H.B. No. 1543
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 ..................................... 25
1-23 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
1-24 REGULATIONS ..................................... 26
2-1 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS ............. 27
2-2 Sec. 1.015. SUNSET PROVISION .................................. 27
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 ..................... 27
2-6 Sec. 1.102. DEPUTY COMMISSIONERS .............................. 27
2-7 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT .......... 28
2-8 Sec. 1.104. OATH OF OFFICE .................................... 28
2-9 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER ................. 29
2-10 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT ............... 29
2-11 Sec. 1.107. CONFLICTS OF LAW .................................. 30
2-12 Sec. 1.108. CONFLICTS OF INTEREST ............................. 30
2-13 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS ............... 31
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 (f)(1) The finance commission shall:
24-10 (i) conduct research on the availability,
24-11 quality, and prices of financial services, including lending and
24-12 depository services, offered in the state to agricultural
24-13 businesses, small businesses, and individual consumers in the
24-14 state; and
24-15 (ii) conduct research on the practices of
24-16 business entities in the state that provide financial services to
24-17 agricultural businesses, small businesses, and individual consumers
24-18 in the state.
24-19 (2) The finance commission shall have the authority to
24-20 apply for and receive public and private grants and gifts to
24-21 conduct the research authorized in this subsection.
24-22 (3) The finance commission shall have the authority to
24-23 contract with public and private entities to carry out studies and
24-24 analysis under this section.
24-25 (4) Not later than December 1 of each year, the
24-26 finance commission shall provide to the legislature a report
24-27 detailing its findings and making recommendations to improve the
25-1 availability, quality, and prices of financial services.
25-2 Sec. 1.012. BANKING RULES. (a) The finance commission may
25-3 adopt rules to accomplish the purposes of this Act, including rules
25-4 necessary or reasonable to:
25-5 (1) implement and clarify this Act;
25-6 (2) preserve or protect the safety and soundness of
25-7 state banks;
25-8 (3) grant the same rights and privileges to state
25-9 banks that are or may be granted to national banks domiciled in
25-10 this state;
25-11 (4) provide for recovery of the cost of maintenance
25-12 and operation of the department and the cost of enforcing this Act
25-13 through the imposition and collection of ratable and equitable fees
25-14 for notices, applications, and examinations; and
25-15 (5) facilitate the fair hearing and adjudication of
25-16 matters before the banking commissioner and the finance commission.
25-17 (b) In adopting the rules, the finance commission shall
25-18 consider the need to:
25-19 (1) promote a stable banking environment;
25-20 (2) provide the public with convenient, safe, and
25-21 competitive banking services;
25-22 (3) preserve and promote the competitive parity of
25-23 state banks with national banks and other depository institutions
25-24 in this state consistent with the safety and soundness of state
25-25 banks and the state bank system; and
25-26 (4) allow for economic development within this state.
25-27 (c) The presence or absence in this Act of a specific
26-1 reference to rules regarding a particular subject does not enlarge
26-2 or diminish the rulemaking authority conferred by this section.
26-3 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
26-4 REGULATIONS. (a) The finance commission may adopt rules
26-5 applicable to state savings associations or to savings banks and
26-6 may authorize state savings associations and savings banks to
26-7 invest their funds in any manner permitted for a federal savings
26-8 association or federal savings bank domiciled in this state. This
26-9 authority may not be construed to confer authority to abridge,
26-10 diminish, or limit a right or power specifically given to state
26-11 savings associations or savings banks by state law.
26-12 (b) The finance commission may also adopt rules to:
26-13 (1) prevent state savings associations or savings
26-14 banks from concentrating an excessive or unreasonable portion of
26-15 their resources in a type or character of loan or security
26-16 authorized by the Texas Savings and Loan Act (Article 852a,
26-17 Vernon's Texas Civil Statutes) or the Texas Savings Bank Act
26-18 (Article 489e, Vernon's Texas Civil Statutes); and
26-19 (2) establish standards for investments by state
26-20 savings associations or savings banks, including limits on the
26-21 amount that a state savings association or savings bank may invest
26-22 in a type or character of investment to an amount or percentage of
26-23 the savings association's or savings bank's assets or net worth.
26-24 (c) Information regarding the financial condition of a state
26-25 savings association or savings bank obtained through examination or
26-26 otherwise may not be disclosed to a member of the finance
26-27 commission, except that the savings and loan commissioner may
27-1 disclose to the finance commission a file or record pertinent to a
27-2 hearing or matter pending before the finance commission.
27-3 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS. The
27-4 finance commission may adopt rules necessary for supervising the
27-5 consumer credit commissioner and for ensuring compliance with Title
27-6 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
27-7 Civil Statutes).
27-8 Sec. 1.015. SUNSET PROVISION. The finance commission is
27-9 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
27-10 continued in existence as provided by that chapter, the commission
27-11 is abolished September 1, 2001.
27-12 (Sections 1.016-1.100 reserved for expansion)
27-13 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
27-14 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. The finance
27-15 commission, by at least five affirmative votes, shall appoint a
27-16 savings and loan commissioner, who serves at the pleasure of the
27-17 finance commission, as an employee of the commission, and subject
27-18 to its orders and direction. The savings and loan commissioner is
27-19 the chief executive officer of the Savings and Loan Department.
27-20 The savings and loan commissioner must have not less than seven
27-21 years' experience in the executive management of a savings
27-22 association or savings bank or in savings association or savings
27-23 bank supervision. The finance commission shall set the
27-24 compensation of the savings and loan commissioner, which shall be
27-25 paid from funds of the Savings and Loan Department.
27-26 Sec. 1.102. DEPUTY COMMISSIONERS. The savings and loan
27-27 commissioner shall appoint one or more deputy savings and loan
28-1 commissioners. One deputy savings and loan commissioner must have
28-2 the qualifications required of the savings and loan commissioner.
28-3 That deputy savings and loan commissioner has the powers and shall
28-4 perform the duties of the savings and loan commissioner during the
28-5 absence or inability of the savings and loan commissioner. The
28-6 savings and loan commissioner shall also appoint savings
28-7 association and savings bank examiners.
28-8 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
28-9 Subject to Subsection (b) of this section, each officer and
28-10 employee of the Savings and Loan Department is entitled to
28-11 compensation fixed by the finance commission, which shall be paid
28-12 from the funds of the Savings and Loan Department.
28-13 (b) Chapter 654, Government Code, applies to a position of
28-14 the Savings and Loan Department only if it is classified in salary
28-15 groups 1-10 under the General Appropriations Act. The legislature
28-16 in the General Appropriations Act may determine the total amount
28-17 appropriated to the Savings and Loan Department but may not
28-18 determine the number or salaries of employees other than the
28-19 positions specifically subject to Chapter 654, Government Code, as
28-20 provided by this section. The finance commission, subject to the
28-21 limits provided by this section, shall otherwise determine the
28-22 number of employees of the Savings and Loan Department and the
28-23 salaries of those employees. The Savings and Loan Department may
28-24 use funds appropriated to it for any purpose to pay the salaries
28-25 determined by the finance commission.
28-26 Sec. 1.104. OATH OF OFFICE. Before assuming the duties of
28-27 office, the savings and loan commissioner, each deputy savings and
29-1 loan commissioner, examiner, assistant examiner, conservator,
29-2 supervisor, and special agent, and each other officer or employee
29-3 specified by the savings and loan commissioner must take an oath of
29-4 office to discharge faithfully the duties assigned and uphold the
29-5 constitution and laws of this state and the United States.
29-6 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. The savings
29-7 and loan commissioner shall:
29-8 (1) supervise and regulate the organization,
29-9 operation, and liquidation of state savings associations, as
29-10 provided by the Texas Savings and Loan Act (Article 852a, Vernon's
29-11 Texas Civil Statutes), and state savings banks, as provided by the
29-12 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
29-13 Statutes); and
29-14 (2) enforce those acts in person or through a deputy
29-15 savings and loan commissioner, examiner, supervisor, conservator,
29-16 or other agent.
29-17 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a) The
29-18 savings and loan commissioner and the finance commission shall
29-19 establish reasonable and necessary fees for the administration of
29-20 the Texas Savings and Loan Act (Article 852a, Vernon's Texas Civil
29-21 Statutes) and the Texas Savings Bank Act (Article 489e, Vernon's
29-22 Texas Civil Statutes) and for the support of the finance commission
29-23 as provided by Section 1.011 of this Act.
29-24 (b) The savings and loan commissioner shall collect all
29-25 fees, penalties, charges, and revenues required to be paid by state
29-26 savings associations and savings banks and shall from time to time,
29-27 as directed by the finance commission, submit to the commission a
30-1 full and complete report of the receipts and expenditures of the
30-2 Savings and Loan Department.
30-3 (c) The financial transactions of the Savings and Loan
30-4 Department are subject to audit by the state auditor as provided by
30-5 Chapter 321, Government Code, and the actual costs of any audit
30-6 shall be paid to the state auditor from the funds of the Savings
30-7 and Loan Department.
30-8 (d) All money paid to the Savings and Loan Department from
30-9 all sources shall be deposited in the state treasury to the credit
30-10 of the Savings and Loan Department expense fund, which may be used
30-11 only for the expenses incurred by the Savings and Loan Department
30-12 and finance commission. All expenses incurred by the Savings and
30-13 Loan Department shall be paid only from the fund.
30-14 Sec. 1.107. CONFLICTS OF LAW. If this subchapter conflicts
30-15 with the Texas Savings and Loan Act (Article 852a, Vernon's Texas
30-16 Civil Statutes) or the Texas Savings Bank Act (Article 489e,
30-17 Vernon's Texas Civil Statutes), this subchapter controls.
30-18 Sec. 1.108. CONFLICTS OF INTEREST. (a) An officer or
30-19 employee of the Savings and Loan Department may not be an officer,
30-20 employee, or paid consultant of a trade association in the savings
30-21 association industry or the savings bank industry.
30-22 (b) An officer or employee of the Savings and Loan
30-23 Department may not be related within the second degree by affinity
30-24 or consanguinity, as determined under Chapter 573, Government Code,
30-25 to a person who is an officer, employee, or paid consultant of a
30-26 trade association in the savings association industry or the
30-27 savings bank industry.
