
90-4 commissioner, a state bank may not directly or indirectly:
90-5 (1) sell or lease an asset of the bank to an officer,
90-6 director, manager, managing participant, or principal shareholder
90-7 or participant of the bank or an affiliate of the bank; or
90-8 (2) purchase or lease an asset in which an officer,
90-9 director, manager, managing participant, or principal shareholder
90-10 or participant of the bank or an affiliate of the bank has an
90-11 interest.
90-12 (b) Notwithstanding Subsection (a) of this section, a lease
90-13 transaction described in Subsection (a)(2) of this section
90-14 involving real property may not be consummated, renewed, or
90-15 extended without the prior written approval of the banking
90-16 commissioner. For purposes of this subsection only, an affiliate
90-17 of the bank does not include a subsidiary of the bank.
90-18 (c) An officer, director, manager, or managing participant
90-19 of the bank who knowingly participates in or permits a violation of
90-20 this section commits an offense. An offense under this subsection
90-21 is a felony of the third degree.
90-22 (Sections 4.108-4.200 reserved for expansion)
90-23 SUBCHAPTER C. SPECIAL PROVISIONS
90-24 FOR LIMITED BANKING ASSOCIATIONS
90-25 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
90-26 limited banking association shall file with the banking
90-27 commissioner a copy of any participation agreement by which a
91-1 participant of the limited banking association agrees to become a
91-2 full liability participant and the name and address of each full
91-3 liability participant. The filed copy is a public record.
91-4 (b) The banking commissioner may require a complete copy of
91-5 the participation agreement to be filed with the department,
91-6 regardless of whether the state bank has a full liability
91-7 participant, except that the provisions of the participation
91-8 agreement other than those by which a participant of the limited
91-9 banking association agrees to become a full liability participant
91-10 are confidential and subject to release only as provided by
91-11 Subchapter B, Chapter 2, of this Act.
91-12 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
91-13 (a) Except as provided by Subsection (b), the participants,
91-14 participant-transferees, and managers of a limited banking
91-15 association may not be held liable for a debt, obligation, or
91-16 liability of the limited banking association, including a debt,
91-17 obligation, or liability under a judgment, decree, or order of
91-18 court. A participant, other than a full liability participant, or
91-19 a manager of a limited banking association is not a proper party to
91-20 proceedings by or against a limited banking association, unless the
91-21 object of the proceeding is to enforce a participant's or manager's
91-22 right against or liability to a limited banking association.
91-23 (b) A full liability participant of a limited banking
91-24 association is liable under a judgment, decree, or order of court
91-25 for a debt, obligation, or liability of the limited banking
91-26 association that accrued during the participation of the full
91-27 liability participant in the limited banking association and before
92-1 the full liability participant or a successor in interest files a
92-2 notice of withdrawal as a full liability participant from the
92-3 limited banking association with the banking commissioner. The
92-4 filed notice of withdrawal is a public record.
92-5 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
92-6 provided by this section or the articles of association of the
92-7 limited banking association, debts, liabilities, and other
92-8 obligations may be contracted for or incurred on behalf of a
92-9 limited banking association by:
92-10 (1) a majority of the managers, if management of the
92-11 limited banking association has been vested in a board of managers;
92-12 (2) a majority of the managing participants; or
92-13 (3) an officer or other agent vested with actual or
92-14 apparent authority to contract for or incur the debt, liability, or
92-15 other obligation.
92-16 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
92-17 Management of a limited banking association is vested in the
92-18 participants in proportion to each participant's contribution to
92-19 capital, as adjusted periodically to properly reflect any
92-20 additional contribution. The articles of association may provide
92-21 that management of a limited banking association is vested in a
92-22 board of managers to be elected annually by the participants as
92-23 prescribed by the bylaws.
92-24 (b) Participants of a limited banking association may not
92-25 retain management and must elect a board of managers if:
92-26 (1) any participant is disqualified from serving as a
92-27 managing participant under Section 4.103 of this Act;
93-1 (2) the limited banking association has fewer than
93-2 five or more than 25 participants; or
93-3 (3) any participant has been removed by the banking
93-4 commissioner under Subchapter A, Chapter 6, of this Act.
93-5 (c) The articles of association, bylaws, and participation
93-6 agreement of a limited banking association may use the terms
93-7 "director" and "board" instead of "manager" and "board of
93-8 managers," respectively.
93-9 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
93-10 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
93-11 limited banking association any part of the participant's
93-12 contribution to capital until:
93-13 (1) all liabilities of the bank, except liabilities to
93-14 participants on account of contribution to capital, have been paid
93-15 or, if after the withdrawal or reduction, sufficient property of
93-16 the bank will remain to pay all liabilities of the bank, except
93-17 liabilities to participants on account of contribution to capital;
93-18 (2) all participants consent, unless the return of the
93-19 contribution to capital may be demanded as provided by this
93-20 chapter; or
93-21 (3) the articles of association are canceled or
93-22 amended to set out the withdrawal or reduction.
93-23 (b) A participant may demand the return of the participant's
93-24 contribution to capital on the dissolution of the association and
93-25 the failure by the full liability participants to exercise the
93-26 right for the business of the limited banking association to be
93-27 carried on by the remaining participants as provided by Section
94-1 4.207 of this Act.
94-2 (c) Unless allowed by the articles of association or by the
94-3 unanimous consent of all participants of the limited banking
94-4 association, a participant may demand the return of the
94-5 participant's contribution to capital only in cash.
94-6 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
94-7 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
94-8 participant-transferee in a limited banking association is the
94-9 personal estate of the participant or the participant-transferee
94-10 and may be transferred as provided by the bylaws or the
94-11 participation agreement. A transferee of a participant's interest
94-12 has the status of a participant-transferee and does not by the
94-13 transfer become a participant or obtain a right to participate in
94-14 the management of the limited banking association. A
94-15 participant-transferee is entitled to receive only a share of
94-16 profits, return of contribution, or other distributive benefit in
94-17 respect to the interest transferred to which the participant who
94-18 transferred the interest would have been entitled. A
94-19 participant-transferee may become a participant only as provided by
94-20 the bylaws or the participation agreement.
94-21 (b) A limited banking association may add additional
94-22 participants in the same manner as participant-transferees after
94-23 payment in full of the capital contribution to the limited banking
94-24 association payable for the issuance of additional participation
94-25 interests.
94-26 Sec. 4.207. DISSOLUTION. (a) A limited banking association
94-27 organized under this chapter is dissolved on:
95-1 (1) the expiration of the period fixed for the
95-2 duration of the limited banking association;
95-3 (2) a vote to dissolve or the execution of a written
95-4 consent to dissolve by all full liability participants, if any, and
95-5 a sufficient number of other participants that combined with all
95-6 full liability participants hold at least two-thirds of the
95-7 participation shares in each class in the association, or a greater
95-8 fraction as provided by the articles of association;
95-9 (3) except as provided by the articles of association,
95-10 the death, insanity, expulsion, bankruptcy, retirement, or
95-11 resignation of a participant unless a majority in interest of all
95-12 remaining participants elect in writing not later than the 90th day
95-13 after the date of the event to continue the business of the
95-14 association; or
95-15 (4) the occurrence of an event of dissolution
95-16 specified in the articles of association.
95-17 (b) A dissolution under this section is considered to be the
95-18 initiation of a voluntary liquidation under Subchapter B, Chapter
95-19 7, of this Act.
95-20 (c) An event of dissolution described by Subsection (a)(3)
95-21 of this section does not cancel or revoke a contract to which the
95-22 bank is a party, including a trust indenture or agreement or
95-23 voluntary dissolution under Subchapter B, Chapter 7, of this Act,
95-24 until the period for the remaining participants to continue the
95-25 business of the bank has expired without the remaining participants
95-26 having completed the necessary action to continue the business of
95-27 the bank.
96-1 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
96-2 and losses of a limited banking association may be allocated among
96-3 the participants and among classes of participants as provided by
96-4 the participation agreement. Without the prior written approval of
96-5 the banking commissioner, the profits and losses must be allocated
96-6 based on the relative interests of the participants as reflected in
96-7 the articles of association and related documents filed with and
96-8 approved by the banking commissioner.
96-9 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
96-10 Act, distributions of cash or other assets of a limited banking
96-11 association may be made to the participants as provided by the
96-12 participation agreement. Without the prior written approval of the
96-13 banking commissioner, distributions must be made to the
96-14 participants based on the relative interests of the participants as
96-15 reflected in the articles of association and related documents
96-16 filed with and approved by the banking commissioner.
96-17 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
96-18 ASSOCIATIONS. For purposes of the provisions of this Act other
96-19 than this subchapter, as the context requires:
96-20 (1) a manager and the board of managers are considered
96-21 to be a director and the board of directors, respectively;
96-22 (2) if there is not a board of managers, a participant
96-23 is considered to be a director and all of the participants are
96-24 considered to be the board of directors;
96-25 (3) a participant or participant-transferee is
96-26 considered to be a shareholder;
96-27 (4) a participation share is considered to be a share
97-1 of stock; and
97-2 (5) a distribution is considered to be a dividend.
97-3 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
97-4 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
97-5 OF BANK FACILITIES AND OTHER REAL ESTATE
97-6 Sec. 5.001. INVESTMENT IN BANK FACILITIES .................... 98
97-7 Sec. 5.002. OTHER REAL ESTATE ................................ 100
97-8 (Sections 5.003-5.100 reserved for expansion)
97-9 SUBCHAPTER B. INVESTMENTS
97-10 Sec. 5.101. SECURITIES ....................................... 101
97-11 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
97-12 SHARES ......................................... 104
97-13 Sec. 5.103. BANK SUBSIDIARIES ................................ 104
97-14 Sec. 5.104. MUTUAL FUNDS ..................................... 106
97-15 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS .................. 107
97-16 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE ................... 110
97-17 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED .................. 111
97-18 (Sections 5.108-5.200 reserved for expansion)
97-19 SUBCHAPTER C. LOANS
97-20 Sec. 5.201. LENDING LIMITS ................................... 111
97-21 Sec. 5.202. LOAN EXPENSES AND FEES ........................... 115
97-22 Sec. 5.203. LEASE FINANCING TRANSACTIONS ..................... 116
97-23 (Sections 5.204-5.300 reserved for expansion)
97-24 SUBCHAPTER D. DEPOSITS
97-25 Sec. 5.301. NATURE OF DEPOSIT CONTRACT ....................... 117
97-26 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT ................... 117
97-27 Sec. 5.303. FEES; DISCLOSURES ................................ 119
98-1 Sec. 5.304. SECURING DEPOSITS ................................ 120
98-2 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS ....................... 120
98-3 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION ........ 121
98-4 Sec. 5.307. RIGHT OF SET-OFF ................................. 123
98-5 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
98-6 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
98-7 OF BANK FACILITIES AND OTHER REAL ESTATE
98-8 Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) In this
98-9 subchapter, "bank facility" means real estate, including an
98-10 improvement, owned, or leased to the extent the lease or the
98-11 leasehold improvements are capitalized, by a state bank for the
98-12 purpose of:
98-13 (1) providing space for bank employees to perform
98-14 their duties and space for parking by bank employees and customers;
98-15 (2) conducting bank business, including meeting the
98-16 reasonable needs and convenience of the public and the bank's
98-17 customers, computer operations, document and other item processing,
98-18 maintenance and storage of foreclosed collateral pending disposal,
98-19 and record retention and storage;
98-20 (3) holding, improving, and occupying as an incident
98-21 to future expansion of the bank's facilities; or
98-22 (4) conducting another activity authorized by rules
98-23 adopted under this Act.
98-24 (b) Without the prior written approval of the banking
98-25 commissioner, a state bank may not directly or indirectly invest an
98-26 amount in excess of its capital and certified surplus in bank
98-27 facilities, furniture, fixtures, and equipment. Except as
99-1 otherwise provided by rules adopted under this Act, in computing
99-2 this limitation a state bank:
99-3 (1) shall include:
99-4 (A) its direct investment in bank facilities;
99-5 (B) any investment in equity or investment
99-6 securities of a company holding title to a facility used by the
99-7 bank for the purposes specified by Subsection (a) of this section;
99-8 (C) any loan made by the bank to or on the
99-9 security of equity or investment securities issued by a company
99-10 holding title to a facility used by the bank; and
99-11 (D) any indebtedness incurred on bank facilities
99-12 by a company:
99-13 (i) that holds title to the facility;
99-14 (ii) that is an affiliate of the bank; and
99-15 (iii) in which the bank is invested in the
99-16 manner described by Paragraph (B) or (C) of this subdivision; and
99-17 (2) may exclude an amount included under Subdivisions
99-18 (1)(B)-(D) of this subsection to the extent any lease of a facility
99-19 from the company holding title to the facility is capitalized on
99-20 the books of the bank.
99-21 (c) Real estate acquired under Subsection (a)(3) of this
99-22 section and not improved and occupied by the bank ceases to be a
99-23 bank facility on the third anniversary of the date of its
99-24 acquisition, unless the banking commissioner on application grants
99-25 written approval to further delay in the improvement and occupation
99-26 of the property by the bank.
99-27 (d) A bank shall comply with regulatory accounting
100-1 principles in accounting for its investment in and depreciation of
100-2 bank facilities, furniture, fixtures, and equipment.
100-3 Sec. 5.002. OTHER REAL ESTATE. (a) A state bank may not
100-4 acquire real estate except:
100-5 (1) as permitted by Section 5.001 of this Act or as
100-6 otherwise provided by this Act, including rules adopted under this
100-7 Act;
100-8 (2) with the prior written approval of the banking
100-9 commissioner; or
100-10 (3) if necessary to avoid or minimize a loss on a loan
100-11 or investment previously made in good faith.
100-12 (b) With the prior written approval of the banking
100-13 commissioner, a state bank may exchange real estate for other real
100-14 estate or personal property, invest additional funds in or improve
100-15 real estate acquired under this subsection or Subsection (a) of
100-16 this section, or acquire additional real estate to avoid or
100-17 minimize loss on real estate acquired as permitted by Subsection
100-18 (a) of this section.
100-19 (c) A state bank shall dispose of any real estate subject to
100-20 this section not later than:
100-21 (1) the fifth anniversary of the date:
100-22 (A) it was acquired, except as otherwise
100-23 provided by rules adopted under this Act; or
100-24 (B) it ceases to be used as a bank facility; or
100-25 (2) the second anniversary of the date it ceases to be
100-26 a bank facility as provided by Section 5.001(c) of this Act.
100-27 (d) The banking commissioner on application may grant one or
101-1 more extensions of time for disposing of real estate if the banking
101-2 commissioner determines that:
101-3 (1) the bank has made a good faith effort to dispose
101-4 of the real estate; or
101-5 (2) disposal of the real estate would be detrimental
101-6 to the bank.
101-7 (Sections 5.003-5.100 reserved for expansion)
101-8 SUBCHAPTER B. INVESTMENTS
101-9 Sec. 5.101. SECURITIES. (a) A state bank may purchase and
101-10 sell equity and investment securities without recourse, solely on
101-11 the order and for the account of a customer, and may not underwrite
101-12 an issue of securities except as otherwise provided by this Act or
101-13 rules adopted under this Act.
101-14 (b) Except as otherwise provided by this Act or rules
101-15 adopted under this Act, a state bank may not invest its funds in
101-16 equity securities except as necessary to avoid or minimize a loss
101-17 on a loan or investment previously made in good faith.
101-18 (c) A state bank may purchase investment securities for its
101-19 own account under limitations and restrictions prescribed by rules
101-20 adopted under this Act. Except as otherwise provided by this
101-21 section, the total amount of the investment securities of any one
101-22 obligor or maker, held by the bank for its own account, may not
101-23 exceed an amount equal to 15 percent of the bank's capital and
101-24 certified surplus.
101-25 (d) Notwithstanding Subsections (a)-(c) of this section, a
101-26 state bank may, with prudent banking judgment, deal in, underwrite,
101-27 or purchase for its own account:
102-1 (1) bonds and other legally created general
102-2 obligations of a state, an agency or political subdivision of a
102-3 state, the United States, or an agency or instrumentality of the
102-4 United States;
102-5 (2) an investment security that this state, an agency
102-6 or political subdivision of this state, the United States, or an
102-7 agency or instrumentality of the United States has unconditionally
102-8 agreed to purchase, insure, or guarantee;
102-9 (3) securities that are offered and sold under 15
102-10 U.S.C. Section 77d(5);
102-11 (4) mortgage related securities, as defined by 15
102-12 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
102-13 the Riegle Community Development and Regulatory Improvement Act of
102-14 1994, a note or obligation that is secured by a first lien on one
102-15 or more parcels of real estate on which is located one or more
102-16 commercial structures is subject to the limitations of Subsection
102-17 (c) of this section;
102-18 (5) investment securities issued or guaranteed by the
102-19 Federal Home Loan Mortgage Corporation, the Federal National
102-20 Mortgage Association, the Government National Mortgage Association,
102-21 the Federal Agriculture Mortgage Association, or the Federal Farm
102-22 Credit Banks Funding Corporation;
102-23 (6) investment securities issued or guaranteed by the
102-24 North American Development Bank; or
102-25 (7) securities issued by a Federal Home Loan Bank.
102-26 (e) Subsection (a) of this section does not apply to an
102-27 obligation issued by a state or an agency or political subdivision
103-1 of a state for housing, higher education, health care, or public
103-2 welfare purposes if the state bank evaluates the obligation, before
103-3 dealing in, underwriting, or purchasing the obligation, to
103-4 determine whether the obligation is of sufficient investment
103-5 quality and marketability for investment by the bank and whether
103-6 the obligation has been issued for the appropriate purpose by a
103-7 qualifying issuer. If the bank has made a firm commitment to
103-8 underwrite the obligation, the bank is considered to hold the
103-9 obligation for purposes of the limitations of Subsection (c) of
103-10 this section.
103-11 (f) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
103-12 (c) of this section applies to investments in small business
103-13 related securities as defined by 15 U.S.C. Section 78c(a).
103-14 (g) A state bank may not invest more than an amount equal to
103-15 25 percent of its capital and certified surplus in investment grade
103-16 adjustable rate preferred stock and money market (auction rate)
103-17 preferred stock.
103-18 (h) A state bank may deposit funds in a federally insured
103-19 financial institution, a Federal Reserve Bank, or a Federal Home
103-20 Loan Bank without limitation.
103-21 (i) The finance commission may adopt rules to administer and
103-22 carry out this section, including rules to define or further define
103-23 terms used by this section, establish limits, requirements, or
103-24 exemptions other than those specified by this section for
103-25 particular classes or categories of investment securities, or limit
103-26 or expand investment authority for state banks for particular
103-27 classes or categories of investment securities.
104-1 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
104-2 SHARES. (a) Except as otherwise provided by this section, a state
104-3 bank may not acquire a lien by pledge or otherwise on its own
104-4 shares or participation shares or otherwise purchase or acquire
104-5 title to its own shares or participation shares, except as
104-6 necessary to avoid or minimize a loss on a loan or investment
104-7 previously made in good faith.
104-8 (b) With the prior written approval of the banking
104-9 commissioner or as permitted by rules adopted under this Act, a
104-10 state bank may acquire title to its own shares or participation
104-11 shares and hold those shares or participation shares as treasury
104-12 stock. Treasury stock acquired under this subsection is not
104-13 considered an equity investment.
104-14 (c) If a state bank acquires a lien on or title to its own
104-15 shares or participation shares under this section, the lien may not
104-16 by its original terms extend for more than two years. Except with
104-17 the prior written approval of the banking commissioner, the bank
104-18 may not hold title to its own shares or participation shares for
104-19 more than one year.
104-20 (d) For purposes of this section and except as otherwise
104-21 provided by rules adopted under this Act, equity securities in a
104-22 bank holding company that are not publicly held and traded on a
104-23 national securities exchange or automated quotation system are
104-24 considered to be shares or participation shares of each of the bank
104-25 holding company's subsidiary state banks.
104-26 Sec. 5.103. BANK SUBSIDIARIES. (a) Except as otherwise
104-27 provided by this Act or rules adopted under this Act, a state bank
105-1 may conduct any activity or investment through an operating
105-2 subsidiary that a state bank or a bank holding company is
105-3 authorized to conduct under the laws of this state, if the
105-4 operating subsidiary is adequately empowered and appropriately
105-5 licensed to conduct its business.
105-6 (b) Except for investment in a subsidiary engaging solely in
105-7 activities that may be engaged in directly by the bank, a state
105-8 bank without the prior written approval of the banking commissioner
105-9 may not invest more than an amount equal to 10 percent of its
105-10 capital and certified surplus in a single subsidiary and may not
105-11 invest more than the amount of its equity capital in all
105-12 subsidiaries. The amount of a state bank's investment in a
105-13 subsidiary is the total amount of the bank's investment in equity
105-14 or investment securities issued by its subsidiary and any loans and
105-15 extensions of credit from the bank to its subsidiary.
105-16 (c) A state bank may establish or acquire a subsidiary as
105-17 provided by 12 CFR Section 337.4 to conduct securities activities
105-18 that the bank is prohibited from conducting directly.
105-19 (d) Except as otherwise provided by a rule adopted under
105-20 this Act, a state bank may make a minority investment indirectly
105-21 through an operating subsidiary in equity securities of:
105-22 (1) another bank;
105-23 (2) a company that engages solely in an activity that
105-24 is permissible for a bank service corporation or a bank holding
105-25 company subsidiary; or
105-26 (3) a company that engages solely in activities as
105-27 agent or trustee or in a brokerage, custodial, advisory, or
106-1 administrative capacity.
106-2 (e) A state bank that intends to acquire, establish, or
106-3 perform new activities through a subsidiary shall submit a letter
106-4 to the banking commissioner describing in detail the proposed
106-5 activities of the subsidiary.
106-6 (f) The bank may acquire or establish a subsidiary or
106-7 perform new activities in an existing subsidiary beginning on the
106-8 31st day after the date the banking commissioner receives the
106-9 bank's letter, unless the banking commissioner specifies an earlier
106-10 or later date. The banking commissioner may extend the 30-day
106-11 period on a determination that the bank's letter raises issues that
106-12 require additional information or additional time for analysis. If
106-13 the period is extended, the bank may acquire or establish a
106-14 subsidiary, or may perform new activities in an existing
106-15 subsidiary, only on prior written approval of the banking
106-16 commissioner.
106-17 (g) A subsidiary of a state bank is subject to regulation by
106-18 the banking commissioner to the extent provided by this Act or
106-19 rules adopted under this Act. In the absence of limiting rules,
106-20 the banking commissioner may regulate a subsidiary as if it were a
106-21 state bank.
106-22 Sec. 5.104. MUTUAL FUNDS. (a) A state bank may invest for
106-23 its own account in equity securities of an investment company
106-24 registered under the Investment Company Act of 1940 (15 U.S.C.
106-25 Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C.
106-26 Section 77a et seq.) if the portfolio of the investment company
106-27 consists wholly of investments in which the bank could invest
107-1 directly for its own account.
107-2 (b) If the portfolio of an investment company described by
107-3 Subsection (a) of this section consists wholly of investments in
107-4 which the bank could invest directly without limitation under
107-5 Section 5.101(d) of this Act, the bank may invest in the investment
107-6 company without limitation.
107-7 (c) If the portfolio of an investment company described by
107-8 Subsection (a) of this section contains an investment or obligation
107-9 that is subject to the limits of Section 5.101(c) or 5.201(a) of
107-10 this Act, the bank may invest in the investment company not more
107-11 than an amount equal to 15 percent of the bank's capital and
107-12 certified surplus.
107-13 (d) A state bank that invests in an investment company as
107-14 provided by Subsection (c) of this section shall periodically
107-15 determine that its pro rata share of any security in the portfolio
107-16 of the investment company is not in excess of applicable investment
107-17 and lending limits by reason of being combined with the bank's pro
107-18 rata share of that security held by all other investment companies
107-19 in which the bank has invested and with the bank's own direct
107-20 investment and loan holdings.
107-21 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) A state
107-22 bank may purchase for its own account equity securities of any
107-23 class issued by:
107-24 (1) a bank service corporation, except that not more
107-25 than an amount equal to 15 percent of the bank's capital and
107-26 certified surplus may be invested in a single bank service
107-27 corporation and not more than an amount equal to five percent of
108-1 its assets may be invested in all bank service corporations;
108-2 (2) an agricultural credit corporation, but the bank
108-3 may not invest more than an amount equal to 30 percent of the
108-4 bank's capital and certified surplus in the agricultural credit
108-5 corporation unless the bank owns at least 80 percent of the equity
108-6 securities of the agricultural credit corporation;
108-7 (3) a small business investment company if the
108-8 aggregate investment does not exceed an amount equal to 10 percent
108-9 of the bank's capital and certified surplus;
108-10 (4) a banker's bank if the aggregate investment does
108-11 not exceed an amount equal to 15 percent of the bank's capital and
108-12 certified surplus or result in the bank acquiring or retaining
108-13 ownership, control, or power to vote more than five percent of any
108-14 class of voting securities of the banker's bank; and
108-15 (5) a housing corporation if the sum of the amount of
108-16 investment and the amount of loans and commitments for loans to the
108-17 housing corporation does not exceed an amount equal to 10 percent
108-18 of the bank's capital and certified surplus.
108-19 (b) The banking commissioner may authorize investments in
108-20 excess of the limitations of Subsection (a) of this section in
108-21 response to a written application if the banking commissioner
108-22 concludes that:
108-23 (1) the excess investment is not precluded by other
108-24 applicable law; and
108-25 (2) the safety and soundness of the requesting bank
108-26 would not be adversely affected.
108-27 (c) For the purposes of this section:
109-1 (1) "Agricultural credit corporation" means a company
109-2 organized solely for the purpose of making loans to farmers and
109-3 ranchers for agriculture purposes, including the breeding, raising,
109-4 fattening, or marketing of livestock.
109-5 (2) "Banker's bank" means a bank insured by the
109-6 Federal Deposit Insurance Corporation or a bank holding company
109-7 that owns or controls such an insured bank, if:
109-8 (A) all equity securities of the bank or bank
109-9 holding company, other than director's qualifying shares or shares
109-10 issued under an employee compensation plan, are owned by depository
109-11 institutions or depository institution holding companies; and
109-12 (B) the bank or bank holding company and all its
109-13 subsidiaries are engaged exclusively in providing:
109-14 (i) services to or for other depository
109-15 institutions, depository institution holding companies, and the
109-16 directors, managers, managing participants, officers, and employees
109-17 of other depository institutions and depository institution holding
109-18 companies; and
109-19 (ii) correspondent banking services at the
109-20 request of other depository institutions, depository institution
109-21 holding companies, or their subsidiaries.
109-22 (3) "Bank service corporation" has the meaning
109-23 assigned by the Bank Service Corporation Act (12 U.S.C. Section
109-24 1861 et seq.) or a successor to that Act.
109-25 (4) "Housing corporation" means a corporation
109-26 organized under Title IX of the Housing and Urban Development Act
109-27 of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited
110-1 partnership, or joint venture organized under Section 907(a) or (c)
110-2 of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing
110-3 corporation organized pursuant to the laws of this state for the
110-4 purpose of engaging in or financing low- and moderate-income
110-5 housing developments or projects.
110-6 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) A state
110-7 bank may make investments of a predominantly civic, community, or
110-8 public nature designed primarily to promote the public welfare,
110-9 including the welfare of low and moderate income communities or
110-10 families, including investments providing housing, services, or
110-11 jobs. The state bank may make the investments directly or by
110-12 purchasing equity securities in an entity primarily engaged in
110-13 making those investments. The state bank may not make the
110-14 investment if it would expose the bank to unlimited liability. In
110-15 addition, a bank may serve as a community partner and make
110-16 investments in a community partnership, as those terms are defined
110-17 by the Riegle Community Development and Regulatory Improvement Act
110-18 of 1994.
110-19 (b) A bank's aggregate investments under this section,
110-20 including loans and commitments for loans, may not exceed an amount
110-21 equal to 10 percent of the bank's capital and certified surplus.
110-22 The banking commissioner may authorize investments in excess of
110-23 this limitation in response to a written application if the banking
110-24 commissioner concludes that:
110-25 (1) the excess investment is not precluded by other
110-26 applicable law; and
110-27 (2) the safety and soundness of the requesting bank
111-1 would not be adversely affected.
111-2 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Except as
111-3 otherwise provided by this Act or rules adopted under this Act, a
111-4 state bank may not invest its funds in trade or commerce by buying,
111-5 selling, or otherwise dealing in goods or by owning or operating a
111-6 business not part of the business of banking, except as necessary
111-7 to avoid or minimize a loss on a loan or investment previously made
111-8 in good faith.
111-9 (Sections 5.108-5.200 reserved for expansion)
111-10 SUBCHAPTER C. LOANS
111-11 Sec. 5.201. LENDING LIMITS. (a) Without the prior written
111-12 approval of the banking commissioner, the total loans and
111-13 extensions of credit by a state bank to a person outstanding at one
111-14 time may not exceed an amount equal to 25 percent of the bank's
111-15 capital and certified surplus. This limitation does not apply to:
111-16 (1) liability as endorser or guarantor of commercial
111-17 or business paper discounted by or assigned to the bank by its
111-18 owner who has acquired it in the ordinary course of business;
111-19 (2) indebtedness evidenced by bankers' acceptances as
111-20 described by 12 U.S.C. Section 372 and issued by other banks;
111-21 (3) indebtedness secured by a bill of lading,
111-22 warehouse receipt, or similar document transferring or securing
111-23 title to readily marketable goods, except that:
111-24 (A) the goods shall be insured if it is
111-25 customary to insure those goods; and
111-26 (B) the aggregate indebtedness of a person under
111-27 this subdivision may not exceed an amount equal to 50 percent of
112-1 the bank's capital and certified surplus;
112-2 (4) indebtedness evidenced by notes or other paper
112-3 secured by liens on agricultural products in secure and properly
112-4 documented storage in bonded warehouses or elevators if the value
112-5 of the collateral is not less than 125 percent of the amount of the
112-6 indebtedness and the bank's interest in the collateral is
112-7 adequately insured against loss, except that the aggregate
112-8 indebtedness of a person under this subdivision may not exceed an
112-9 amount equal to 50 percent of the bank's capital and certified
112-10 surplus;
112-11 (5) indebtedness of another depository institution
112-12 arising out of loans with settlement periods of less than one week;
112-13 (6) indebtedness arising out of the daily transaction
112-14 of the business of a clearinghouse association in this state;
112-15 (7) liability under an agreement by a third party to
112-16 repurchase from the bank an investment security listed in
112-17 Subsection 5.101(d) of this Act to the extent that the agreed
112-18 repurchase price does not exceed the original purchase price to the
112-19 bank or the market value of the investment security;
112-20 (8) that portion of an indebtedness that this state,
112-21 an agency or political subdivision of this state, the United
112-22 States, or an agency or instrumentality of the United States has
112-23 unconditionally agreed to purchase, insure, or guarantee;
112-24 (9) indebtedness secured by investment securities
112-25 listed in Subsection 5.101(d) of this Act to the extent that the
112-26 market value of the investment securities equals or exceeds the
112-27 indebtedness;
113-1 (10) that portion of an indebtedness that is fully
113-2 secured by a segregated deposit account in the lending bank;
113-3 (11) loans and extensions of credit arising from the
113-4 purchase of negotiable or nonnegotiable installment consumer paper
113-5 that carries a full recourse endorsement or unconditional guarantee
113-6 by the person transferring the paper if the bank's files or the
113-7 knowledge of its officers of the financial condition of each maker
113-8 of the consumer paper is reasonably adequate and if an officer of
113-9 the bank designated for that purpose by the board certifies in
113-10 writing that the bank is relying primarily on the responsibility of
113-11 each maker for payment of the loans or extensions of credit and not
113-12 on a full or partial recourse endorsement or guarantee by the
113-13 transferor;
113-14 (12) that portion of an indebtedness in excess of the
113-15 limitation of Subsection (a) of this section that is fully secured
113-16 by marketable securities or bullion with a market value at least
113-17 equal to the amount of the overage, as determined by reliable and
113-18 continuously available price quotations, except that the exempted
113-19 indebtedness or overage of a person under this subdivision may not
113-20 exceed an amount equal to 15 percent of the bank's capital and
113-21 certified surplus;
113-22 (13) indebtedness of an affiliate of the bank if the
113-23 transaction with the affiliate is subject to the restrictions and
113-24 limitations of 12 U.S.C. Section 371c;
113-25 (14) indebtedness of an operating subsidiary of the
113-26 bank; and
113-27 (15) that portion of the indebtedness of a person
114-1 secured in good faith by a purchase money lien taken by the bank in
114-2 exchange for the sale of real or personal property owned by the
114-3 bank if the sale is in the best interest of the bank.
114-4 (b) The finance commission may adopt rules to administer and
114-5 carry out this section, including rules to:
114-6 (1) define or further define terms used by this
114-7 section;
114-8 (2) establish limits, requirements, or exemptions
114-9 other than those specified by this section for particular classes
114-10 or categories of loans or extensions of credit; and
114-11 (3) establish collective lending and investment
114-12 limits.