31-1 (c) Before the 11th day after the date on which an employee
31-2 begins employment with the Savings and Loan Department, the
31-3 employee shall read the conflict-of-interest statutes applicable to
31-4 employees of the Savings and Loan Department and sign a notarized
31-5 affidavit stating that the employee has read those statutes.
31-6 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS. (a) The
31-7 savings and loan commissioner shall prepare information of consumer
31-8 interest describing the regulatory functions of the Savings and
31-9 Loan Department and describing the procedures by which consumer
31-10 complaints are filed with and resolved by the Savings and Loan
31-11 Department. The information must be made available to the general
31-12 public and appropriate state agencies.
31-13 (b) The Savings and Loan Department shall keep an
31-14 information file about each filed complaint relating to a state
31-15 savings association or savings bank.
31-16 (c) If a written complaint is filed with the Savings and
31-17 Loan Department relating to a state savings association or savings
31-18 bank, at least as frequently as quarterly and until final
31-19 disposition of the complaint, the Savings and Loan Department shall
31-20 notify the parties to the complaint of the status of the complaint
31-21 unless the notice would jeopardize an undercover investigation.
31-22 Sec. 1.110. SUNSET PROVISION. The office of savings and
31-23 loan commissioner and the Savings and Loan Department are subject
31-24 to Chapter 325, Government Code (Texas Sunset Act). Unless
31-25 continued in existence as provided by that chapter, the office and
31-26 department are abolished September 1, 2001.
31-27 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
32-1 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
32-2 Sec. 2.001. BANKING COMMISSIONER .............................. 33
32-3 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT ............... 33
32-4 Sec. 2.003. DEPUTY BANKING COMMISSIONER ....................... 33
32-5 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS ........... 34
32-6 Sec. 2.005. DUTIES OF BANKING COMMISSIONER .................... 34
32-7 Sec. 2.006. AUDITS; FEES AND REVENUES ......................... 34
32-8 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS .............. 35
32-9 Sec. 2.008. EXAMINATION ....................................... 36
32-10 Sec. 2.009. CALL REPORTS ...................................... 38
32-11 Sec. 2.010. LIABILITIES ....................................... 38
32-12 Sec. 2.011. OFFENSES .......................................... 39
32-13 Sec. 2.012. CONFLICT OF INTEREST .............................. 40
32-14 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS ............... 40
32-15 Sec. 2.014. SUNSET PROVISION .................................. 41
32-16 (Sections 2.015-2.100 reserved for expansion)
32-17 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
32-18 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED ............... 41
32-19 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION .................. 42
32-20 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES ...................... 42
32-21 Sec. 2.104. OTHER DISCLOSURE PROHIBITED ....................... 43
32-22 Sec. 2.105. CIVIL DISCOVERY ................................... 43
32-23 Sec. 2.106. INVESTIGATIVE INFORMATION ......................... 43
32-24 Sec. 2.107. EMPLOYMENT INFORMATION ............................ 44
32-25 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS ..................... 44
32-26 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
32-27 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
33-1 Sec. 2.001. BANKING COMMISSIONER. The finance commission,
33-2 by at least five affirmative votes, shall appoint a banking
33-3 commissioner who serves at the pleasure of the finance commission,
33-4 as an employee of the finance commission, and subject to the
33-5 finance commission's orders and directions. The banking
33-6 commissioner must have not less than seven years' experience in
33-7 banking or bank supervision and shall serve as the chief executive
33-8 officer of the Texas Department of Banking. The finance commission
33-9 shall set the compensation of the banking commissioner, which shall
33-10 be paid from funds of the department.
33-11 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Chapter
33-12 654, Government Code, applies to a position of the department only
33-13 if it is classified in salary groups 1-10 under the currently
33-14 effective General Appropriations Act. The legislature in the
33-15 General Appropriations Act may determine the total amount
33-16 appropriated to the department but may not determine the number or
33-17 salaries of employees of the department other than positions
33-18 subject to Chapter 654, Government Code. The finance commission,
33-19 subject to the limits provided by this section, shall otherwise
33-20 determine the number of employees of the department and the
33-21 salaries of those employees. The department may use funds
33-22 appropriated to it for any purpose to pay the salaries determined
33-23 by the finance commission.
33-24 Sec. 2.003. DEPUTY BANKING COMMISSIONER. The banking
33-25 commissioner shall appoint a deputy banking commissioner who must
33-26 have the qualifications required of the banking commissioner.
33-27 During the absence or inability of the banking commissioner, the
34-1 deputy banking commissioner has the powers and shall perform the
34-2 duties of the banking commissioner.
34-3 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS. Before
34-4 assuming the duties of office, the banking commissioner, the deputy
34-5 banking commissioner, and each examiner, assistant examiner,
34-6 conservator, supervisor, special agent, and other officer or
34-7 employee specified by the banking commissioner must take an oath of
34-8 office to discharge faithfully the duties assigned and uphold the
34-9 constitution and laws of this state and of the United States.
34-10 Sec. 2.005. DUTIES OF BANKING COMMISSIONER. The banking
34-11 commissioner shall:
34-12 (1) supervise and regulate, as provided by this Act,
34-13 state banks, trust companies, and state-licensed foreign bank
34-14 agencies;
34-15 (2) administer and enforce this Act in person or
34-16 through the deputy banking commissioner or an examiner, supervisor,
34-17 conservator, or other agent; and
34-18 (3) administer and enforce laws other than this Act as
34-19 directed by the legislature.
34-20 Sec. 2.006. AUDITS; FEES AND REVENUES. (a) The department
34-21 is subject to audit by the state auditor as provided by Chapter
34-22 321, Government Code, and the actual costs of an audit shall be
34-23 paid to the state auditor from the funds of the department.
34-24 (b) The finance commission shall establish reasonable and
34-25 necessary fees for the administration of this Act.
34-26 (c) All money paid to the department under this Act shall be
34-27 deposited in the state treasury to the credit of the Department of
35-1 Banking expense fund and may be used only for the administration of
35-2 the statutory duties of the department and finance commission under
35-3 this Act. All expenses incurred by the department in administering
35-4 this Act shall be paid only from the fund.
35-5 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
35-6 banking commissioner may issue interpretive statements containing
35-7 matters of general policy for the guidance of state banks. The
35-8 banking commissioner shall file the statements for publication in
35-9 the Texas Register. The banking commissioner may amend or repeal a
35-10 published interpretive statement by issuing an amended statement or
35-11 notice of repeal of a statement and filing the statement or notice
35-12 for publication in the Texas Register. The secretary of state
35-13 shall publish the filed statements and notices in the Texas
35-14 Register and in a designated chapter of the Texas Administrative
35-15 Code.
35-16 (b) The banking commissioner may issue opinions in response
35-17 to specific requests from members of the public or the banking
35-18 industry directly or through the deputy banking commissioner or the
35-19 department's attorneys. If the banking commissioner determines
35-20 that the opinion is useful for the general guidance of state banks
35-21 or trust companies, the banking commissioner may file the opinion
35-22 for publication in the Texas Register. A published opinion must be
35-23 redacted in a manner that preserves the confidentiality of the
35-24 requesting party, unless the requesting party consents to be
35-25 identified in the published opinion. The banking commissioner may
35-26 amend or repeal a published opinion by issuing an amended opinion
35-27 or notice of repeal of an opinion and filing the opinion or notice
36-1 for publication in the Texas Register, except that the requesting
36-2 party may rely on the original opinion if all material facts were
36-3 originally disclosed to the banking commissioner, considerations of
36-4 safety and soundness of the affected bank are not implicated with
36-5 respect to further and prospective reliance on the original
36-6 opinion, and the text and interpretation of relevant, governing
36-7 provisions of this Act have not been changed by legislative or
36-8 judicial action. The secretary of state shall publish the filed
36-9 opinions and notices in the Texas Register and a designated chapter
36-10 of the Texas Administrative Code.
36-11 (c) An interpretive statement or opinion issued under this
36-12 section does not have the force of law and is not a rule for the
36-13 purposes of Chapter 2001, Government Code, unless adopted by the
36-14 finance commission as provided by Chapter 2001, Government Code.
36-15 An interpretive statement or opinion is an administrative
36-16 construction of this Act entitled to great weight if the
36-17 construction is reasonable and does not conflict with this Act.
36-18 Sec. 2.008. EXAMINATION. (a) The banking commissioner
36-19 shall examine each state bank annually or more often as the banking
36-20 commissioner considers necessary to safeguard the interests of
36-21 depositors, creditors, shareholders, participants, and
36-22 participant-transferees and to enforce this Act. The banking
36-23 commissioner may defer an examination for not more than six months
36-24 if the banking commissioner considers the deferment necessary for
36-25 the efficient enforcement of this Act. The banking commissioner
36-26 may accept examinations of a state bank by a federal or other
36-27 governmental agency in lieu of an examination under this section or
37-1 may conduct examinations of a state bank jointly with a federal or
37-2 other governmental agency.
37-3 (b) Each state bank shall pay the cost of examination, the
37-4 equitable or proportionate cost of maintenance and operation of the
37-5 department, and the cost of enforcement of this Act through the
37-6 imposition and collection of fees established by the finance
37-7 commission under Section 1.012(a)(4) of this Act.
37-8 (c) The performance of data processing, electronic fund
37-9 transfers, or other bank services on behalf of a state bank by a
37-10 third-party contractor, other than a national bank, and the
37-11 activities of a state bank affiliate are subject to regulation and
37-12 examination by the banking commissioner to the same extent as if
37-13 the services or activities were performed by that state bank on its
37-14 own premises. The banking commissioner may collect a fee from an
37-15 examined contractor or affiliate in connection with each
37-16 examination to cover the cost of the examination or may collect
37-17 that fee from the state banks using the third-party contractor.
37-18 For purposes of this subsection, a state bank affiliate does not
37-19 include a company in which ownership or membership is limited to
37-20 individuals and conditioned by law on the existence and maintenance
37-21 of professional licensing.
37-22 (d) The banking commissioner may administer oaths and
37-23 examine persons under oath on any subject that the banking
37-24 commissioner considers pertinent to the financial condition or the
37-25 safety and soundness of the activities of a state bank.