114-13 (c) The banking commissioner may determine whether a loan or
114-14 extension of credit putatively made to a person will be attributed
114-15 to another person for purposes of this section.
114-16 (d) An officer, director, manager, managing participant, or
114-17 employee of a state bank who approves or participates in the
114-18 approval of a loan with actual knowledge that the loan violates
114-19 this section is jointly and severally liable to the bank for the
114-20 lesser of the amount by which the loan exceeded applicable lending
114-21 limits or the bank's actual loss, and remains liable for that
114-22 amount until the loan and all prior indebtedness of the borrower to
114-23 the bank have been fully repaid. The bank may initiate a
114-24 proceeding to collect an amount due under this subsection at any
114-25 time before four years after the date the borrower defaults on the
114-26 subject loan or any prior indebtedness. A person that is liable
114-27 for and pays amounts to the bank under this subsection is entitled
115-1 to an assignment of the bank's claim against the borrower to the
115-2 extent of the payments. For purposes of this subsection, an
115-3 officer, director, manager, managing participant, or employee of a
115-4 state bank is presumed to know the amount of the bank's lending
115-5 limit under Subsection (a) of this section and the amount of the
115-6 borrower's aggregate outstanding indebtedness to the bank
115-7 immediately before a new loan or extension of credit to that
115-8 borrower.
115-9 Sec. 5.202. LOAN EXPENSES AND FEES. (a) A bank may require
115-10 a borrower to pay all reasonable expenses and fees incurred in
115-11 connection with the making, closing, disbursing, extending,
115-12 readjusting, or renewing of a loan, regardless of whether those
115-13 expenses or fees are paid to third parties. A fee charged by the
115-14 bank under this section may not exceed the cost the bank reasonably
115-15 expects to incur in connection with the transaction to which the
115-16 fee relates. Payment for these expenses may be collected by the
115-17 bank from the borrower and retained by the bank or paid to a person
115-18 rendering services for which a charge has been made, or the
115-19 payments may be paid directly by the borrower to a third party to
115-20 whom they are payable. This section does not authorize the bank to
115-21 charge its borrower for payment of fees and expenses to an officer,
115-22 director, manager, or managing participant of the bank for services
115-23 rendered in the person's capacity as an officer, director, manager,
115-24 or managing participant.
115-25 (b) A bank may charge a penalty for prepayment or late
115-26 payment. Only one penalty may be charged by the bank on each past
115-27 due payment. Unless otherwise agreed in writing, prepayment of
116-1 principal must be applied on the final installment of the note or
116-2 other obligation until that installment is fully paid, and further
116-3 prepayments must be applied on installments in the inverse order of
116-4 their maturity.
116-5 (c) Fees and expenses charged and collected as provided by
116-6 this section are not considered a part of the interest or
116-7 compensation charged by the bank for the use, forbearance, or
116-8 detention of money.
116-9 (d) To the extent of any conflict between this section and a
116-10 provision of Subtitle 2, Title 79, Revised Statutes (Article
116-11 5069-2.01 et seq., Vernon's Texas Civil Statutes), or Chapter 15,
116-12 Title 79, Revised Statutes (Article 5069-15.01 et seq., Vernon's
116-13 Texas Civil Statutes), the provision of Title 79, Revised Statutes,
116-14 prevails.
116-15 Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) A state bank
116-16 may purchase or construct a public facility and, as holder of legal
116-17 title, lease the facility to a public authority having sufficient
116-18 resources to pay all rentals as they become due. A lease under
116-19 this subsection must provide that legal title to the property
116-20 transfers to the lessee on consummation and expiration of the
116-21 lease.
116-22 (b) Subject to rules adopted under this Act, a state bank
116-23 may become the owner and lessor of tangible personal property for
116-24 lease financing transactions on a net lease basis on the specific
116-25 request and for the use of a customer. Without the written
116-26 approval of the banking commissioner to continue holding property
116-27 acquired for leasing purposes under this subsection, the bank may
117-1 not hold the property more than six months after the date of
117-2 expiration of the original or any extended or renewed lease period
117-3 agreed to by the customer for whom the property was acquired or by
117-4 a subsequent lessee.
117-5 (c) Rental payments received by the bank in a lease
117-6 financing transaction under this section are considered to be rent
117-7 and not interest or compensation for the use, forbearance, or
117-8 detention of money. However, a lease financing transaction is
117-9 considered to be a loan or extension of credit for purposes of
117-10 Section 5.201 of this Act.
117-11 (Sections 5.204-5.300 reserved for expansion)
117-12 SUBCHAPTER D. DEPOSITS
117-13 Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) A deposit
117-14 contract between a bank and an account holder is considered a
117-15 contract in writing for all purposes and may be evidenced by one or
117-16 more agreements, deposit tickets, signature cards, or notices as
117-17 provided by Section 5.302 of this Act, or by other documentation as
117-18 provided by law.
117-19 (b) A cause of action for denial of deposit liability on a
117-20 deposit contract without a maturity date does not accrue until the
117-21 bank has denied liability and given notice of the denial to the
117-22 account holder. A bank that provides an account statement or
117-23 passbook to the account holder is considered to have denied
117-24 liability and given the notice as to any amount not shown on the
117-25 statement or passbook.
117-26 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) A bank and
117-27 its account holder may amend the deposit contract as permitted by
118-1 Subsection (b) of this section, by agreement, or as otherwise
118-2 permitted by law.
118-3 (b) A bank may amend a deposit contract by mailing a written
118-4 notice of the amendment to the account holder, separately or as an
118-5 enclosure with or part of the account holder's statement of account
118-6 or passbook. The notice must include the text and effective date
118-7 of the amendment. The bank is required to deliver the notice to
118-8 only one of the account holders of a deposit account that has more
118-9 than one account holder. The effective date may not be earlier
118-10 than the 30th day after the date of mailing the notice, unless the
118-11 amendment:
118-12 (1) is made to comply with a statute or rule that
118-13 authorizes an earlier effective date;
118-14 (2) does not reduce the interest rate on the account
118-15 or otherwise adversely affect the account holder; or
118-16 (3) is made for reasons relating to security of
118-17 accounts.
118-18 (c) Except for a disclosure required to be made under
118-19 Section 5.303 of this Act or the Truth in Savings Act (12 U.S.C.
118-20 Section 4301 et seq.) or other federal law, before renewal of an
118-21 account, a notice of amendment is not required under Subsection
118-22 (b) of this section for:
118-23 (1) a change in the interest rate on a variable-rate
118-24 account, including a money market or negotiable order of withdrawal
118-25 account;
118-26 (2) a change in a term for a time account with a
118-27 maturity of one month or less, if the deposit contract authorizes
119-1 the change in the term; or
119-2 (3) a change contemplated and permitted by the
119-3 original contract.
119-4 (d) An amendment under Subsection (b) of this section may
119-5 reduce the rate of interest or eliminate interest on an account
119-6 without a maturity date.
119-7 (e) Amendment of a deposit contract made in compliance with
119-8 this section is not a violation of the Deceptive Trade
119-9 Practices-Consumer Protection Act (Section 17.41 et seq., Business
119-10 & Commerce Code).
119-11 Sec. 5.303. FEES; DISCLOSURES. (a) Except as otherwise
119-12 provided by law, a bank may charge an account holder a fee, service
119-13 charge, or penalty relating to service or activity of a deposit
119-14 account, including a fee for an overdraft, insufficient fund check,
119-15 or stop payment order.
119-16 (b) Except as otherwise provided by the Truth in Savings Act
119-17 (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall
119-18 disclose the amount of each fee, charge, or penalty related to an
119-19 account, or if the amount of a fee, charge, or penalty cannot be
119-20 stated, the method of computing the fee, charge, or penalty, by
119-21 written notice delivered or mailed to each customer opening an
119-22 account not later than the 10th business day after the date the
119-23 account is opened. A bank that increases or adds a new fee,
119-24 charge, or penalty shall give notice of the change to each affected
119-25 account holder in the manner provided by Section 5.302(b) of this
119-26 Act for notice of an amendment of a deposit contract.
119-27 Sec. 5.304. SECURING DEPOSITS. (a) A state bank may not
120-1 pledge or create a lien on its assets or secure the repayment of a
120-2 deposit except as authorized or required by this section, rules
120-3 adopted under this Act, or other law.
120-4 (b) A state bank may pledge its assets to secure a deposit
120-5 of this state, an agency or political subdivision of this state,
120-6 the United States, or an instrumentality of the United States.
120-7 (c) This section does not prohibit the pledge of assets to
120-8 secure the repayment of money borrowed or the purchase of excess
120-9 deposit insurance from a private insurance company. An act, deed,
120-10 conveyance, pledge, or contract in violation of this section is
120-11 void.
120-12 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Except as
120-13 otherwise provided by this section, a bank lawfully doing business
120-14 in this state may enter a deposit account with a minor as the sole
120-15 and absolute owner of the account and may pay checks and
120-16 withdrawals and otherwise act with respect to the account on the
120-17 order of the minor. A payment or delivery of rights to a minor who
120-18 holds a deposit account evidenced by a receipt or acquittance
120-19 signed by the minor discharges the bank to the extent of the
120-20 payment made or rights delivered.
120-21 (b) If the minor is the sole and absolute owner of the
120-22 deposit account, the disabilities of minority are removed for the
120-23 limited purpose of enabling:
120-24 (1) the minor to enter into a depository contract with
120-25 the bank; and
120-26 (2) the bank to enforce the contract against the
120-27 minor, including collection of overdrafts and account fees and
121-1 submission of account history to account reporting agencies and
121-2 credit reporting bureaus.
121-3 (c) A parent or legal guardian of a minor may deny the
121-4 minor's authority to control, transfer, draft on, or make
121-5 withdrawals from the minor's deposit account by notifying the bank
121-6 in writing. On receipt of the notice by the bank, the minor may
121-7 not control, transfer, draft on, or make withdrawals from the
121-8 account during minority except with the joinder of a parent or
121-9 legal guardian of the minor.
121-10 (d) If a minor with a deposit account dies, the receipt or
121-11 acquittance of the minor's parent or legal guardian discharges the
121-12 liability of the bank to the extent of the receipt or acquittance,
121-13 except that the aggregate discharges under this subsection may not
121-14 exceed $3,000.
121-15 (e) Subsection (a) of this section does not authorize a loan
121-16 to the minor by the bank, whether on pledge of the minor's savings
121-17 account or otherwise, or bind the minor to repay a loan made except
121-18 as provided by Subsection (b) of this section or other law or
121-19 unless the depository institution has obtained the express consent
121-20 and joinder of a parent or legal guardian of the minor. This
121-21 subsection does not apply to an inadvertent extension of credit
121-22 because of an overdraft from insufficient funds, returned checks or
121-23 deposits, or other shortages in a depository account resulting from
121-24 normal banking operations.
121-25 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION.
121-26 (a) If a deposit account is opened with a bank by one or more
121-27 persons expressly as a trustee for one or more other named persons
122-1 and further notice of the existence and terms of a legal and valid
122-2 trust is not given in writing to the bank, the bank may accept and
122-3 administer the account, subject to Chapter XI, Probate Code.
122-4 (b) If a deposit account is opened with a bank by one or
122-5 more persons expressly as a trustee for one or more other named
122-6 persons pursuant to or purporting to be pursuant to a written trust
122-7 agreement, the trustee may provide the bank with a certificate of
122-8 trust to evidence the trust relationship. The certificate must be
122-9 an affidavit of the trustee and must include the effective date of
122-10 the trust, the name of the trustee, the name or method for choosing
122-11 successor trustees, the name and address of each beneficiary, the
122-12 authority granted to the trustee, the disposition of the account on
122-13 the death of the trustee or the survivor of two or more trustees,
122-14 other information required by the bank, and an indemnification of
122-15 the bank. The bank may accept and administer the account, subject
122-16 to Chapter XI, Probate Code, in accordance with the certificate of
122-17 trust without requiring a copy of the trust agreement. The bank is
122-18 not liable for administering the account as provided by the
122-19 certificate of trust, even if the certificate of trust is contrary
122-20 to the terms of the trust agreement, unless the bank has actual
122-21 knowledge of the terms of the trust agreement.
122-22 (c) On the death of the trustee or the survivor of two or
122-23 more trustees, the bank may pay all or part of the withdrawal value
122-24 of the account with interest as provided by the certificate of
122-25 trust. If the trustee did not deliver a certificate of trust, the
122-26 bank's right to treat the account as owned by a trustee ceases on
122-27 the death of the trustee. On the death of the trustee or the
123-1 survivor of two or more trustees, the bank shall, unless the
123-2 certificate of trust provides otherwise, pay the withdrawal value
123-3 of the account with interest in equal shares to the persons who
123-4 survived the trustee, are named as beneficiaries in the certificate
123-5 of trust, and can be located by the bank from its own records. If
123-6 there is not a certificate of trust, payment of the withdrawal
123-7 value and interest shall be made as provided by Chapter XI, Probate
123-8 Code. Any payment made under this section for all or part of the
123-9 withdrawal value and interest discharges any liability of the bank
123-10 to the extent of the payment. The bank may pay all or part of the
123-11 withdrawal value and interest in the manner provided by this
123-12 section, regardless of whether it has knowledge of a competing
123-13 claim, unless the bank receives actual knowledge that payment has
123-14 been restrained by order of a court of competent jurisdiction.
123-15 (d) This section does not obligate a bank to accept a
123-16 deposit account from a trustee who does not furnish a copy of the
123-17 trust agreement or to search beyond its own records for the
123-18 location of a named beneficiary.
123-19 (e) This section does not affect a contractual provision to
123-20 the contrary that otherwise complies with the laws of this state.
123-21 Sec. 5.307. RIGHT OF SET-OFF. (a) Except as otherwise
123-22 provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
123-23 seq.) or other federal law, a bank has a right of set-off, without
123-24 further agreement or action, against all accounts owned by a
123-25 depositor to whom or on whose behalf the bank has made an advance
123-26 of money by loan, overdraft, or otherwise, if the bank has
123-27 previously disclosed this right to the depositor. If the depositor
124-1 defaults in the repayment or satisfaction of the obligation, the
124-2 bank may, without notice to or consent of the depositor, set off or
124-3 cancel on its books all or part of the accounts owned by the
124-4 depositor and apply the value of the accounts in payment of and to
124-5 the extent of the obligation.
124-6 (b) For purposes of this section, a default occurs when an
124-7 obligor has failed to make a payment as provided by the terms of
124-8 the loan or other credit obligation and a grace period provided for
124-9 by the agreement or law has expired. An obligation is not required
124-10 to be accelerated or matured for a default to authorize set-off of
124-11 the depositor's obligation against the defaulted payment.
124-12 (c) A bank may not exercise its right of set-off under this
124-13 section against an account unless the account is due and owing to
124-14 the depositor in the same capacity as the defaulted credit
124-15 obligation. A trust account for which a depositor is trustee,
124-16 including a trustee under a certificate of trust delivered under
124-17 Section 5.306(b) of this Act, is not subject to the right of
124-18 set-off under this section unless the trust relationship is solely
124-19 evidenced by the account card as provided by Chapter XI, Probate
124-20 Code.
124-21 (d) This section does not limit or prohibit the exercise of
124-22 another right of set-off, including a right under contract or
124-23 common law.
124-24 CHAPTER 6. ENFORCEMENT ACTIONS
124-25 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
124-26 Sec. 6.001. DETERMINATION LETTER ............................. 126
124-27 Sec. 6.002. CEASE AND DESIST ORDER ........................... 127
125-1 Sec. 6.003. REMOVAL OR PROHIBITION ORDER ..................... 128
125-2 Sec. 6.004. HEARING ON PROPOSED ORDER ........................ 130
125-3 Sec. 6.005. EMERGENCY ORDERS ................................. 131
125-4 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS .......... 132
125-5 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION
125-6 ORDER .......................................... 132
125-7 Sec. 6.008. LIMITATION ON ACTION ............................. 134
125-8 Sec. 6.009. ENFORCEMENT OF FINAL ORDER ....................... 134
125-9 Sec. 6.010. ADMINISTRATIVE PENALTIES ......................... 134
125-10 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE
125-11 PENALTIES ...................................... 135
125-12 Sec. 6.012. CONFIDENTIALITY OF RECORDS ....................... 136
125-13 Sec. 6.013. COLLECTION OF FEES ............................... 136
125-14 (Sections 6.014-6.100 reserved for expansion)
125-15 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
125-16 Sec. 6.101. ORDER OF SUPERVISION ............................. 137
125-17 Sec. 6.102. ORDER OF CONSERVATORSHIP ......................... 137
125-18 Sec. 6.103. HEARING .......................................... 137
125-19 Sec. 6.104. POST-HEARING ORDER ............................... 138
125-20 Sec. 6.105. CONFIDENTIALITY OF RECORDS ....................... 139
125-21 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION ................. 140
125-22 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR ................. 140
125-23 Sec. 6.108. QUALIFICATIONS OF APPOINTEE ...................... 141
125-24 Sec. 6.109. EXPENSES ......................................... 141
125-25 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR
125-26 DECISIONS ...................................... 142
125-27 Sec. 6.111. VENUE ............................................ 143
126-1 Sec. 6.112. DURATION ......................................... 144
126-2 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES .............. 144
126-3 (Sections 6.114-6.200 reserved for expansion)
126-4 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
126-5 INVESTIGATION AND ENFORCEMENT
126-6 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY ........... 144
126-7 Sec. 6.202. SUBPOENA AUTHORITY ............................... 146
126-8 Sec. 6.203. ENFORCEMENT OF SUBPOENA .......................... 147
126-9 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS ............ 148
126-10 Sec. 6.205. EVIDENCE ......................................... 149
126-11 Sec. 6.206. CEASE AND DESIST ORDER REGARDING
126-12 UNAUTHORIZED ACTIVITY .......................... 149
126-13 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER
126-14 REGARDING UNAUTHORIZED ACTIVITY ................ 150
126-15 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER
126-16 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-17 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
126-18 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-19 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY .......... 153
126-20 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER .............. 154
126-21 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER ................. 156
126-22 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND .................. 157
126-23 CHAPTER 6. ENFORCEMENT ACTIONS
126-24 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
126-25 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
126-26 commissioner determines from examination or other credible evidence
126-27 that a state bank is in a condition that may warrant the issuance
127-1 of an enforcement order under this chapter, the banking
127-2 commissioner may, by personal delivery or by registered or
127-3 certified mail, return receipt requested, notify the bank in
127-4 writing of the determination, the requirements the bank must
127-5 satisfy to abate the determination, and the time in which the
127-6 requirements must be satisfied to avert further administrative
127-7 action.
127-8 (b) The determination letter may be issued in connection
127-9 with the issuance of a cease and desist, removal, or prohibition
127-10 order under this subchapter or an order of supervision or
127-11 conservatorship under Subchapter B of this chapter.
127-12 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
127-13 commissioner has grounds to issue a cease and desist order to an
127-14 officer, employee, director, manager, or managing participant of a
127-15 state bank, or the bank itself acting through an authorized person,
127-16 if the banking commissioner determines from examination or other
127-17 credible evidence that the bank or person, directly or indirectly:
127-18 (1) has violated this Act or another applicable law or
127-19 rule;
127-20 (2) has engaged in a breach of trust or other
127-21 fiduciary duty;
127-22 (3) has refused to submit to examination or
127-23 examination under oath;
127-24 (4) has conducted business in an unsafe or unsound
127-25 manner; or
127-26 (5) has violated a condition of the bank's charter or
127-27 an agreement between the bank or the person and the banking
128-1 commissioner or the department.
128-2 (b) If the banking commissioner has grounds for action under
128-3 Subsection (a) of this section and further finds that an order to
128-4 cease and desist from a violation appears to be necessary and in
128-5 the best interest of the bank involved and its depositors,
128-6 creditors, and shareholders or participants, the banking
128-7 commissioner, by personal delivery or by registered or certified
128-8 mail, return receipt requested, may serve a proposed cease and
128-9 desist order on the bank and each person who committed or
128-10 participated in the violation. The proposed order must state the
128-11 grounds for the proposed order with reasonable certainty. The
128-12 proposed order must state its effective date, which may not be
128-13 before the 21st day after the date the proposed order is mailed or
128-14 delivered. The order takes effect for the bank if the bank does
128-15 not request a hearing in writing before the effective date and
128-16 takes effect for each other person against whom the proposed order
128-17 is directed if that person does not request a hearing in writing
128-18 before the effective date. After taking effect the order is final
128-19 and nonappealable as to that bank or other person.
128-20 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
128-21 commissioner has grounds to remove a present or former officer,
128-22 director, manager, managing participant, or employee of a state
128-23 bank from office or employment in, or prohibit a controlling
128-24 shareholder or participant or other person participating in the
128-25 affairs of a state bank from further participation in the affairs
128-26 of, a state bank, trust company, or other entity chartered or
128-27 licensed by the banking commissioner under the laws of this state,
129-1 if the banking commissioner determines from examination or other
129-2 credible evidence that:
129-3 (1) the person committed, participated, or acted, in
129-4 other than an inadvertent or unintentional manner, as described by
129-5 Section 6.002(a) of this Act with regard to the affairs of the
129-6 bank, or violated a final cease and desist order issued in response
129-7 to the same or a similar act; and
129-8 (2) because of this action by the person:
129-9 (A) the bank has suffered or will probably
129-10 suffer financial loss or other damage;
129-11 (B) the interests of the bank's depositors have
129-12 been or could be prejudiced; or
129-13 (C) the person has received financial gain or
129-14 other benefit by reason of the violation; and
129-15 (3) this action by the person:
129-16 (A) involves personal dishonesty on the part of
129-17 the person; or
129-18 (B) demonstrates wilful or continuing disregard
129-19 for the safety or soundness of the bank.
129-20 (b) If the banking commissioner finds grounds for action
129-21 under Subsection (a) of this section and further finds that a
129-22 removal or prohibition order appears to be necessary and in the
129-23 best interest of the bank involved and its depositors, creditors,
129-24 and shareholders or participants, the banking commissioner, by
129-25 personal delivery or by registered or certified mail, return
129-26 receipt requested, may serve a proposed removal or prohibition
129-27 order, as appropriate, on an officer, employee, director, manager
130-1 or managing participant, controlling shareholder or participant, or
130-2 other person alleged to have committed or participated in the
130-3 violation. The proposed order must state the grounds for removal
130-4 or prohibition with reasonable certainty. The proposed order must
130-5 state its effective date, which may not be before the 21st day
130-6 after the date the proposed order is mailed or delivered. The
130-7 order takes effect for a person against whom the proposed order is
130-8 directed if the person does not request a hearing in writing before
130-9 the effective date. After taking effect the order is final and
130-10 nonappealable as to that person.
130-11 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
130-12 hearing on a proposed order shall be held not later than the 30th
130-13 day after the date the first request for a hearing on the order was
130-14 received by the department unless the parties agree to a later
130-15 hearing date. Each party shall be given written notice by personal
130-16 delivery or by registered or certified mail, return receipt
130-17 requested, of the date set by the banking commissioner for the
130-18 hearing not later than the 11th day before that date. The hearing
130-19 shall be conducted as provided by Chapter 2001, Government Code.
130-20 At the hearing, the department has the burden of proof and each
130-21 person against whom the proposed order is directed may
130-22 cross-examine and present evidence to show why the proposed order
130-23 should not be issued.
130-24 (b) After the hearing, the banking commissioner shall issue
130-25 or decline to issue the proposed order. The proposed order may be
130-26 modified as necessary to conform to the findings at the hearing and
130-27 to require the board to take necessary affirmative action to
131-1 correct the conditions cited in the order.
131-2 (c) An order issued under this section is immediately final
131-3 for purposes of enforcement and appeal. The order may be appealed
131-4 as provided by Section 3.009 of this Act.
131-5 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
131-6 commissioner believes that immediate action is needed to prevent
131-7 immediate and irreparable harm to the bank and its depositors,
131-8 creditors, and shareholders or participants, the banking
131-9 commissioner may issue one or more cease and desist, removal, or
131-10 prohibition orders as emergency orders to become effective
131-11 immediately on service without prior notice or hearing. Service
131-12 must be by personal delivery or by registered or certified mail,
131-13 return receipt requested.
131-14 (b) In each emergency order the banking commissioner shall
131-15 notify the bank and any person against whom the emergency order is
131-16 directed of the specific conduct, activity, or omission requiring
131-17 the order, the citation of each statute or rule alleged to have
131-18 been violated, the immediate and irreparable harm alleged to be
131-19 threatened, and the right to a hearing. A hearing on the order may
131-20 be requested in writing not later than the 10th day after the date
131-21 that the order is served. Unless a person against whom the
131-22 emergency order is directed requests a hearing in writing before
131-23 the 11th day after the date it is served on the person, the
131-24 emergency order is final and nonappealable as to that person.
131-25 (c) A hearing on an emergency order, if requested, must be
131-26 given priority over all other matters pending before the banking
131-27 commissioner and must be held not later than the 20th day after the
132-1 date that it is requested unless the parties agree to a later
132-2 hearing date.
132-3 (d) Until the hearing, an emergency order continues in
132-4 effect unless the order is stayed by the banking commissioner. The
132-5 banking commissioner may impose any condition before granting a
132-6 stay of the emergency order.
132-7 (e) After the hearing, the banking commissioner may affirm,
132-8 modify, or set aside in whole or part the emergency order. An
132-9 order affirming or modifying the emergency order is immediately
132-10 final for purposes of enforcement and appeal. The order may be
132-11 appealed as provided by Section 3.009 of this Act.
132-12 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS. A copy
132-13 of any determination letter, proposed order, emergency order, or
132-14 final order issued by the banking commissioner under this
132-15 subchapter shall be immediately brought to the attention of the
132-16 board of the affected bank, regardless of whether the bank is a
132-17 party, and filed in the minutes of the board. Each director,
132-18 manager, or managing participant shall immediately certify to the
132-19 banking commissioner in writing that the certifying person has read
132-20 and understood the determination letter, proposed order, emergency
132-21 order, or final order. The required certification may not be
132-22 considered an admission of a person in a subsequent legal or
132-23 administrative proceeding.
132-24 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
132-25 (a) Without the prior written approval of the banking
132-26 commissioner, a person subject to a final and enforceable removal
132-27 or prohibition order issued by the banking commissioner:
133-1 (1) may not serve as a director, officer, or employee
133-2 of any state bank, trust company, or other entity chartered or
133-3 licensed by the banking commissioner under the laws of this state
133-4 while the order is in effect;
133-5 (2) may not directly or indirectly participate in any
133-6 manner in the management of such an entity;
133-7 (3) may not directly or indirectly vote for a director
133-8 of such an entity;
133-9 (4) may not solicit, procure, transfer, attempt to
133-10 transfer, vote, or attempt to vote a proxy, consent, or
133-11 authorization with respect to voting rights in such an entity; and
133-12 (5) remains entitled to receive dividends or a share
133-13 of profits, return of contribution, or other distributive benefit
133-14 from such an entity with respect to voting securities in the entity
133-15 owned by the person.
133-16 (b) If voting securities of an entity identified in
133-17 Subsection (a)(1) of this section cannot be voted under this
133-18 section, the voting securities are considered to be authorized but
133-19 unissued for purposes of determining the procedures for and results
133-20 of the affected vote<>.
133-21 (c) Participants of a limited banking association in which a
133-22 participant has been finally removed or prohibited from
133-23 participation in the bank's affairs under this subchapter shall
133-24 elect a board of managers.
133-25 (d) This section and Section 6.008 of this Act do not
133-26 prohibit a removal or prohibition order that has indefinite
133-27 duration or that by its terms is perpetual.
134-1 Sec. 6.008. LIMITATION ON ACTION. The banking commissioner
134-2 may not initiate an enforcement action under this subchapter later
134-3 than the fifth anniversary of the date the conduct or acts involved
134-4 were discovered or reasonably should have been discovered by the
134-5 banking commissioner.
134-6 Sec. 6.009. ENFORCEMENT OF FINAL ORDER. (a) If the banking
134-7 commissioner reasonably believes that a bank or person has violated
134-8 a final and enforceable cease and desist, removal, or prohibition
134-9 order issued under this subchapter, the banking commissioner may:
134-10 (1) initiate administrative penalty proceedings
134-11 against the bank under Section 6.010 of this Act;
134-12 (2) refer the matter to the attorney general for
134-13 enforcement by injunction or other available remedy; or
134-14 (3) pursue any other action the banking commissioner
134-15 considers appropriate under applicable law.
134-16 (b) If the attorney general prevails in an action brought
134-17 under Subsection (a)(2) of this section, the attorney general is
134-18 entitled to recover reasonable attorney's fees from the bank or
134-19 person violating the order.
134-20 Sec. 6.010. ADMINISTRATIVE PENALTIES. (a) The banking
134-21 commissioner may initiate a proceeding for an administrative
134-22 penalty against a bank under Section 6.009(a)(1) of this Act by
134-23 serving on the bank, by personal delivery or registered or
134-24 certified mail, return receipt requested, notice of the time and
134-25 place of a hearing on the penalty. The hearing may not be held
134-26 earlier than the 20th day after the date the notice is served and
134-27 shall be conducted under Chapter 2001, Government Code. The notice
135-1 must contain a statement of the acts or conduct alleged to be in
135-2 violation of the order.
135-3 (b) In determining whether an order has been violated, the
135-4 banking commissioner shall consider the maintenance of procedures
135-5 reasonably adopted to ensure compliance with the order.
135-6 (c) If the banking commissioner determines after the hearing
135-7 that the order has been violated, the banking commissioner may
135-8 impose an administrative penalty against the bank in an amount not
135-9 to exceed $500 for each day the bank is in violation of the final
135-10 order.
135-11 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES.
135-12 (a) When a penalty order under Section 6.010 of this Act becomes
135-13 final, the bank shall pay the penalty or appeal by filing a
135-14 petition for judicial review under the substantial evidence rule in
135-15 the district court of Travis County.
135-16 (b) The petition for judicial review stays the penalty order
135-17 during the period preceding the decision of the court. If the
135-18 court sustains the order, the court shall order the bank to pay the
135-19 full amount of the penalty or a lower amount determined by the
135-20 court. If the court does not sustain the order, a penalty is not
135-21 owed. If the final judgment of the court requires payment of a
135-22 penalty, interest accrues on the penalty, at the rate charged on
135-23 loans to depository institutions by the New York Federal Reserve
135-24 Bank, beginning on the date the judgment is final and ending on the
135-25 date the penalty and interest are paid.
135-26 (c) If the bank does not pay a final and nonappealable
135-27 penalty order, the banking commissioner shall refer the matter to
136-1 the attorney general for enforcement. The attorney general is
136-2 entitled to recover reasonable attorney's fees from the bank if the
136-3 attorney general prevails in judicial action necessary for
136-4 collection of the penalty.
136-5 (d) A penalty collected under this section shall be remitted
136-6 to the comptroller for deposit to the credit of the general revenue
136-7 fund.
136-8 Sec. 6.012. CONFIDENTIALITY OF RECORDS. A copy of a notice,
136-9 correspondence, transcript, pleading, or other document in the
136-10 records of the department relating to an order issued under this
136-11 subchapter is confidential and may be released only as provided by
136-12 Subchapter B, Chapter 2, of this Act, except that the banking
136-13 commissioner shall publish all final removal and prohibition orders
136-14 on a periodic basis. The banking commissioner may publish a final
136-15 cease and desist order or information regarding the existence of
136-16 the order to the public if the banking commissioner concludes that
136-17 effective enforcement of the order would be enhanced by the
136-18 release.
136-19 Sec. 6.013. COLLECTION OF FEES. The department may sue to
136-20 enforce the collection of a fee owed to the department under a law
136-21 administered by the department. In the suit a certificate by the
136-22 banking commissioner showing the delinquency is prima facie
136-23 evidence of:
136-24 (1) the levy of the fee or the delinquency of the
136-25 stated fee amount; and
136-26 (2) compliance by the department with the law relating
136-27 to the computation and levy of the fee.
137-1 (Sections 6.014-6.100 reserved for expansion)
137-2 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
137-3 Sec. 6.101. ORDER OF SUPERVISION. If the banking
137-4 commissioner determines from examination or other credible evidence
137-5 that a state bank is in hazardous condition and that an order of
137-6 supervision appears to be necessary and in the best interest of the
137-7 bank and its depositors, creditors, and shareholders or
137-8 participants, or the public, the banking commissioner may without
137-9 prior notice issue an order appointing a supervisor over the bank.
137-10 The supervisor serves until the earlier of the expiration of the
137-11 period stated in the order of supervision or the date the banking
137-12 commissioner determines that the requirements for abatement of the
137-13 order have been satisfied.
137-14 Sec. 6.102. ORDER OF CONSERVATORSHIP. In addition to the
137-15 grounds for conservatorship provided by Sections 4.103 and 6.104 of
137-16 this Act, if the banking commissioner determines from examination
137-17 or other credible evidence that a state bank is in hazardous
137-18 condition and immediate and irreparable harm is threatened to the
137-19 bank, its depositors, creditors, or shareholders or participants,
137-20 or the public, the banking commissioner may without prior notice
137-21 issue an order appointing a conservator at any time before, during,
137-22 or after the period of supervision. An order of conservatorship
137-23 issued under this section must specifically state the basis for the
137-24 order.