37-26 Sec. 2.009. CALL REPORTS. (a) Except as provided by
37-27 Subsection (b) of this section, each state bank shall periodically
38-1 file with the banking commissioner a copy of its call report
38-2 stating the bank's financial condition and results of operation.
38-3 (b) The finance commission may by rule:
38-4 (1) specify the form of a call report, including
38-5 specified confidential and public information to be in the call
38-6 report;
38-7 (2) require public information in call reports of
38-8 state banks to be published at the times and in the publications
38-9 and locations the finance commission determines; and
38-10 (3) require call reports to be filed with the banking
38-11 commissioner at the intervals the finance commission determines.
38-12 (c) A state bank that fails to timely file its call report
38-13 as required by this section is subject to a penalty not exceeding
38-14 $500 a day to be collected by suit by the attorney general on
38-15 behalf of the banking commissioner.
38-16 Sec. 2.010. LIABILITIES. (a) The banking commissioner,
38-17 each member of the finance commission, the deputy banking
38-18 commissioner, or an examiner, assistant examiner, supervisor,
38-19 conservator, agent, or other officer or employee of the department
38-20 is not personally liable for damages arising from the person's
38-21 official act or omission, unless the act or omission is corrupt or
38-22 malicious.
38-23 (b) The attorney general shall defend an action brought
38-24 against a person because of an official act or omission under
38-25 Subsection (a) of this section, regardless of whether the defendant
38-26 has terminated service with the department before the action
38-27 commences.
39-1 Sec. 2.011. OFFENSES. (a) The banking commissioner or an
39-2 officer or employee of the department commits an offense if the
39-3 person knowingly:
39-4 (1) discloses information or permits access to a file
39-5 or record of the department in violation of Subchapter B of this
39-6 chapter;
39-7 (2) becomes directly or indirectly indebted to, or
39-8 financially interested in, a state bank, foreign bank agency, or
39-9 trust company; or
39-10 (3) purchases an asset owned by a state bank or trust
39-11 company in the possession of the banking commissioner or other
39-12 receiver for purposes of liquidation.
39-13 (b) An offense under this section is a Class A misdemeanor.
39-14 (c) A department employee, other than the banking
39-15 commissioner and deputy banking commissioner, does not commit an
39-16 offense under Subsection (a)(2) solely because the spouse of or
39-17 other person related to the officer or employee is employed by a
39-18 state bank and participates in an employee benefit plan, including
39-19 an employee stock option, bonus, or ownership plan, or other plan
39-20 the sole purpose of which is to compensate employees of the bank
39-21 for services rendered with an ownership interest in the bank.
39-22 (d) The banking commissioner shall adopt a policy requiring
39-23 each employee of the department to notify the banking commissioner
39-24 in writing of an employment relationship described by Subsection
39-25 (c) of this section and to be recused from all matters affecting
39-26 the employing bank until the employment relationship is terminated
39-27 or the spouse or related person no longer owns equity securities
40-1 issued by the bank. Not later than one year after the date the
40-2 employment relationship described by Subsection (c) of this section
40-3 ends, the spouse or related person must divest ownership of equity
40-4 securities issued by the bank.
40-5 Sec. 2.012. CONFLICT OF INTEREST. (a) An officer or
40-6 employee of the department may not be an officer, employee, or paid
40-7 consultant of a trade association in an industry regulated by the
40-8 department.
40-9 (b) An officer or employee of the department may not be
40-10 related within the second degree by affinity or consanguinity, as
40-11 determined under Chapter 573, Government Code, to a person who is
40-12 an officer, employee, or paid consultant of a trade association in
40-13 an industry regulated by the department.
40-14 (c) Before the 11th day after the date on which an employee
40-15 begins employment with the department, the employee shall read the
40-16 conflict of interest statutes applicable to employees of the
40-17 department and sign a notarized affidavit stating that the employee
40-18 has read those statutes.
40-19 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a) The
40-20 banking commissioner shall prepare information of consumer interest
40-21 describing the regulatory functions of the department and
40-22 describing the department's procedures by which consumer complaints
40-23 are filed with and resolved by the department. The banking
40-24 commissioner shall make the information available to the general
40-25 public and appropriate state agencies.
40-26 (b) The banking commissioner shall keep an information file
40-27 about each complaint filed with the banking commissioner relating
41-1 to any entity regulated by the department.
41-2 (c) If a written complaint is filed with the banking
41-3 commissioner relating to any entity regulated by the department,
41-4 the banking commissioner, at least as frequently as quarterly and
41-5 until final disposition of the complaint, shall notify the parties
41-6 to the complaint of the status of the complaint unless the notice
41-7 would jeopardize an undercover investigation.
41-8 Sec. 2.014. SUNSET PROVISION. The office of banking
41-9 commissioner is subject to Chapter 325, Government Code (Texas
41-10 Sunset Act). Unless continued in existence as provided by that
41-11 chapter, the office is abolished September 1, 2001.
41-12 (Sections 2.015-2.100 reserved for expansion)
41-13 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
41-14 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
41-15 (a) Information obtained directly or indirectly by the department
41-16 relative to the financial condition or business affairs of a
41-17 financial institution, or a present, former, or prospective
41-18 shareholder, participant, officer, director, manager, affiliate, or
41-19 service provider of a financial institution, other than the public
41-20 portions of call reports and profit and loss statements, whether
41-21 obtained through application, examination, or otherwise, except
41-22 published statements, and all related files and records of the
41-23 department are confidential and may not be disclosed by the banking
41-24 commissioner or an employee of the department except as expressly
41-25 provided otherwise by this Act or rules adopted under this Act.
41-26 (b) Information obtained by the department from a federal or
41-27 state regulatory agency that is confidential under federal or state
42-1 law may not be disclosed except as provided by federal or state
42-2 law.
42-3 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
42-4 information may not be disclosed to a member of the finance
42-5 commission, and a member of the finance commission may not be given
42-6 access to the files and records of the department except that the
42-7 banking commissioner may disclose to the finance commission
42-8 information, files, and records pertinent to a hearing or matter
42-9 pending before the finance commission.
42-10 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
42-11 and execution of an appropriate confidentiality agreement approved
42-12 by the banking commissioner, the banking commissioner may disclose
42-13 to a federal banking regulatory agency confidential information
42-14 relative to a financial institution within the agency's
42-15 jurisdiction, or an affiliate or service provider of the financial
42-16 institution, and may permit the agency access to files and records
42-17 or reports relating to the financial institution or its affiliate
42-18 or service provider.
42-19 (b) The banking commissioner may, if the banking
42-20 commissioner considers it necessary or proper to the enforcement of
42-21 the laws of this state, another state, the United States, or a
42-22 foreign sovereign state, or to the best interest of the public,
42-23 disclose or authorize release of confidential information to
42-24 another department of this state, another state, the United States,
42-25 a foreign sovereign state, or any related agency or
42-26 instrumentality.
42-27 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
43-1 information that is provided to a financial institution, affiliate,
43-2 or service provider of a financial institution, whether in the form
43-3 of a report of examination or otherwise, is the confidential
43-4 property of the department. The information may not be made public
43-5 or disclosed by the recipient or by its officers, directors,
43-6 managers, employees, or agents to a person not officially connected
43-7 to the recipient as officer, director, employee, attorney, auditor,
43-8 or independent auditor except as authorized by rules adopted under
43-9 this Act. A disclosure or use of the information in violation of
43-10 this section is an offense punishable as provided for an offense
43-11 under Section 37.10, Penal Code.
43-12 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
43-13 information from a person subject to this subchapter pursuant to
43-14 subpoena or other legal process must comply with rules adopted
43-15 under this Act and other applicable law. The rules may restrict
43-16 release of confidential information to solely that portion directly
43-17 relevant to the legal dispute at issue and may require that a
43-18 protective order, in form and under circumstances specified by the
43-19 rules, be issued by a court of competent jurisdiction before
43-20 release of the confidential information.
43-21 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
43-22 other law, the banking commissioner may refuse to release
43-23 information or records in the custody of the department if, in the
43-24 opinion of the banking commissioner, release of the information or
43-25 records might jeopardize an ongoing investigation of potentially
43-26 unlawful activities.
43-27 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
44-1 employment information to a financial institution or to a person
44-2 providing employment information to a financial institution
44-3 concerning the known or suspected involvement of a present or
44-4 former employee, officer, or director in a violation of any state
44-5 or federal law, rule, or regulation that has been reported to
44-6 appropriate state or federal authorities. The person may not be
44-7 held liable for providing that information unless the information
44-8 provided is false and the person provided the information with
44-9 disregard for the truth.
44-10 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
44-11 Notwithstanding Article 2.44, Texas Business Corporation Act, a
44-12 shareholder or participant of a state bank may not examine:
44-13 (1) a report of examination or other confidential
44-14 property of the department that is in the possession of the state
44-15 bank; or
44-16 (2) a book or record of the state bank that directly
44-17 or indirectly pertains to financial or other information maintained
44-18 by the bank on behalf of its customers, including a specific item
44-19 in the minutes of the board or a committee of the board regarding
44-20 loan review and approval or a loan delinquency report that would
44-21 tend to identify the bank's customer.
44-22 (b) This section does not affect the rights of a shareholder
44-23 or participant of a state bank when acting in another capacity.