137-25 Sec. 6.103. HEARING. (a) An order issued under Section
137-26 6.101 or 6.102 of this Act must contain or be accompanied by a
137-27 notice that a hearing before the banking commissioner will be held
138-1 at the request of the bank at which the bank may cross-examine and
138-2 present evidence to contest the order or show that it has satisfied
138-3 all requirements for abatement of the order. The department has
138-4 the burden of proof for any continuation of the order or the
138-5 issuance of a new order.
138-6 (b) A bank that seeks to contest or modify the order or
138-7 demonstrate that it has satisfied all requirements for abatement of
138-8 the order shall submit a written request for a hearing to the
138-9 banking commissioner. The request must state the grounds for the
138-10 request to set aside or modify the order. On receiving a request
138-11 for hearing, the banking commissioner shall serve notice by
138-12 personal delivery or by registered or certified mail, return
138-13 receipt requested, of the time and place of the hearing, which must
138-14 be not later than the 10th day after the date the banking
138-15 commissioner receives the request for a hearing unless the parties
138-16 agree to a later hearing date.
138-17 (c) The banking commissioner may delay a decision for a
138-18 prompt examination of the bank and may reopen the record as
138-19 necessary to allow presentation of the results of the examination
138-20 and appropriate opportunity for cross-examination and presentation
138-21 of other relevant evidence.
138-22 Sec. 6.104. POST-HEARING ORDER. (a) If the banking
138-23 commissioner after the hearing finds that the bank has been
138-24 rehabilitated, its hazardous condition has been remedied,
138-25 irreparable harm is no longer threatened, or that the bank should
138-26 otherwise be released from the order, the banking commissioner
138-27 shall release the bank, subject to conditions the banking
139-1 commissioner from the evidence believes are warranted to preserve
139-2 the safety and soundness of the bank.
139-3 (b) If the banking commissioner after the hearing finds that
139-4 the bank has failed to comply with the lawful requirements of the
139-5 banking commissioner, has not been rehabilitated, is insolvent, or
139-6 otherwise continues in hazardous condition, the banking
139-7 commissioner by order shall:
139-8 (1) appoint or reappoint a supervisor pursuant to
139-9 Section 6.101 of this Act;
139-10 (2) appoint or reappoint a conservator pursuant to
139-11 Section 6.102 of this Act; or
139-12 (3) take other appropriate action authorized by law.
139-13 (c) An order issued under Subsection (b) of this section is
139-14 immediately final for purposes of appeal. The order may be
139-15 appealed as provided by Section 3.009 of this Act.
139-16 (d) This subchapter does not prevent release of the bank
139-17 from supervision or conservatorship before a hearing if the banking
139-18 commissioner is satisfied that requirements for abatement have been
139-19 adequately satisfied.
139-20 Sec. 6.105. CONFIDENTIALITY OF RECORDS. An order issued
139-21 under this subchapter and a copy of a notice, correspondence,
139-22 transcript, pleading, or other document in the records of the
139-23 department relating to the order are confidential and may be
139-24 released only as provided by Subchapter B, Chapter 2, of this Act,
139-25 except that the banking commissioner may release an order or
139-26 information regarding the existence of an order to the public if
139-27 the banking commissioner concludes that effective enforcement of
140-1 the order would be enhanced by the release.
140-2 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION. During the
140-3 period of supervision the bank may not, without the prior approval
140-4 of the banking commissioner or the supervisor or as otherwise
140-5 permitted or restricted by the order of supervision:
140-6 (1) dispose of, sell, transfer, convey, or encumber
140-7 the bank's assets;
140-8 (2) lend or invest the bank's funds;
140-9 (3) incur a debt, obligation, or liability; or
140-10 (4) pay a cash dividend to the bank's shareholders or
140-11 participants.
140-12 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR. (a) A
140-13 conservator appointed under this subchapter shall immediately take
140-14 charge of the bank and all of its property, books, records, and
140-15 affairs on behalf and at the direction and control of the banking
140-16 commissioner.
140-17 (b) Subject to any limitation contained in the order of
140-18 appointment or other direction of the banking commissioner, the
140-19 conservator has all the powers of the directors, managers, managing
140-20 participants, officers, and shareholders or participants of the
140-21 bank and shall conduct the business of the bank and take all steps
140-22 the conservator considers appropriate to remove the causes and
140-23 conditions that required the appointment of a conservator. During
140-24 the conservatorship, the board may not direct or participate in the
140-25 affairs of the bank.
140-26 (c) Except as otherwise provided by this subchapter, rules
140-27 adopted under this Act, or Section 2.010 of this Act, the
141-1 conservator has the rights and privileges and is subject to the
141-2 duties, restrictions, penalties, conditions, and limitations of the
141-3 directors, officers, and employees of state banks.
141-4 Sec. 6.108. QUALIFICATIONS OF APPOINTEE. The banking
141-5 commissioner may appoint any person as a supervisor or conservator
141-6 who in the sole judgment of the banking commissioner is qualified
141-7 to serve. The banking commissioner may serve or may appoint an
141-8 employee of the department to serve as supervisor or conservator.
141-9 Sec. 6.109. EXPENSES. (a) The banking commissioner shall
141-10 determine and approve the reasonable expenses attributable to the
141-11 service of a supervisor or conservator, including costs incurred by
141-12 the department and the compensation and expenses of the supervisor
141-13 or conservator and any professional employees appointed to
141-14 represent or assist the supervisor or conservator. The banking
141-15 commissioner or an employee of the department may not receive
141-16 compensation in addition to salary for serving as supervisor or
141-17 conservator, but the department may receive reimbursement for the
141-18 fully allocated personnel cost associated with service of the
141-19 banking commissioner or an employee as supervisor or conservator.
141-20 (b) All approved expenses shall be paid by the bank as the
141-21 banking commissioner determines. The banking commissioner has a
141-22 lien against the assets and funds of the bank to secure payment of
141-23 approved expenses. The lien has a higher priority than any other
141-24 lien against the bank.
141-25 (c) Notwithstanding any other provision of this subchapter,
141-26 the bank may employ an attorney and other persons the bank selects
141-27 to assist the bank in contesting or satisfying the requirements of
142-1 an order of supervision or conservatorship. The banking
142-2 commissioner shall authorize the payment of reasonable fees and
142-3 expenses from the bank for the attorney or other persons as
142-4 expenses of the supervision or conservatorship.
142-5 (d) The banking commissioner may defer collection of
142-6 assessment and examination fees by the department from the bank
142-7 during a period of supervision or conservatorship, if deferral
142-8 would appear to aid prospects for rehabilitation. As a condition
142-9 of release from supervision or conservatorship, the banking
142-10 commissioner may require the rehabilitated bank to pay or develop a
142-11 reasonable plan for payment of deferred fees.
142-12 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS.
142-13 (a) Notwithstanding Section 6.107(b) of this Act, a majority of
142-14 the bank's board, acting directly or through counsel who
142-15 affirmatively represents that the requisite majority has been
142-16 obtained, may request in writing that the banking commissioner
142-17 review an action taken or proposed by the supervisor or
142-18 conservator. The request must specify why the action would not be
142-19 in the best interest of the bank. The banking commissioner shall
142-20 investigate to the extent necessary and make a prompt written
142-21 ruling on the request. If the action is proposed rather than
142-22 already taken or if the effect of the action can be postponed, the
142-23 banking commissioner may stay the action on request pending review.
142-24 (b) If a majority of the bank's board objects to the banking
142-25 commissioner's ruling, the majority may, not later than the 10th
142-26 day after the date the bank is notified of the ruling, request a
142-27 hearing before the banking commissioner.
143-1 (c) The banking commissioner shall give the board notice of
143-2 the time and place of the hearing by personal delivery or by
143-3 registered or certified mail, return receipt requested. The
143-4 hearing may not be held later than the 10th day after the date the
143-5 banking commissioner receives the request for a hearing unless the
143-6 parties agree to a later hearing date. At the hearing the board
143-7 has the burden of proof to demonstrate that the action is not in
143-8 the best interest of the bank.
143-9 (d) After the hearing, the banking commissioner may affirm,
143-10 modify, or set aside in whole or part the prior ruling. An order
143-11 supporting the action contested by the board is immediately final
143-12 for purposes of appeal. The order may be appealed as provided by
143-13 Section 3.009 of this Act. If the order is appealed to the finance
143-14 commission, the finance commission may affirm, terminate, or modify
143-15 the order, continue or end supervision or conservatorship, and
143-16 order further relief as justice, equity, and protection of
143-17 depositors, creditors, and the public require.
143-18 Sec. 6.111. VENUE. A suit filed against a bank while the
143-19 bank is under an order of conservatorship, or a suit filed against
143-20 a person in connection with an action taken or decision made by
143-21 that person as a supervisor or conservator of a bank, regardless of
143-22 whether the bank remains under an order of supervision or
143-23 conservatorship, must be brought in Travis County. A conservator
143-24 may sue a person on the bank's behalf to preserve, protect, or
143-25 recover bank assets, including claims or causes of action. The
143-26 suit may be in:
143-27 (1) Travis County; or
144-1 (2) another location where jurisdiction and venue
144-2 against that person may be obtained under law.
144-3 Sec. 6.112. DURATION. A supervisor or conservator shall
144-4 serve for the period necessary to accomplish the purposes of the
144-5 supervision or conservatorship as intended by this subchapter. A
144-6 rehabilitated bank shall be returned to its former or new
144-7 management under conditions reasonable and necessary to prevent
144-8 recurrence of the conditions causing the supervision or
144-9 conservatorship.
144-10 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES. If the
144-11 banking commissioner determines that a bank should be closed and
144-12 liquidated under Chapter 7 of this Act, the banking commissioner
144-13 may take any action authorized under that chapter regardless of the
144-14 existence of supervision or conservatorship. A period of
144-15 supervision or conservatorship is not required before a bank is
144-16 closed for liquidation or other remedial action is taken.
144-17 (Sections 6.114-6.200 reserved for expansion)
144-18 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
144-19 INVESTIGATION AND ENFORCEMENT
144-20 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY. (a) If
144-21 the banking commissioner has reason to believe that a person has
144-22 engaged, is engaging, or is likely to engage in an unauthorized
144-23 activity, the banking commissioner may:
144-24 (1) make any investigation necessary inside or outside
144-25 this state to determine whether the unauthorized activity has
144-26 occurred or is likely to occur, or to aid in the enforcement of the
144-27 laws administered by the banking commissioner;
145-1 (2) initiate appropriate disciplinary action as
145-2 provided by this subchapter; and
145-3 (3) report any unauthorized activity to a law
145-4 enforcement agency or another regulatory agency with appropriate
145-5 jurisdiction.
145-6 (b) The banking commissioner may furnish any materials,
145-7 documents, reports, complaints, or other evidence the banking
145-8 commissioner has compiled in connection with the unauthorized
145-9 activity to a law enforcement agency on written request and may
145-10 assist the law enforcement agency or other regulatory agency as
145-11 requested.
145-12 (c) A person acting without malice, fraudulent intent, or
145-13 bad faith is not subject to liability, including liability for
145-14 libel, slander, or other relevant tort, because the person files a
145-15 report or furnishes, orally or in writing, information concerning a
145-16 suspected, anticipated, or completed unauthorized activity to a law
145-17 enforcement agency, the banking commissioner or another regulatory
145-18 agency with appropriate jurisdiction, or an agent or employee of a
145-19 law enforcement agency, the banking commissioner, or other
145-20 regulatory agency. The person is entitled to attorney's fees and
145-21 court costs if the person prevails in an action for libel, slander,
145-22 or any other relevant tort based on the report or other information
145-23 the person furnished as provided by this subchapter. This section
145-24 does not:
145-25 (1) affect or modify a common law or statutory
145-26 privilege or immunity;
145-27 (2) preempt the authority or relieve the duty of a law
146-1 enforcement agency or other regulatory agency with appropriate
146-2 jurisdiction to investigate and prosecute suspected criminal acts;
146-3 (3) prohibit a person from voluntarily disclosing
146-4 information to a law enforcement agency or other regulatory agency;
146-5 or
146-6 (4) limit a power or duty granted to the banking
146-7 commissioner under this Act or other law.
146-8 (d) This subchapter does not apply to a state or national
146-9 bank, a state or federal savings bank, a state or federal savings
146-10 association, or a state or federal credit union.
146-11 Sec. 6.202. SUBPOENA AUTHORITY. (a) This section applies
146-12 only to an investigation of an unauthorized activity as provided by
146-13 Section 6.201 of this Act, and does not affect the conduct of a
146-14 contested case under Chapter 2001, Government Code.
146-15 (b) The banking commissioner may issue a subpoena to compel
146-16 the attendance and testimony of a witness and the production of a
146-17 book, account, record, paper, or correspondence relating to a
146-18 matter that the banking commissioner has authority to consider or
146-19 investigate at the department's offices in Austin or at another
146-20 place the banking commissioner designates.
146-21 (c) The banking commissioner or the deputy banking
146-22 commissioner shall sign and issue the subpoena.
146-23 (d) A person who is required by subpoena to attend a
146-24 proceeding before the banking commissioner is entitled to receive:
146-25 (1) reimbursement for mileage, in the amount provided
146-26 for travel by state employees, for traveling to or returning from a
146-27 proceeding that is more than 25 miles from the witness's residence;
147-1 and
147-2 (2) a fee for each day or part of a day the witness is
147-3 necessarily present as a witness in an amount equal to the per diem
147-4 travel allowance of a state employee.
147-5 (e) The banking commissioner may serve the subpoena or have
147-6 it served by an authorized agent of the banking commissioner, a
147-7 sheriff, or a constable. The sheriff's or constable's fee for
147-8 serving the subpoena must be the same as the fee paid the sheriff
147-9 or constable for similar services.
147-10 (f) A person possessing materials located outside this state
147-11 that are requested by the banking commissioner may make the
147-12 materials available to the banking commissioner or a representative
147-13 of the banking commissioner for examination at the place where the
147-14 materials are located. The banking commissioner may designate a
147-15 representative, including an official of the state in which the
147-16 materials are located, to examine the materials and may respond to
147-17 similar requests from an official of another state, the United
147-18 States, or a foreign country.
147-19 (g) A subpoena issued under this section to a financial
147-20 institution is not subject to Section 30.007, Civil Practice and
147-21 Remedies Code.
147-22 (h) The authority granted under this section is in addition
147-23 to other law authorizing the banking commissioner to obtain or
147-24 require information.
147-25 Sec. 6.203. ENFORCEMENT OF SUBPOENA. (a) If necessary the
147-26 banking commissioner may apply to the district court of Travis
147-27 County or of the county in which the subpoena was served for
148-1 enforcement of the subpoena and the court may issue an order
148-2 compelling compliance.
148-3 (b) If the court orders compliance with the subpoena or
148-4 finds the person in contempt for failure to obey the order, the
148-5 banking commissioner, or the attorney general if representing the
148-6 banking commissioner, may recover reasonable court costs,
148-7 attorney's fees, and investigative costs incurred in the
148-8 proceeding.
148-9 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS. (a) A
148-10 book, account, record, paper, correspondence, or other document
148-11 subpoenaed and produced under this section that is otherwise made
148-12 privileged or confidential by law remains privileged or
148-13 confidential unless admitted into evidence at an administrative
148-14 hearing or in a court. The banking commissioner may issue an order
148-15 protecting the confidentiality or privilege of the document and
148-16 restricting its use or distribution by any person or in any
148-17 proceeding, other than a proceeding before the banking
148-18 commissioner.
148-19 (b) Subject to Subchapter B, Chapter 2, of this Act and
148-20 confidentiality provisions of other law administered by the banking
148-21 commissioner, information or material acquired under this section
148-22 under a subpoena is not a public record for the period the banking
148-23 commissioner considers reasonably necessary to complete the
148-24 investigation, protect the person being investigated from
148-25 unwarranted injury, or serve the public interest. The information
148-26 or material is not subject to a subpoena, except a valid grand jury
148-27 subpoena, until released for public inspection by the banking
149-1 commissioner or, after notice and a hearing, a district court
149-2 determines that the public interest and any investigation by the
149-3 banking commissioner would not be jeopardized by obeying the
149-4 subpoena. The district court order may not apply to:
149-5 (1) a record or communication received from another
149-6 law enforcement or regulatory agency except on compliance with the
149-7 confidentiality laws governing the records of the other agency; or
149-8 (2) an internal note, memorandum, report, or
149-9 communication made in connection with a matter that the banking
149-10 commissioner has the authority to consider or investigate, except
149-11 on good cause and compliance with applicable confidentiality laws.
149-12 Sec. 6.205. EVIDENCE. (a) On certification by the banking
149-13 commissioner, a book, record, paper, or document produced or
149-14 testimony taken as provided by Section 6.203 of this Act and held
149-15 by the department is admissible as evidence in any case without
149-16 prior proof of its correctness and without other proof. The
149-17 certified book, record, document, or paper, or a certified copy, is
149-18 prima facie evidence of the facts it contains.
149-19 (b) This section does not limit another provision of this
149-20 Act or a law that provides for the admission of evidence or its
149-21 evidentiary value.
149-22 Sec. 6.206. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED
149-23 ACTIVITY. (a) If the banking commissioner believes a person is
149-24 engaging or is likely to engage in an unauthorized activity, the
149-25 banking commissioner may serve on the person, by personal delivery
149-26 or registered or certified mail, return receipt requested, to the
149-27 person's last known address, a proposed cease and desist order.
150-1 The proposed order must state the acts or practices alleged to be
150-2 an unauthorized activity. The proposed order must state its
150-3 effective date, which may not be before the 21st day after the date
150-4 the proposed order is mailed or delivered. Unless the person
150-5 against whom the proposed order is directed requests a hearing in
150-6 writing before the effective date of the proposed order, the order
150-7 takes effect and is final and nonappealable as to that person.
150-8 (b) A requested hearing on a proposed order shall be held
150-9 not later than the 30th day after the date the first written
150-10 request for a hearing on the order is received by the department
150-11 unless the parties agree to a later hearing date. At the hearing,
150-12 the department has the burden of proof and must present evidence in
150-13 support of the order. Each person against whom the order is
150-14 directed may cross-examine and show cause why the order should not
150-15 be issued.
150-16 (c) After the hearing, the banking commissioner shall issue
150-17 or decline to issue a cease and desist order. The proposed order
150-18 may be modified as necessary to conform to the findings at the
150-19 hearing. An order issued under this section is immediately final
150-20 for purposes of enforcement and appeal and must require the person
150-21 to immediately cease and desist from the unauthorized activity.
150-22 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER REGARDING
150-23 UNAUTHORIZED ACTIVITY. (a) The banking commissioner may issue an
150-24 emergency cease and desist order if the banking commissioner
150-25 reasonably believes a person is engaging in a continuing
150-26 unauthorized activity that is fraudulent or threatens immediate and
150-27 irreparable public harm.
151-1 (b) On issuance of an emergency cease and desist order the
151-2 banking commissioner shall serve on each person affected by the
151-3 order, by personal delivery or registered or certified mail, return
151-4 receipt requested, to the person's last known address, an order
151-5 that states the specific charges and requires the person
151-6 immediately to cease and desist from the unauthorized activity.
151-7 The order must contain a notice that a request for hearing may be
151-8 filed under this section.
151-9 (c) A person affected by an emergency cease and desist order
151-10 may request a hearing before the banking commissioner not later
151-11 than the 10th day after the date on which the person receives the
151-12 order. A request for a hearing must be in writing and directed to
151-13 the banking commissioner and must state the grounds for the request
151-14 to set aside or modify the order. Unless a person against whom the
151-15 emergency order is directed requests a hearing in writing before
151-16 the 11th day after the date it is served on the person, the
151-17 emergency order is final and nonappealable as to that person.
151-18 (d) On receiving a request for a hearing, the banking
151-19 commissioner shall serve notice of the time and place of the
151-20 hearing by personal delivery or registered or certified mail,
151-21 return receipt requested. The hearing must be held not later than
151-22 the 10th day after the date the banking commissioner receives the
151-23 request for a hearing unless the parties agree to a later hearing
151-24 date. At the hearing, the department has the burden of proof and
151-25 must present evidence in support of the order. The person
151-26 requesting the hearing may cross-examine witnesses and show cause
151-27 why the order should not be affirmed.
152-1 (e) Until the hearing, an emergency cease and desist order
152-2 continues in effect unless the order is stayed by the banking
152-3 commissioner. The banking commissioner may impose any condition
152-4 before granting a stay of the order.
152-5 (f) After the hearing, the banking commissioner shall
152-6 affirm, modify, or set aside in whole or part the emergency cease
152-7 and desist order. An order affirming or modifying the emergency
152-8 cease and desist order is immediately final for purposes of
152-9 enforcement and appeal.
152-10 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER REGARDING
152-11 UNAUTHORIZED ACTIVITY. (a) A person affected by a cease and
152-12 desist order issued, affirmed, or modified after a hearing may file
152-13 a petition for judicial review in the district court of Travis
152-14 County under the substantial evidence rule as provided by Chapter
152-15 2001, Government Code.
152-16 (b) A filed petition for judicial review does not stay or
152-17 vacate the order unless the court, after hearing, specifically
152-18 stays or vacates the order.
152-19 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
152-20 REGARDING UNAUTHORIZED ACTIVITY. (a) If the banking commissioner
152-21 reasonably believes that a person has violated a final and
152-22 enforceable cease and desist order, the banking commissioner may:
152-23 (1) initiate administrative penalty proceedings under
152-24 Section 6.210 of this Act;
152-25 (2) refer the matter to the attorney general for
152-26 enforcement by injunction and any other available remedy; or
152-27 (3) pursue any other action the banking commissioner
153-1 considers appropriate under applicable law.
153-2 (b) If the attorney general prevails in an action brought
153-3 under Subsection (a)(2) of this section, the attorney general is
153-4 entitled to reasonable attorney's fees.
153-5 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY. (a)
153-6 The banking commissioner may initiate an action for an
153-7 administrative penalty against a person under Section 6.209(a)(1)
153-8 of this Act by serving on the person, by personal delivery or
153-9 certified mail, return receipt requested, to the person's last
153-10 known address, notice of the time and place of a hearing on the
153-11 penalty. The hearing may not be held earlier than the 20th day
153-12 after the date the notice is served and shall be conducted under
153-13 Chapter 2001, Government Code. The notice must contain a statement
153-14 of the facts or conduct alleged to be in violation of the cease and
153-15 desist order.
153-16 (b) In determining whether a cease and desist order has been
153-17 violated, the banking commissioner shall consider the maintenance
153-18 of procedures reasonably adopted to ensure compliance with the
153-19 order.
153-20 (c) If the banking commissioner after the hearing determines
153-21 that a cease and desist order has been violated, the banking
153-22 commissioner may:
153-23 (1) impose an administrative penalty in an amount not
153-24 to exceed $25,000 for each discrete act of unauthorized activity;
153-25 (2) direct the person against whom the order was
153-26 issued to make complete restitution, in the form and amount and
153-27 within the period determined by the banking commissioner, to each
154-1 resident of this state and entity operating in this state damaged
154-2 by the violation; or
154-3 (3) both impose the penalty and direct restitution.
154-4 (d) In determining the amount of the penalty and whether to
154-5 impose restitution, the banking commissioner shall consider:
154-6 (1) the seriousness of the violation, including the
154-7 nature, circumstances, extent, and gravity of any prohibited act;
154-8 (2) the economic harm caused by the violation;
154-9 (3) the history of previous violations;
154-10 (4) the amount necessary to deter future violations;
154-11 (5) efforts to correct the violation;
154-12 (6) whether the violation was intentional or
154-13 unintentional;
154-14 (7) the financial ability of the person against whom
154-15 the penalty is to be assessed; and
154-16 (8) any other matter that justice may require.
154-17 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER. (a) When
154-18 a penalty order under Section 6.210 of this Act becomes final, a
154-19 person affected by the order shall, within the time permitted by
154-20 law for appeal:
154-21 (1) pay the amount of the penalty;
154-22 (2) pay the amount of the penalty and file a petition
154-23 for judicial review contesting the occurrence of the violation, the
154-24 amount of the penalty, or both; or
154-25 (3) without paying the amount of the penalty, file a
154-26 petition for judicial review contesting the occurrence of the
154-27 violation, the amount of the penalty, or both.
155-1 (b) Within the time permitted by law for appeal, a person
155-2 who acts under Subsection (a)(3) may:
155-3 (1) stay enforcement of the penalty by:
155-4 (A) paying the amount of the penalty to the
155-5 court for placement in an escrow account; or
155-6 (B) giving the court a supersedeas bond that is
155-7 approved by the court for the amount of the penalty and that is
155-8 effective until all judicial review of the order is final; or
155-9 (2) request the court to stay enforcement of the
155-10 penalty by:
155-11 (A) filing with the court a sworn affidavit of
155-12 the person stating that the person is financially unable to pay the
155-13 amount of the penalty and is financially unable to give the
155-14 supersedeas bond; and
155-15 (B) giving a copy of the affidavit to the
155-16 banking commissioner by certified mail.
155-17 (c) If the banking commissioner receives a copy of an
155-18 affidavit under Subsection (b)(2) of this section, the banking
155-19 commissioner may file with the court, within five days after the
155-20 date the copy is received, a contest to the affidavit. The court
155-21 shall hold a hearing on the facts alleged in the affidavit as soon
155-22 as practicable and shall stay the enforcement of the penalty on
155-23 finding that the alleged facts are true. The person who files an
155-24 affidavit has the burden of proving that the person is financially
155-25 unable to pay the amount of the penalty and to give a supersedeas
155-26 bond.
155-27 (d) If the person does not pay the amount of the penalty and
156-1 the enforcement of the penalty is not stayed, the banking
156-2 commissioner may refer the matter to the attorney general for
156-3 collection of the amount of the penalty.
156-4 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER. (a) Judicial
156-5 review of a penalty order of the banking commissioner:
156-6 (1) is instituted by filing a petition as provided by
156-7 Chapter 2001, Government Code; and
156-8 (2) is under the substantial evidence rule.
156-9 (b) If the court sustains the order, the court shall order
156-10 the person to pay the full amount of the penalty or a lower amount
156-11 determined by the court. If the court does not sustain the order,
156-12 a penalty is not owed.
156-13 (c) When the judgment of the court becomes final, if the
156-14 person paid the amount of the penalty and if that amount is reduced
156-15 or is not upheld by the court, the court shall order that the
156-16 appropriate amount plus accrued interest computed at the annual
156-17 rate of 10 percent be remitted to the department. The interest
156-18 shall be paid for the period beginning on the date the penalty was
156-19 paid and ending on the date the penalty is remitted. If the person
156-20 gave a supersedeas bond and if the amount of the penalty is not
156-21 upheld by the court, the court shall order the release of the bond.
156-22 If the person gave a supersedeas bond and if the amount of the
156-23 penalty is reduced, the court shall order the release of the bond
156-24 after the person pays the amount.
156-25 (d) If the judgment of the court requires payment of a
156-26 penalty that has not previously been paid, the court shall order as
156-27 part of its judgment that interest accrues on the penalty at the
157-1 annual rate of 10 percent, beginning on the date the judgment is
157-2 final and ending on the date the penalty and interest are paid.
157-3 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND. A penalty
157-4 collected under this subchapter shall be remitted to the
157-5 comptroller for deposit to the credit of the general revenue fund.
157-6 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
157-7 SUBCHAPTER A. GENERAL PROVISIONS
157-8 Sec. 7.001. DEFINITION ....................................... 159
157-9 Sec. 7.002. REMEDIES EXCLUSIVE ............................... 160
157-10 Sec. 7.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS
157-11 LIQUIDATOR ..................................... 160
157-12 Sec. 7.004. APPOINTMENT OF INDEPENDENT RECEIVER .............. 161
157-13 Sec. 7.005. SUCCESSION OF TRUST POWERS ....................... 161
157-14 (Sections 7.006-7.100 reserved for expansion)
157-15 SUBCHAPTER B. VOLUNTARY DISSOLUTION
157-16 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY
157-17 DISSOLUTION .................................... 162
157-18 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION .................. 163
157-19 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS ................ 165
157-20 Sec. 7.104. FIDUCIARY ACTIVITIES ............................. 165
157-21 Sec. 7.105. FINAL LIQUIDATION ................................ 166
157-22 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF
157-23 REMEDIES ....................................... 167
157-24 (Sections 7.107-7.200 reserved for expansion)
157-25 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
157-26 Sec. 7.201. ACTION TO CLOSE STATE BANK ....................... 168
157-27 Sec. 7.202. INVOLUNTARY CLOSING .............................. 168
158-1 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP .............. 169
158-2 Sec. 7.204. CONTEST OF LIQUIDATION ........................... 170
158-3 Sec. 7.205. NOTICE OF BANK CLOSING ........................... 171
158-4 Sec. 7.206. INVENTORY ........................................ 172
158-5 Sec. 7.207. TITLE IN RECEIVER ................................ 172
158-6 Sec. 7.208. RIGHTS FIXED ..................................... 173
158-7 Sec. 7.209. DEPOSITORIES ..................................... 173
158-8 Sec. 7.210. PENDING LAWSUITS ................................. 174
158-9 Sec. 7.211. NEW LAWSUITS ..................................... 174
158-10 Sec. 7.212. RECORDS WITH THIRD PARTIES ....................... 175
158-11 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION ................. 175
158-12 Sec. 7.214. SUBPOENA ......................................... 176
158-13 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS ............. 178
158-14 Sec. 7.216. PREFERENCES ...................................... 179
158-15 Sec. 7.217. OTHER POWERS OF THE RECEIVER;
158-16 ADMINISTRATIVE EXPENSES ........................ 180
158-17 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS ............ 181
158-18 Sec. 7.219. DISCRETION OF THE COURT .......................... 182
158-19 Sec. 7.220. FILING REPORTS; EXPENSES ......................... 182
158-20 Sec. 7.221. COURT-ORDERED AUDIT .............................. 183
158-21 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS ................ 183
158-22 Sec. 7.223. FIDUCIARY ACTIVITIES ............................. 184
158-23 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS ........... 185
158-24 Sec. 7.225. RECORDS ADMITTED ................................. 186
158-25 Sec. 7.226. RESUMPTION OF BUSINESS ........................... 187
158-26 Sec. 7.227. AFTER-DISCOVERED ASSETS .......................... 187
158-27 (Sections 7.228-7.300 reserved for expansion)
159-1 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
159-2 Sec. 7.301. FILING CLAIMS .................................... 188
159-3 Sec. 7.302. PROOF OF CLAIM ................................... 189
159-4 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM ....................... 190
159-5 Sec. 7.304. SECURED CLAIMS ................................... 190
159-6 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS .............. 191
159-7 Sec. 7.306. SET-OFF .......................................... 192
159-8 Sec. 7.307. ACTION ON CLAIMS ................................. 193
159-9 Sec. 7.308. OBJECTION TO APPROVED CLAIM ...................... 194
159-10 Sec. 7.309. APPEAL OF REJECTED CLAIM ......................... 194
159-11 Sec. 7.310. PAYMENT OF CLAIMS ................................ 194
159-12 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED BANK .......... 195
159-13 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED
159-14 BANK ........................................... 195
159-15 Sec. 7.313. EXCESS ASSETS .................................... 196
159-16 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY ..................... 197
159-17 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
159-18 SUBCHAPTER A. GENERAL PROVISIONS
159-19 Sec. 7.001. DEFINITION. In this chapter, "administrative
159-20 expense" means:
159-21 (1) an expense designated as an administrative expense
159-22 by Subchapter C or D of this chapter;
159-23 (2) court costs and expenses of operation and
159-24 liquidation of the bank estate;
159-25 (3) wages owed to an employee of a bank for services
159-26 rendered within three months before the date the bank was closed
159-27 for liquidation and not exceeding:
160-1 (A) $2,000 to each employee; or
160-2 (B) another amount set by rules adopted under
160-3 this Act;
160-4 (4) current wages owed to an employee of a bank whose
160-5 services are retained by the receiver for services rendered after
160-6 the date the bank is closed for liquidation;
160-7 (5) an unpaid expense of supervision or
160-8 conservatorship of the bank before its closing for liquidation; and
160-9 (6) any unpaid fees or assessments owed to the
160-10 department.
160-11 Sec. 7.002. REMEDIES EXCLUSIVE. (a) Unless the banking
160-12 commissioner requests, a court may not:
160-13 (1) order the closing or suspension of operation of
160-14 any state bank; or
160-15 (2) appoint for a state bank a receiver, supervisor,
160-16 conservator, or liquidator, or other manager or overseer with
160-17 similar responsibility.
160-18 (b) A person may not be designated receiver, supervisor,
160-19 conservator, or liquidator without the voluntary approval and
160-20 concurrence of the banking commissioner.
160-21 (c) This chapter prevails over any other conflicting law of
160-22 this state.
160-23 Sec. 7.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS
160-24 LIQUIDATOR. The banking commissioner without court action may
160-25 tender a state bank that has been closed for liquidation to the
160-26 Federal Deposit Insurance Corporation or its successor as receiver
160-27 and liquidating agent if the deposits of the bank were insured by
161-1 the Federal Deposit Insurance Corporation or its successor on the
161-2 date of closing. After acceptance of tender of the bank, the
161-3 Federal Deposit Insurance Corporation or its successor shall
161-4 perform the acts and duties as receiver of the bank that it
161-5 considers necessary or desirable and that are permitted or required
161-6 by federal law or this chapter. If the Federal Deposit Insurance
161-7 Corporation or its successor refuses to accept tender of the bank,
161-8 the banking commissioner shall act as receiver.
161-9 Sec. 7.004. APPOINTMENT OF INDEPENDENT RECEIVER. (a) On
161-10 request of the banking commissioner, the court in which the
161-11 liquidation proceeding is pending may appoint an independent
161-12 receiver and may require a suitable bond of the independent
161-13 receiver.
161-14 (b) If an independent receiver is appointed, the banking
161-15 commissioner is discharged as receiver but shall remain a party to
161-16 the liquidation proceeding with standing to initiate or contest any
161-17 motion. The views of the banking commissioner are entitled to
161-18 deference if not contrary to the plain meaning of this chapter.
161-19 Sec. 7.005. SUCCESSION OF TRUST POWERS. (a) If any state
161-20 bank in the process of voluntary or involuntary dissolution and
161-21 liquidation is acting as trustee, guardian, executor,
161-22 administrator, or escrow agent, or in another fiduciary or
161-23 custodial capacity, the banking commissioner may authorize the sale
161-24 of the bank's administration of fiduciary accounts to a successor
161-25 entity with fiduciary powers.
161-26 (b) The successor entity shall, without the necessity of
161-27 action by a court or the creator or a beneficiary of the fiduciary
162-1 relationship, continue the office, trust, or fiduciary relationship
162-2 and shall perform all the duties and exercise all the powers
162-3 connected with or incidental to the fiduciary relationship in the
162-4 same manner as if the successor entity had been originally
162-5 designated as the fiduciary.
162-6 (c) This section applies to all fiduciary relationships,
162-7 including a trust established for the benefit of a minor by court
162-8 order under Section 142.005, Property Code. This section does not
162-9 affect any right of a court or a party to the instrument governing
162-10 the fiduciary relationship to subsequently designate another
162-11 trustee as the successor fiduciary.
162-12 (Sections 7.006-7.100 reserved for expansion)
162-13 SUBCHAPTER B. VOLUNTARY DISSOLUTION
162-14 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION.
162-15 (a) A state bank may initiate voluntary dissolution and surrender
162-16 its charter as provided by this subchapter:
162-17 (1) with the approval of the banking commissioner;
162-18 (2) after complying with the provisions of the Texas
162-19 Business Corporation Act regarding board and shareholder approval
162-20 for voluntary dissolution; and
162-21 (3) by filing the notice of dissolution as provided by
162-22 Section 7.102(a) of this Act.
162-23 (b) Unless the banking commissioner directs or consents
162-24 otherwise, the home office and all branch offices of the bank shall
162-25 remain open for business during normal business hours until the
162-26 last date specified in published notices for presentation of
162-27 claims, withdrawal of accounts, and redemption of property.
163-1 (c) The shareholders or participants of a state bank
163-2 initiating voluntary dissolution shall by resolution appoint one or
163-3 more persons to act as liquidating agent or committee who shall
163-4 conduct the liquidation as provided by law and under the
163-5 supervision of the board. The board, in consultation with the
163-6 banking commissioner, shall require the liquidating agent or
163-7 committee to give a suitable bond.
163-8 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION. (a) After
163-9 resolutions to dissolve and liquidate the bank have been adopted by
163-10 the board and shareholders or participants, a majority of the
163-11 directors, managers, or managing participants shall verify and file
163-12 duplicate certified copies with the banking commissioner of:
163-13 (1) the resolutions of the shareholders or
163-14 participants that are adopted at a meeting for which proper notice
163-15 was given or by unanimous written consent and that approve the
163-16 dissolution and liquidation of the bank;
163-17 (2) if the bank is operated by a board of directors or
163-18 managers, the resolutions of the board approving the dissolution
163-19 and liquidation of the bank; and
163-20 (3) a copy of the notice to the shareholders or
163-21 participants informing them of the meeting.
163-22 (b) The banking commissioner shall review the submitted
163-23 documentation and conduct any necessary investigation or
163-24 examination. If the proceedings appear to have been properly
163-25 conducted and the bond to be given by the liquidating agent or
163-26 committee is adequate for its purposes, the banking commissioner
163-27 shall consent to dissolution and direct the bank to publish notice
164-1 of its pending dissolution.
164-2 (c) The bank shall publish notice in a newspaper of general
164-3 circulation in each community where its home office or a branch is
164-4 located at least once each week for eight consecutive weeks or at
164-5 other times specified by the banking commissioner or rules adopted
164-6 under this Act. The notice must state that the bank is
164-7 liquidating, that depositors and creditors must present their
164-8 claims for payment on or before a specific date, and that all safe
164-9 deposit box holders and bailors of property left with the bank
164-10 should remove their property on or before a specified date. The
164-11 dates selected by the bank must be approved by the banking
164-12 commissioner and must allow the affairs of the bank to be wound up
164-13 as quickly as feasible and allow creditors, depositors, and owners
164-14 of property adequate time for presentation of claims, withdrawal of
164-15 accounts, and redemption of property. The banking commissioner may
164-16 adjust the dates with or without republication of notice if
164-17 additional time appears needed for these activities.
164-18 (d) At the same time as or promptly after publication of the
164-19 notice, the bank shall mail to each of the bank's known depositors,
164-20 creditors, safe deposit box holders, and bailors of property left
164-21 with the bank, at the mailing address shown on the bank's records,
164-22 an individual notice containing the information required in a
164-23 notice under Subsection (c) of this section and specific
164-24 information pertinent to the account or property of the addressee.
164-25 (e) A notice under this section must be in the form and
164-26 include the information required by the banking commissioner.
164-27 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
165-1 contract between the bank and a person for bailment, or of deposit
165-2 for hire, or for the lease of a safe, vault, or box, ceases on the
165-3 date specified as the date for removal of property in the notices
165-4 or a later date approved by the banking commissioner. A person who
165-5 has paid rental or storage charges for a period extending beyond
165-6 the date designated for removal of property has an unsecured claim
165-7 against the bank for a refund of any unearned amount paid.
165-8 (b) If the property is not removed by the date specified in
165-9 the notices or by the banking commissioner, an officer of the bank,
165-10 in the presence of a notary public who is not an officer or
165-11 employee of the bank and who is bonded in an amount and by sureties
165-12 approved by the banking commissioner, shall inventory the property
165-13 and may open a safe, vault, or box, or any package, parcel, or
165-14 receptacle, in the custody or possession of the bank, to make the
165-15 inventory. The property shall be marked to identify, to the extent
165-16 possible, its owner or the person who left it with the bank. After
165-17 all property belonging to others that is in the bank's custody and
165-18 control has been inventoried, a master list certified by the bank
165-19 officer and the notary public shall be furnished to the banking
165-20 commissioner. The master list shall be kept in a place and dealt
165-21 with in a manner the banking commissioner specifies pending
165-22 delivery of the property to its owner or to the state treasurer as
165-23 unclaimed property.
165-24 Sec. 7.104. FIDUCIARY ACTIVITIES. (a) As soon after
165-25 publication of the notice of dissolution as is practicable, the
165-26 bank shall terminate all fiduciary positions it holds, surrender
165-27 all property held by it as a fiduciary, and settle its fiduciary
166-1 accounts.
166-2 (b) Unless all fiduciary accounts are settled and
166-3 transferred by the last date specified in published notices or by
166-4 the banking commissioner and unless the banking commissioner
166-5 directs otherwise, the bank shall mail individual notices to each
166-6 trustor and beneficiary of any remaining trust, escrow arrangement,
166-7 or other fiduciary relationship advising the person of an office
166-8 location open during normal business hours and a telephone number
166-9 at that location where administration of the remaining fiduciary
166-10 accounts will continue until settled or transferred.
166-11 Sec. 7.105. FINAL LIQUIDATION. (a) After the bank has
166-12 taken all of the actions specified by Sections 7.102, 7.103, and
166-13 7.104 of this Act and has paid all its debts and obligations and
166-14 transferred all property for which a legal claimant has been found
166-15 after the time for presentation of claims has expired, the bank
166-16 shall, under oath or affirmation of a majority of its board or
166-17 managing participants, make a list from its books of the names of
166-18 each depositor, creditor, owner of personal property in the bank's
166-19 possession or custody, or lessee of any safe, vault, or box, who
166-20 has not claimed or has not received a deposit, debt, dividend,
166-21 interest, balance, or other amount or property due to the person.
166-22 (b) The list, accompanied by any necessary identifying
166-23 information, shall be filed with the banking commissioner. The
166-24 bank shall pay any unclaimed funds and deliver any unclaimed
166-25 property to the state treasurer as provided by Chapter 74, Property
166-26 Code, and certify to the banking commissioner that the unclaimed
166-27 funds and property have been paid or delivered.
167-1 (c) After the banking commissioner has reviewed the list and
167-2 has reconciled the unclaimed cash and property with the amounts of
167-3 money and property reported and transferred to the state treasurer,
167-4 the banking commissioner shall allow the bank to distribute the
167-5 bank's remaining assets, if any, among its shareholders,
167-6 participants, or participant-transferees as their ownership
167-7 interests appear.
167-8 (d) After distribution of all remaining assets, the bank
167-9 shall:
167-10 (1) file with the department, under the oath or
167-11 affirmation of a majority of its board or managing participants,
167-12 another affidavit accompanied by schedules showing the distribution
167-13 to each shareholder, participant, or participant-transferee; and
167-14 (2) tender to the department:
167-15 (A) all copies of reports of examination of the
167-16 bank in its possession; and
167-17 (B) its original charter or an affidavit stating
167-18 that the original charter is lost.
167-19 (e) After verifying the submitted information and documents,
167-20 the banking commissioner shall issue a certificate cancelling the
167-21 charter of the bank.
167-22 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES.
167-23 (a) A state bank in the process of voluntary dissolution and
167-24 liquidation remains subject to this Act, including provisions for
167-25 examination by the banking commissioner, and the bank shall furnish
167-26 reports required by the banking commissioner.
167-27 (b) The banking commissioner may authorize a deviation from
168-1 the procedures for voluntary dissolution in this subchapter if the
168-2 banking commissioner determines that the interests of claimants are
168-3 not jeopardized by the deviation.
168-4 (c) If the banking commissioner determines that the
168-5 voluntary liquidation is being conducted in an improper or illegal
168-6 manner or is not in the best interests of the bank's depositors and
168-7 creditors or that the bank is insolvent or imminently insolvent,
168-8 the banking commissioner may close the bank for involuntary
168-9 dissolution and liquidation under this chapter.
168-10 (d) After a state bank's charter has been voluntarily
168-11 surrendered and canceled, the bank may not resume business or
168-12 reopen except on application for and approval of a new charter.
168-13 (Sections 7.107-7.200 reserved for expansion)
168-14 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
168-15 Sec. 7.201. ACTION TO CLOSE STATE BANK. (a) The banking
168-16 commissioner may close and liquidate a state bank on finding that:
168-17 (1) the interests of its depositors and creditors are
168-18 jeopardized by the bank's insolvency or imminent insolvency; and
168-19 (2) the best interests of depositors and creditors
168-20 would be served by requiring that the bank be closed and its assets
168-21 liquidated.
168-22 (b) A majority of the bank's directors, managers, or
168-23 managing participants may voluntarily close the bank and place it
168-24 with the banking commissioner for liquidation.
168-25 Sec. 7.202. INVOLUNTARY CLOSING. (a) After closing a state
168-26 bank under Section 7.201 of this Act, the banking commissioner
168-27 shall place a sign at its main entrance stating that the bank has
169-1 been closed and the findings on which the closing of the bank is
169-2 based. A correspondent bank of the closed bank may not pay an item
169-3 drawn on the account of the closed bank that is presented for
169-4 payment after the correspondent has received actual notice of
169-5 closing unless it previously certified the item for payment.
169-6 (b) As soon as practicable after posting the sign at the
169-7 bank's main entrance, the banking commissioner shall tender the
169-8 bank to the Federal Deposit Insurance Corporation as provided by
169-9 Section 7.003 of this Act or initiate a receivership proceeding by
169-10 filing a copy of the notice contained on the sign in a district
169-11 court in the county where the bank's home office is located. The
169-12 court in which the notice is filed shall docket it as a case
169-13 styled, "In re liquidation of ____" (inserting the name of the
169-14 bank). As soon as this notice is filed, the court has constructive
169-15 custody of all the bank's assets, and any action initiated that
169-16 seeks to directly or indirectly affect bank assets is considered to
169-17 be an intervention in the receivership proceeding and subject to
169-18 this subchapter and Subchapter D of this chapter.
169-19 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP. (a) The
169-20 court may not require a bond from the banking commissioner as
169-21 receiver. Any reference in this chapter to the receiver is a
169-22 reference to the banking commissioner as receiver and any
169-23 successors in office, the Federal Deposit Insurance Corporation if
169-24 acting as receiver as provided by Section 7.003 of this Act and
169-25 federal law, or an independent receiver appointed at the request of
169-26 the banking commissioner as provided by Section 7.004 of this Act.
169-27 The receiver and all employees and agents acting on behalf of the
170-1 receiver are acting in an official capacity and subject to the
170-2 protection of Section 2.010 of this Act. The acts of the receiver
170-3 are the acts of the bank in liquidation and this state and its
170-4 political subdivisions are not liable and may not be held
170-5 accountable for any debt or obligation of a state bank in
170-6 receivership.
170-7 (b) The receiver has all the powers of the directors,
170-8 managers, managing participants, officers, and shareholders or
170-9 participants of the bank as necessary to support an action taken on
170-10 behalf of the bank.
170-11 (c) Section 64.072, Civil Practice and Remedies Code,
170-12 applies to the receivership of a bank except as provided by this
170-13 subsection. A bank receivership shall be administered continuously
170-14 for the length of time necessary to complete its purposes, and a
170-15 period prescribed by other law limiting the time for the
170-16 administration of receiverships or of corporate affairs generally,
170-17 including Subsection 64.072(d), Civil Practice and Remedies Code,
170-18 does not apply.
170-19 Sec. 7.204. CONTEST OF LIQUIDATION. (a) A state bank,
170-20 acting through a majority of its directors, managers, or managing
170-21 participants, may intervene in the action filed by the banking
170-22 commissioner to challenge the banking commissioner's closing of the
170-23 bank and to enjoin the banking commissioner or other receiver from
170-24 liquidating its assets. The intervenors must file the intervention
170-25 not later than the second business day after the closing of the
170-26 bank, excluding legal holidays. The court may issue an ex parte
170-27 order restraining the receiver from liquidating bank assets pending
171-1 a hearing on the injunction. The receiver shall comply with the
171-2 restraining order but may petition the court for permission to
171-3 liquidate an asset as necessary to prevent its loss or diminution
171-4 pending the outcome of the injunction.
171-5 (b) The court shall hear this action as quickly as possible
171-6 and shall give it priority over other business.
171-7 (c) The bank or receiver may appeal the court's judgment as
171-8 in other civil cases, except that the receiver shall retain all
171-9 bank assets pending a final appellate court order even if the
171-10 banking commissioner does not prevail in the trial court. If the
171-11 banking commissioner prevails in the trial court, liquidation of
171-12 the bank may proceed unless the trial court or appellate court
171-13 orders otherwise. If liquidation is enjoined or stayed pending
171-14 appeal, the trial court retains jurisdiction to permit liquidation
171-15 of an asset as necessary to prevent its loss or diminution pending
171-16 the outcome of the appeal.
171-17 Sec. 7.205. NOTICE OF BANK CLOSING. (a) As soon as
171-18 reasonably practicable after initiation of the receivership
171-19 proceeding, the receiver shall publish notice, in a newspaper of
171-20 general circulation in each community where the bank's home office
171-21 and a branch are located. The notice must state that the bank has
171-22 been closed for liquidation, that depositors and creditors must
171-23 present their claims for payment on or before a specific date, and
171-24 that all safe deposit box holders and bailors of property left with
171-25 the bank should remove their property not later than a specified
171-26 date. The receiver shall select the dates to allow the affairs of
171-27 the bank to be wound up as quickly as feasible while allowing
172-1 creditors, depositors, and owners of property adequate time for
172-2 presentation of claims, withdrawal of accounts, and redemption of
172-3 property, but may not select a date before the 121st day after the
172-4 date of the notice. The receiver may adjust the dates with the
172-5 approval of the court with or without republication of notice if
172-6 additional time appears needed for these activities.
172-7 (b) As soon as reasonably practicable given the state of
172-8 bank records and the adequacy of staffing, the receiver shall mail
172-9 to each of the bank's known depositors, creditors, safe deposit box
172-10 holders, and bailors of property left with the bank, at the mailing
172-11 address shown on the bank's records, an individual notice
172-12 containing the information required in a notice under Subsection
172-13 (a) of this section and specific information pertinent to the
172-14 account or property of the addressee.
172-15 (c) The receiver may determine the form and content notices
172-16 under this section.
172-17 Sec. 7.206. INVENTORY. As soon as reasonably practicable
172-18 given the state of bank records and the adequacy of staffing, the
172-19 receiver shall prepare a comprehensive inventory of the bank's
172-20 assets for filing with the court. The inventory shall be open to
172-21 inspection.
172-22 Sec. 7.207. TITLE IN RECEIVER. (a) The receiver has the
172-23 title to all the bank's property, contracts, and rights of action,
172-24 wherever located, beginning on the date the bank is closed for
172-25 liquidation.
172-26 (b) The rights of the receiver have priority over a
172-27 contractual lien or statutory landlord's lien under Chapter 54,
173-1 Property Code, judgment lien, attachment lien, or voluntary lien
173-2 that arises after the date of the closing of the bank for
173-3 liquidation.
173-4 (c) The filing or recording of a receivership order in a
173-5 record office of this state gives the same notice that would be
173-6 given by a deed, bill of sale, or other evidence of title duly
173-7 filed or recorded by the bank in liquidation. The recording clerk
173-8 shall index a recorded receivership order in the records to which
173-9 the order relates.
173-10 Sec. 7.208. RIGHTS FIXED. The rights and liabilities of the
173-11 bank in liquidation and of a depositor, creditor, officer,
173-12 director, manager, managing participant, employee, shareholder,
173-13 participant, participant-transferee, agent, or other person
173-14 interested in the bank's estate are fixed on the date of closing of
173-15 the bank for liquidation except as otherwise directed by the court
173-16 or as expressly provided otherwise by this subchapter or Subchapter
173-17 D of this chapter.
173-18 Sec. 7.209. DEPOSITORIES. (a) The receiver may deposit
173-19 funds collected on behalf of the bank estate in:
173-20 (1) the Texas Treasury Safekeeping Trust Company in
173-21 accordance with procedures established by the state treasurer or
173-22 successor official; or
173-23 (2) one or more state banks in this state, the
173-24 deposits of which are insured by the Federal Deposit Insurance
173-25 Corporation or its successor, if the receiver, using sound
173-26 financial judgment, determines that it would be advantageous to do
173-27 so.
174-1 (b) If receivership funds deposited in an account at a state
174-2 bank exceed the maximum insured amount, the receiver shall require
174-3 the excess deposit to be adequately secured through pledge of
174-4 securities or otherwise, without approval of the court. The
174-5 depository bank may secure the deposits of the bank in liquidation
174-6 on behalf of the receiver, notwithstanding any other provision of
174-7 this Act.
174-8 Sec. 7.210. PENDING LAWSUITS. (a) A judgment or order of a
174-9 court of this state or of any other jurisdiction in an action
174-10 pending by or against the bank, rendered after the date the bank
174-11 was closed for liquidation, is not binding on the receiver unless
174-12 the receiver was made a party to the suit.
174-13 (b) Before the first anniversary of the date the bank was
174-14 closed for liquidation, the receiver may not be required to plead
174-15 to any suit pending against the bank in a court in this state on
174-16 the date the bank was closed for liquidation and in which the
174-17 receiver is a proper plaintiff or defendant.
174-18 (c) Sections 64.052, 64.053, and 64.056, Civil Practice and
174-19 Remedies Code, do not apply to a bank estate being administered
174-20 under this subchapter and Subchapter D of this chapter.
174-21 Sec. 7.211. NEW LAWSUITS. (a) Except as otherwise provided
174-22 by this section, the court in which the receivership proceeding is
174-23 pending under this subchapter has exclusive jurisdiction to hear
174-24 and determine all actions or proceedings instituted by or against
174-25 the bank or receiver after the receivership proceeding starts.
174-26 (b) The receiver may file in any jurisdiction an ancillary
174-27 suit that may be helpful to obtain jurisdiction or venue over a
175-1 person or property.
175-2 (c) Exclusive venue of an action or proceeding instituted
175-3 against the receiver or the receiver's employee, including an
175-4 employee of the department, that asserts personal liability on the
175-5 part of the receiver or employee lies in Travis County.
175-6 Sec. 7.212. RECORDS WITH THIRD PARTIES. (a) Each bank
175-7 affiliate, officer, director, manager, managing participant,
175-8 employee, shareholder, participant, participant-transferee,
175-9 trustee, agent, servant, employee, attorney, attorney-in-fact, or
175-10 correspondent shall immediately deliver to the receiver any
175-11 property, book, record, account, document, or other writing of the
175-12 bank or that relates to the business of the bank without cost to
175-13 the receiver.
175-14 (b) If by contract or otherwise any book, record, account,
175-15 document, or other property that can be copied is the property of a
175-16 person listed in Subsection (a) of this section, it shall be
175-17 copied, the copy shall be delivered to the receiver, and the
175-18 original shall be retained by the owner until notification by the
175-19 receiver that it is no longer required in the administration of the
175-20 bank's estate or at another time the court, after notice and
175-21 hearing, directs. A copy is considered to be a record of the bank
175-22 in liquidation under Section 7.225 of this Act.
175-23 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION. (a) On
175-24 application by the receiver, the court may with or without notice
175-25 issue an injunction:
175-26 (1) restraining each bank officer, director, manager,
175-27 managing participant, employee, shareholder, participant,
176-1 participant-transferee, trustee, agent, servant, employee,
176-2 attorney, attorney-in-fact, correspondent, or another person from
176-3 transacting the bank's business or wasting or disposing of its
176-4 property; or
176-5 (2) requiring the delivery of its property or assets
176-6 to the receiver subject to the further order of the court.
176-7 (b) The court, at any time during a proceeding under this
176-8 subchapter, may issue another injunction or order considered
176-9 necessary or desirable to prevent:
176-10 (1) interference with the receiver or the proceeding;
176-11 (2) waste of the assets of the bank;
176-12 (3) the beginning or prosecution of an action;
176-13 (4) the obtaining of a preference, judgment,
176-14 attachment, garnishment, or other lien; or
176-15 (5) the making of a levy against the bank or against
176-16 its assets.
176-17 Sec. 7.214. SUBPOENA. (a) In addition to the authority
176-18 granted by law to the receiver relating to the taking of a
176-19 deposition of a witness in a civil action, the receiver may request
176-20 the court ex parte to issue a subpoena to compel the attendance and
176-21 testimony of a witness before the receiver and the production of a
176-22 book, account, record, paper, or correspondence or other record
176-23 relating to the receivership estate. For this purpose the receiver
176-24 or the receiver's designated representative may administer an oath
176-25 or affirmation, examine a witness, or receive evidence. The court
176-26 has statewide subpoena power and may compel attendance and
176-27 production of a record before the receiver at the bank, the office
177-1 of the receiver, or another location.
177-2 (b) A person served with a subpoena under this section may
177-3 file a motion with the court for a protective order as provided by
177-4 Rule 166b, Texas Rules of Civil Procedure. In a case of
177-5 disobedience of a subpoena, or of the contumacy of a witness
177-6 appearing before the receiver or the receiver's designated
177-7 representative, the receiver may request and the court may issue an
177-8 order requiring the person subpoenaed to obey the subpoena, give
177-9 evidence, or produce a book, account, record, paper, or
177-10 correspondence or other record relating to the matter in question.
177-11 (c) Each witness who is required to appear before the
177-12 receiver is entitled to receive:
177-13 (1) reimbursement for mileage, in the amount for
177-14 travel by state employees, for traveling to or returning from a
177-15 proceeding that is more than 25 miles from the witness's
177-16 residence; and
177-17 (2) a fee of not less than $10 a day and not more than
177-18 an amount equal to the per diem travel allowance of a state
177-19 employee for each day or part of a day the witness is necessarily
177-20 present as a witness, as established by the receiver with the
177-21 approval of the court.
177-22 (d) All disbursements made in the payment of fees under
177-23 Subsection (c) of this section are administrative expenses of
177-24 liquidation.
177-25 (e) The receiver may serve the subpoena or have it served by
177-26 the receiver's authorized agent, a sheriff, or a constable. The
177-27 sheriff's or constable's fee for serving a subpoena must be the
178-1 same as the fee paid the sheriff or constable for similar services.
178-2 (f) A subpoena issued under this section to a financial
178-3 institution is not subject to Section 30.007, Civil Practice and
178-4 Remedies Code.
178-5 (g) On certification by the receiver under official seal, a
178-6 book, account, record, paper, correspondence, or other record or
178-7 document produced or testimony taken as provided by this section
178-8 and held by the receiver is admissible in evidence in any case
178-9 without prior proof of its correctness and without other proof
178-10 except the certificate of the receiver that the book, account,
178-11 record, paper, correspondence, document, or testimony was received
178-12 from the person producing the material or testifying. The
178-13 certified book, account, record, paper, correspondence, or other
178-14 record or document, or a certified copy of such a document, is
178-15 prima facie evidence of the facts it contains. This section does
178-16 not limit another provision of this subchapter, Subchapter D of
178-17 this chapter, or another law that provides for the admission of
178-18 evidence or its evidentiary value.
178-19 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS. (a) Not
178-20 later than six months after the date the receivership proceeding
178-21 begins, the receiver may terminate any executory contract to which
178-22 the bank is a party, or any obligation of the bank as a lessee. A
178-23 lessor who receives notice of the receiver's election to terminate
178-24 the lease before the 60th day preceding the termination date is not
178-25 entitled to rent or damages for termination, other than rent
178-26 accrued to the date of termination.
178-27 (b) An agreement that tends to diminish or defeat the
179-1 interest of the estate in a bank asset is not valid against the
179-2 receiver unless the agreement:
179-3 (1) is in writing;
179-4 (2) was executed by the bank and any person claiming
179-5 an adverse interest under the agreement, including the obligor, at
179-6 the same time as the acquisition of the asset by the bank;
179-7 (3) was approved by the board of the bank or its loan
179-8 committee, and the approval is reflected in the minutes of the
179-9 board or committee; and
179-10 (4) has been continuously since its execution an
179-11 official record of the bank.
179-12 Sec. 7.216. PREFERENCES. (a) Any transfer of or lien on
179-13 the property or assets of a state bank is voidable by the receiver
179-14 if the transfer or lien:
179-15 (1) is made or created before:
179-16 (A) four months before the date the bank is
179-17 closed for liquidation; or
179-18 (B) one year before the date the bank is closed
179-19 for liquidation if the receiving creditor was at the time an
179-20 affiliate, officer, director, manager, managing participant,
179-21 principal shareholder, or participant of the bank or an affiliate
179-22 of the bank;
179-23 (2) was made or created with the intent of giving to a
179-24 creditor or depositor, or enabling a creditor or depositor to
179-25 obtain, a greater percentage of the claimant's debt than is given
179-26 or obtained by another claimant of the same class; and
179-27 (3) is accepted by a creditor or depositor having
180-1 reasonable cause to believe that a preference will occur.
180-2 (b) Each bank officer, director, manager, managing
180-3 participant, employee, shareholder, participant,
180-4 participant-transferee, trustee, agent, servant, employee,
180-5 attorney-in-fact, or correspondent, or other person acting on
180-6 behalf of the bank, who has participated in implementing a voidable
180-7 transfer or lien, and each person receiving property or the benefit
180-8 of property of the bank as a result of the voidable transfer or
180-9 lien, is personally liable for the property or benefit received and
180-10 shall account to the receiver for the benefit of the depositors and
180-11 creditors of the bank.
180-12 (c) The receiver may avoid a transfer of or lien on the
180-13 property or assets of a bank that a depositor, creditor,
180-14 shareholder, participant, or participant-transferee of the bank
180-15 could have avoided and may recover the property transferred or its
180-16 value from the person to whom it was transferred or from a person
180-17 who has received it, unless the transferee or recipient was a bona
180-18 fide holder for value before the date the bank was closed for
180-19 liquidation.
180-20 Sec. 7.217. OTHER POWERS OF THE RECEIVER; ADMINISTRATIVE
180-21 EXPENSES. The receiver may employ agents, legal counsel,
180-22 accountants, appraisers, consultants, and other personnel the
180-23 receiver considers necessary to assist in the performance of the
180-24 receiver's duties. The receiver may use personnel of the
180-25 department if the receiver considers the use to be advantageous or
180-26 desirable. The expense of employing these persons is an
180-27 administrative expense of liquidation.
181-1 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS. (a) In
181-2 the course of liquidating a bank, the receiver on order of the
181-3 court entered with or without hearing may:
181-4 (1) sell all or part of the real and personal property
181-5 of the bank;
181-6 (2) borrow money and pledge all or part of the assets
181-7 of the bank to secure the debt created, except that the receiver
181-8 may not be held personally liable to repay borrowed funds;
181-9 (3) compromise or compound a doubtful or uncollectible
181-10 debt or claim owed by or owing to the bank; and
181-11 (4) enter another agreement on behalf of the bank that
181-12 the receiver considers necessary or proper to the management,
181-13 conservation, or liquidation of its assets.
181-14 (b) If the amount of a debt or claim owed by or owing to the
181-15 bank or the value of an item of property of the bank does not
181-16 exceed $20,000, excluding interest, the receiver may compromise or
181-17 compound the debt or claim or sell the property on terms the
181-18 receiver considers to be in the best interests of the bank estate
181-19 without obtaining the approval of the court.
181-20 (c) The receiver may with the approval of the court sell or
181-21 offer or agree to sell an asset of the bank, other than fiduciary
181-22 assets, to a depositor or creditor of the bank. Payment may be in
181-23 whole or in part out of distributions payable to the purchasing
181-24 creditor or depositor on account of an approved claim against the
181-25 bank's estate. On application by the receiver, the court may
181-26 designate one or more representatives to act for certain depositors
181-27 or creditors as a class in the purchase, holding, and management of
182-1 assets purchased by the class under this section, and the receiver
182-2 may with the approval of the court advance the expenses of the
182-3 appointed representative against the security of the claims of the
182-4 class.
182-5 Sec. 7.219. DISCRETION OF THE COURT. If the court requires
182-6 notice and hearing before entering an order, the court shall fix
182-7 the time and place of the hearing and prescribe whether the notice
182-8 is to be given by service on specific parties, by publication, or
182-9 by a combination of these methods. The court may not enter an
182-10 order requested by a person other than the receiver without notice
182-11 to the receiver and an opportunity for the receiver to be heard.
182-12 Sec. 7.220. FILING REPORTS; EXPENSES. (a) The receiver
182-13 shall file quarterly reports with the court showing the operation,
182-14 receipts, expenditures, and general condition of the bank in
182-15 liquidation. The receiver shall also file a final report regarding
182-16 a liquidated bank showing all receipts and expenditures and giving
182-17 a full explanation and a statement of the disposition of all assets
182-18 of the bank.
182-19 (b) The receiver shall pay all administrative expenses out
182-20 of funds or assets of the bank. Each quarter the receiver shall
182-21 submit an itemized report of those expenses, sworn to by the
182-22 receiver. The court shall approve the report unless an objection
182-23 is filed before the 11th day after the date of submission of the
182-24 account. An objection, if any, may be made only by a party in
182-25 interest and must specify each item objected to and the ground for
182-26 the objection. The court shall set the objection for hearing and
182-27 notify the parties of this action. The objecting party has the
183-1 burden of proof to show that the item objected to is improper,
183-2 unnecessary, or excessive.
183-3 (c) The court may prescribe whether the notice of the
183-4 receiver's report is to be given by service on specific parties, by
183-5 publication, or by a combination of these methods.
183-6 Sec. 7.221. COURT-ORDERED AUDIT. The court in which the
183-7 receivership proceeding is pending may order an audit of the books
183-8 and records of the receiver that relate to the receivership. A
183-9 report of an audit ordered under this section shall be filed with
183-10 the court. The receiver shall make the books and records relating
183-11 to the receivership available to the auditor as required by the
183-12 court order. The receiver shall pay the expenses of an audit
183-13 ordered under this section as an administrative expense.
183-14 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
183-15 contract between the bank and another person for bailment, of
183-16 deposit for hire, or for the lease of a safe, vault, or box ceases
183-17 on the date specified for removal of property in the notices that
183-18 were published and mailed or a later date approved by the receiver
183-19 or the court. A person who has paid rental or storage charges for
183-20 a period extending beyond the date designated as the date for
183-21 removal of property shall have a claim against the bank estate for
183-22 a refund of any unearned amount paid.