44-24 CHAPTER 3. POWERS; ORGANIZATION AND
44-25 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
44-26 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
44-27 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS ............ 47
45-1 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK ............. 48
45-2 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER ................ 50
45-3 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER
45-4 APPLICATION ..................................... 51
45-5 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION ....... 52
45-6 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY .............. 53
45-7 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL
45-8 BUSINESS CORPORATIONS ........................... 54
45-9 Sec. 3.008. BANKING COMMISSIONER HEARINGS ..................... 55
45-10 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS .............. 55
45-11 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS ........... 57
45-12 (Sections 3.011-3.100 reserved for expansion)
45-13 SUBCHAPTER B. AMENDMENT OF ARTICLES;
45-14 CHANGES IN CAPITAL AND SURPLUS
45-15 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
45-16 OF ASSOCIATION .................................. 60
45-17 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR
45-18 PARTICIPATION SHARES ............................ 62
45-19 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS ......... 63
45-20 Sec. 3.104. CAPITAL NOTES OR DEBENTURES ....................... 63
45-21 (Sections 3.105-3.200 reserved for expansion)
45-22 SUBCHAPTER C. BANK OFFICES
45-23 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING ............... 64
45-24 Sec. 3.202. HOME OFFICE ....................................... 65
45-25 Sec. 3.203. BRANCH OFFICES .................................... 66
45-26 Sec. 3.204. ELECTRONIC TERMINALS .............................. 67
45-27 Sec. 3.205. LOAN PRODUCTION OFFICES ........................... 68
46-1 (Sections 3.206-3.300 reserved for expansion)
46-2 SUBCHAPTER D. MERGER
46-3 Sec. 3.301. MERGER AUTHORITY .................................. 68
46-4 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER .................. 69
46-5 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER .................... 71
46-6 (Sections 3.304-3.400 reserved for expansion)
46-7 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
46-8 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
46-9 FINANCIAL INSTITUTION ........................... 71
46-10 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT .............. 71
46-11 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION ................ 72
46-12 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS ............... 73
46-13 Sec. 3.405. SALE OF ASSETS .................................... 73
46-14 (Sections 3.406-3.500 reserved for expansion)
46-15 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
46-16 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
46-17 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
46-18 BANK INTO NATIONAL BANK OR SAVINGS BANK OR
46-19 SAVINGS ASSOCIATION ............................. 74
46-20 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
46-21 BANK ............................................ 76
46-22 CHAPTER 3. POWERS; ORGANIZATION AND
46-23 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
46-24 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
46-25 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
46-26 One or more persons, a majority of whom are residents of this
46-27 state, may organize a state bank as a banking association or a
47-1 limited banking association. A state bank may:
47-2 (1) receive and pay deposits with or without interest,
47-3 discount and negotiate promissory notes, borrow or lend money with
47-4 or without security or interest, invest and deal in securities, buy
47-5 and sell exchange, coin, and bullion and exercise incidental powers
47-6 as necessary to carry on the business of banking as provided by
47-7 this Act;
47-8 (2) act as agent, including a fiscal agent, registrar,
47-9 or transfer agent and, in that capacity, receive and disburse money
47-10 and transfer securities;
47-11 (3) act in a fiduciary capacity, without giving bond,
47-12 as guardian, receiver, executor, administrator, or trustee,
47-13 including a mortgage or indenture trustee; and
47-14 (4) engage in any other activity, directly or through
47-15 a subsidiary, authorized by this Act or rules adopted under this
47-16 Act or determined by the banking commissioner to be closely related
47-17 to banking.
47-18 (b) Subject to Section 3.007 of this Act, a state bank may
47-19 exercise the powers of a Texas business corporation reasonably
47-20 necessary to enable exercise of its specific powers under this Act.
47-21 (c) A state bank may contribute to community funds, or to
47-22 charitable, philanthropic, or benevolent instrumentalities
47-23 conducive to public welfare, amounts that its board considers
47-24 expedient and in the interests of the bank.
47-25 (d) A state bank may be organized or reorganized as a
47-26 community development financial institution, as defined by the
47-27 Riegle Community Development and Regulatory Improvement Act of
48-1 1994.
48-2 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. The
48-3 articles of association of a state bank must be signed and
48-4 acknowledged by each organizer and must contain:
48-5 (1) the name of the state bank, except that the
48-6 banking commissioner may determine that a proposed bank name is
48-7 potentially misleading to the public and require the organizers to
48-8 select a different name;
48-9 (2) the period of its duration, which may be
48-10 perpetual, except that a state bank, other than a private bank,
48-11 organized before August 31, 1993, is considered to have perpetual
48-12 existence, notwithstanding a contrary statement in its articles of
48-13 association, unless after the effective date of this Act the bank
48-14 amends its articles of association to reaffirm its limited
48-15 duration;
48-16 (3) the powers of the state bank, which may be stated
48-17 as:
48-18 (A) all powers granted by law to a state bank;
48-19 or
48-20 (B) a list of the specific powers under Section
48-21 3.001 of this Act that the state bank chooses to exercise;
48-22 (4) the aggregate number of shares or participation
48-23 shares that the bank will be authorized to issue, the number of
48-24 classes of shares or participation shares, which may be one or
48-25 more, the number of shares or participation shares of each class if
48-26 more than one class, and a statement of the par value of the shares
48-27 or participation shares of each class or that the shares or
49-1 participation shares are to be without par value;
49-2 (5) if the shares or participation shares are to be
49-3 divided into classes, the designation of each class and statement
49-4 of the preferences, limitations, and relative rights of the shares
49-5 or participation shares of each class, which in the case of a
49-6 limited banking association may be more fully set forth in the
49-7 participation agreement;
49-8 (6) any provision limiting or denying to shareholders
49-9 or participants the preemptive right to acquire additional or
49-10 treasury shares or participation shares of the bank;
49-11 (7) any provision granting the right of shareholders
49-12 or participants to cumulative voting in the election of directors
49-13 or managers;
49-14 (8) the aggregate amount of consideration to be
49-15 received for all shares or participation shares initially issued by
49-16 the bank, and a statement that all authorized shares or
49-17 participation shares have been subscribed and that all
49-18 subscriptions received provide for the consideration to be fully
49-19 paid in cash before issuance of the charter;
49-20 (9) any provision consistent with law that the
49-21 organizers elect to set forth in the articles of association for
49-22 the regulation of the internal affairs of the bank or that is
49-23 otherwise required by this Act to be set forth in the articles of
49-24 association;
49-25 (10) the street address of the bank's initial home
49-26 office required to be maintained under Section 3.202 of this Act;
49-27 and
50-1 (11) the number of directors or managers constituting
50-2 the initial board, which may be no fewer than five or more than 25,
50-3 and the names and street addresses of the persons who are to serve
50-4 as directors or managers until the first annual meeting of
50-5 shareholders or participants or until successor directors or
50-6 managers have been elected and qualified; or, at the option of the
50-7 organizers of a limited banking association that will have no fewer
50-8 than five or more than 25 participants, a statement that management
50-9 is vested in a board composed of all participants, with management
50-10 authority vested in each participant in proportion to the
50-11 participant's contribution to capital as adjusted from time to time
50-12 to properly reflect any additional contribution, and the names and
50-13 street addresses of the persons who are to be managing
50-14 participants.
50-15 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a) An
50-16 application for a state bank charter must be made under oath and in
50-17 the form required by the banking commissioner, who shall inquire
50-18 fully into the identity and character of each proposed director,
50-19 manager, officer, managing participant, and principal shareholder
50-20 or participant. The application must be accompanied by all charter
50-21 fees and deposits required by law or regulation.
50-22 (b) The banking commissioner shall grant a state bank
50-23 charter only if the commissioner determines that the organizers
50-24 have established that:
50-25 (1) a public necessity exists for the proposed state
50-26 bank;
50-27 (2) the proposed organizational and capital structure
51-1 and amount of initial capitalization is adequate for the proposed
51-2 business and location;
51-3 (3) the anticipated volume of business indicates
51-4 profitable operation;
51-5 (4) the proposed officers, directors, and managers, or
51-6 managing participants, as a group have sufficient banking
51-7 experience, ability, standing, competence, trustworthiness, and
51-8 integrity to justify a belief that the proposed state bank will
51-9 operate in compliance with law and that success of the proposed
51-10 state bank is probable;
51-11 (5) each principal shareholder or participant has
51-12 sufficient experience, ability, standing, competence,
51-13 trustworthiness, and integrity to justify a belief that the
51-14 proposed state bank will be free from improper or unlawful
51-15 influence or interference with respect to the bank's operation in
51-16 compliance with law; and
51-17 (6) the organizers are acting in good faith.
51-18 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
51-19 (a) The banking commissioner shall notify the organizers when the
51-20 application is complete and accepted for filing and all required
51-21 fees and deposits have been paid. Promptly after this notification
51-22 the organizers shall publish notice of the application and solicit
51-23 comments and protests, in the form specified by the banking
51-24 commissioner, in a newspaper of general circulation in the county
51-25 where the proposed state bank is to be located.
51-26 (b) At the expense of the organizers, the banking
51-27 commissioner shall thoroughly investigate the application. The
52-1 banking commissioner shall prepare a written report of the
52-2 investigation, and any person, other than a person protesting under
52-3 Section 3.005 of this Act, may request a copy of the
52-4 nonconfidential portions of the application and written report as
52-5 provided by Chapter 552, Government Code. Rules adopted under
52-6 this Act may specify the confidential or nonconfidential character
52-7 of information obtained by the department under this chapter.
52-8 Except as provided by Subchapter B, Chapter 2, of this Act or in
52-9 rules regarding confidential information, the financial statement
52-10 of a proposed officer, director, manager, or managing participant
52-11 is confidential and not subject to public disclosure.
52-12 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
52-13 (a) Any person may file a protest to an application.
52-14 (b) If a protest of the application is not filed before the
52-15 15th day after the date the organizers publish notice under Section
52-16 3.004(a) of this Act, the banking commissioner may immediately
52-17 determine whether the necessary conditions set forth in Section
52-18 3.003(b) of this Act have been established, based on the
52-19 application and investigation. The banking commissioner shall
52-20 approve the application for charter or set the charter application
52-21 for hearing.
52-22 (c) If a protest of the application is timely filed,
52-23 accompanied by the fees and deposits required by statute or rules,
52-24 or if the banking commissioner sets a hearing, the banking
52-25 commissioner shall conduct a public hearing and one or more
52-26 prehearing conferences and opportunities for discovery as the
52-27 banking commissioner considers advisable and consistent with the
53-1 applicable statutes and rules. A person protesting the application
53-2 is entitled to the confidential portion of the application, subject
53-3 to a protective order that restricts the use of confidential
53-4 information to the charter proceedings.
53-5 (d) Based on the record of the hearing, the banking
53-6 commissioner shall determine whether the application meets the
53-7 requirements of Section 3.003(b) of this Act and shall enter an
53-8 order granting or denying the charter.
53-9 (e) The banking commissioner may make approval of an
53-10 application conditional. The banking commissioner shall include
53-11 any conditions in the order approving the application.
53-12 (f) Chapter 2001, Government Code, does not apply to a
53-13 charter application filed for the purpose of assuming the assets
53-14 and liabilities of a financial institution considered by the
53-15 banking commissioner to be in hazardous condition.