183-23 (b) If the property is not removed by the date specified in
183-24 the notices or by the receiver or the court, the receiver shall
183-25 inventory the property and may open a safe, vault, or box, or any
183-26 package, parcel, or receptacle, in the custody or possession of the
183-27 receiver, to make the inventory. The property shall be marked to
184-1 identify, to the extent possible, its owner or the person who left
184-2 it with the bank. After all property belonging to others that is
184-3 in the receiver's custody and control has been inventoried, the
184-4 receiver shall compile a master list that is divided for each
184-5 office of the bank that received property that remains unclaimed.
184-6 The receiver shall publish, in a newspaper of general circulation
184-7 in each community in which the bank had an office that received
184-8 property that remains unclaimed, the list and the names of the
184-9 owners of the property as shown in the bank's records. The
184-10 published notice shall specify a procedure for claiming the
184-11 property, unless the court, on application of the receiver,
184-12 approves an alternate procedure.
184-13 Sec. 7.223. FIDUCIARY ACTIVITIES. (a) As soon after
184-14 beginning the receivership proceeding as is practicable, the
184-15 receiver shall terminate all fiduciary positions it holds,
184-16 surrender all property held by it as a fiduciary, and settle the
184-17 bank's fiduciary accounts. The receiver shall release all
184-18 segregated and identifiable fiduciary property held by the bank to
184-19 successor fiduciaries.
184-20 (b) With the approval of the court, the receiver may sell
184-21 the administration of all or substantially all remaining fiduciary
184-22 accounts to one or more successor fiduciaries on terms that appear
184-23 to be in the best interests of the bank's estate and the persons
184-24 interested in the fiduciary accounts.
184-25 (c) If commingled fiduciary funds held by the bank as
184-26 trustee are insufficient to satisfy all fiduciary claims to the
184-27 commingled funds, the receiver shall distribute commingled funds
185-1 pro rata to all fiduciary claimants of commingled funds based on
185-2 their proportionate interests after payment of administrative
185-3 expenses related solely to the fiduciary claims. The fictional
185-4 tracing rule does not apply. To the extent of any unsatisfied
185-5 fiduciary claim to commingled funds, claimants to commingled trust
185-6 funds are entitled to the same priority as depositors of the bank.
185-7 (d) Subject to Subsection (c) of this section, if the bank
185-8 has lost fiduciary funds or property through misappropriation or
185-9 otherwise, claimants to missing fiduciary funds or property are
185-10 entitled to the same priority as depositors of the bank.
185-11 (e) The receiver may require certain fiduciary claimants to
185-12 file proofs of claim if the records of the bank are insufficient to
185-13 identify their respective interests.
185-14 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a) On
185-15 approval by the court, the receiver may dispose of records of the
185-16 bank in liquidation that are obsolete and unnecessary to the
185-17 continued administration of the receivership proceeding.
185-18 (b) The receiver may devise a method for the effective,
185-19 efficient, and economical maintenance of the records of the bank
185-20 and of the receiver's office, including maintaining those records
185-21 on any medium approved by the records management division of the
185-22 Texas State Library.
185-23 (c) To maintain the records of a liquidated bank after the
185-24 closing of the receivership proceeding, the receiver may reserve
185-25 assets of an estate, deposit them in an account, and use them for
185-26 maintenance, storage, and disposal of records in closed
185-27 receivership estates.
186-1 (d) Records of a liquidated bank are not government records
186-2 for any purpose, including Chapter 552, Government Code, but shall
186-3 be preserved and disposed of as if they were records of the
186-4 department under Chapter 441, Government Code. These records are
186-5 confidential as provided by Subchapter B, Chapter 2, of this Act,
186-6 rules adopted under this Act, and Section 30.007, Civil Practice
186-7 and Remedies Code.
186-8 Sec. 7.225. RECORDS ADMITTED. (a) A book, record,
186-9 document, or paper of a bank in liquidation obtained by the
186-10 receiver and held in the course of the receivership proceeding, or
186-11 a certified copy of such a record under the official seal of the
186-12 receiver shall be received in evidence in all cases without proof
186-13 of correctness or other proof, except the certificate of the
186-14 receiver that the records were received from the custody of the
186-15 bank or found among its effects.
186-16 (b) The receiver may certify the correctness of a paper,
186-17 document, or record of the receiver's office, including those
186-18 described by Subsection (a) of this section, and may certify any
186-19 fact contained in the paper, document, or record. The paper,
186-20 document, or record shall be received in evidence in all cases in
186-21 which the original would be evidence.
186-22 (c) The original book, record, document, or paper, or a
186-23 certified copy of such a record is prima facie evidence of the
186-24 facts it contains.
186-25 (d) A copy of an original record or another record that is
186-26 maintained on a medium approved by the records management division
186-27 of the Texas State Library, within the scope of this section, and
187-1 produced by the receiver or the receiver's authorized
187-2 representative under this section has the same force and effect as
187-3 the original record and may be used the same as the original record
187-4 in a judicial or administrative proceeding in this state.
187-5 Sec. 7.226. RESUMPTION OF BUSINESS. (a) A state bank
187-6 closed under Section 7.201 of this Act may not be reopened without
187-7 the approval of the banking commissioner unless a contest of
187-8 liquidation under Section 7.204 of this Act is finally resolved
187-9 adversely to the banking commissioner and the court authorizes its
187-10 reopening.
187-11 (b) If a bank reopens under this section, the banking
187-12 commissioner may place temporary limits on the right of withdrawals
187-13 by, or payments to, individual depositors and creditors. The
187-14 limits:
187-15 (1) must apply equally to all unsecured depositors and
187-16 creditors;
187-17 (2) may not defer a secured depositor or creditor
187-18 without the person's written consent; and
187-19 (3) may not postpone the right of full withdrawal or
187-20 payment of unsecured depositors or creditors for more than 18
187-21 months after the date that the bank reopens.
187-22 (c) As a depositor or creditor of a reopened bank, this
187-23 state or a political subdivision of this state may agree to
187-24 temporary limits that the banking commissioner places on payments
187-25 or withdrawals.
187-26 Sec. 7.227. AFTER-DISCOVERED ASSETS. (a) If the banking
187-27 commissioner discovers, after the receivership has been closed by
188-1 final order of the court, assets that have value and were abandoned
188-2 as worthless or unknown during receivership, the banking
188-3 commissioner shall report the discovery to the court. The court
188-4 may reopen the receivership proceeding for continued liquidation if
188-5 the value of the after-discovered assets justifies the reopening.
188-6 (b) If the banking commissioner suspects that the
188-7 information may have been intentionally or fraudulently concealed,
188-8 the banking commissioner shall notify appropriate civil and
188-9 criminal authorities to determine what penalties, if any, may be
188-10 available.
188-11 (Sections 7.228-7.300 reserved for expansion)
188-12 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
188-13 Sec. 7.301. FILING CLAIMS. (a) A person other than a
188-14 shareholder, participant, or participant-transferee acting in that
188-15 capacity who has a claim against the bank in liquidation, including
188-16 a claimant with a secured claim and a claimant under a fiduciary
188-17 relationship that has been ordered by the receiver to file a claim
188-18 pursuant to Section 7.223 of this Act, may assert the claim by
188-19 presenting proof of the claim to the receiver at a place specified
188-20 by the receiver within the period specified by the receiver under
188-21 Section 7.205 of this Act. Receipt of the required proof of claim
188-22 by the receiver is a condition precedent to the payment of a claim.
188-23 Except as provided by Subsection (b) of this section, a claim that
188-24 is not filed within the period specified by the court may not
188-25 participate in a distribution of the assets by the receiver.
188-26 Interest does not accrue on a claim after the date the bank is
188-27 closed for liquidation.
189-1 (b) Subject to court approval, the receiver may accept a
189-2 claim filed after the date specified if the claim is filed with the
189-3 receiver not later than the 180th day after the date notice of the
189-4 claimant's right to file a proof of claim is mailed to the
189-5 claimant. If accepted and approved, the claim is subordinate to an
189-6 approved claim of a general creditor.
189-7 Sec. 7.302. PROOF OF CLAIM. (a) A proof of claim must be a
189-8 written statement signed by the claimant that includes:
189-9 (1) the claim;
189-10 (2) the consideration for the claim;
189-11 (3) a statement of whether collateral is held or a
189-12 security interest is asserted against the claim and, if so, a
189-13 description of the collateral held or security interest asserted;
189-14 (4) any right of priority of payment for the claim or
189-15 other specific right asserted by the claimant;
189-16 (5) a statement of whether a payment has been made on
189-17 the claim and, if so, the amount and source of the payment, to the
189-18 extent known by the claimant;
189-19 (6) a statement that the amount claimed is justly owed
189-20 by the bank in liquidation to the claimant; and
189-21 (7) any other matter that is required by the court in
189-22 which the receivership is pending.
189-23 (b) The receiver may designate the form of the proof of
189-24 claim. A proof of claim shall be filed under oath unless the oath
189-25 is waived by the receiver. A proof of claim filed with the
189-26 receiver is considered filed in an official proceeding for purposes
189-27 of Chapter 37, Penal Code.
190-1 (c) If a claim is founded on an instrument in writing, the
190-2 original instrument, unless lost or destroyed, shall be filed with
190-3 the proof of claim. After the instrument is filed, the receiver
190-4 may permit the claimant to substitute a copy of the instrument
190-5 until the final disposition of the claim. If the instrument is
190-6 lost or destroyed, a statement of that fact and of the
190-7 circumstances of the loss or destruction shall be filed under oath
190-8 with the claim.
190-9 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM. A judgment entered
190-10 against the bank before the date the bank was closed for
190-11 liquidation may not be given higher priority than an unsecured
190-12 creditor unless the judgment creditor in a proof of claim proves
190-13 the allegations supporting the judgment to the receiver's
190-14 satisfaction. A judgment against the bank entered after the date
190-15 the bank was closed for liquidation may not be considered as
190-16 evidence of liability or of the amount of damages. A judgment
190-17 against the bank taken by default or by collusion before the date
190-18 the bank was closed for liquidation may not be considered as
190-19 conclusive evidence of the liability of the bank to the judgment
190-20 creditor or of the amount of damages to which the judgment creditor
190-21 is entitled.
190-22 Sec. 7.304. SECURED CLAIMS. (a) The owner of a secured
190-23 claim against a bank in liquidation may surrender the security and
190-24 file a claim as a general creditor or apply the security to the
190-25 claim and discharge the claim. If the owner applies the security
190-26 and discharges the claim, any deficiency shall be treated as a
190-27 claim against the general assets of the bank on the same basis as a
191-1 claim of an unsecured creditor. The amount of the deficiency shall
191-2 be determined as provided by Section 7.305 of this Act, except that
191-3 if the amount of the deficiency has been adjudicated by a court of
191-4 competent jurisdiction in a proceeding in which the receiver has
191-5 had notice and an opportunity to be heard, the court's decision is
191-6 conclusive as to the amount.
191-7 (b) The value of security held by a secured creditor shall
191-8 be determined under supervision of the court by:
191-9 (1) converting the security into money according to
191-10 the terms of the agreement under which the security was delivered
191-11 to the creditor; or
191-12 (2) agreement, arbitration, compromise, or litigation
191-13 between the creditor and the receiver.
191-14 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS. (a) A
191-15 claim based on an unliquidated or undetermined demand shall be
191-16 filed within the period provided by Subchapter C of this chapter
191-17 for the filing of a claim. The claim may not share in any
191-18 distribution to claimants until the claim is definitely liquidated,
191-19 determined, and allowed. After the claim is liquidated,
191-20 determined, and allowed, the claim shares ratably with the claims
191-21 of the same class in all subsequent distributions.
191-22 (b) For the purposes of this section, a demand is considered
191-23 unliquidated or undetermined if the right of action on the demand
191-24 accrued while the bank was closed for liquidation and the liability
191-25 on the demand has not been determined or the amount of the demand
191-26 has not been liquidated.
191-27 (c) If the receiver in all other respects is in a position
192-1 to close the receivership proceeding, the proposed closing is
192-2 sufficient grounds for the rejection of any remaining claim based
192-3 on an unliquidated or undetermined demand. The receiver shall
192-4 notify the claimant of the intention to close the proceeding. If
192-5 the demand is not liquidated or determined before the 61st day
192-6 after the date of the notice, the receiver may reject the claim.
192-7 Sec. 7.306. SET-OFF. (a) Mutual credits and mutual debts
192-8 shall be set off and only the balance allowed or paid, except that
192-9 a set-off may not be allowed in favor of a person if:
192-10 (1) the obligation of the bank to the person did not
192-11 on the date the bank was closed for liquidation entitle the person
192-12 to share as a claimant in the assets of the bank;
192-13 (2) the obligation of the bank to the person was
192-14 purchased by or transferred to the person after the date the bank
192-15 was closed for liquidation or for the purpose of increasing set-off
192-16 rights; or
192-17 (3) the obligation of the person or the bank is as a
192-18 trustee or fiduciary.
192-19 (b) On request, the receiver shall provide a person with an
192-20 accounting statement identifying each debt that is due and payable.
192-21 If a person owes the bank an amount that is due and payable against
192-22 which the person asserts set-off of mutual credits that may become
192-23 due and payable from the bank in the future, the person shall
192-24 promptly pay to the receiver the amount due and payable. The
192-25 receiver shall promptly refund, to the extent of the person's prior
192-26 payment, mutual credits that become due and payable to the person
192-27 by the bank in liquidation.
193-1 Sec. 7.307. ACTION ON CLAIMS. (a) Not later than six
193-2 months after the last day permitted for the filing of claims or a
193-3 later date allowed by the court, the receiver shall accept or
193-4 reject each filed claim in whole or in part, except for an
193-5 unliquidated or undetermined claim governed by Section 7.305 of
193-6 this Act. The receiver may approve or reject a claim filed against
193-7 the bank in liquidation, and shall reject a claim if the receiver
193-8 doubts its validity.
193-9 (b) The receiver shall mail written notice to each claimant,
193-10 specifying the disposition of the person's claim. If a claim is
193-11 rejected in whole or in part, the receiver in the notice shall
193-12 specify the basis for rejection and advise the claimant of the
193-13 procedures and deadline for appeal.
193-14 (c) The receiver shall send each claimant a summary schedule
193-15 of approved and rejected claims by priority class and notify the
193-16 claimant:
193-17 (1) that a copy of a schedule of claims disposition
193-18 including only the name of the claimant, the amount of the claim
193-19 allowed, and the amount of the claim rejected is available on
193-20 request; and
193-21 (2) of the procedure and deadline for filing objection
193-22 to an approved claim.
193-23 (d) The receiver and the receiver's agents and employees,
193-24 including employees of the department, are not liable for and a
193-25 cause of action may not be brought against any of them for an
193-26 action taken or not taken by them relating to the adjustment,
193-27 negotiation, or settlement of claims.
194-1 Sec. 7.308. OBJECTION TO APPROVED CLAIM. On or before the
194-2 date specified for objection to an approved claim, which shall be
194-3 set by the receiver with court approval, a depositor, creditor,
194-4 other claimant, shareholder, participant, or participant-transferee
194-5 of the bank may file an objection to an approved claim. The
194-6 objection shall be heard and determined by the court. If the
194-7 objection is sustained, the court shall direct an appropriate
194-8 modification of the schedule.
194-9 Sec. 7.309. APPEAL OF REJECTED CLAIM. If an action on a
194-10 rejected claim is not brought in the court in which the
194-11 receivership proceeding is pending within three months after the
194-12 date of service of notice, the action of the receiver is final and
194-13 not subject to review. If the action is timely brought, review is
194-14 de novo as if originally filed in the court and subject to the
194-15 rules of procedure and appeal applicable to civil cases. This
194-16 action is separate from the receivership proceeding and is not
194-17 initiated by a claimant's attempt to appeal the action of the
194-18 receiver by intervening in the receivership proceeding.
194-19 Sec. 7.310. PAYMENT OF CLAIMS. (a) Except as expressly
194-20 provided otherwise by this subchapter or Subchapter C of this
194-21 chapter, without the approval of the court the receiver may not
194-22 make a payment on a claim, other than a claim for an obligation
194-23 incurred by the receiver for administrative expenses.
194-24 (b) After all objections have been heard and decided as
194-25 provided by Section 7.308 of this Act and the time for filing
194-26 appeals has expired as provided by Section 7.309 of this Act, the
194-27 receiver may periodically make partial distribution to the holders
195-1 of approved claims if a proper reserve is established for the pro
195-2 rata payment of rejected claims that have been appealed and any
195-3 claims based on unliquidated or undetermined demands governed by
195-4 Section 7.305 of this Act.
195-5 (c) As soon as practicable after the determination of all
195-6 objections, appeals, and claims based on previously unliquidated or
195-7 undetermined demands governed by Section 7.305 of this Act, the
195-8 receiver shall distribute the assets of the bank in satisfaction of
195-9 approved claims other than claims asserted in a person's capacity
195-10 as a shareholder, participant, or participant-transferee.
195-11 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED BANK. The
195-12 distribution of assets from the estate of a bank the deposits of
195-13 which are insured by the Federal Deposit Insurance Corporation or
195-14 its successor shall be made in the same order of priority as assets
195-15 would be distributed on liquidation or purchase of assets and
195-16 assumption of liabilities of a national bank under federal law.
195-17 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED BANK.
195-18 (a) The priority of distribution of assets from the estate of a
195-19 bank the deposits of which are not insured by the Federal Deposit
195-20 Insurance Corporation or its successor shall be in accordance with
195-21 the order of each class as provided by this section. Every claim
195-22 in each class shall be paid in full, or adequate funds shall be
195-23 retained for that payment, before the members of the next class
195-24 receive any payment. A subclass may not be established within a
195-25 class, except for a preference or subordination within a class
195-26 expressly created by contract or other instrument or in the
195-27 articles of association.
196-1 (b) Assets shall be distributed in the following order of
196-2 priority:
196-3 (1) administrative expenses;
196-4 (2) approved claims of secured creditors to the extent
196-5 of the value of the security as provided by Section 7.304 of this
196-6 Act;
196-7 (3) approved claims by beneficiaries of insufficient
196-8 commingled fiduciary funds or missing fiduciary property and
196-9 approved claims of depositors of the bank;
196-10 (4) other approved claims of general creditors not
196-11 falling within a higher priority under this section, including
196-12 unsecured claims for taxes and debts due the federal government or
196-13 a state or local government;
196-14 (5) approved claims of a type described by
196-15 Subdivisions (1)-(4) of this subsection that were not filed within
196-16 the period prescribed by this subchapter; and
196-17 (6) claims of capital note or debenture holders or
196-18 holders of similar obligations and proprietary claims of
196-19 shareholders, participants, participant-transferees, or other
196-20 owners according to the terms established by issue, class, or
196-21 series.
196-22 Sec. 7.313. EXCESS ASSETS. (a) If bank assets remain after
196-23 the receiver has provided for unclaimed distributions and all of
196-24 the liabilities of the bank in liquidation, the receiver shall
196-25 distribute the remaining assets to the shareholders or participants
196-26 of the bank. If the remaining assets are not liquid or otherwise
196-27 require continuing administration, the receiver may call a meeting
197-1 of the shareholders or participants and participant-transferees of
197-2 the bank by giving notice in a newspaper of general circulation in
197-3 the county where the home office of the bank was located and by
197-4 written notice to the shareholders or participants and
197-5 participant-transferees of record at their last known addresses.
197-6 (b) At the meeting, the shareholders or participants shall
197-7 appoint one or more agents to take over the affairs to continue the
197-8 liquidation for the benefit of the shareholders or participants and
197-9 participant-transferees. Voting privileges are governed by the
197-10 bank's bylaws and articles of association. If a quorum cannot be
197-11 obtained at the meeting, the banking commissioner shall appoint an
197-12 agent.
197-13 (c) An agent appointed under Subsection (b) of this section
197-14 shall execute and file with the court a bond approved by the court,
197-15 conditioned on the faithful performance of all the duties of the
197-16 trust. Under order of the court the receiver shall transfer and
197-17 deliver to the agent or agents for continued liquidation under the
197-18 court's supervision all assets of the bank remaining in the
197-19 receiver's hands, and the court shall discharge the receiver from
197-20 further liability to the bank and its depositors, creditors,
197-21 shareholders, participants, and participant-transferees. The bank
197-22 may not resume business and the charter of the bank is void on the
197-23 date the court issues the order directing the receiver to transfer
197-24 and deliver the remaining assets of the bank to the agent or
197-25 agents.
197-26 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY. After completion
197-27 of the liquidation, any unclaimed property remaining in the hands
198-1 of the receiver shall be tendered to the state treasurer as
198-2 provided by Chapter 74, Property Code.
198-3 CHAPTER 8. PROVISIONS APPLICABLE TO
198-4 BANKS AND OTHER DEPOSITORY INSTITUTIONS;
198-5 BANK HOLDING COMPANIES
198-6 SUBCHAPTER A. GENERAL PROVISIONS
198-7 Sec. 8.001. LIABILITIES, DEFENSES, AND
198-8 INDEMNIFICATION OF CORPORATE OFFICIALS ......... 200
198-9 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION ............. 202
198-10 Sec. 8.003. OFFICES OF OUT-OF-STATE BANKS .................... 202
198-11 Sec. 8.004. UNAUTHORIZED BANKING ............................. 204
198-12 Sec. 8.005. SLANDER OR LIBEL OF A BANK ....................... 205
198-13 Sec. 8.006. AUTHORITY TO ACT AS NOTARY PUBLIC ................ 205
198-14 Sec. 8.007. EXEMPTION FROM SECURITIES LAW .................... 206
198-15 Sec. 8.008. SUCCESSION OF TRUST POWERS ....................... 206
198-16 Sec. 8.009. AFFILIATES AS AGENTS ............................. 207
198-17 Sec. 8.010. DISCOVERY OF CUSTOMER RECORDS .................... 208
198-18 Sec. 8.011. COMPLIANCE REVIEW COMMITTEE ...................... 208
198-19 (Sections 8.012-8.100 reserved for expansion)
198-20 SUBCHAPTER B. SAFE DEPOSIT BOXES
198-21 Sec. 8.101. DEFINITION ....................................... 210
198-22 Sec. 8.102. AUTHORITY FOR SAFE DEPOSIT BOXES ................. 210
198-23 Sec. 8.103. ACCESS BY MULTIPLE PARTIES ....................... 210
198-24 Sec. 8.104. NONEMERGENCY OPENING AND RELOCATION .............. 211
198-25 Sec. 8.105. EMERGENCY OPENING AND RELOCATION ................. 212
198-26 Sec. 8.106. EXERCISE OF LIEN AND SALE OF CONTENTS ............ 212
198-27 Sec. 8.107. IDENTIFICATION NUMBER FOR KEYS ................... 213
199-1 (Sections 8.108-8.200 reserved for expansion)
199-2 SUBCHAPTER C. EMERGENCIES
199-3 Sec. 8.201. DEFINITION ....................................... 214
199-4 Sec. 8.202. EFFECT OF CLOSING ................................ 215
199-5 Sec. 8.203. EFFECT OF OTHER PROVISIONS ....................... 215
199-6 Sec. 8.204. LIMITATIONS ON WITHDRAWALS FROM A STATE
199-7 BANK ........................................... 215
199-8 Sec. 8.205. FINANCIAL MORATORIUM ............................. 216
199-9 Sec. 8.206. EMERGENCY SUSPENSION OF OPERATIONS BY
199-10 BANK ........................................... 216
199-11 Sec. 8.207. EMERGENCY SUSPENSION OF OPERATIONS BY
199-12 BANKING COMMISSIONER ........................... 217
199-13 (Sections 8.208-8.300 reserved for expansion)
199-14 SUBCHAPTER D. BANK HOLDING COMPANIES
199-15 Sec. 8.301. ACQUISITION OF BANK OR BANK HOLDING
199-16 COMPANY ........................................ 218
199-17 Sec. 8.302. OTHER APPLICABLE REQUIREMENTS .................... 219
199-18 Sec. 8.303. ADDITIONAL REQUIREMENTS APPLICABLE TO
199-19 OUT-OF-STATE BANK HOLDING COMPANIES ............ 220
199-20 Sec. 8.304. ACQUISITION OF NONBANKING INSTITUTION BY
199-21 A BANK HOLDING COMPANY ......................... 221
199-22 Sec. 8.305. ENFORCEMENT ...................................... 222
199-23 CHAPTER 8. PROVISIONS APPLICABLE TO
199-24 BANKS AND OTHER DEPOSITORY INSTITUTIONS;
199-25 BANK HOLDING COMPANIES
199-26 SUBCHAPTER A. GENERAL PROVISIONS
199-27 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION OF
200-1 CORPORATE OFFICIALS. (a) The provisions of the Texas Business
200-2 Corporation Act regarding liability, defenses, and indemnification
200-3 of a director, officer, agent, or employee apply to a director,
200-4 officer, agent, or employee of a depository institution in this
200-5 state. Except as limited by those provisions, a disinterested
200-6 director, manager, managing participant, officer, or employee of a
200-7 depository institution may not be held personally liable in an
200-8 action seeking monetary damages arising from the conduct of the
200-9 depository institution's affairs unless the damages resulted from
200-10 the gross negligence or wilful or intentional misconduct of the
200-11 person during the person's term of office with the depository
200-12 institution.
200-13 (b) A director, manager, managing participant, officer, or
200-14 employee of a depository institution is disinterested with respect
200-15 to a decision or transaction if the director, manager, managing
200-16 participant, officer, or employee fully discloses any interest in
200-17 the decision or transaction and does not participate in the
200-18 decision or transaction, or if the decision or transaction does not
200-19 involve:
200-20 (1) personal profit for the director, manager,
200-21 managing participant, officer, or employee through dealing with the
200-22 depository institution or usurping an opportunity of the depository
200-23 institution;
200-24 (2) buying or selling assets of the depository
200-25 institution in a transaction in which the director, manager,
200-26 managing participant, officer, or employee has a direct or indirect
200-27 pecuniary interest;
201-1 (3) dealing with another depository institution or
201-2 other person in which the director, manager, managing participant,
201-3 officer, or employee is also a director, manager, managing
201-4 participant, officer, or employee or otherwise has a significant
201-5 direct or indirect financial interest; or
201-6 (4) dealing with a family member of the director,
201-7 manager, managing participant, officer, or employee.
201-8 (c) A director, manager, managing participant, or officer
201-9 who, in performing the person's duties and functions, acts in good
201-10 faith and reasonably believes that reliance is warranted is
201-11 entitled to rely on information or an opinion, report, statement,
201-12 including a financial statement or other financial data, decision,
201-13 judgment, or performance, including a decision, judgment, or
201-14 performance by a committee, prepared, presented, made, or rendered
201-15 by:
201-16 (1) one or more directors, managers, managing
201-17 participants, officers, or employees of the depository institution,
201-18 or of an entity under joint or common control with the depository
201-19 institution, who the director, manager, managing participant, or
201-20 officer reasonably believes merits confidence;
201-21 (2) legal counsel, a public accountant, or another
201-22 person who the director, manager, managing participant, or officer
201-23 reasonably believes merits confidence; or
201-24 (3) a committee of the board of which the director,
201-25 manager, or managing participant is not a member.
201-26 (d) In this section, "family member" means a person's:
201-27 (1) spouse;
202-1 (2) minor child; or
202-2 (3) adult child who resides in the person's home.
202-3 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. (a) An
202-4 attachment, injunction, or execution for the purpose of collecting
202-5 a money judgment or securing a prospective money judgment against a
202-6 financial institution may not be issued against a financial
202-7 institution located in this state before the judgment is final and
202-8 all appeals have been exhausted or foreclosed by law.
202-9 (b) This section affects an attachment, injunction,
202-10 execution, or writ of garnishment issued to or served on a
202-11 financial institution for the purpose of collecting a money
202-12 judgment or securing a prospective money judgment against a
202-13 depositor of or deposit account in the financial institution.
202-14 Sec. 8.003. OFFICES OF OUT-OF-STATE BANKS. (a) A bank that
202-15 is not domiciled or primarily located in this state may establish
202-16 one or more offices in this state for any lawful purpose. Before
202-17 transacting business in this state, the bank shall file with the
202-18 secretary of state:
202-19 (1) a duly executed instrument, by its terms of
202-20 indefinite duration and irrevocable, appointing the secretary of
202-21 state as its agent for service of process on whom a notice or
202-22 process issued by a court in this state may be served in an action
202-23 or proceeding relating to the business of the bank in this state;
202-24 and
202-25 (2) a written certificate of designation, which may be
202-26 changed from time to time by the filing of a new certificate of
202-27 designation, specifying the name and address of the officer, agent,
203-1 or other person to whom the notice or process should be forwarded
203-2 by the secretary of state.
203-3 (b) The secretary of state shall collect for the use of the
203-4 state:
203-5 (1) a fee of $100 for indexing and filing the initial
203-6 certificate of designation and accompanying instruments required to
203-7 be filed by Subsection (a) of this section; and
203-8 (2) a fee of $15 for the filing of an amended
203-9 certificate of designation.
203-10 (c) On receipt of a notice or process, the secretary of
203-11 state shall promptly forward it by registered or certified mail,
203-12 return receipt requested, to the officer, agent, or other person
203-13 designated. Failure of the bank to maintain a designated person
203-14 does not affect the validity of service mailed to the last
203-15 designated person at the last designated address. Service of
203-16 notice or process on the secretary of state as agent for a bank
203-17 described in this section has the same effect as personal service
203-18 would have if made in this state on the depository institution.
203-19 (d) A bank transacting business in this state in compliance
203-20 with this section is not doing business in this state for the
203-21 purposes of Part Eight, Texas Business Corporation Act.
203-22 (e) A bank described by Subsection (a) of this section may
203-23 not use any form of advertising, including a sign or printed or
203-24 broadcast material, that implies or tends to imply that the bank is
203-25 engaged in banking business that the bank is not legally authorized
203-26 to transact.
203-27 Sec. 8.004. UNAUTHORIZED BANKING. (a) Except as otherwise
204-1 provided by law, a person other than a depository institution
204-2 authorized to conduct business in this state may not conduct the
204-3 business of banking or represent to the public that it is
204-4 conducting the business of banking in this state.
204-5 (b) A person may not use the term "bank" or "bank and
204-6 trust," or a similar term, or a character, ideogram, phonogram,
204-7 phrase, or foreign language word in its name, stationery, or
204-8 advertising in a manner that would imply to the public that the
204-9 person is engaged in the business of banking in this state.
204-10 (c) Subsection (b) of this section does not apply to:
204-11 (1) a depository institution authorized to conduct
204-12 business in this state;
204-13 (2) a foreign bank agency;
204-14 (3) a loan production office or representative office
204-15 of a foreign bank corporation or an out-of-state bank established
204-16 in compliance with this Act; or
204-17 (4) another entity organized under the laws of this
204-18 state, another state, the United States, or a foreign sovereign
204-19 state to the extent that:
204-20 (A) the entity is authorized under its charter
204-21 or the laws of this state or the United States to use a term, word,
204-22 character, ideogram, phonogram, or phrase prohibited by Subsection
204-23 (b) of this section; and
204-24 (B) the entity is authorized by the laws of this
204-25 state or the United States to conduct the activities in which the
204-26 entity is engaged in this state.
204-27 (d) A person violating this section is subject to an
205-1 enforcement action initiated by the banking commissioner under
205-2 Subchapter C, Chapter 6, of this Act, except that the maximum
205-3 administrative penalty under Section 6.210 of this Act for
205-4 violation involving only Subsection (b) of this section is $500 for
205-5 each day the violation continues.
205-6 Sec. 8.005. SLANDER OR LIBEL OF A BANK. (a) A person
205-7 commits an offense if the person:
205-8 (1) knowingly makes, circulates, or transmits to
205-9 another person an untrue statement that is derogatory to the
205-10 financial condition of a bank located in this state; or
205-11 (2) with intent to injure the bank, counsels, aids,
205-12 procures, or induces another person to knowingly make, circulate,
205-13 or transmit to another person an untrue statement that is
205-14 derogatory to the financial condition of any bank located in this
205-15 state.
205-16 (b) An offense under this section is a state jail felony.
205-17 Sec. 8.006. AUTHORITY TO ACT AS NOTARY PUBLIC. A notary
205-18 public is not disqualified from taking an acknowledgement or proof
205-19 of a written instrument as provided by Section 406.016, Government
205-20 Code, solely because of the person's ownership of stock or
205-21 participation interest in or employment by a bank that is an
205-22 interested party in the underlying transaction.
205-23 Sec. 8.007. EXEMPTION FROM SECURITIES LAW. (a) An officer,
205-24 director, manager, managing participant, or employee of a bank
205-25 located in this state with fewer than 500 shareholders or
205-26 participants or a bank holding company with fewer than 500
205-27 shareholders or participants that controls a bank located in this
206-1 state is exempt from the registration and licensing provisions of
206-2 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
206-3 Statutes) with respect to that person's participation in a sale or
206-4 other transaction involving securities issued by:
206-5 (1) the bank or bank holding company of which that
206-6 person is an officer, director, manager, managing participant, or
206-7 employee;
206-8 (2) a bank holding company that controls the bank of
206-9 which that person is an officer, director, manager, managing
206-10 participant, or employee; or
206-11 (3) a bank controlled by the bank holding company of
206-12 which that person is an officer, director, manager, managing
206-13 participant, or employee.
206-14 (b) A person may not be compensated for services performed
206-15 under the exemption provided by this section.
206-16 Sec. 8.008. SUCCESSION OF TRUST POWERS. If a reorganizing
206-17 or selling financial institution at the time of a merger,
206-18 reorganization, conversion, or sale of substantially all of its
206-19 assets under Chapter 3 of this Act or other applicable law is
206-20 acting as trustee, guardian, executor, or administrator, or in
206-21 another fiduciary capacity, the successor entity with fiduciary
206-22 powers may, without the necessity of judicial action or action by
206-23 the creator of the trust, continue the office, trust, or fiduciary
206-24 relationship. The financial institution may perform all the duties
206-25 and exercise all the powers connected with or incidental to the
206-26 fiduciary relationship in the same manner as if the successor
206-27 entity had been originally designated as the fiduciary.
207-1 Sec. 8.009. AFFILIATES AS AGENTS. (a) A bank subsidiary of
207-2 a bank holding company may receive deposits, renew time deposits,
207-3 close loans, service loans, and receive payments on loans and other
207-4 obligations as an agent for a depository institution affiliate.
207-5 Notwithstanding any other provision of law, a bank acting as an
207-6 agent for a depository institution affiliate as provided by this
207-7 section is not considered to be a branch of the affiliate.
207-8 (b) A depository institution may not:
207-9 (1) conduct an activity as an agent under Subsection
207-10 (a) that the institution is prohibited from conducting as a
207-11 principal under federal or state law; or
207-12 (2) as a principal, have an agent conduct an activity
207-13 under Subsection (a) that the institution is prohibited from
207-14 conducting under federal or state law.
207-15 (c) This section does not affect:
207-16 (1) the authority of a depository institution to act
207-17 as an agent on behalf of another depository institution under
207-18 another law; or
207-19 (2) whether a depository institution that conducts
207-20 activity as an agent on behalf of another depository institution
207-21 under another law is considered to be a branch of the other
207-22 institution.
207-23 (d) An agency relationship between depository institutions
207-24 under Subsection (a) of this section must be on terms that are
207-25 consistent with safe and sound banking practices and all applicable
207-26 rules.
207-27 Sec. 8.010. DISCOVERY OF CUSTOMER RECORDS. Civil discovery
208-1 of a customer record maintained by a financial institution is
208-2 governed by Section 30.007, Civil Practice and Remedies Code.
208-3 Sec. 8.011. COMPLIANCE REVIEW COMMITTEE. (a) In this
208-4 section:
208-5 (1) "Civil action" means a civil proceeding pending in
208-6 a court or other adjudicatory tribunal with jurisdiction to issue a
208-7 request or subpoena for records, including an alternative dispute
208-8 resolution mechanism, voluntary or required, under which a party
208-9 may compel the production of records. The term does not include an
208-10 examination or enforcement proceeding initiated by:
208-11 (A) a governmental agency with primary
208-12 regulatory jurisdiction over a financial institution in possession
208-13 of a compliance review document;
208-14 (B) the Federal Deposit Insurance Corporation or
208-15 its successor; or
208-16 (C) the board of governors of the Federal
208-17 Reserve System or its successor.
208-18 (2) "Compliance review document" means a document
208-19 prepared for or created by a compliance review committee.
208-20 (b) A financial institution or an affiliate of a financial
208-21 institution, including its holding company, may establish a
208-22 compliance review committee to test, review, or evaluate the
208-23 institution's conduct, transactions, or potential transactions for
208-24 the purpose of monitoring and improving or enforcing compliance
208-25 with:
208-26 (1) a statutory or regulatory requirement;
208-27 (2) financial reporting to a governmental agency;
209-1 (3) the policies and procedures of the financial
209-2 institution or its affiliates; or
209-3 (4) safe, sound, and fair lending practices.
209-4 (c) Except as provided by Subsection (d) of this section:
209-5 (1) a compliance review document is confidential and
209-6 is not discoverable or admissible in evidence in a civil action;
209-7 (2) an individual serving on a compliance review
209-8 committee or acting under the direction of a compliance review
209-9 committee may not be required to testify in a civil action as to
209-10 the contents or conclusions of a compliance review document or as
209-11 to an action taken or discussions conducted by or for a compliance
209-12 review committee; and
209-13 (3) a compliance review document or an action taken or
209-14 discussion conducted by or for a compliance review committee that
209-15 is disclosed to a governmental agency remains confidential and is
209-16 not discoverable or admissible in a civil action.
209-17 (d) Subsection (c)(2) of this section does not apply to an
209-18 individual that has management responsibility for the operations,
209-19 records, employees, or activities being examined or evaluated by
209-20 the compliance review committee.
209-21 (e) This section does not limit the discovery or
209-22 admissibility in a civil action of a document that is not a
209-23 compliance review document.
209-24 (Sections 8.012-8.100 reserved for expansion)
209-25 SUBCHAPTER B. SAFE DEPOSIT BOXES
209-26 Sec. 8.101. DEFINITION. In this subchapter "safe deposit
209-27 company" means a person, including a depository institution, trust
210-1 company, hotel, or other entity, that maintains and rents safe
210-2 deposit boxes.
210-3 Sec. 8.102. AUTHORITY FOR SAFE DEPOSIT BOXES. (a) Any
210-4 person may be a safe deposit company. In safe deposit transactions
210-5 the relationship of the safe deposit company and the renter is that
210-6 of lessor and lessee and landlord and tenant, and the rights and
210-7 liabilities of the safe deposit company are governed accordingly in
210-8 the absence of a contract or statute to the contrary. The lessee
210-9 is considered for all purposes to be in possession of the box and
210-10 its contents.
210-11 (b) A notice required by this subchapter must be in writing
210-12 and personally delivered or sent by registered or certified mail,
210-13 return receipt requested, to each lessee at the last known address
210-14 of the person according to the records of the safe deposit company.
210-15 (c) This subchapter does not affect Sections 36B through
210-16 36F, Texas Probate Code, or another statute of this state governing
210-17 safe deposit boxes.
210-18 Sec. 8.103. ACCESS BY MULTIPLE PARTIES. If a safe deposit
210-19 box is leased in the name of two or more persons jointly or if a
210-20 person other than the lessee is designated in the lease agreement
210-21 as having a right of access to the box, each of those persons is
210-22 entitled to access to the box and to remove its contents in the
210-23 absence of a contract to the contrary. This right of access and
210-24 removal is not affected by the death or incapacity of another
210-25 person that is a lessee or otherwise entitled to access to the box.
210-26 The safe deposit company is not responsible for damage arising from
210-27 access to the safe deposit box or removal of any of its contents by
211-1 a person with a right of access to the box.
211-2 Sec. 8.104. NONEMERGENCY OPENING AND RELOCATION. (a) A
211-3 safe deposit company may not relocate a safe deposit box rented for
211-4 a term of six months or longer if the box rental is not delinquent
211-5 or open the box to relocate its contents to another box or location
211-6 except in the presence of the lessee or with the lessee's written
211-7 authorization or as provided by this section or Section 8.105 of
211-8 this Act. A safe deposit box may not be relocated under this
211-9 section unless the storage conditions at the new location are at
211-10 least as secure as the conditions at the original box location.
211-11 This section and Section 8.105 of this Act do not apply to a
211-12 relocation of a safe deposit box within the same building.
211-13 (b) Not later than the 30th day before the scheduled date of
211-14 a nonemergency relocation, the safe deposit company shall give
211-15 notice of the relocation and its scheduled date and time to the
211-16 lessee or to each joint lessee. The notice must state whether the
211-17 box will be opened during the relocation. A lessee may personally
211-18 supervise the relocation or authorize the relocation in writing if
211-19 notice is given to all joint lessees.
211-20 (c) If during the relocation the box is opened and a lessee
211-21 does not personally supervise or authorize the relocation in
211-22 writing, two employees, at least one of whom is an officer or
211-23 manager of the safe deposit company and at least one of whom is a
211-24 notary public, shall inventory the contents of the box in detail.
211-25 The safe deposit company shall notify each lessee of the new box
211-26 number or location not later than the 30th day after the date of
211-27 the relocation and shall include a signed and notarized copy of the
212-1 inventory report. The cost of a certified mailing other than the
212-2 first notice sent in connection with each relocation may be treated
212-3 as box rental due and payable at the expiration of the rental term.
212-4 Sec. 8.105. EMERGENCY OPENING AND RELOCATION. A safe
212-5 deposit company may relocate a safe deposit box or open the box to
212-6 relocate its contents to another box or location without complying
212-7 with Sections 8.104(a) and (b) of this Act if the security of the
212-8 original box is threatened or destroyed by natural disaster,
212-9 including tornado, flood, fire, or other unforeseeable
212-10 circumstances beyond the control of the safe deposit company. The
212-11 safe deposit company shall follow the procedure of Section 8.104(c)
212-12 of this Act, except that the notice of the new box number or
212-13 location must be given not later than the 90th day after the date
212-14 of a relocation under this section.
212-15 Sec. 8.106. EXERCISE OF LIEN AND SALE OF CONTENTS. (a) If
212-16 the rental for a safe deposit box is delinquent for six months, the
212-17 safe deposit company may send notice to each lessee that the
212-18 company will remove the contents of the box if the rent is not paid
212-19 before the date specified in the notice, which may not be before
212-20 the 60th day after the date the notice is delivered or sent. If
212-21 the rent is not paid before this time, the safe deposit company may
212-22 open the box in the presence of two employees, at least one of whom
212-23 is an officer or manager of the safe deposit company and at least
212-24 one of whom is a notary public. The safe deposit company shall
212-25 inventory the contents of the box in detail as provided by state
212-26 treasury reporting instructions and place the contents of the box
212-27 in a sealed envelope or container bearing the name of the lessee.
213-1 (b) The safe deposit company has a lien on the contents of
213-2 the box for an amount equal to the rental of the box and the cost
213-3 of opening the box and may retain possession of the contents. If
213-4 the rental and the cost of opening the box are not paid before the
213-5 second anniversary of the date the box was opened, the safe deposit
213-6 company may sell all or part of the contents at public auction in
213-7 the manner and with the notice prescribed for the sale of real
213-8 property under deed of trust under Section 51.002, Property Code.
213-9 Any unsold contents of the box and any excess proceeds from a sale
213-10 of contents shall be remitted to the state treasury as provided by
213-11 Chapters 72 through 75, Property Code.
213-12 Sec. 8.107. IDENTIFICATION NUMBER FOR KEYS. (a) A
213-13 depository institution that rents or permits access to a safe
213-14 deposit box shall imprint each key to the box with its routing
213-15 number. The requirement of this subsection begins to apply to a
213-16 key issued under a lease in effect on September 1, 1992, on the
213-17 date the term of that lease expires, without regard to any
213-18 extension of the lease term.
213-19 (b) If a depository institution believes that the routing
213-20 number imprinted on a key, or tag attached to a key, used to open a
213-21 safe deposit box has been altered or defaced so that the correct
213-22 routing number is illegible, the depository institution shall
213-23 notify the Department of Public Safety of the State of Texas, on a
213-24 form designed by the banking commissioner, not later than the 10th
213-25 day after the date the altered or defaced key is used to open the
213-26 box.
213-27 (c) This section does not require a depository institution
214-1 to inspect the routing number imprinted on a key or an attached tag
214-2 to determine if the number has been altered or defaced. A
214-3 depository institution that has imprinted a key to a safe deposit
214-4 box as provided by this section and that follows applicable law and
214-5 the depository institution's established security procedures in
214-6 permitting access to the box is not liable for any damage arising
214-7 because of access to or removal of the contents of the box.
214-8 (Sections 8.108-8.200 reserved for expansion)
214-9 SUBCHAPTER C. EMERGENCIES
214-10 Sec. 8.201. DEFINITION. In this subchapter "emergency"
214-11 means a condition or occurrence that may interfere physically with
214-12 the conduct of normal business at the offices of a bank or of
214-13 particular bank operations or that poses an imminent or existing
214-14 threat to the safety or security of persons or property, including:
214-15 (1) fire, flood, earthquake, hurricane, tornado, or
214-16 wind, rain, or snow storm;
214-17 (2) labor dispute or strike;
214-18 (3) power failure, transportation failure, or
214-19 interruption of communication facilities;
214-20 (4) shortage of fuel, housing, food, transportation,
214-21 or labor;
214-22 (5) robbery, burglary, or attempted robbery or
214-23 burglary;
214-24 (6) epidemic or other catastrophe; or
214-25 (7) riot, civil commotion, enemy attack, or other acts
214-26 of lawlessness or violence, or a threat of such an act.
214-27 Sec. 8.202. EFFECT OF CLOSING. A day on which a bank, or
215-1 any one or more of its operations, is closed during all or part of
215-2 its normal banking hours as provided by this subchapter is a legal
215-3 holiday for all purposes with respect to any banking business
215-4 affected by the closed bank or bank operations. No liability or
215-5 loss of rights of any kind on the part of any bank or a director,
215-6 manager, managing participant, officer, or employee of a bank
215-7 arises because of a closing authorized by this subchapter.
215-8 Sec. 8.203. EFFECT OF OTHER PROVISIONS. This subchapter is
215-9 in addition to any other provision of law of this state, including
215-10 another provision of this Act, or the United States that
215-11 authorizes the closing of a bank or that excuses a delay by a bank
215-12 in the performance of its duties and obligations.
215-13 Sec. 8.204. LIMITATIONS ON WITHDRAWALS FROM A STATE BANK.
215-14 (a) On the request of a state bank that is experiencing or
215-15 threatened with unusual and excessive withdrawals because of
215-16 financial conditions, panic, or crisis, the banking commissioner,
215-17 to prevent unnecessary loss to or preference among the depositors
215-18 and creditors of the bank and to preserve the financial structure
215-19 of the bank and its usefulness to the community, may issue an order
215-20 limiting the right of withdrawal by or payment to depositors,
215-21 creditors, and other persons to whom the bank is liable.
215-22 (b) An order issued under this section:
215-23 (1) must expire not later than the 10th day after the
215-24 date it is issued;
215-25 (2) must be uniform in application to each class of
215-26 liability; and
215-27 (3) is not subject to judicial review.
216-1 Sec. 8.205. FINANCIAL MORATORIUM. (a) The banking
216-2 commissioner, with the approval of a majority of the finance
216-3 commission and the governor, may proclaim a financial moratorium
216-4 for, and invoke a uniform limitation on, withdrawal of deposits of
216-5 every character from all banks within this state. A bank refusing
216-6 to comply with a written proclamation of the banking commissioner
216-7 under this section, signed by a majority of the members of the
216-8 finance commission and the governor:
216-9 (1) forfeits its charter, if it is a state bank; or
216-10 (2) may not act as reserve agent for a state bank or
216-11 act as depository of state, county, municipal, or other public
216-12 funds, if it is a national bank.
216-13 (b) On refusal of a national bank to comply with the
216-14 proclamation, all public funds shall be immediately withdrawn by
216-15 the depositor from the national bank on order of the banking
216-16 commissioner and may not be redeposited in the national bank
216-17 without the prior written approval of the banking commissioner.
216-18 Sec. 8.206. EMERGENCY SUSPENSION OF OPERATIONS BY BANK. (a)
216-19 If the officers of a bank located in this state believe that an
216-20 emergency exists or is impending that affects or may affect the
216-21 bank's offices or particular bank operations, the officers of the
216-22 bank may choose not to open the bank's offices or conduct the
216-23 particular bank operations. During a business or banking day on
216-24 which the bank offices have opened or bank operations begun, the
216-25 officers may close bank offices or suspend and close the particular
216-26 bank operations during the emergency, even if the banking
216-27 commissioner has not issued a proclamation of emergency.
217-1 (b) The office or operations closed or suspended may remain
217-2 closed until the officers determine that the emergency has ended,
217-3 and for additional time reasonably required to reopen, except that
217-4 the offices or operations may not remain closed or suspended for
217-5 more than three consecutive days, excluding days on which the bank
217-6 is customarily closed, without the approval of the banking
217-7 commissioner. A bank closing an office or operations under this
217-8 section shall give notice of its action to the banking commissioner
217-9 as promptly as possible and by any means available.
217-10 Sec. 8.207. EMERGENCY SUSPENSION OF OPERATIONS BY BANKING
217-11 COMMISSIONER. (a) If the banking commissioner believes that an
217-12 emergency exists or is impending in all or part of this state, the
217-13 banking commissioner may by proclamation authorize banks located in
217-14 the affected area to close or suspend all or part of their offices
217-15 or operations.
217-16 (b) If the banking commissioner believes that an emergency
217-17 exists or is impending that affects or may affect a particular bank
217-18 or banks or a particular bank operation, but not banks located in
217-19 the area generally, the banking commissioner may authorize the
217-20 particular bank or banks affected to close or to suspend and close
217-21 a particular bank operation.
217-22 (c) A bank office or bank operation closed or suspended
217-23 under this section may remain closed until the banking commissioner
217-24 proclaims that the emergency has ended, or until an earlier time
217-25 that the officers of the bank determine that the closed bank
217-26 offices or bank operations should reopen, except that the affected
217-27 bank offices and operations may remain closed for additional time
218-1 reasonably required to reopen.
218-2 (Sections 8.208-8.300 reserved for expansion)
218-3 SUBCHAPTER D. BANK HOLDING COMPANIES
218-4 Sec. 8.301. ACQUISITION OF BANK OR BANK HOLDING COMPANY.
218-5 (a) A bank or bank holding company that seeks to directly or
218-6 indirectly acquire or acquire control of a bank located in this
218-7 state, or of a bank holding company that controls a bank in this
218-8 state, and that submits an application for approval to the Board of
218-9 Governors of the Federal Reserve System as provided by Section 3,
218-10 Bank Holding Company Act of 1956 (12 U.S.C. Section 1842), shall
218-11 submit a copy of the application and any additional information
218-12 required under Section 8.303 of this Act to the banking
218-13 commissioner when the application is submitted to the board of
218-14 governors.
218-15 (b) The banking commissioner, on receipt of the notice
218-16 prescribed by Section 3(b), Bank Holding Company Act of 1956 (12
218-17 U.S.C. Section 1842(b)), shall state in writing within the period
218-18 prescribed by that subsection:
218-19 (1) the views and recommendations of the banking
218-20 commissioner concerning the application; and
218-21 (2) the opinion of the banking commissioner regarding
218-22 whether the application evidences compliance with the Community
218-23 Reinvestment Act of 1977, as amended (12 U.S.C. Section 2901 et
218-24 seq.), except that the banking commissioner is not required to
218-25 disapprove the application solely because of that opinion.
218-26 (c) If the proposed acquisition is of a state bank or a bank
218-27 holding company controlling a state bank and the banking
219-1 commissioner disapproves the application in the response, the
219-2 banking commissioner shall appear at the hearing held as provided
219-3 by Section 3(b), Bank Holding Company Act of 1956 (12 U.S.C.
219-4 Section 1842(b)), and present evidence at the hearing regarding the
219-5 reasons the application should be denied.
219-6 (d) If the proposed acquisition is of a national bank or a
219-7 bank holding company controlling a national bank and the banking
219-8 commissioner opposes the application in the response, the banking
219-9 commissioner shall request that a hearing be held as provided by
219-10 Section 3(b), Bank Holding Company Act of 1956 (12 U.S.C. Section
219-11 1842(b)). If the board of governors grants the request, the
219-12 banking commissioner shall appear and present evidence at the
219-13 hearing regarding the reasons the application should be denied.
219-14 (e) If the board of governors approves an application that
219-15 the banking commissioner opposed, the banking commissioner may
219-16 accept the decision or seek to overturn the decision on appeal,
219-17 with the assistance of the attorney general, as provided by Section
219-18 9, Bank Holding Company Act of 1956 (12 U.S.C. Section 1848).
219-19 Sec. 8.302. OTHER APPLICABLE REQUIREMENTS. Notwithstanding
219-20 any other law, a bank or bank holding company may not acquire
219-21 control of or acquire all or substantially all of the assets of a
219-22 bank located in this state or of a bank holding company that
219-23 controls a bank in this state if the acquiring bank or bank holding
219-24 company and all its insured depository institution affiliates
219-25 controls, or after consummation of the acquisition would control,
219-26 more than 20 percent of the total amount of deposits of insured
219-27 depository institutions located in this state, as reported in the
220-1 most recently available reports of condition or similar reports
220-2 filed with state or federal authorities. For purposes of this
220-3 section, "deposit" and "insured depository institution" have the
220-4 same meanings assigned by Section 3, Federal Deposit Insurance Act
220-5 (12 U.S.C. Section 1813).
220-6 Sec. 8.303. ADDITIONAL REQUIREMENTS APPLICABLE TO
220-7 OUT-OF-STATE BANK HOLDING COMPANIES. (a) An out-of-state bank
220-8 holding company may not make an acquisition specified by Section
220-9 8.301(a) of this Act unless each bank in this state that would on
220-10 consummation of the acquisition be directly or indirectly
220-11 controlled by the out-of-state bank holding company has existed and
220-12 continuously operated as a bank at least five years.
220-13 (b) For the purposes of this section:
220-14 (1) a bank that is the successor as a result of merger
220-15 or acquisition of all or substantially all of the assets of a prior
220-16 bank is considered to have been in existence and continuously
220-17 operated during the period of its existence and continuous
220-18 operation as a bank and during the period of existence and
220-19 continuous operation of the prior bank;
220-20 (2) a bank effecting a purchase and assumption,
220-21 merger, or similar transaction with or supervised by the Federal
220-22 Deposit Insurance Corporation or its successor is considered to
220-23 have been in existence and continuously operated during the
220-24 existence and continuous operation of the bank with respect to
220-25 which the transaction was consummated; and
220-26 (3) a bank holding company is considered an
220-27 out-of-state bank holding company after it becomes an out-of-state
221-1 bank holding company until the banking commissioner determines
221-2 otherwise.
221-3 (c) In this section, "out-of-state bank holding company" has
221-4 the meaning assigned by Section 2(o)(7), Bank Holding Company Act
221-5 of 1956 (12 U.S.C. Section 1841(o)(7)), and includes a bank
221-6 holding company domiciled outside the United States.
221-7 Sec. 8.304. ACQUISITION OF NONBANKING INSTITUTION BY A BANK
221-8 HOLDING COMPANY. (a) A bank holding company doing business in
221-9 this state that submits an application or notice to the Board of
221-10 Governors of the Federal Reserve System regarding an acquisition or
221-11 activity regulated by Section 4, Bank Holding Company Act of 1956
221-12 (12 U.S.C. Section 1843), that will directly or indirectly affect
221-13 residents of this state, including any remote or contingent effect,
221-14 shall submit a copy of the application or notice to the banking
221-15 commissioner when the application or notice is submitted to the
221-16 board of governors. The bank holding company shall submit other
221-17 information reasonably requested by the banking commissioner to
221-18 determine the manner in which the acquisition or activity will
221-19 directly or indirectly affect residents of this state.
221-20 (b) The banking commissioner may hold a public hearing
221-21 regarding the application and its effect on this state, regardless
221-22 of whether requested to do so by a person, as provided by Section
221-23 3.008 of this Act, to assist in determining whether to oppose the
221-24 application. The banking commissioner shall convene a hearing if
221-25 the bank holding company requests a hearing in writing when it
221-26 submits the application or notice to the banking commissioner. The
221-27 banking commissioner shall oppose the application if the banking
222-1 commissioner determines that the acquisition or activity would be
222-2 detrimental to the public interest as a result of probable adverse
222-3 effects, including undue concentration of resources, decreased or
222-4 unfair competition, conflicts of interest, or unsound banking
222-5 practices.
222-6 (c) If the banking commissioner determines to oppose the
222-7 application, the banking commissioner may prepare and file a
222-8 response to the application with the board of governors and request
222-9 that a hearing be held. If the board of governors grants the
222-10 request, the banking commissioner shall appear and present evidence
222-11 at the hearing regarding the reasons the application should be
222-12 denied.
222-13 (d) If the board of governors approves an application that
222-14 the banking commissioner opposed, the banking commissioner may
222-15 accept the decision or seek to overturn the decision on appeal,
222-16 with the assistance of the attorney general, as provided by Section
222-17 9, Bank Holding Company Act of 1956 (12 U.S.C. Section 1848).
222-18 Sec. 8.305. ENFORCEMENT. The banking commissioner may bring
222-19 an enforcement proceeding under Chapter 6 of this Act against a
222-20 bank holding company that violates or participates in the violation
222-21 of this Act, an agreement filed with the banking commissioner under
222-22 this subchapter, or a rule or order issued by the banking
222-23 commissioner or the finance commission under this Act, as if the
222-24 bank holding company were a state bank.
222-25 CHAPTER 9. FOREIGN BANK CORPORATIONS
222-26 AND REPRESENTATIVE OFFICES
222-27 Sec. 9.001. PURPOSES ......................................... 223
223-1 Sec. 9.002. APPLICABILITY OF ACT ............................. 224
223-2 Sec. 9.003. REQUIREMENTS FOR MAINTAINING A FOREIGN
223-3 BANK AGENCY .................................... 224
223-4 Sec. 9.004. APPLICATION FOR LICENSE .......................... 224
223-5 Sec. 9.005. HEARING AND DECISION ON APPLICATION .............. 226
223-6 Sec. 9.006. REPRESENTATIVE OFFICES OF FOREIGN BANK
223-7 CORPORATIONS ................................... 228
223-8 Sec. 9.007. DESIGNATED AGENT FOR SERVICE OF PROCESS .......... 230
223-9 Sec. 9.008. LOCATION OF PLACE OF BUSINESS .................... 232
223-10 Sec. 9.009. REVOCATION OF LICENSE OR REGISTRATION ............ 233
223-11 Sec. 9.010. EFFECT OF REVOKED REGISTRATION ................... 235
223-12 Sec. 9.011. STATUS OF REVOKED LICENSEE ....................... 235
223-13 Sec. 9.012. POWERS AND PERMITTED ACTIVITIES .................. 235
223-14 Sec. 9.013. REPORTS .......................................... 237
223-15 Sec. 9.014. TAXATION ......................................... 238
223-16 Sec. 9.015. DISSOLUTION ...................................... 238
223-17 CHAPTER 9. FOREIGN BANK CORPORATIONS
223-18 AND REPRESENTATIVE OFFICES
223-19 Sec. 9.001. PURPOSES. A foreign bank corporation with
223-20 equity capital equivalent to at least $100 million in United States
223-21 currency may establish a foreign bank agency as provided by this
223-22 chapter in a standard metropolitan statistical area in this state
223-23 having a population in excess of 500,000. A foreign bank agency in
223-24 this state may perform only the functions permitted by this
223-25 chapter. A license issued under this chapter is not transferable
223-26 or assignable.
223-27 Sec. 9.002. APPLICABILITY OF ACT. (a) A foreign bank
224-1 agency is subject to this Act and other laws of this state
224-2 applicable to banks as if the foreign bank agency were a state
224-3 bank, except as otherwise provided by rules adopted under this Act
224-4 or unless the context of a provision or other information indicates
224-5 that a provision applies only to a bank organized under the laws of
224-6 this state or the United States.
224-7 (b) The finance commission may adopt rules specifically
224-8 applicable to foreign bank corporations, including rules that
224-9 provide for proportionate recovery of the cost of maintenance and
224-10 operation of the department and of enforcement of this chapter
224-11 through ratable and equitable fees established for notices,
224-12 applications, and examinations.
224-13 Sec. 9.003. REQUIREMENTS FOR MAINTAINING A FOREIGN BANK
224-14 AGENCY. A foreign bank corporation may not maintain a foreign bank
224-15 agency in this state or an office in this state for carrying on
224-16 functions permitted for a foreign bank agency unless the
224-17 corporation has complied with Section 9.007 of this Act and holds a
224-18 license for a foreign bank agency issued by the banking
224-19 commissioner.
224-20 Sec. 9.004. APPLICATION FOR LICENSE. (a) To obtain a
224-21 license for a foreign bank agency, a foreign bank corporation must
224-22 submit an application to the banking commissioner, accompanied by
224-23 all application fees and deposits required by applicable rules.
224-24 The application, in the form specified by the banking commissioner,
224-25 must be subscribed and acknowledged by an officer of the foreign
224-26 bank corporation and must have attached a complete copy of the
224-27 foreign bank corporation's application to the board of governors of
225-1 the Federal Reserve System under 12 U.S.C. Section 3105(d). The
225-2 application is due when the federal application is submitted to the
225-3 board of governors and must include on its face or in accompanying
225-4 documents:
225-5 (1) the name of the foreign bank corporation;
225-6 (2) an authenticated copy of the foreign bank
225-7 corporation's articles of incorporation and bylaws or other
225-8 constitutive documents and, if a copy is in a language other than
225-9 English, an English translation of the document, under the oath of
225-10 the translator;
225-11 (3) the street address where the foreign bank agency's
225-12 principal office is to be located and, if different, the foreign
225-13 bank agency's mailing address;
225-14 (4) the name and qualifications of each officer and
225-15 director of the foreign bank corporation who will have control of
225-16 all or part of the business and affairs of the foreign bank agency;
225-17 (5) a detailed statement of the foreign bank
225-18 corporation's financial condition as of a date not more than 360
225-19 days before the date of the application; and
225-20 (6) other information that:
225-21 (A) is necessary to enable the banking
225-22 commissioner to make the findings listed in Subsection (b) of this
225-23 section;
225-24 (B) is required by rules adopted under this Act;
225-25 or
225-26 (C) the banking commissioner reasonably
225-27 requests.
226-1 (b) The banking commissioner shall approve an application if
226-2 the banking commissioner finds after reasonable inquiry that:
226-3 (1) the foreign bank corporation has equity capital
226-4 under regulatory accounting principles equivalent to at least $100
226-5 million in United States currency;
226-6 (2) the standard metropolitan statistical area in
226-7 which the principal office of the foreign bank agency is proposed
226-8 to be located has a population in excess of 500,000;
226-9 (3) all members of the proposed management of the
226-10 agency have sufficient banking experience, ability, standing,
226-11 competence, trustworthiness, and integrity to justify a belief that
226-12 the proposed foreign bank agency will operate in compliance with
226-13 state law;
226-14 (4) the foreign bank corporation has sufficient
226-15 standing to justify a belief that the proposed foreign bank agency
226-16 will be free from improper or unlawful influence or interference
226-17 with respect to the bank's operation in compliance with state law;
226-18 and
226-19 (5) the applicant is acting in good faith and the
226-20 application does not contain a material misrepresentation.
226-21 Sec. 9.005. HEARING AND DECISION ON APPLICATION. (a) After
226-22 the application is complete and accepted for filing and all
226-23 required fees and deposits have been paid, the banking commissioner
226-24 shall determine whether the conditions set forth by Section
226-25 9.004(b) of this Act have been established, based on the
226-26 application and the initial investigation. The banking
226-27 commissioner shall approve the application or set the application
227-1 for hearing. As provided by 12 CFR Section 211.25(b)(5), the
227-2 banking commissioner shall notify the board of governors of the
227-3 Federal Reserve System that the application has been set for
227-4 hearing.
227-5 (b) If the banking commissioner sets the application for
227-6 hearing, the department shall participate as the opposing party,
227-7 and the banking commissioner shall conduct a hearing and one or
227-8 more prehearing conferences and opportunities for discovery as the
227-9 banking commissioner considers advisable and consistent with
227-10 applicable statutes and rules. Information relating to the
227-11 financial condition and business affairs of the foreign bank
227-12 corporation and financial information of its management and
227-13 shareholders, except for previously published statements and
227-14 information, is confidential and may not be released to the public
227-15 or considered in the public portion of the hearing. Based on the
227-16 record, the banking commissioner shall make a finding on each
227-17 condition listed in Section 9.004(b) of this Act and enter an order
227-18 granting or denying the license. The banking commissioner shall
227-19 inform the board of governors of the Federal Reserve System of the
227-20 order and the reasons the federal application should be denied if
227-21 the banking commissioner denied the application under this section.
227-22 (c) The banking commissioner may make approval of any
227-23 application conditional. The banking commissioner shall include
227-24 any conditions in the order granting the license, but may not issue
227-25 the license until the agency has received the approval of the board
227-26 of governors of the Federal Reserve System as provided by 12 U.S.C.
227-27 Section 3105(d). A written commitment from the applicant offered
228-1 to and accepted by the banking commissioner as a condition on the
228-2 approval of the application is enforceable against the applicant
228-3 and is considered for all purposes an agreement under this Act.
228-4 (d) If a hearing has been held, the banking commissioner has
228-5 entered an order denying the application, and the order has become
228-6 final, the applicant may appeal as provided by Section 3.009 of
228-7 this Act.