53-16 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) A
53-17 state bank may not engage in the business of banking until it
53-18 receives a certificate of authority from the banking commissioner.
53-19 The banking commissioner may not deliver the certificate of
53-20 authority until the bank has:
53-21 (1) received cash for the issuance of all authorized
53-22 shares or participation shares in the full amount subscribed;
53-23 (2) elected or qualified the initial officers and
53-24 directors or managers, as appropriate, named in the application for
53-25 charter or other officers and directors or managers approved by the
53-26 banking commissioner; and
53-27 (3) complied with all the other requirements of this
54-1 Act relating to the organization of state banks.
54-2 (b) If the state bank does not open and engage in the
54-3 business of banking within six months after the date of the
54-4 granting of its charter, the banking commissioner may forfeit the
54-5 charter or cancel the conditional approval of application for
54-6 charter without judicial action.
54-7 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
54-8 CORPORATIONS. (a) The Texas Business Corporation Act and the
54-9 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
54-10 seq., Vernon's Texas Civil Statutes) apply to a state bank to the
54-11 extent not inconsistent with this Act or the proper business of a
54-12 state bank, except that:
54-13 (1) a reference in those Acts to the secretary of
54-14 state means the banking commissioner unless the context requires
54-15 otherwise; and
54-16 (2) the right of shareholders or participants to
54-17 cumulative voting in the election of directors or managers exists
54-18 only if granted by the state bank's articles of association.
54-19 (b) The finance commission may adopt rules to limit or
54-20 refine the applicability of Subsection (a) of this section to a
54-21 state bank or to alter or supplement the procedures and
54-22 requirements of the Texas Business Corporation Act applicable to an
54-23 action taken under this chapter.
54-24 (c) Unless expressly authorized by this Act or a rule
54-25 adopted under this Act, a state bank may not take an action
54-26 authorized by the Texas Business Corporation Act regarding its
54-27 corporate status, capital structure, or a matter of corporate
55-1 governance, of the type for which the Texas Business Corporation
55-2 Act would require a filing with the secretary of state if the bank
55-3 were a business corporation, without submitting the filing to the
55-4 banking commissioner and obtaining the banking commissioner's prior
55-5 written approval of the action.
55-6 Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) This
55-7 section does not grant a right to hearing to a person that is not
55-8 otherwise granted by governing law.
55-9 (b) The banking commissioner may convene a hearing to
55-10 receive evidence and argument regarding any matter before the
55-11 banking commissioner for decision or review under this Act. The
55-12 hearing must be conducted under Chapter 2001, Government Code.
55-13 (c) A hearing before the banking commissioner that is
55-14 required or authorized by law may be conducted by a hearing officer
55-15 on behalf of the banking commissioner. A matter made confidential
55-16 by law must be considered by the banking commissioner in a closed
55-17 hearing.
55-18 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
55-19 Except as expressly provided otherwise by this Act, a decision or
55-20 order of the banking commissioner made under this Act after hearing
55-21 may be appealed directly to the District Court of Travis County as
55-22 provided by Subsection (c) of this section or, at the option of the
55-23 appellant, to the finance commission for review.
55-24 (b) The finance commission shall consider the questions
55-25 raised by the application for review and may also consider
55-26 additional matters pertinent to the appeal. An order of the
55-27 banking commissioner continues in effect pending review unless the
56-1 order is stayed by the finance commission. The finance commission
56-2 may impose any condition before granting a stay of the appealed
56-3 order. The finance commission may not be required to accept
56-4 additional evidence or hold an evidentiary hearing if a hearing was
56-5 held and a record made before the banking commissioner. The
56-6 finance commission shall remand the proceeding to the banking
56-7 commissioner for the purpose of receiving any additional evidence
56-8 the finance commission chooses to consider. A hearing before the
56-9 finance commission that is required or authorized by law may be
56-10 conducted by a hearing officer on behalf of the finance commission.
56-11 A matter made confidential by law must be considered by the finance
56-12 commission in a closed hearing.
56-13 (c) A person affected by a final order of the banking
56-14 commissioner that elects to appeal directly to district court, or a
56-15 person affected by a final order of the finance commission under
56-16 this section, may appeal the final order by filing a petition for
56-17 judicial review under the substantial evidence rule in the District
56-18 Court of Travis County as provided by Chapter 2001, Government
56-19 Code. A petition for appeal filed in the district court does not
56-20 stay or vacate the appealed order unless the court, after notice
56-21 and hearing, expressly stays or vacates the order.
56-22 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS.
56-23 (a) Section 16(a), Article XVI, Texas Constitution, empowers the
56-24 legislature to authorize the incorporation of state banks and
56-25 provide for a system of state regulation and control of state banks
56-26 that will adequately protect and secure depositors and creditors.
56-27 Section 16(c), Article XVI, Texas Constitution, grants to state
57-1 banks, created by virtue of the power vested in the legislature by
57-2 Section 16(a) of that article, the same rights and privileges that
57-3 are or may be granted to national banks domiciled in this state.
57-4 The legislature finds that Section 16(c) of that article does not
57-5 restrict the legislature's power to provide a system of state
57-6 regulation pursuant to Section 16(a) of that article that differs
57-7 from the regulatory scheme imposed on national banks under federal
57-8 law or prevent the finance commission, acting under authority
57-9 granted by the legislature for the purpose of implementing this
57-10 Act, from adopting rules that differ from federal statutes and
57-11 regulations or that reasonably regulate the method or manner by
57-12 which a state bank exercises its rights and privileges, if the
57-13 rules are adopted after due consideration of the factors listed in
57-14 Section 1.012(b) of this Act. The legislature further finds that
57-15 Section 16(c) does not diminish or limit any rights or powers
57-16 specifically given to state banks by the laws of this state.
57-17 (b) A state bank that intends to exercise a right or
57-18 privilege granted to national banks that is not authorized for
57-19 state banks under the statutes and rules of this state shall submit
57-20 a letter to the banking commissioner, describing in detail the
57-21 activity in which the state bank intends to engage and the specific
57-22 authority of a national bank that authorizes the activity for a
57-23 national bank and shall attach copies, if available, of relevant
57-24 federal law, regulations, and interpretive letters. The bank may
57-25 begin to perform the proposed activity after the 30th day after the
57-26 date the banking commissioner receives the bank's letter unless the
57-27 banking commissioner specifies an earlier or later date or
58-1 prohibits the activity. The banking commissioner may prohibit the
58-2 state bank from performing the activity only if the banking
58-3 commissioner finds that:
58-4 (1) a national bank domiciled in this state does not
58-5 possess the specific right or privilege to perform the activity the
58-6 state bank seeks to perform; or
58-7 (2) the performance of the activity by the state bank
58-8 would adversely affect the safety and soundness of the requesting
58-9 state bank.
58-10 (c) The banking commissioner may extend the 30-day period
58-11 under Subsection (b) of this section if the banking commissioner
58-12 determines that the bank's letter raises issues requiring
58-13 additional information or additional time for analysis. If the
58-14 30-day period is extended, the bank may perform the proposed
58-15 activity only on prior written approval by the banking
58-16 commissioner, except that the banking commissioner must approve or
58-17 prohibit the proposed activity or convene a hearing under Section
58-18 3.008 of this Act not later than the 60th day after the date the
58-19 commissioner receives the bank's letter. If a hearing is convened
58-20 under Section 3.008 of this Act, the banking commissioner must
58-21 approve or prohibit the proposed activity not later than the 30th
58-22 day after the date the hearing is completed.
58-23 (d) A state bank that is denied the requested right or
58-24 privilege to engage in an activity by the banking commissioner
58-25 under this section may appeal as provided by Section 3.009 of this
58-26 Act or may resubmit a letter under this subsection with additional
58-27 information or authority relevant to the banking commissioner's
59-1 determination. A denial is immediately final for purposes of
59-2 appeal.
59-3 (e) To effectuate the Texas Constitution, the finance
59-4 commission may adopt rules implementing the method or manner in
59-5 which a state bank exercises specific rights and privileges granted
59-6 pursuant to Section 16(c), Article XVI, Texas Constitution,
59-7 including rules regarding the exercise of rights and privileges
59-8 that would be prohibited to state banks but for Section 16(c). The
59-9 finance commission may not adopt rules under this subsection unless
59-10 it considers the factors listed in Section 1.012(b) of this Act and
59-11 finds that:
59-12 (1) national banks domiciled in this state possess the
59-13 rights or privileges to perform activities the rule would permit
59-14 state banks to perform; and
59-15 (2) the rules contain adequate safeguards and
59-16 controls, consistent with safety and soundness, to address the
59-17 concern of the legislature evidenced by the state law the rules
59-18 would impact.
59-19 (f) The exercise of rights and privileges by a state bank in
59-20 compliance with and in the manner authorized by this section is not
59-21 a violation of any statute of this state.
59-22 (Sections 3.011-3.100 reserved for expansion)
59-23 SUBCHAPTER B. AMENDMENT OF ARTICLES;
59-24 CHANGES IN CAPITAL AND SURPLUS
59-25 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
59-26 OF ASSOCIATION. (a) A state bank that has been granted a
59-27 certificate of authority under Section 3.006 of this Act may amend
60-1 or restate its articles of association for any lawful purpose,
60-2 including the creation of authorized but unissued shares or
60-3 participation shares in one or more classes or series.
60-4 (b) An amendment authorizing the issuance of shares or
60-5 participation shares in series must contain:
60-6 (1) the designation of each series and a statement of
60-7 any variations in the preferences, limitations, and relative rights
60-8 among series to the extent that the preferences, limitations, and
60-9 relative rights are to be established in the articles of
60-10 association; and
60-11 (2) a statement of any authority to be vested in the
60-12 board to establish series and determine the preferences,
60-13 limitations, and relative rights of each series.
60-14 (c) A limited banking association may not amend its articles
60-15 of association to extend its period of existence for a perpetual
60-16 period or for any period of years, unless the period of existence
60-17 is expressly contingent on those events resulting in dissolution of
60-18 the limited banking association under Section 4.207 of this Act.
60-19 (d) Amendment or restatement of the articles of association
60-20 of a state bank and approval of the board and shareholders or
60-21 participants must be made or obtained in accordance with provisions
60-22 of the Texas Business Corporation Act for the amendment or
60-23 restatement of articles of incorporation except as otherwise
60-24 provided by this Act or rules adopted under this Act. The original
60-25 and one copy of the articles of amendment or restated articles of
60-26 association must be filed with the banking commissioner for
60-27 approval. Unless the submission presents novel or unusual
61-1 questions, the banking commissioner shall approve or reject the
61-2 amendment or restatement not later than the 31st day after the date
61-3 the banking commissioner considers the submission informationally
61-4 complete and accepted for filing. The banking commissioner may
61-5 require the submission of additional information as considered
61-6 necessary to an informed decision to approve or reject any
61-7 amendment or restatement of articles of association under this
61-8 section. If the banking commissioner finds that the amendment or
61-9 restatement conforms to law and any conditions imposed by the
61-10 banking commissioner, and any required filing fee has been paid,
61-11 the banking commissioner shall:
61-12 (1) endorse the face of the original and copy of the
61-13 amendment or restatement with the date of approval and the word
61-14 "Approved";
61-15 (2) file the original of the amendment or restatement
61-16 in the department's records; and
61-17 (3) deliver a certified copy of the amendment or
61-18 restatement to the state bank.
61-19 (e) An amendment or restatement, if approved, takes effect
61-20 on the date of approval, unless the amendment or restatement
61-21 provides for a different effective date.
61-22 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
61-23 SHARES. (a) If the articles of association expressly give the
61-24 board authority to establish series and determine the preferences,
61-25 limitations, and relative rights of each series, the board may do
61-26 so only on compliance with this section and any rules adopted under
61-27 this Act.
62-1 (b) A series of shares or participation shares may be
62-2 established in the manner provided by the Texas Business
62-3 Corporation Act as if the state bank were a domestic corporation,
62-4 but the shares or participation shares of the series may not be
62-5 issued and sold without the prior written approval of the banking
62-6 commissioner under Section 3.103 of this Act. The state bank shall
62-7 file the original and one copy of the statement of action required
62-8 by the Texas Business Corporation Act with the banking
62-9 commissioner. Unless the submission presents novel or unusual
62-10 questions, the banking commissioner shall approve or reject the
62-11 series not later than the 31st day after the date the banking
62-12 commissioner considers the submission informationally complete and
62-13 accepted for filing. The banking commissioner may require the
62-14 submission of additional information as considered necessary to an
62-15 informed decision to approve or reject a proposed series under this
62-16 section. If the banking commissioner finds that the interests of
62-17 depositors and creditors will not be adversely affected by the
62-18 series, that the series conforms to law and any conditions imposed
62-19 by the banking commissioner, and that any required filing fee has
62-20 been paid, the banking commissioner shall:
62-21 (1) endorse the face of the original and copy of the
62-22 statement with the date of approval and the word "Approved";
62-23 (2) file the original of the statement in the
62-24 department's records; and
62-25 (3) deliver a certified copy of the statement to the
62-26 state bank.
62-27 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
63-1 A state bank may not reduce or increase its outstanding capital and
63-2 surplus through dividend, redemption, issuance of shares or
63-3 participation shares, or otherwise, without the prior written
63-4 approval of the banking commissioner, except as permitted by this
63-5 section or rules adopted under this Act.
63-6 (b) Unless otherwise restricted by rules, prior written
63-7 approval is not required for an increase in capital and surplus
63-8 accomplished through:
63-9 (1) issuance of shares of common stock or their
63-10 equivalent in participation shares for cash;
63-11 (2) declaration and payment of pro rata share
63-12 dividends as defined in the Texas Business Corporation Act; or
63-13 (3) adoption by the board of a resolution directing
63-14 that all or part of undivided profits be transferred to capital or
63-15 surplus.
63-16 (c) Prior approval is not required for a decrease in capital
63-17 or surplus caused by losses in excess of undivided profits.
63-18 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
63-19 prior written approval of the banking commissioner a state bank
63-20 may, at any time, through action of its board, and without
63-21 requiring action of its shareholders or participants, issue and
63-22 sell its capital notes or debentures, which must be subordinate to
63-23 the claims of depositors and may be subordinate to other claims,
63-24 including the claims of other creditors or the shareholders or
63-25 participants.
63-26 (b) Capital notes or debentures may be convertible into
63-27 shares or participation shares of any class or series. The
64-1 issuance and sale of convertible capital notes or debentures are
64-2 subject to satisfaction of preemptive rights, if any, to the extent
64-3 provided by law.
64-4 (c) Without the prior written approval of the banking
64-5 commissioner, interest due or principal repayable on outstanding
64-6 capital notes or debentures may not be paid by a state bank at a
64-7 time when the bank is in hazardous condition or is insolvent, or to
64-8 the extent that payment will cause the bank to be in hazardous
64-9 condition or insolvent, as determined by the banking commissioner.
64-10 (d) The amount of any outstanding capital notes or
64-11 debentures that meet the requirements of this section and that are
64-12 subordinated to unsecured creditors of the bank may be included in
64-13 equity capital of the bank for purposes of determining hazardous
64-14 condition or insolvency and for other purposes provided by rules
64-15 adopted under this Act.
64-16 (Sections 3.105-3.200 reserved for expansion)
64-17 SUBCHAPTER C. BANK OFFICES
64-18 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
64-19 state bank may engage in the banking business at its home office,
64-20 at an approved branch office location, and through electronic
64-21 terminals. A drive-in facility must be approved as a branch if it
64-22 is more than 2,000 feet from the nearest wall of the bank's home
64-23 office or another approved branch office.
64-24 (b) A function of a state bank that does not involve banking
64-25 contact with the public may be conducted at any location without
64-26 prior written approval of the banking commissioner. The finance
64-27 commission may adopt rules further defining functions of a state
65-1 bank that are not required to be conducted at an approved location.
65-2 (c) Under Section 3.010 of this Act the finance commission
65-3 may by rule authorize a new form of banking facility. The banking
65-4 commissioner may approve a new form of banking facility other than
65-5 as provided in this subchapter if the banking commissioner does not
65-6 have a significant supervisory or regulatory concern regarding the
65-7 proposed facility.
65-8 Sec. 3.202. HOME OFFICE. (a) Each state bank must have and
65-9 continuously maintain in this state a home office, which must be a
65-10 location at which the bank does business with the public and keeps
65-11 its corporate books and records. At least one officer of the bank
65-12 must maintain an office at the home office and each officer at the
65-13 home office is an agent for service of process for the bank.
65-14 (b) A state bank may change its home office to one of its
65-15 previously established branch locations within this state, if the
65-16 location that is the home office before the change is to remain as
65-17 a branch of the bank, by filing a written notice with the banking
65-18 commissioner setting forth the name of the state bank, the street
65-19 address of its home office before the change, the street address of
65-20 the location to which the home office is to be changed, and a copy
65-21 of the resolution adopted by the board authorizing the change. The
65-22 change of home office takes effect on the 31st day after the date
65-23 the banking commissioner receives the notice unless the banking
65-24 commissioner consents to a different effective date.
65-25 (c) A state bank may change its home office to any location
65-26 within this state, other than as permitted by Subsection (b) of
65-27 this section, on prior written approval of the banking
66-1 commissioner. The banking commissioner shall grant an application
66-2 under this subsection if the banking commissioner does not have a
66-3 significant supervisory or regulatory concern regarding the
66-4 proposed banking facility, the applicant, or an affiliate of the
66-5 applicant. Any standard established by the banking commissioner or
66-6 the finance commission regarding the establishment of a branch
66-7 under Section 3.203 of this Act applies to an application for a
66-8 change of home office that is subject to this subsection, except as
66-9 otherwise provided by rules adopted under this Act.
66-10 (d) If the proposed relocation of the bank's home office
66-11 would effect an abandonment of all or part of the community served
66-12 by the bank, the bank must also establish to the satisfaction of
66-13 the banking commissioner that the abandonment is consistent with
66-14 the original determination of public necessity for the
66-15 establishment of a bank at that location.
66-16 Sec. 3.203. BRANCH OFFICES. A state bank may establish and
66-17 maintain branch offices at any location on prior written approval
66-18 of the banking commissioner. If the banking commissioner does not
66-19 have a significant supervisory or regulatory concern regarding the
66-20 proposed branch, the applicant, or an affiliate, the banking
66-21 commissioner shall approve the application. The finance commission
66-22 may adopt rules establishing additional standards for the approval
66-23 of branch offices.
66-24 Sec. 3.204. ELECTRONIC TERMINALS. (a) A person or group of
66-25 persons, for the convenience of customers of depository
66-26 institutions, may install, maintain, and operate one or more
66-27 electronic terminals at any location within this state.
67-1 (b) Depository institutions may agree in writing to share in
67-2 the use of an electronic terminal on a reasonable,
67-3 nondiscriminatory basis and on the condition that a depository
67-4 institution using one or more electronic terminals may be required
67-5 to meet necessary and reasonable technical standards and to pay
67-6 charges for the use of the electronic terminal. The standards or
67-7 charges imposed must be reasonable, fair, equitable, and
67-8 nondiscriminatory among the depository institutions. Any charges
67-9 imposed must:
67-10 (1) not exceed an equitable proportion of the cost of
67-11 establishing the electronic terminal, including provisions for
67-12 amortization of development costs and capital expenditures over a
67-13 reasonable period, and the cost of operation and maintenance of the
67-14 electronic terminal, plus a reasonable return on those costs; and
67-15 (2) be related to the services provided to the
67-16 depository institution or its customers.
67-17 (c) This section does not apply to:
67-18 (1) an electronic terminal located at the domicile or
67-19 home office or a branch of a depository institution; or
67-20 (2) the use by a person of an electronic terminal,
67-21 regardless of location, solely to withdraw cash, make account
67-22 balance inquiries, or make transfers among the person's accounts
67-23 within the same depository institution.