228-8 Sec. 9.006. REPRESENTATIVE OFFICES OF FOREIGN BANK
228-9 CORPORATIONS. (a) A foreign bank corporation that does not
228-10 possess a license to operate a foreign bank agency in this state
228-11 may establish one or more representative offices in this state for
228-12 any lawful purpose by filing with the banking commissioner a
228-13 verified statement of registration accompanied by all registration
228-14 fees and deposits required by rule. The statement of registration,
228-15 in a form specified by the banking commissioner, must be subscribed
228-16 and acknowledged by an officer of the foreign bank corporation and
228-17 must contain as an exhibit or attachment a complete copy of the
228-18 foreign bank corporation's registration form submitted to the Board
228-19 of Governors of the Federal Reserve System under 12 U.S.C. Section
228-20 3107. The statement of registration is due at the same time the
228-21 federal application is submitted to the Board of Governors and must
228-22 set forth, directly or in exhibits or attachments:
228-23 (1) the name of the foreign bank corporation;
228-24 (2) a duly authenticated copy of its articles of
228-25 incorporation and bylaws or other constitutive documents, and if
228-26 the copy is in a language other than English, an attached English
228-27 translation of the document, under the oath of the translator;
229-1 (3) the street and post office address and county
229-2 where each representative office is to be located in this state;
229-3 (4) the name and qualifications of each officer and
229-4 director of the foreign bank corporation who will have charge of
229-5 any aspect of the business and affairs of the representative
229-6 office;
229-7 (5) a complete and detailed statement of the financial
229-8 condition of the foreign bank corporation as of a date not more
229-9 than 360 days before the date of the filing; and
229-10 (6) other information the banking commissioner
229-11 requires.
229-12 (b) Before transacting business in this state through a
229-13 representative office, a foreign bank corporation described by this
229-14 section must comply with Section 9.007 of this Act.
229-15 (c) A representative office of a foreign bank corporation
229-16 established or maintained in this state may:
229-17 (1) solicit loans in principal amount of $250,000 or
229-18 more and in connection with the loans may:
229-19 (A) assemble credit information about the
229-20 borrower;
229-21 (B) make inspections and appraisals of property;
229-22 (C) obtain property title information; and
229-23 (D) prepare applications for loans;
229-24 (2) solicit purchasers for loans from the foreign
229-25 banking corporation;
229-26 (3) solicit persons to contract for loan servicing of
229-27 the foreign bank corporation loans;
230-1 (4) conduct research;
230-2 (5) perform services as liaison for customers and
230-3 correspondents of the foreign banking corporation;
230-4 (6) provide for execution of loan documents for
230-5 permitted loans as provided by written approval from the foreign
230-6 bank corporation; and
230-7 (7) engage in other activities approved by the banking
230-8 commissioner or permitted by rule.
230-9 (d) A representative office may not solicit or accept credit
230-10 balances or deposits or make final credit decisions.
230-11 (e) A representative office may engage in the business
230-12 authorized by this section at the places of business registered
230-13 with the banking commissioner. A representative office may change
230-14 its location in this state by filing a notice with the banking
230-15 commissioner containing the street and post office mailing address
230-16 and county of the new location.
230-17 (f) The banking commissioner may examine a representative
230-18 office of a foreign bank corporation to determine compliance with
230-19 this section.
230-20 Sec. 9.007. DESIGNATED AGENT FOR SERVICE OF PROCESS. (a)
230-21 Before transacting business in this state through a foreign bank
230-22 agency or a representative office, a foreign bank corporation shall
230-23 file with the secretary of state:
230-24 (1) a duly executed instrument, by its terms of
230-25 indefinite duration and irrevocable, appointing the secretary of
230-26 state as its agent for service of process on whom a notice or
230-27 process issued by a court in this state may be served in an action
231-1 or proceeding relating to the business of the foreign bank
231-2 corporation in this state; and
231-3 (2) a written certificate of designation, which may be
231-4 amended periodically by the filing of a new certificate of
231-5 designation, specifying the name and address of the officer, agent,
231-6 or other person to whom the notice or process shall be forwarded by
231-7 the secretary of state.
231-8 (b) The secretary of state shall collect for the use of the
231-9 state:
231-10 (1) a fee of $100 for indexing and filing the initial
231-11 certificate of designation and accompanying instruments required to
231-12 be filed by Subsection (a) of this section; and
231-13 (2) a fee of $15 for the filing of an amended
231-14 certificate of designation.
231-15 (c) On receipt of a notice or process, the secretary of
231-16 state shall promptly forward it by registered or certified mail to
231-17 the officer, agent, or other person designated. Failure of the
231-18 foreign bank corporation to maintain a designated person does not
231-19 affect the validity of service mailed to the last designated person
231-20 at the last designated address. Service of notice or process on
231-21 the secretary of state as agent for a foreign bank corporation has
231-22 the same effect as personal service made in this state on the
231-23 foreign bank corporation.
231-24 (d) A foreign bank corporation is not considered to be doing
231-25 business in this state for the purposes of Part Eight, Texas
231-26 Business Corporation Act, solely because it transacts business in
231-27 this state through a foreign bank agency or representative office
232-1 as provided by this Act.
232-2 Sec. 9.008. LOCATION OF PLACE OF BUSINESS. (a) Except as
232-3 otherwise provided by this Act, a foreign bank corporation may
232-4 engage in business through a foreign bank agency as authorized by
232-5 this Act only at the place of business specified in its license or
232-6 another location permitted by rule or approval of the banking
232-7 commissioner under Subsection (b) of this section. The license
232-8 must at all times be conspicuously displayed in the authorized
232-9 place of business.
232-10 (b) With the prior written approval of the banking
232-11 commissioner, the foreign bank agency may change the location of
232-12 its place of business to another location in an area where a
232-13 foreign bank agency is authorized to be established under Section
232-14 9.001 of this Act. A foreign bank agency may not maintain more
232-15 than one place of business in this state.
232-16 (c) For the purposes of this section, a place where loans or
232-17 extensions of credit or other permissible services are solicited is
232-18 not an impermissible place of business of the foreign bank agency
232-19 if the loans or extensions of credit are approved and made or other
232-20 permissible services are conducted at the authorized place of
232-21 business of the foreign bank agency. This section does not apply
232-22 to a representative office of the foreign bank corporation
232-23 registered with the banking commissioner under Section 9.006 of
232-24 this Act.
232-25 Sec. 9.009. REVOCATION OF LICENSE OR REGISTRATION. (a) The
232-26 banking commissioner may initiate a proceeding to revoke a license
232-27 or cancel a registration if the banking commissioner finds, by
233-1 examination or other credible evidence, that the foreign bank
233-2 corporation:
233-3 (1) with respect to its foreign bank agency, does not
233-4 currently meet the criteria established by this chapter for the
233-5 original issuance of a license;
233-6 (2) has refused to permit the banking commissioner to
233-7 examine a foreign bank agency's or representative office's books,
233-8 papers, accounts, records, or affairs;
233-9 (3) has violated this Act, another law or rule
233-10 applicable to a foreign bank corporation or foreign bank agency, or
233-11 a final and enforceable order of the banking commissioner or the
233-12 finance commission;
233-13 (4) has misrepresented or concealed a material fact in
233-14 the original registration or application for license;
233-15 (5) has violated a condition of its license or an
233-16 agreement between the foreign bank corporation and the banking
233-17 commissioner or the department; or
233-18 (6) conducts business in an unsafe and unsound manner.
233-19 (b) Notice of a proceeding under Subsection (a) of this
233-20 section must be served on the foreign bank corporation by personal
233-21 delivery or registered or certified mail, return receipt requested,
233-22 to a director, officer, or employee of the foreign bank corporation
233-23 at its foreign bank agency or representative office location. The
233-24 notice must be in the form of a proposed order and must state the
233-25 grounds for the proposed revocation with reasonable certainty. The
233-26 effective date of the proposed order must be stated in the proposed
233-27 order and may not be before the 21st day after the date the
234-1 proposed order is mailed or delivered. Unless the foreign bank
234-2 corporation requests a hearing in writing on or before the
234-3 effective date of the proposed order, the order takes effect as
234-4 proposed and is final and nonappealable.
234-5 (c) A hearing requested on a proposed order shall be held
234-6 not later than the 30th day after the date written request for
234-7 hearing is received by the department unless the parties agree to a
234-8 later hearing date. The department shall participate as the
234-9 opposing party, and the banking commissioner shall conduct the
234-10 hearing and one or more prehearing conferences and opportunities
234-11 for discovery as the banking commissioner considers advisable and
234-12 consistent with applicable statutes and rules. During the pendency
234-13 of the hearing and unless the banking commissioner gives prior
234-14 written approval, the foreign bank corporation may not accept new
234-15 business, except that it shall comply with any stricter
234-16 requirements imposed by 12 U.S.C. Section 3105(e). Information
234-17 relating to the financial condition and business affairs of the
234-18 foreign bank corporation, except for previously published
234-19 statements and information, is confidential and may not be released
234-20 to the public or considered in the public portion of the hearing.
234-21 Based on the record, the banking commissioner shall issue or refuse
234-22 to issue the proposed order. An issued order may contain any
234-23 modifications indicated by the record to be necessary or desirable.
234-24 (d) If a hearing has been held, the banking commissioner has
234-25 entered an order adverse to the foreign bank corporation, and the
234-26 order has become final, the foreign bank corporation may appeal as
234-27 provided by Section 3.009 of this Act.
235-1 Sec. 9.010. EFFECT OF REVOKED REGISTRATION. A foreign bank
235-2 corporation that has had its registration under Section 9.006 of
235-3 this Act revoked shall cease all activities in this state.
235-4 Continued activity of an unregistered foreign bank corporation is
235-5 subject to Subchapter C, Chapter 6, of this Act.
235-6 Sec. 9.011. STATUS OF REVOKED LICENSEE. Unless stayed by
235-7 the finance commission or district court that has jurisdiction over
235-8 an appeal, a final revocation order of the banking commissioner is
235-9 effective and the foreign bank corporation must immediately cease
235-10 all licensed activity in this state. The foreign bank agency
235-11 reverts to the status of a representative office and all licensed
235-12 functions must be immediately transferred to a branch, affiliate,
235-13 or agency of the foreign bank corporation that is located outside
235-14 of this state and that has the power to perform these functions
235-15 under governing law.
235-16 Sec. 9.012. POWERS AND PERMITTED ACTIVITIES. (a) A foreign
235-17 bank corporation licensed to transact business in this state
235-18 through a foreign bank agency may exercise the powers of a state
235-19 bank except as limited by this chapter, including the power to:
235-20 (1) borrow and lend money with or without real or
235-21 personal property as security;
235-22 (2) purchase, sell, and make loans regardless of
235-23 whether the loans are secured by bonds or mortgages on real
235-24 property;
235-25 (3) engage in a foreign exchange transaction;
235-26 (4) issue, advise, confirm, and otherwise deal with a
235-27 letter of credit and pay, accept, or negotiate a draft drawn under
236-1 a letter of credit;
236-2 (5) accept a bill of exchange or draft;
236-3 (6) buy or acquire and sell or dispose of a bill of
236-4 exchange, draft, note, acceptance, or other obligation for the
236-5 payment of money;
236-6 (7) maintain a credit balance of funds received at the
236-7 foreign bank agency incidental to or arising out of the exercise of
236-8 its authorized activities in this state, if the funds are not
236-9 intended to be deposits and do not remain in the foreign bank
236-10 agency after the completion of all transactions to which they
236-11 relate;
236-12 (8) receive money for transmission and transmit the
236-13 money from its authorized place of business in this state to any
236-14 other place; and
236-15 (9) perform other activities that are authorized by
236-16 rules adopted under this Act or that the banking commissioner
236-17 determines are analogous or incidental to specific activities
236-18 authorized by this section for a foreign bank agency.
236-19 (b) A foreign bank corporation may not receive deposits or
236-20 exercise fiduciary powers in this state, other than through the
236-21 performance of duties as an indenture trustee or as a registrar,
236-22 paying agent, or transfer agent, on behalf of the issuer, for
236-23 equity or investment securities. The exercise of the powers and
236-24 activities permitted by this subsection or Subsection (a) of this
236-25 section by a foreign bank agency is not considered the exercise of
236-26 banking or discounting privileges in this state by the foreign bank
236-27 corporation.
237-1 (c) A foreign bank corporation licensed to transact business
237-2 in this state through a foreign bank agency may share the premises
237-3 of the foreign bank agency with another authorized office of the
237-4 foreign bank corporation or a direct or indirect subsidiary of the
237-5 foreign bank corporation if the books and records of the foreign
237-6 bank agency are kept separately from the books and records of the
237-7 other office.
237-8 Sec. 9.013. REPORTS. (a) Before opening a foreign bank
237-9 agency in this state and annually while the foreign bank agency is
237-10 maintained in this state at the time specified by the banking
237-11 commissioner, the foreign bank corporation shall furnish the
237-12 banking commissioner with a copy of its annual financial statement,
237-13 expressed in the currency of the country of its incorporation or
237-14 organization.
237-15 (b) A foreign bank corporation doing business in this state
237-16 shall, at the times and in the form specified by the banking
237-17 commissioner, make written reports in English to the banking
237-18 commissioner under oath of one of its officers, managers, or agents
237-19 transacting business in this state. The report must show the
237-20 amount of the foreign bank corporation's assets and liabilities and
237-21 contain other information that the banking commissioner requires.
237-22 Failing to make the report or knowingly making a false statement in
237-23 the report is grounds for revocation of the license or registration
237-24 of the foreign bank corporation.
237-25 Sec. 9.014. TAXATION. A foreign bank corporation is subject
237-26 to the franchise tax to the extent provided by Chapter 171, Tax
237-27 Code.
238-1 Sec. 9.015. DISSOLUTION. (a) If a foreign bank corporation
238-2 licensed to maintain a foreign bank agency in this state is
238-3 dissolved, has its authority or existence terminated or canceled in
238-4 the jurisdiction of its incorporation, or has its authority to
238-5 maintain an agency in this state terminated by the board of
238-6 governors of the Federal Reserve System under 12 U.S.C. Section
238-7 3105(e), an officer, manager, or agent of the foreign bank
238-8 corporation shall deliver to the banking commissioner:
238-9 (1) a certificate of the official responsible for
238-10 records of banking corporations of the foreign bank corporation's
238-11 jurisdiction of incorporation attesting to the occurrence of
238-12 dissolution or cancellation or termination of existence or
238-13 authority;
238-14 (2) a certified copy of an order or decree of a court
238-15 of competent jurisdiction directing the dissolution of the foreign
238-16 bank corporation or cancellation or termination of its existence or
238-17 authority; or
238-18 (3) a certified copy of the order of the board of
238-19 governors of the Federal Reserve System terminating its authority
238-20 under 12 U.S.C. Section 3105(e).
238-21 (b) The filing of the certificate, order, or decree has the
238-22 same effect provided by Section 9.012 of this Act as if the license
238-23 issued under this chapter were revoked by the banking commissioner.
238-24 SECTION 2. (a) Sections 1 and 2, Article 1, Chapter XI, The
238-25 Texas Banking Code (Article 342-1101, Vernon's Texas Civil
238-26 Statutes), are amended to read as follows:
238-27 Sec. 1. (a) Prior to exercising trust powers, a trust
239-1 company shall incorporate in accordance with this chapter and the
239-2 Texas Banking Act <code>. A trust company may incorporate for the
239-3 following purpose: to act as a trustee, executor, administrator,
239-4 or guardian when designated by any person, corporation, or court to
239-5 do so and as agent for the performance of any lawful act, including
239-6 the right to receive deposits made by agencies of the United States
239-7 of America for the authorized account of any individual, and to
239-8 lend and accumulate money without banking privileges, when licensed
239-9 under provisions of Subtitle 2, Title 79, Revised Statutes.
239-10 (b) The Banking Commissioner <State Banking Board> shall
239-11 hear and determine applications for state trust company charters.
239-12 A final order of the Banking Commissioner on a charter application
239-13 may be appealed as provided by Section 3.009, Texas Banking Act.
239-14 Sec. 2. (a) Subject to Subsection (b), every trust company
239-15 with a capital of not less than $1 million <$500,000> shall, in
239-16 addition to all other powers conferred by law, have the power: to
239-17 purchase, sell, discount, and negotiate, with or without its
239-18 endorsement or guaranty, notes, drafts, checks, bills of exchange,
239-19 acceptances, including bankers' acceptances, cable transfers, and
239-20 other evidences of indebtedness; to purchase and sell, with or
239-21 without its endorsement or guaranty, stocks, bonds, securities,
239-22 including the obligations of the United States or of any states
239-23 thereof; to issue debentures, bonds, and promissory notes, to
239-24 accept bills or drafts drawn upon it, but in no event having
239-25 liabilities outstanding thereon at any one time exceeding five
239-26 times its capital stock and surplus; provided, however, that with
239-27 the consent in writing of the Banking Commissioner it may have
240-1 outstanding at any one time 10 times the capital stock and surplus;
240-2 and generally, to exercise such powers as are incidental to the
240-3 powers conferred by this article.
240-4 (b) The <Banking Section of The> Finance Commission of Texas
240-5 shall prescribe regulations pursuant to which the Banking
240-6 Commissioner may require such additional capital over and above the
240-7 minimum amount of $1 million <$500,000> prescribed in Subsection
240-8 (a) as may be necessary to assure the safety and soundness of trust
240-9 companies engaging in activities under Subsection (a). The
240-10 proposed effective date of an order requiring a trust company to
240-11 increase its capital must be stated in the order as on or after the
240-12 21st day after the date the proposed order is mailed or delivered.
240-13 Unless the trust company requests a hearing before the Banking
240-14 Commissioner in writing before the effective date of the proposed
240-15 order, the order becomes effective and is final and nonappealable.
240-16 (b) Article 2, Chapter XI, The Texas Banking Code (Article
240-17 342-1102, Vernon's Texas Civil Statutes), is amended to read as
240-18 follows:
240-19 Art. 2. Applicability of State Banking Code; Venue
240-20 Sec. 1. Unless otherwise provided in this chapter, a trust
240-21 company is subject to the provisions of Chapters 1-4, 6-8, and
240-22 Subchapters A and B, Chapter 5, Texas Banking Act, <I, II, III, IV,
240-23 V, VIII, and IX of this code> as if the trust company were a state
240-24 bank; provided, however, that Section 3.001 of that Act <Article 1,
240-25 Chapter III>, relating to banking powers, and Section 8.008 of that
240-26 Act <Article 11a, Chapter IV>, relating to securities law
240-27 exemption, <Article 4a, Chapter VIII, relating to priority of
241-1 distribution in liquidation, and Article 3, Chapter IX, relating to
241-2 limited branch banking> shall not apply.
241-3 Sec. 2. Venue for an action instituted to effect, contest,
241-4 or otherwise intervene in the liquidation of a trust company as
241-5 provided in this chapter and Chapter 7, Texas Banking Act, <VIII of
241-6 this code (Article 342-801 et seq., Vernon's Texas Civil Statutes)>
241-7 is in Travis County, except that on motion filed and served
241-8 concurrently with or before the filing of the answer, the court
241-9 may, upon a finding of good cause, transfer the action to the
241-10 county of the trust company's principal place of business.
241-11 (c) Sections 1 and 5, Article 3, Chapter XI, The Texas
241-12 Banking Code (Article 342-1103, Vernon's Texas Civil Statutes), are
241-13 amended to read as follows:
241-14 Sec. 1. Annual Statement. (a) Every trust company shall be
241-15 subject to regulation by the Banking Commissioner of Texas and
241-16 shall file with the banking commissioner on or before March 1 of
241-17 each year a statement of its condition on the previous December 31,
241-18 in such form as may be required by the banking commissioner,
241-19 showing under oath its assets and liabilities, together with a fee
241-20 of $50 for filing; and such statement shall be published in a
241-21 newspaper of general circulation published in the county in which
241-22 the trust company is located. The banking commissioner may, for
241-23 good cause shown, extend the time for filing such statement for not
241-24 more than 60 days. In addition, each trust company shall make and
241-25 publish statements of its financial condition as provided by
241-26 Section 2.009, Texas Banking Act <Article 9 of Chapter II of this
241-27 code>.
242-1 (b) Each trust company annually may be required by the
242-2 commissioner to obtain an external audit of its books and records
242-3 by a certified public accountant and provide the commissioner a
242-4 copy of the audit report.
242-5 Sec. 5. Confidentiality. The confidentiality provisions of
242-6 Subchapter B, Chapter 2, Texas Banking Act, <Article 10, Chapter
242-7 II, of this code> apply to all information obtained by the
242-8 Department relative to the financial condition of trust companies
242-9 other than the annual statements required under Section 1 of this
242-10 article.
242-11 (d) Article 4, Chapter XI, The Texas Banking Code (Article
242-12 342-1104, Vernon's Texas Civil Statutes), is amended to read as
242-13 follows:
242-14 Art. 4. Action by Banking Commissioner; Officers and
242-15 Directors; Cease and Desist Orders; Removal; Review. (a) With
242-16 regard to a trust company, the Banking Commissioner of Texas may
242-17 take action in accordance with Subchapter A, Chapter 6, Texas
242-18 Banking Act <Article 12, Chapter IV, of this code>, as if the trust
242-19 company were a state bank if the banking commissioner finds that an
242-20 officer, director, or employee of the trust company, or the trust
242-21 company itself acting through any authorized person:
242-22 (1) violates any law or rule applicable to the trust
242-23 company;
242-24 (2) refuses to comply with any law or rule applicable
242-25 to the trust company;
242-26 (3) wilfully neglects to perform his or its duties or
242-27 commits a breach of trust or of fiduciary duty;
243-1 (4) commits any fraudulent or questionable practice in
243-2 the conduct of the trust company's business that threatens the
243-3 trust company's solvency;
243-4 (5) refuses to submit to examination under oath;
243-5 (6) conducts business in an unsafe or unauthorized
243-6 manner; or
243-7 (7) violates any conditions of the trust company's
243-8 charter or of any agreement entered with the Banking Commissioner
243-9 of the Banking Department.
243-10 (b) An individual or trust company against which action is
243-11 taken under this section may request review of that action in
243-12 accordance with Subchapter A, Chapter 6, Texas Banking Act <Article
243-13 12, Chapter IV, of this code>, as if the trust company were a state
243-14 bank.
243-15 (e) Sections (a) and (b), Article 5, Chapter XI, The Texas
243-16 Banking Code (Article 342-1105, Vernon's Texas Civil Statutes), are
243-17 amended to read as follows:
243-18 (a) With regard to a trust company, the Banking Commissioner
243-19 of Texas may take action in accordance with Subchapter B, Chapter
243-20 6, Texas Banking Act <Article 1a, Chapter VIII, of this code>, as
243-21 if the trust company were a state bank if:
243-22 (1) it appears to the banking commissioner that the
243-23 trust company is in a condition that would be a hazardous <an
243-24 unsafe> condition for a state bank <under Article 1a> and the trust
243-25 company's condition renders the continuance of its business
243-26 hazardous to the public or to the shareholders or creditors of the
243-27 trust company;
244-1 (2) it appears to the banking commissioner
244-2 <considering Article 1a> that the trust company has exceeded its
244-3 powers;
244-4 (3) the trust company had failed to comply with the
244-5 law; or
244-6 (4) the trust company gives written consent to
244-7 supervision or conservatorship under this section.
244-8 (b) A trust company against which action is taken under this
244-9 section may request review of that action in accordance with
244-10 Subchapter B, Chapter 6, Texas Banking Act <Article 1a, Chapter
244-11 VIII, of this code>, as if it were a state bank.
244-12 (f) Section (a), Article 6, Chapter XI, The Texas Banking
244-13 Code (Article 342-1106, Vernon's Texas Civil Statutes), is amended
244-14 to read as follows:
244-15 (a) The Finance Commission <State Banking Board> shall
244-16 promulgate and adopt such rules and procedural regulations as may
244-17 be necessary to facilitate the fair hearing and adjudication of
244-18 charter applications.
244-19 (g) Article 8, Chapter XI, The Texas Banking Code (Article
244-20 342-1108, Vernon's Texas Civil Statutes), is amended to read as
244-21 follows:
244-22 Art. 8. PAID-IN CAPITAL. (a) A trust company shall have
244-23 and maintain a fully paid-in capital of not less than $1 million
244-24 <$500,000>.
244-25 (b) The banking commissioner may require additional capital
244-26 of a trust company if the banking commissioner <he> determines it
244-27 necessary to protect the safety and soundness of the trust company.
245-1 The proposed effective date of an order requiring a trust company
245-2 to increase its capital must be stated in the order as on or after
245-3 the 21st day after the date the proposed order is mailed or
245-4 delivered. Unless the trust company requests a hearing before the
245-5 banking commissioner in writing before the effective date of the
245-6 proposed order, the order becomes effective and is final and
245-7 nonappealable.
245-8 (c) The banking commissioner on application may authorize a
245-9 trust company to have and maintain capital of less than the amount
245-10 required by Subsection (a) of this section if the banking
245-11 commissioner finds that the safety and soundness of the trust
245-12 company will be adequately protected by the lower capital
245-13 requirement.
245-14 (h) Article 13, Chapter XI, The Texas Banking Code (Article
245-15 342-1113, Vernon's Texas Civil Statutes), is amended to read as
245-16 follows:
245-17 Art. 13. Exemptions. The provisions of this chapter shall
245-18 not affect or apply to:
245-19 (1) any state or federal credit union doing business
245-20 in this state provided that such credit union is otherwise
245-21 authorized to exercise trust powers;
245-22 (2) a public, private, or independent institution of
245-23 higher education or a university system, as those terms are defined
245-24 by Section 61.003, Education Code, including its affiliated
245-25 foundations or corporations, acting as trustee as provided by the
245-26 Education Code; or
245-27 (3) a corporation serving as trustee of a charitable
246-1 trust as provided by Article 2.31, Texas Non-Profit Corporation Act
246-2 (Article 1396-2.31, Vernon's Texas Civil Statutes).
246-3 (i) Section 2, Article 14, Chapter XI, The Texas Banking
246-4 Code (Article 342-1114, Vernon's Texas Civil Statutes), is amended
246-5 to read as follows:
246-6 Sec. 2. Subject to the provisions of Sections 7.310 and
246-7 7.313, Texas Banking Act <Articles 14 and 15 of Chapter VIII of
246-8 this Act>, after fully satisfying all timely filed and approved
246-9 claims of a higher priority, the commissioner may make a ratable
246-10 distribution to approved claimants within a particular class or
246-11 priority if there are insufficient funds to fully satisfy all of
246-12 those claims, after reserving funds for administrative expenses, if
246-13 necessary.
246-14 (j) A trust company that possesses a charter on September 1,
246-15 1995, and that has capital and surplus of less than the amount
246-16 required by Article 8, Chapter XI, The Texas Banking Code, as
246-17 amended by this section, shall increase its capital and surplus to
246-18 the amount required by that article before September 1, 2000. The
246-19 Finance Commission of Texas may adopt rules specifying procedures
246-20 for ratable increases in capital and surplus under this section and
246-21 for deferrals and extensions of time for a trust company acting in
246-22 good faith to achieve minimum required capital and surplus.
246-23 SECTION 3. Chapter 30, Civil Practice and Remedies Code, is
246-24 amended by adding Section 30.007 to read as follows:
246-25 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
246-26 (a) In this section:
246-27 (1) "Customer" means a person who uses, purchases, or
247-1 obtains an account, extension of credit, or product of a financial
247-2 institution or for whom a financial institution acts as a
247-3 fiduciary, agent, or custodian or in another representative
247-4 capacity.
247-5 (2) "Financial institution" means a state or national
247-6 bank, state or federal savings and loan association, state or
247-7 federal savings bank, state or federal credit union, foreign bank,
247-8 foreign bank agency, or trust company.
247-9 (3) "Record" means financial or other information of a
247-10 customer maintained by a financial institution.
247-11 (4) "Record request" means a valid and enforceable
247-12 subpoena, request for production, or other instrument issued under
247-13 authority of a tribunal that compels production of a customer
247-14 record.
247-15 (5) "Tribunal" means a court or other adjudicatory
247-16 tribunal with jurisdiction to issue a request for records,
247-17 including a government agency exercising adjudicatory functions and
247-18 an alternative dispute resolution mechanism, voluntary or required,
247-19 under which a party may compel the production of records.
247-20 (b) This section provides the exclusive method for compelled
247-21 discovery of a record of a financial institution relating to one or
247-22 more customers, does not create a right of privacy in a record, and
247-23 does not apply to:
247-24 (1) a demand or inquiry from a state or federal
247-25 government agency authorized by law to conduct an examination of
247-26 the financial institution;
247-27 (2) a record request from a state or federal
248-1 government agency or instrumentality under statutory or
248-2 administrative authority that provides for, or is accompanied by, a
248-3 specific mechanism for discovery and protection of a customer
248-4 record of a financial institution, including a record request from
248-5 a federal agency subject to the Right to Financial Privacy Act of
248-6 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
248-7 Service under 26 U.S.C. Section 7609;
248-8 (3) a record request from or report to a government
248-9 agency arising out of the investigation or prosecution of a
248-10 criminal offense;
248-11 (4) a record request in connection with a garnishment
248-12 proceeding in which the financial institution is garnishee and the
248-13 customer is debtor;
248-14 (5) an investigative demand or inquiry from a state
248-15 legislative investigating committee;
248-16 (6) an investigative demand or inquiry from the
248-17 attorney general of this state as authorized by law other than the
248-18 procedural law governing discovery in civil cases; or
248-19 (7) the voluntary use or disclosure of a record by a
248-20 financial institution subject to other applicable state or federal
248-21 law.
248-22 (c) A financial institution shall produce a record in
248-23 response to a record request only if:
248-24 (1) it is served with the record request not later
248-25 than the 24th day before the date that compliance with the record
248-26 request is required;
248-27 (2) before the financial institution complies with the
249-1 record request the requesting party pays the financial
249-2 institution's reasonable costs of complying with the record
249-3 request, including costs of reproduction, postage, research,
249-4 delivery, and attorney's fees, or posts a cost bond in an amount
249-5 estimated by the financial institution to cover those costs; and
249-6 (3) when the customer is not a party to the proceeding
249-7 in which the request was issued, the requesting party complies with
249-8 Subsections (d) and (e) and:
249-9 (A) the financial institution receives the
249-10 customer's written consent to release the record after a request
249-11 under Subsection (d)(3); or
249-12 (B) the tribunal takes further action based on
249-13 action initiated by the requesting party under Subsection (e).
249-14 (d) If the affected customer is not a party to the
249-15 proceeding in which the record request was issued, in addition to
249-16 serving the financial institution with a record request, the
249-17 requesting party shall:
249-18 (1) give notice stating the rights of the customer
249-19 under Subsection (f) and a copy of the request to each affected
249-20 customer in the manner and within the time provided by Rule 21a,
249-21 Texas Rules of Civil Procedure;
249-22 (2) file a certificate of service indicating that the
249-23 customer has been mailed or served with the notice and a copy of
249-24 the record request as required by this subsection with the tribunal
249-25 and the financial institution; and
249-26 (3) request the customer's written consent authorizing
249-27 the financial institution to comply with the request.
250-1 (e) If the customer refuses to execute the written consent
250-2 or fails to respond to the requesting party's request under
250-3 Subsection (d)(3) on or before the date that compliance with the
250-4 request is required, the requesting party may by written motion
250-5 seek an in camera inspection of the requested record as its sole
250-6 means of obtaining access to the requested record. In response to
250-7 a motion for in camera inspection, the tribunal may inspect the
250-8 requested record to determine its relevance to the matter before
250-9 the tribunal. The tribunal may order redaction of portions of the
250-10 records that the tribunal determines should not be produced and
250-11 shall enter a protective order preventing the record that it orders
250-12 produced from being:
250-13 (1) disclosed to a person who is not a party to the
250-14 proceeding before the tribunal; and
250-15 (2) used by a person for any purpose other than
250-16 resolving the dispute before the tribunal.
250-17 (f) The customer bears the burden of preventing or limiting
250-18 the financial institution's compliance with a record request
250-19 subject to this section by seeking an appropriate remedy, including
250-20 filing a motion to quash the record request or a motion for a
250-21 protective order. The customer has standing to appear before the
250-22 tribunal for that purpose if the customer is not otherwise a party.
250-23 Any motion filed shall be served on the financial institution and
250-24 the requesting party before the date that compliance with the
250-25 request is required. A financial institution is not liable to its
250-26 customer or another person for disclosure of a record in compliance
250-27 with this section.
251-1 (g) A financial institution may not be required to produce a
251-2 record under this section before the later of:
251-3 (1) the 24th day after the date of receipt of the
251-4 record request as provided by Subsection (c)(1);
251-5 (2) the 15th day after the date of receipt of a
251-6 customer consent to disclose a record as provided by Subsection
251-7 (c)(3); or
251-8 (3) the 15th day after the date a court orders
251-9 production of a record after an in camera inspection of a requested
251-10 record as provided by Subsection (e).
251-11 (h) An order to quash or for protection or other remedy
251-12 entered or denied by the tribunal under Subsection (e) or (f) is
251-13 not a final order and an interlocutory appeal may not be taken.
251-14 SECTION 4. Section 2001.223, Government Code, is amended to
251-15 read as follows:
251-16 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
251-17 Enforcement, and Contested Case Provisions. Section 2001.038 and
251-18 Subchapters C through H do not apply to:
251-19 (1) the granting, payment, denial, or withdrawal of
251-20 financial or medical assistance or benefits under service programs
251-21 of the Texas Department of Human Services;
251-22 (2) action by the Banking Commissioner or the Finance
251-23 Commission of Texas <State Banking Board> regarding the issuance of
251-24 a state bank charter for a bank to assume the assets and
251-25 liabilities of a financial institution <state bank> that the
251-26 commissioner considers <determines> to be in hazardous <an unsafe>
251-27 condition as defined by Section 1.002(a), <Section 1, Article 1a,
252-1 Chapter VIII, The> Texas Banking Act <Code (Article 342-801a,
252-2 Vernon's Texas Civil Statutes)>;
252-3 (3) a hearing or interview conducted by the Board of
252-4 Pardons and Paroles or the pardons and paroles division of the
252-5 Texas Department of Criminal Justice relating to the grant,
252-6 rescission, or revocation of parole or other form of administrative
252-7 release; or
252-8 (4) the suspension, revocation, or termination of the
252-9 certification of a breath analysis operator or technical supervisor
252-10 under the rules of the Department of Public Safety.
252-11 SECTION 5. Sections 2257.002(1) and (3), Government Code,
252-12 are amended to read as follows:
252-13 (1) "Bank holding company" has the meaning assigned by
252-14 Section 1.002(a), Texas Banking Act <Article 2, Chapter I, The
252-15 Texas Banking Code (Article 342-102, Vernon's Texas Civil
252-16 Statutes)>.
252-17 (3) "Control" has the meaning assigned by Section
252-18 1.002(a), Texas Banking Act <Article 2, Chapter I, The Texas
252-19 Banking Code (Article 342-102, Vernon's Texas Civil Statutes)>.
252-20 SECTION 6. Section 712.042(b), Health and Safety Code, is
252-21 amended to read as follows:
252-22 (b) The banking department shall receive and disburse
252-23 revenues collected under this chapter in accordance with Section
252-24 2.006, Texas Banking Act <Article 12, Chapter I, The Texas Banking
252-25 Code of 1943 (Article 342-112, Vernon's Texas Civil Statutes)>.
252-26 SECTION 7. Section 1(c), Article 1.19-1, Insurance Code, is
252-27 amended to read as follows:
253-1 (c) A subpoena issued to a bank or other financial
253-2 institution as part of a criminal investigation is not subject to
253-3 Section 30.007, Civil Practice and Remedies Code <Article 5,
253-4 Chapter VII, The Texas Banking Code (Article 342-705, Vernon's
253-5 Texas Civil Statutes)>.
253-6 SECTION 8. Section 1, Article 9.05, Insurance Code, is
253-7 amended to read as follows:
253-8 Sec. 1. Any corporation heretofore chartered under the
253-9 provisions of Article 9.03 of this Act, or its antecedents, Article
253-10 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
253-11 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
253-12 having as one of its powers "to act as trustee under any lawful
253-13 trust committed to it by contract or will, appointment by any court
253-14 having jurisdiction of the subject matter, as trustee, receiver or
253-15 guardian and as executor or guardian under the terms of any will
253-16 and as any administrator of the estates of decedents under the
253-17 appointment of the court" may transfer and assign to a state bank
253-18 or trust company created under the provisions of the Texas Banking
253-19 Act or a predecessor of that Act <Code of 1943>, as amended, all of
253-20 its fiduciary business in which such corporation is named or acting
253-21 as guardian, trustee, executor, administrator or in any other
253-22 fiduciary capacity, whereupon said state bank or trust company
253-23 shall, without the necessity of any judicial action in the courts
253-24 of the State of Texas or any action by the creator or beneficiary
253-25 of such trust or estate, continue the guardianship, trusteeship,
253-26 executorship, administration or other fiduciary relationship, and
253-27 perform all of the duties and obligations of such corporation, and
254-1 exercise all of the powers and authority relative thereto now being
254-2 exercised by such corporation, and provided further that the
254-3 transfer or assignment by such corporation of such fiduciary
254-4 business being conducted by it under the powers granted in its
254-5 original charter, as amended, shall not constitute or be deemed a
254-6 resignation or refusal to act upon the part of such corporation as
254-7 to any such guardianship, trust, executorship, administration, or
254-8 any other fiduciary capacity; and provided further that the naming
254-9 or designation by a testator or the creator of a living trust of
254-10 such corporation to act as trustee, guardian, executor, or in any
254-11 other fiduciary capacity, shall be considered the naming or
254-12 designation of the state bank or trust company and authorizing such
254-13 state bank or trust company to act in said fiduciary capacity. All
254-14 transfers and assignments of fiduciary business by such
254-15 corporations to a state bank or trust company consistent with the
254-16 provisions of this Act are hereby validated.
254-17 SECTION 9. Section 105.001(13), Local Government Code, is
254-18 amended to read as follows:
254-19 (13) "State bank" has the meaning assigned by Section
254-20 1.002(a), Texas Banking Act <The Texas Banking Code (Article
254-21 342-101 et seq., Vernon's Texas Civil Statutes)>.
254-22 SECTION 10. Sections 105A(c) and (d), Texas Probate Code,
254-23 are amended to read as follows:
254-24 (c) No foreign bank or trust company shall establish or
254-25 maintain any branch office, agency or other place of business
254-26 within this state, or shall in any way solicit, directly or
254-27 indirectly, any fiduciary business in this state of the types
255-1 embraced by subdivision (a) hereof. Except as authorized herein or
255-2 as may otherwise be authorized by the laws of this state, no
255-3 foreign bank or trust company shall act in a fiduciary capacity in
255-4 this state. Nothing in this Section shall be construed to
255-5 authorize foreign banks and trust companies to issue or to sell or
255-6 otherwise market or distribute in this state any investment
255-7 certificates, trust certificates, or other types of securities
255-8 (including without limiting the generality of the foregoing any
255-9 securities of the types authorized by Chapter 7 of the Insurance
255-10 Code of 1951 prior to the repeal thereof), or to conduct any
255-11 activities or exercise any powers of the type embraced and
255-12 regulated by the Texas Banking Act <Code of 1943> other than those
255-13 conducted and exercised in a fiduciary capacity under the terms and
255-14 conditions hereof.
255-15 (d) Any foreign bank or trust company acting in a fiduciary
255-16 capacity in this state in strict accordance with the provisions of
255-17 this Section shall not be deemed to be doing business in the State
255-18 of Texas within the meaning of Article 8.01 of the Texas Business
255-19 Corporation Act; shall be deemed qualified to serve in such
255-20 capacity under the provisions of Section 105 of this Code; and
255-21 notwithstanding other law shall not be prohibited <by the
255-22 provisions of Chapter 137, Acts of the 55th Legislature, Regular
255-23 Session, 1957, amending Article 342-902 of the Texas Banking Code
255-24 of 1943,> from using in its name and stationery the terms "bank,"
255-25 "trust," or "bank and trust."
255-26 SECTION 11. Section 73.003(c), Property Code, is amended to
255-27 read as follows:
256-1 (c) This section does not affect the provisions of
256-2 Subchapter B, Chapter 8, Texas Banking Act <Article 6, Chapter IX,
256-3 The Texas Banking Code of 1943 (Article 342-906, Vernon's Texas
256-4 Civil Statutes)>.
256-5 SECTION 12. Section 171.001(b)(1), Tax Code, is amended to
256-6 read as follows:
256-7 (1) "Banking corporation" means each state, national,
256-8 domestic, or foreign bank, including a limited banking association,
256-9 as defined by Section 1.002(a), Texas Banking Act <organized under
256-10 Subchapter C, Chapter III, The Texas Banking Code (Article 342-360
256-11 et seq., Vernon's Texas Civil Statutes)>, and each bank organized
256-12 under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
256-13 (edge corporations), but does not include a bank holding company as
256-14 that term is defined by Section 2, Bank Holding Company Act of 1956
256-15 (12 U.S.C. Sec. 1841).
256-16 SECTION 13. Section 171.1031(c), Tax Code, is amended to
256-17 read as follows:
256-18 (c) To the extent that this subsection is not preempted by
256-19 federal law, the Texas Department of Banking <does not conflict
256-20 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
256-21 342-908, Vernon's Texas Civil Statutes), the Banking Department of
256-22 Texas> is required to appoint a conservator under Subchapter B,
256-23 Chapter 6, Texas Banking Act, to pay the franchise tax <revoke the
256-24 chapter> of any banking corporation certified by the Comptroller as
256-25 being delinquent in the payment of its franchise tax.
256-26 SECTION 14. Section 5, Article 350, Revised Statutes, is
256-27 amended to read as follows:
257-1 Sec. 5. Fees. The commissioner by rule shall set the
257-2 license application fees, license fees, license renewal fees, <and>
257-3 examination fees, and investigation fees in amounts reasonable and
257-4 necessary to defray the cost of administering this article.
257-5 SECTION 15. Section 8, Article 350, Revised Statutes, is
257-6 amended by amending Subsections (c) and (d) and adding Subsections
257-7 (e), (f), and (g) to read as follows:
257-8 (c) A person is not eligible for a license or must surrender
257-9 an existing license if<, during the previous 10 years,> the person,
257-10 an agent of the person for purposes of the currency exchange or
257-11 transmission business, or a principal of the person, if a business:
257-12 (1) has been convicted within 10 years preceding the
257-13 date of the application of a felony or a crime involving moral
257-14 turpitude under the laws of this state, any other state, or the
257-15 United States;
257-16 (2) has been convicted within 10 years of the date of
257-17 the application of a crime under the laws of another country that
257-18 involves moral turpitude or would be a felony if committed in the
257-19 United States; or
257-20 (3) owes delinquent taxes, fines, or fees to any
257-21 local, state, or federal taxing or governmental entity.
257-22 (d) An applicant for a license or renewal of a license must
257-23 demonstrate that the applicant:
257-24 (1) has not recklessly failed to file or evaded the
257-25 obligation to file a currency transaction report as required by 31
257-26 U.S.C. Section 5313 during the previous three years;
257-27 (2) has not recklessly accepted currency for exchange
258-1 or transmission during the previous three years in which a portion
258-2 of the currency was derived from an illegal transaction or
258-3 activity;
258-4 (3) will conduct its currency exchange or transmission
258-5 business within the bounds of state and federal law; <and>
258-6 (4) warrants the trust of the community; and
258-7 (5) has a minimum net worth of $25,000, computed
258-8 according to generally accepted accounting principles, for each
258-9 location at which business is conducted, including any location or
258-10 agency that receives or holds any funds intended to be transmitted
258-11 by another location, except that an applicant may not be required
258-12 to maintain a net worth of more than $1 million.
258-13 (e) If the applicant is an individual who is a foreign
258-14 citizen, the applicant must be a resident of the state. If the
258-15 applicant is a person other than an individual, a majority of the
258-16 principals of the applicant who the commissioner determines are
258-17 actively involved in the currency exchange or transmission business
258-18 in the state must be residents of the state.
258-19 (f) Before approving an application for a license under this
258-20 article, the commissioner may investigate an applicant or a
258-21 principal of the applicant. The commissioner shall charge and
258-22 collect from the applicant a nonrefundable fee to cover the expense
258-23 of an investigation under this subsection. If the applicant fails
258-24 to pay a fee required by this subsection or the applicant or
258-25 principal of the applicant fails to cooperate with an investigation
258-26 conducted under this subsection, the commissioner may deny the
258-27 application.
259-1 (g) A licensee shall maintain a minimum net worth for each
259-2 license in the amount required under Subsection (d)(5).
259-3 SECTION 16. Section 10(a), Article 350, Revised Statutes, is
259-4 amended to read as follows:
259-5 (a) A person who is licensed under this article shall post a
259-6 bond with a qualified surety company doing business in this state
259-7 that is acceptable to the commissioner or an irrevocable letter of
259-8 credit issued by a qualified financial institution that is
259-9 acceptable to the commissioner. The bond or letter of credit shall
259-10 be in an amount determined by the commissioner. The commissioner
259-11 shall determine the amount of the bond or letter of credit based on
259-12 the dollar volume of the licensee's currency exchange or
259-13 transmission business and the number of locations from which the
259-14 person operates, but the bond or letter of credit must be at least
259-15 $25,000 for a person conducting a currency exchange business and at
259-16 least $300,000 for a person conducting a currency transmission or
259-17 currency transportation business.
259-18 SECTION 17. Section 11, Article 350, Revised Statutes, is
259-19 amended to read as follows:
259-20 Sec. 11. Examination. (a) Each licensee is subject to a
259-21 periodic examination of the licensee's business records by the
259-22 commissioner at the expense of the licensee. For the purpose of
259-23 carrying out this article, the commissioner may examine all books,
259-24 records, papers, or other objects that the commissioner determines
259-25 are necessary for conducting a complete examination and may also
259-26 examine under oath any principal associated with the license
259-27 holder, including an officer, director, or employee of the
260-1 licensee. If a person required by the commissioner to submit to an
260-2 examination refuses to permit the examination or to answer any
260-3 question authorized by this article, the commissioner may suspend
260-4 the person's license until the examination is completed.
260-5 (b) The Banking Department may, at its sole discretion,
260-6 periodically conduct an unannounced examination to determine a
260-7 licensee's compliance with this article.
260-8 (c) As part of every examination, the Banking Department
260-9 shall determine whether the licensee is complying with all state
260-10 and federal laws relating to the currency exchange, transportation,
260-11 or transmission business.
260-12 SECTION 18. Article 350, Revised Statutes, is amended by
260-13 adding Sections 22 and 23 to read as follows:
260-14 Sec. 22. DECEPTIVE ADVERTISING. (a) A licensee who
260-15 advertises the prices to be charged by the currency exchange,
260-16 transportation, or currency transmission business for services
260-17 provided must specifically state in the advertisement any fee or
260-18 commission that is included as part of the price to the consumer.
260-19 (b) The commissioner by rule shall establish requirements
260-20 for the size and type of lettering a licensee must use in placing
260-21 an advertisement for prices or rates to be charged by the business.
260-22 (c) A person who violates this section or a rule adopted
260-23 under this section commits a false, misleading, or deceptive act or
260-24 practice within the meaning of Subsections (a) and (b) of Section
260-25 17.46, Business & Commerce Code.
260-26 Sec. 23. NAME. The commissioner may not issue a license to
260-27 an applicant if the commissioner determines the applicant's name is
261-1 misleading or deceptive to consumers.
261-2 SECTION 19. Section 2.13, Texas Savings Bank Act (Article
261-3 489e, Vernon's Texas Civil Statutes), is amended to read as
261-4 follows:
261-5 Sec. 2.13. Corporate Name. The name of a savings bank must
261-6 include the words "State Savings Bank" or the abbreviation "SSB."
261-7 These words or the abbreviation must be preceded by an appropriate
261-8 descriptive word or words approved by the commissioner. The
261-9 commissioner may not approve the incorporation of a savings bank
261-10 having the same name as another financial institution authorized to
261-11 do business in this state under this Act, the Texas Savings and
261-12 Loan Act (Article 852a, Vernon's Texas Civil Statutes), or the
261-13 Texas Banking Act <The Texas Banking Code (Article 342-101 et seq.,
261-14 Vernon's Texas Civil Statutes)> or a name so nearly resembling the
261-15 name of another financial institution as to be calculated to
261-16 deceive unless the savings bank is formed by the reincorporation,
261-17 reorganization, or consolidation of the other financial institution
261-18 or on the sale of the property or franchise of the other savings
261-19 bank. A person or company, either domestic or foreign, other than
261-20 a state or federal savings bank, may not do business under a name
261-21 or title that contains the words "savings bank," that indicates or
261-22 reasonably implies that the business is the character or kind of
261-23 business carried on or transacted by a savings bank, or that is
261-24 calculated to lead any person to believe that its business is that
261-25 of a savings bank. On application by the commissioner or any
261-26 savings bank, a court of competent jurisdiction may issue an
261-27 injunction to restrain a person or company from violating this
262-1 section.
262-2 SECTION 20. Section 4.07, Texas Savings Bank Act (Article
262-3 489e, Vernon's Texas Civil Statutes), is amended to read as
262-4 follows:
262-5 Sec. 4.07. Fees. The commissioner and the finance
262-6 commission, acting under the rulemaking power delegated by Section
262-7 1.106, Texas Banking Act <Article 5, Chapter II, The Texas Banking
262-8 Code (Article 342-205, Vernon's Texas Civil Statutes)>, and Section
262-9 4.04 of this Act, shall establish the amount of the fees to be
262-10 charged by the commissioner for supervision and examination of
262-11 savings banks, for filing an application or other documents, for
262-12 conducting a hearing, and for other services performed by the
262-13 commissioner and the commission's office and the time and manner of
262-14 payment of the fees. Fees collected by the commissioner shall be
262-15 deposited and used in accordance with Section 1.106, Texas Banking
262-16 Act <(h), Article 5, Chapter II, The Texas Banking Code (Article
262-17 342-205, Vernon's Texas Civil Statutes)>.
262-18 SECTION 21. Section 12.07, Texas Savings Bank Act (Article
262-19 489e, Vernon's Texas Civil Statutes), is amended to read as
262-20 follows:
262-21 Sec. 12.07. Initiation of Rulemaking by Savings Banks. If
262-22 20 percent or more of the savings banks subject to this Act
262-23 petition the commissioner in writing requesting the adoption,
262-24 amendment, or repeal of a rule, the commissioner shall initiate
262-25 rulemaking proceedings under Chapter 2001, Government Code
262-26 <Subsection (e), Article 5, Chapter II, The Texas Banking Code
262-27 (Article 342-205, Vernon's Texas Civil Statutes)>.
263-1 SECTION 22. Section 12.12(b), Texas Savings Bank Act
263-2 (Article 489e, Vernon's Texas Civil Statutes), is amended to read
263-3 as follows:
263-4 (b) Subsection (a) of this section does not apply to this
263-5 Act, the Texas Savings and Loan Act (Article 852a, Vernon's Texas
263-6 Civil Statutes), the Texas Banking Act <The Texas Banking Code
263-7 (Article 342-101 et seq., Vernon's Texas Civil Statutes)>, or the
263-8 Penal Code.
263-9 SECTION 23. Section 11.05, Texas Savings and Loan Act
263-10 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
263-11 as follows:
263-12 Sec. 11.05. Fees. The amount of the fees to be charged by
263-13 the Commissioner for supervision and examination of associations,
263-14 filing of applications and other documents and for other services
263-15 performed by the Commissioner and his office and the time and
263-16 manner of payment thereof shall be fixed by rule and regulation
263-17 adopted by the Commissioner and the Finance Commission, acting
263-18 pursuant to the rule-making power delegated by Section 1.106, Texas
263-19 Banking Act <Article 5, Chapter II, the Texas Banking Code of 1943
263-20 (Article 342-205, Vernon's Texas Civil Statutes)>. All fees
263-21 collected by the Commissioner shall be deposited and used in
263-22 accordance with Section 1.106, Texas Banking Act <(h), Article 5,
263-23 Chapter II, The Texas Banking Code of 1943 (Article 342-205,
263-24 Vernon's Texas Civil Statutes)>.
263-25 SECTION 24. Section 11.20(l), Texas Savings and Loan Act
263-26 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
263-27 as follows:
264-1 (l) The Finance Commission of Texas by rule shall adopt a
264-2 schedule of fees for the filing of applications and the holding of
264-3 hearings. The schedule may be graduated so that those applications
264-4 and hearings that are more difficult to review or administer will
264-5 require a larger fee. An application fee is not refundable on
264-6 denial of the application, but the commissioner may refund a
264-7 portion of the fee if the application is withdrawn before he
264-8 completes review of it. Fees collected under this section shall be
264-9 deposited and used in accordance with Section 1.106, Texas Banking
264-10 Act <(h), Article 5, Chapter II, The Texas Banking Code of 1943
264-11 (Article 342-205, Vernon's Texas Civil Statutes)>.
264-12 SECTION 25. Section A(2), Article 7.06, Texas Miscellaneous
264-13 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
264-14 Statutes), is amended to read as follows:
264-15 (2) "Corporation" means:
264-16 (a) Any corporation, association, or other
264-17 organization incorporated or organized under the Texas Business
264-18 Corporation Act, the Texas Non-Profit Corporation Act (Article
264-19 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
264-20 Banking Act or a predecessor of that Act <The Texas Banking Code of
264-21 1943 (Article 342-1.01 et seq., Vernon's Texas Civil Statutes)>,
264-22 the Insurance Code, the Texas Savings and Loan Act (Article 852a,
264-23 Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
264-24 Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
264-25 Texas Civil Statutes), the Texas Credit Union Act (Article
264-26 2461-1.01 et seq., Vernon's Texas Civil Statutes), the Cooperative
264-27 Association Act (Article 1396-50.01, Vernon's Texas Civil
265-1 Statutes), Articles 1399 through 1407, Revised Statutes, Article
265-2 1448, Revised Statutes, Section 2, Chapter 42, Acts of the 42nd
265-3 Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
265-4 Texas Civil Statutes), the State Housing Law (Article 1528a,
265-5 Vernon's Texas Civil Statutes), the Electric Cooperative
265-6 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
265-7 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
265-8 Statutes), the Automobile Club Services Act (Article 1528d,
265-9 Vernon's Texas Civil Statutes), The Texas Professional Corporation
265-10 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
265-11 Professional Association Act (Article 1528f, Vernon's Texas Civil
265-12 Statutes), the Texas Mutual Trust Investment Company Act (Article
265-13 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
265-14 Safety Code, the Texas Transportation Corporation Act (Article
265-15 1528l, Vernon's Texas Civil Statutes), the Cultural Education
265-16 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
265-17 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
265-18 and Safety Code, Title 4, Agricultural Code, Subchapter A, Chapter
265-19 301, Health and Safety Code, Subchapter B, Chapter 301, Health and
265-20 Safety Code, or the Higher Education Authority Act, Chapter 53,
265-21 Education Code;
265-22 (b) Any corporation, association, or other
265-23 organization incorporated or organized under the laws of this state
265-24 that is governed in whole or in part by the Texas Business
265-25 Corporation Act, the Texas Non-Profit Corporation Act (Article
265-26 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
265-27 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
266-1 Vernon's Texas Civil Statutes); or
266-2 (c) To the extent permitted by federal law, any
266-3 federally chartered bank, savings and loan association, or credit
266-4 union.
266-5 SECTION 26. The Texas Non-Profit Corporation Act (Article
266-6 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
266-7 adding Article 2.31 to read as follows:
266-8 Art. 2.31. POWER TO SERVE AS TRUSTEE. A corporation that is
266-9 described by Section 501(c)(3) or 170(c), Internal Revenue Code of
266-10 1986, or a corresponding provision of a subsequent federal tax law,
266-11 may serve as the trustee of a trust:
266-12 (1) of which the corporation is a beneficiary; or
266-13 (2) benefiting another organization described by one
266-14 of those sections of the Internal Revenue Code of 1986, if the
266-15 service as trustee is in furtherance of the purposes for which the
266-16 corporation was formed.
266-17 SECTION 27. Subsections (d) and (k), Article 2.01, Title 79,
266-18 Revised Statutes (Article 5069-2.01, Vernon's Texas Civil
266-19 Statutes), are amended to read as follows:
266-20 (d) "Bank" shall mean any person doing business under the
266-21 authority of and as permitted by the Texas Banking Act <Code of
266-22 1943, as amended,> or any person organized under the provisions of
266-23 Title 12, United States Code, Section 21 (U.S.Rev.Statutes 5133)
266-24 and the amendments thereto.
266-25 (k) "Finance Commission" means the Finance Commission of
266-26 Texas <created by the Texas Banking Code of 1943>, or any
266-27 subcommittee created by any rule or regulation of the Finance
267-1 Commission of Texas.
267-2 SECTION 28. Section (1), Article 2.02B, Title 79, Revised
267-3 Statutes (Article 5069-2.02B, Vernon's Texas Civil Statutes), is
267-4 amended to read as follows:
267-5 (1) All money collected under this Act shall be deposited in
267-6 the Office of the Consumer Credit Commissioner expense fund, which
267-7 is created as a special fund in the State Treasury. Money in the
267-8 fund may be used only for the administration of this Act and
267-9 support of The Finance Commission of Texas as provided by Section
267-10 1.011, Texas Banking Act <Article 11C, Chapter I, The Texas Banking
267-11 Code (Article 342-111C, Vernon's Texas Civil Statutes)>. Income
267-12 earned on money deposited in the expense fund shall be credited to
267-13 that fund.
267-14 SECTION 29. Subsection (d), Article 15.01, Title 79, Revised
267-15 Statutes (Article 5069-15.01, Vernon's Texas Civil Statutes), is
267-16 amended to read as follows:
267-17 (d) "Bank" means a person doing business under the
267-18 authority of and as permitted by the Texas Banking Act <The Texas
267-19 Banking Code of 1943, as amended (Article 342-101 et seq., Vernon's
267-20 Texas Civil Statutes)>, and any person organized under Title 12,
267-21 United States Code, as amended.
267-22 SECTION 30. Section 6, Acts of the 60th Legislature, Regular
267-23 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
267-24 is amended to read as follows:
267-25 Sec. 6. ACT CUMULATIVE. The provisions of this Act are
267-26 cumulative of the Texas Banking Act <Code of 1943, as amended>; the
267-27 "Texas Savings and Loan Act," as amended; and Articles 2461 through
268-1 2484, Revised Civil Statutes of Texas, 1925, as amended and the
268-2 amendments thereto, and Section 5 of House Bill No. 47, Acts of the
268-3 46th Legislature, Regular Session, 1939, and Chapter 173, Acts of
268-4 the 51st Legislature, Regular Session, 1949, relating to Credit
268-5 Unions and the amendments thereto.
268-6 SECTION 31. The following laws are repealed:
268-7 (1) Chapters I-X, The Texas Banking Code (Article
268-8 342-101 et seq., Vernon's Texas Civil Statutes);
268-9 (2) Chapter 183, General Laws, Acts of the 44th
268-10 Legislature, Regular Session, 1935 (Article 489b, Vernon's Texas
268-11 Civil Statutes); and
268-12 (3) Article 3921, Revised Statutes.
268-13 SECTION 32. A change in law made by this Act does not
268-14 affect:
268-15 (1) the validity of any action taken by the Finance
268-16 Commission of Texas, banking commissioner of Texas, savings and
268-17 loan commissioner, or State Banking Board before the effective date
268-18 of this Act; or
268-19 (2) a civil, criminal, or administrative proceeding
268-20 completed before the effective date of this Act.
268-21 SECTION 33. A state bank or private bank that exists on the
268-22 effective date of this Act retains the powers provided by its
268-23 charter and is subject to the jurisdiction and control of the
268-24 Banking Commissioner of Texas as if it were a state bank chartered
268-25 under the Texas Banking Act, as added by this Act.
268-26 SECTION 34. (a) The changes in criminal law made by this
268-27 Act apply only to an offense committed on or after the effective
269-1 date of this Act. For purposes of this section, an offense is
269-2 committed before the effective date of this Act if any element of
269-3 the offense occurs before that date.
269-4 (b) The repeal of a criminal law made by this Act does not
269-5 apply to an offense committed under the repealed law before the
269-6 effective date of this Act.
269-7 (c) An offense committed before the effective date of this
269-8 Act is covered by the law in effect when the offense was committed,
269-9 and the former law is continued in effect for that purpose.
269-10 SECTION 35. (a) The change in law made by this Act does not
269-11 affect the standards for approval to be applied to an application
269-12 accepted for filing by the Texas Department of Banking before the
269-13 effective date of this Act under:
269-14 (1) Article 6, Chapter III, The Texas Banking Code
269-15 (Article 342-306, Vernon's Texas Civil Statutes);
269-16 (2) Article 7, Chapter III, The Texas Banking Code
269-17 (Article 342-307, Vernon's Texas Civil Statutes);
269-18 (3) Article 9, Chapter III, The Texas Banking Code
269-19 (Article 342-309, Vernon's Texas Civil Statutes);
269-20 (4) Article 10, Chapter III, The Texas Banking Code
269-21 (Article 342-310, Vernon's Texas Civil Statutes);
269-22 (5) Article 11, Chapter III, The Texas Banking Code
269-23 (Article 342-311, Vernon's Texas Civil Statutes);
269-24 (6) Article 31, Chapter III, The Texas Banking Code
269-25 (Article 342-331, Vernon's Texas Civil Statutes);
269-26 (7) Article 32, Chapter III, The Texas Banking Code
269-27 (Article 342-332, Vernon's Texas Civil Statutes);
270-1 (8) Article 63, Chapter III, The Texas Banking Code
270-2 (Article 342-363, Vernon's Texas Civil Statutes);
270-3 (9) Article 68, Chapter III, The Texas Banking Code
270-4 (Article 342-368, Vernon's Texas Civil Statutes);
270-5 (10) Article 1a, Chapter IV, The Texas Banking Code
270-6 (Article 342-401a, Vernon's Texas Civil Statutes);
270-7 (11) Article 12, Chapter IX, The Texas Banking Code
270-8 (Article 342-912, Vernon's Texas Civil Statutes);
270-9 (12) Article 6, Chapter X, The Texas Banking Code
270-10 (Article 342-1006, Vernon's Texas Civil Statutes).
270-11 (b) The standards for approval under former law applicable
270-12 to the applications listed in Subsection (a) of this section
270-13 continue in effect as if this Act had not been enacted.
270-14 SECTION 36. (a) A principal shareholder or participant that
270-15 is considered to control a state bank under Section 4.001(a), Texas
270-16 Banking Act, as added by this Act, is not required to file a change
270-17 of control application under Section 4.002, Texas Banking Act, as
270-18 added by this Act, until the person acquires one or more additional
270-19 shares or participation shares of the state bank on or after the
270-20 effective date of this Act.
270-21 (b) With respect to an office of an out-of-state bank that
270-22 exists on the effective date of this Act, the out-of-state bank
270-23 must file the documentation and information required by Section
270-24 8.003, Texas Banking Act, as added by this Act, before September 1,
270-25 1996.
270-26 (c) With respect to a representative office of a foreign
270-27 bank corporation in this state that exists as of the effective date
271-1 of this Act, the foreign bank corporation must file before
271-2 September 1, 1996:
271-3 (1) a registration of the representative office with
271-4 the banking commissioner containing the information required by
271-5 Section 9.006(a), Texas Banking Act, as added by this Act; and
271-6 (2) with the secretary of state the fees,
271-7 documentation, and information required by Section 9.007, Texas
271-8 Banking Act, as added by this Act.
271-9 SECTION 37. The changes in civil enforcement provisions,
271-10 penalties, and procedures made by Chapter 6, Texas Banking Act, as
271-11 added by this Act, do not apply to a civil enforcement proceeding
271-12 begun by the service of a notice for hearing or proposed civil
271-13 enforcement order by the banking commissioner before the effective
271-14 date of this Act. That proceeding is governed by the law in effect
271-15 when the proceeding was begun, and that law is continued in effect
271-16 for that purpose.
271-17 SECTION 38. Subdivision (3), Article 13, Chapter XI, The
271-18 Texas Banking Code (Article 342-1113, Vernon's Texas Civil
271-19 Statutes), as added by Section 2(h) of this Act, and Article 2.31,
271-20 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
271-21 Vernon's Texas Civil Statutes), as added by Section 26 of this Act,
271-22 are clarification of the law existing before the effective date of
271-23 this Act. An act of a nonprofit corporation serving as trustee
271-24 before the effective date of this Act is valid if consistent with
271-25 law as amended by this Act.
271-26 SECTION 39. (a) If this Act conflicts with another Act of
271-27 the 74th Legislature, Regular Session, 1995:
272-1 (1) the change in law made in the other Act prevails
272-2 and the substance of the change is given effect as part of the
272-3 Texas Banking Act adopted by this Act unless:
272-4 (A) this Act or the conflicting Act expressly
272-5 provides otherwise; or
272-6 (B) it is not possible to give the conflicting
272-7 law effect within the context of the Texas Banking Act, in which
272-8 event the Texas Banking Act prevails; and
272-9 (2) the text of a law that is reenacted in the other
272-10 Act only because of the constitutional requirement that the amended
272-11 law be reenacted at length is superseded by this Act.
272-12 (b) If this Act and another Act of the 74th Legislature,
272-13 Regular Session, 1995, make the same substantive change from the
272-14 current law but differ in text, this Act prevails regardless of the
272-15 relative dates of enactment.
272-16 SECTION 40. This Act takes effect September 1, 1995, except
272-17 that Section 2(h), Section 26, and Section 38 of this Act take
272-18 effect immediately.
272-19 SECTION 41. The importance of this legislation and the
272-20 crowded condition of the calendars in both houses create an
272-21 emergency and an imperative public necessity that the
272-22 constitutional rule requiring bills to be read on three several
272-23 days in each house be suspended, and this rule is hereby suspended,
272-24 and that this Act take effect and be in force from and after its
272-25 passage, and it is so enacted.