67-24 Sec. 3.205. LOAN PRODUCTION OFFICES. (a) A state bank may
67-25 establish one or more loan production offices solely for the
67-26 purpose of soliciting loans, accepting loan applications, and
67-27 performing ministerial duties related to consummating a granted
68-1 loan such as execution of loan documents and dispensing of loan
68-2 proceeds by draft or check, including a certified or cashier's
68-3 check, but not by cash. A credit decision, commitment to make a
68-4 loan, and preparation of a check or draft to dispense loan proceeds
68-5 must occur at the bank's home office or a branch office and may not
68-6 occur at a loan production office.
68-7 (b) The bank shall notify the banking commissioner in
68-8 writing before the 31st day preceding the date of establishment of
68-9 a loan production office, except that the banking commissioner may
68-10 waive or shorten the period if the banking commissioner does not
68-11 have a significant supervisory or regulatory concern regarding the
68-12 bank or its planned loan production office.
68-13 (Sections 3.206-3.300 reserved for expansion)
68-14 SUBCHAPTER D. MERGER
68-15 Sec. 3.301. MERGER AUTHORITY. (a) Two or more financial
68-16 institutions, corporations, or other entities with all requisite
68-17 legal authority to participate in a merger, at least one of which
68-18 is a state bank, may adopt and implement a plan of merger in
68-19 accordance with this section. The merger may not be made without
68-20 the prior written approval of the banking commissioner if any
68-21 surviving, new, or acquiring entity that is a party to the merger
68-22 or created by the terms of the merger is a state bank or is not a
68-23 financial institution.
68-24 (b) Implementation of the merger by the parties and approval
68-25 of the board, shareholders, participants, or owners of the parties
68-26 must be made or obtained in accordance with the Texas Business
68-27 Corporation Act as if the state bank were a domestic corporation
69-1 and all other parties to the merger were foreign corporations and
69-2 other entities, except as may be otherwise provided by applicable
69-3 rules.
69-4 (c) A consummated merger has the effect provided by the
69-5 Texas Business Corporation Act. A separate application is not
69-6 required to relocate the home office of a surviving state bank or
69-7 to grant authority to a surviving bank to operate new branch
69-8 offices that previously existed as part of a merging financial
69-9 institution if the intent of the surviving bank is clearly stated
69-10 as part of the plan of merger.
69-11 (d) A merger under this subchapter does not confer
69-12 additional powers on a state bank beyond the powers conferred by
69-13 other provisions of this Act.
69-14 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) If the
69-15 transaction is subject to the prior written approval of the banking
69-16 commissioner, the original articles of merger and a number of
69-17 copies of the articles equal to the number of surviving, new, and
69-18 acquiring entities must be filed with the banking commissioner. On
69-19 this filing, the banking commissioner shall investigate the
69-20 condition of the merging parties. The banking commissioner may
69-21 require the submission of additional information the banking
69-22 commissioner determines necessary to an informed decision to
69-23 approve or reject a merger under this subchapter.
69-24 (b) The banking commissioner shall approve the merger only
69-25 if:
69-26 (1) each resulting state bank will be solvent and have
69-27 adequate capitalization for its business and location;
70-1 (2) each resulting state bank has in all respects
70-2 complied with the laws of this state relative to the organization
70-3 and operation of state banks;
70-4 (3) all deposit and other liabilities of every state
70-5 bank that is a party to the merger have been properly discharged or
70-6 otherwise assumed or retained by a financial institution;
70-7 (4) each surviving, new, or acquiring entity that is
70-8 not a depository institution will not be engaged in the
70-9 unauthorized business of banking, and each state bank will not be
70-10 engaged in a business other than banking or a business incidental
70-11 to banking;
70-12 (5) the parties have in all respects complied with the
70-13 laws of this state; and
70-14 (6) all conditions imposed by the banking commissioner
70-15 have been satisfied or otherwise resolved.
70-16 (c) If the banking commissioner approves the merger and
70-17 finds that all required filing fees and investigative costs have
70-18 been paid, the banking commissioner shall:
70-19 (1) endorse the face of the original and each copy
70-20 with the date of approval and the word "Approved";
70-21 (2) file the original of the articles of merger in the
70-22 department's records; and
70-23 (3) deliver a certified copy of the articles of merger
70-24 to each surviving, new, or acquiring entity.
70-25 (d) An approved merger takes effect on the date of approval,
70-26 unless the merger agreement provides for a different effective
70-27 date.
71-1 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
71-2 participant, or participant-transferee may dissent from the merger
71-3 to the extent and by following the procedure provided by the Texas
71-4 Business Corporation Act or any rules adopted under this Act.
71-5 (Sections 3.304-3.400 reserved for expansion)
71-6 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
71-7 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
71-8 FINANCIAL INSTITUTION. A state bank with the prior written
71-9 approval of the banking commissioner may purchase all or
71-10 substantially all of the assets of another financial institution.
71-11 Except as otherwise expressly provided by another statute, the
71-12 purchase of all or part of the assets of the selling institution
71-13 does not make the purchasing bank responsible for any liability or
71-14 obligation of the selling institution that the purchasing bank does
71-15 not expressly assume. Except as otherwise provided by this Act,
71-16 this subchapter does not govern or prohibit the purchase by a state
71-17 bank of all or part of the assets of a corporation or other entity
71-18 that is not a financial institution.
71-19 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
71-20 purchasing bank may hold the purchase price and any additional
71-21 funds delivered to it by the selling institution in trust for, or
71-22 as a deposit to the credit of, the selling institution and may act
71-23 as agent of the selling institution in disbursing those funds in
71-24 trust or on deposit by paying the depositors and creditors of the
71-25 selling institution. If the purchasing bank acts under written
71-26 contract of agency approved by the banking commissioner that
71-27 specifically names each depositor and creditor and the amount to be
72-1 paid each, and if the agency is limited to the purely ministerial
72-2 act of paying those depositors and creditors the amounts due them
72-3 as determined by the selling institution and reflected in the
72-4 contract of agency and does not involve discretionary duties or
72-5 authority other than the identification of the depositors and
72-6 creditors named, the purchasing bank:
72-7 (1) may rely on the contract of agency and the
72-8 instructions included in it; and
72-9 (2) is not responsible for:
72-10 (A) any error made by the selling institution in
72-11 determining its liabilities, the depositors and creditors to whom
72-12 the liabilities are due, or the amounts due the depositors and
72-13 creditors; or
72-14 (B) any preference that results from the
72-15 payments made under the contract of agency and the instructions
72-16 included in it.
72-17 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
72-18 selling financial institution is at any time after the sale of
72-19 assets voluntarily or involuntarily closed for liquidation by a
72-20 state or federal regulatory agency, the purchasing bank shall pay
72-21 to the receiver of the selling institution the balance of the funds
72-22 held by it in trust or on deposit for the selling institution and
72-23 not yet paid to the depositors and creditors of the selling
72-24 institution. Without further action the purchasing bank is
72-25 discharged of all responsibilities to the selling institution, its
72-26 receiver, or its depositors, creditors, shareholders, participants,
72-27 or participant-transferees.
73-1 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Payment to
73-2 a depositor or creditor of the selling institution of the amount to
73-3 be paid the person under the terms of the contract of agency may be
73-4 made by the purchasing bank by opening an account in the name of
73-5 the depositor or creditor, crediting the account with the amount to
73-6 be paid the depositor or creditor under the terms of the agency
73-7 contract, and mailing or personally delivering a duplicate deposit
73-8 ticket evidencing the credit to the depositor or creditor at the
73-9 person's address shown in the records of the selling institution.
73-10 The relationship between the purchasing bank and the depositor or
73-11 creditor is that of debtor to creditor only to the extent of the
73-12 credit reflected by the deposit ticket.
73-13 Sec. 3.405. SALE OF ASSETS. (a) The board of a state bank,
73-14 with the prior written approval of the banking commissioner, may
73-15 cause a bank to sell all or substantially all of its assets without
73-16 shareholder or participant approval if:
73-17 (1) the banking commissioner finds the interests of
73-18 depositors and creditors are jeopardized because of insolvency or
73-19 imminent insolvency and that the sale is in their best interest;
73-20 and
73-21 (2) the Federal Deposit Insurance Corporation or its
73-22 successor approves the transaction and agrees to provide assistance
73-23 to the prospective buyer under 12 U.S.C. Section 1823(c) or a
73-24 comparable law unless the deposits of the bank are not insured.
73-25 (b) A sale under this section must include an assumption and
73-26 promise by the buyer to pay or otherwise discharge:
73-27 (1) all of the bank's liabilities to depositors;
74-1 (2) all of the bank's liabilities for salaries of the
74-2 bank's employees incurred before the date of the sale;
74-3 (3) obligations incurred by the banking commissioner
74-4 arising out of the supervision or sale of the bank; and
74-5 (4) fees and assessments due the department.
74-6 (c) This section does not affect the banking commissioner's
74-7 right to take action under another law. The sale by a state bank
74-8 of all or substantially all of its assets with shareholder or
74-9 participant approval is considered a voluntary dissolution and
74-10 liquidation and is governed by Subchapter B, Chapter 7, of this
74-11 Act.
74-12 (Sections 3.406-3.500 reserved for expansion)
74-13 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
74-14 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
74-15 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
74-16 BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS ASSOCIATION.
74-17 (a) A state bank may act as necessary under the laws of the United
74-18 States or this state to merge, reorganize, or convert into a
74-19 national bank, state or federal savings bank, or state or federal
74-20 savings association.
74-21 (b) The merger, reorganization, or conversion by the state
74-22 bank must be made and approval of its board, shareholders, or
74-23 participants must be obtained in accordance with the Texas Business
74-24 Corporation Act as if the state bank were a domestic corporation
74-25 and all other parties to the transaction, if any, were foreign
74-26 corporations and other entities, except as may be otherwise
74-27 provided by rules. For purposes of this subsection, a conversion
75-1 is considered a merger into the successor form of financial
75-2 institution.
75-3 (c) The state bank does not cease to be a state bank subject
75-4 to the supervision of the banking commissioner unless:
75-5 (1) the banking commissioner has been given written
75-6 notice of the intention to merge, reorganize, or convert before the
75-7 31st day preceding the date of the proposed transaction;
75-8 (2) the bank has published notice of the transaction,
75-9 in the form and frequency specified by the banking commissioner, in
75-10 a newspaper of general circulation published in the county of its
75-11 home office or, if such a newspaper is not published in the county,
75-12 in an adjacent county and in other locations that the banking
75-13 commissioner considers appropriate;
75-14 (3) the bank has filed with the banking commissioner:
75-15 (A) a copy of the application filed with the
75-16 successor regulatory authority, including a copy of each contract
75-17 evidencing or implementing the merger, reorganization, or
75-18 conversion, or other documents sufficient to show compliance with
75-19 applicable law;
75-20 (B) a certified copy of all minutes of board
75-21 meetings and shareholder or participant meetings at which action
75-22 was taken regarding the merger, reorganization, or conversion; and
75-23 (C) a publisher's certificate showing
75-24 publication of the required notice;
75-25 (4) the banking commissioner determines that:
75-26 (A) all deposit and other liabilities of the
75-27 state bank are fully discharged, assumed, or otherwise retained by
76-1 the successor form of financial institution;
76-2 (B) any conditions imposed by the banking
76-3 commissioner for the protection of depositors and creditors have
76-4 been met or otherwise resolved; and
76-5 (C) any required filing fees have been paid; and
76-6 (5) the bank has received a certificate of authority
76-7 to do business as a national bank, state or federal savings bank,
76-8 or state or federal savings association.
76-9 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
76-10 BANK. (a) A financial institution may apply to the banking
76-11 commissioner for conversion into a state bank on a form prescribed
76-12 by the banking commissioner accompanied by any required fee, if the
76-13 institution follows the procedures prescribed by the laws of the
76-14 United States or this state governing the exit of the institution
76-15 for the purpose of conversion into a state bank from the regulatory
76-16 system applicable before the conversion. A banking association or
76-17 limited banking association may convert its organizational form
76-18 under this section.
76-19 (b) An institution applying to convert into a state bank may
76-20 receive a certificate of authority to do business as a state bank
76-21 if the banking commissioner finds that:
76-22 (1) the institution is not engaging in a pattern or
76-23 practice of unsafe and unsound banking practices;
76-24 (2) the institution has adequate capitalization for a
76-25 state bank to engage in business at the same locations as the
76-26 institution is engaged in business before the conversion;
76-27 (3) the institution can be expected to operate
77-1 profitably after the conversion;
77-2 (4) the officers, directors, managers, and managing
77-3 participants of the institution as a group have sufficient banking
77-4 experience, ability, standing, competence, trustworthiness, and
77-5 integrity to justify a belief that the institution will operate in
77-6 compliance with law; and
77-7 (5) each principal shareholder or participant has
77-8 sufficient experience, ability, standing, competence,
77-9 trustworthiness, and integrity to justify a belief that the
77-10 institution will be free from improper or unlawful influence or
77-11 interference with respect to the institution's operation in
77-12 compliance with law.
77-13 (c) The banking commissioner may:
77-14 (1) request additional or supplemental information
77-15 considered necessary to an informed decision under this section;
77-16 (2) perform an examination of the converting
77-17 institution at the expense of the converting institution; and
77-18 (3) require that examination fees be paid before a
77-19 certificate of authority is issued.
77-20 (d) In connection with the application, the converting
77-21 institution must submit a statement of the law governing the exit
77-22 of the institution from the regulatory system applicable before the
77-23 conversion and the terms of the transition into a state bank. The
77-24 financial institution must also demonstrate that all applicable law
77-25 has been fully satisfied.
77-26 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
77-27 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
78-1 SUBCHAPTER A. TRANSFER OF OWNERSHIP
78-2 INTERESTS IN STATE BANK
78-3 Sec. 4.001. ACQUISITION OF CONTROL ............................ 79
78-4 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL ...... 80
78-5 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL .... 81
78-6 Sec. 4.004. APPEAL FROM ADVERSE DECISION ...................... 83
78-7 Sec. 4.005. EXEMPTIONS ........................................ 84
78-8 Sec. 4.006. OBJECTION TO OTHER TRANSFER ....................... 84
78-9 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES ............. 85
78-10 (Sections 4.008-4.100 reserved for expansion)
78-11 SUBCHAPTER B. BOARD AND OFFICERS
78-12 Sec. 4.101. VOTING SECURITIES HELD BY BANK .................... 85
78-13 Sec. 4.102. BYLAWS ............................................ 86
78-14 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
78-15 PARTICIPANTS .................................... 86
78-16 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS ................... 89
78-17 Sec. 4.105. OFFICERS .......................................... 89
78-18 Sec. 4.106. CERTAIN CRIMINAL OFFENSES ......................... 90
78-19 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES ....... 90
78-20 (Sections 4.108-4.200 reserved for expansion)
78-21 SUBCHAPTER C. SPECIAL PROVISIONS
78-22 FOR LIMITED BANKING ASSOCIATIONS
78-23 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY ................ 91
78-24 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS ............ 92
78-25 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS ................. 93
78-26 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION ......... 93
78-27 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
79-1 CONTRIBUTION TO CAPITAL ......................... 94
79-2 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
79-3 TRANSFERABILITY OF INTEREST ..................... 95
79-4 Sec. 4.207. DISSOLUTION ....................................... 95
79-5 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES .................. 97
79-6 Sec. 4.209. DISTRIBUTIONS ..................................... 97
79-7 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
79-8 ASSOCIATIONS .................................... 97
79-9 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
79-10 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
79-11 SUBCHAPTER A. TRANSFER OF OWNERSHIP
79-12 INTERESTS IN STATE BANK
79-13 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
79-14 expressly otherwise permitted by this Act, a person may not without
79-15 the prior written approval of the banking commissioner directly or
79-16 indirectly acquire a legal or beneficial interest in voting
79-17 securities of a state bank or a corporation or other entity owning
79-18 voting securities of a state bank if, after the acquisition, the
79-19 person would control the state bank. For purposes of this
79-20 subchapter and except as otherwise provided by rules adopted under
79-21 this Act, the principal shareholder or principal participant of a
79-22 state bank that directly or indirectly owns or has the power to
79-23 vote a greater percentage of voting securities of the bank than any
79-24 other shareholder or participant is considered to control the state
79-25 bank.
79-26 (b) This subchapter does not prohibit a person from
79-27 negotiating to acquire, but not acquiring, control of a state bank
80-1 or a person that controls a state bank.
80-2 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
80-3 (a) An application for approval to acquire control of a state bank
80-4 or a person that controls a state bank must be filed under oath by
80-5 the proposed transferee on a form prescribed by the banking
80-6 commissioner and accompanied by any filing fee required by statute
80-7 or rule. The application must contain all information required by
80-8 rules adopted under this Act or that the banking commissioner
80-9 requires in a particular application as necessary to an informed
80-10 decision to approve or reject the proposed acquisition.
80-11 (b) If a person or proposed transferee proposing to acquire
80-12 voting securities subject to this section includes any group of
80-13 individuals or entities acting in concert, the information required
80-14 by the banking commissioner may be required of each member of the
80-15 group.
80-16 (c) Information obtained by the banking commissioner under
80-17 this section is confidential and may not be disclosed by the
80-18 banking commissioner or any employee of the department except as
80-19 provided by Subchapter B, Chapter 2, of this Act.
80-20 (d) The applicants shall publish notice of the application,
80-21 its date of filing, and the identity of each applicant, in the form
80-22 specified by the banking commissioner, in a newspaper of general
80-23 circulation in the county where the bank's home office is located,
80-24 promptly after the applicants are notified by the banking
80-25 commissioner that the application is complete and accepted for
80-26 filing. Publication of notice of an application filed in
80-27 contemplation of a public tender offer subject to the requirements
81-1 of 15 U.S.C. Section 78n(d)(1) may be deferred for not more than 34
81-2 days after the date the application is filed if:
81-3 (1) the applicant requests confidential treatment and
81-4 represents that a public announcement of the tender offer and the
81-5 filing of appropriate forms with the Securities and Exchange
81-6 Commission or the appropriate federal banking agency, as
81-7 applicable, will occur within the period of deferral; and
81-8 (2) the banking commissioner determines that the
81-9 public interest will not be harmed by the requested confidential
81-10 treatment.
81-11 (e) The banking commissioner may waive the requirement that
81-12 a notice be published or permit delayed publication on a
81-13 determination that waiver or delay is in the public interest. If
81-14 publication of notice is waived under this subsection, the
81-15 information that would be contained in a published notice becomes
81-16 public information under Chapter 552, Government Code, on the 35th
81-17 day after the date the application is filed.
81-18 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
81-19 (a) Not later than the 60th day after the date the notice is
81-20 published, the banking commissioner shall approve the application
81-21 or set the application for hearing. If the banking commissioner
81-22 sets a hearing, the department shall participate as the opposing
81-23 party and the banking commissioner shall conduct a hearing and one
81-24 or more prehearing conferences and opportunities for discovery as
81-25 the banking commissioner considers advisable and consistent with
81-26 governing statutes and rules. A hearing held under this section is
81-27 confidential and closed to the public.
82-1 (b) Based on the record, the banking commissioner may issue
82-2 an order denying an application if:
82-3 (1) the acquisition would substantially lessen
82-4 competition, be in restraint of trade, result in a monopoly, or be
82-5 in furtherance of a combination or conspiracy to monopolize or
82-6 attempt to monopolize the banking industry in any part of this
82-7 state, unless:
82-8 (A) the anticompetitive effects of the proposed
82-9 acquisition are clearly outweighed in the public interest by the
82-10 probable effect of acquisition in meeting the convenience and needs
82-11 of the community to be served; and
82-12 (B) the proposed acquisition is not in violation
82-13 of law of this state or the United States;
82-14 (2) the financial condition of the proposed
82-15 transferee, or any member of a group comprising the proposed
82-16 transferee, might jeopardize the financial stability of the bank
82-17 being acquired;
82-18 (3) plans or proposals to operate, liquidate, or sell
82-19 the bank or its assets are not in the best interests of the bank;
82-20 (4) the experience, ability, standing, competence,
82-21 trustworthiness, and integrity of the proposed transferee, or any
82-22 member of a group comprising the proposed transferee, are
82-23 insufficient to justify a belief that the bank will be free from
82-24 improper or unlawful influence or interference with respect to the
82-25 bank's operation in compliance with law;
82-26 (5) the bank will not be solvent, have adequate
82-27 capitalization, or be in compliance with the laws of this state
83-1 after the acquisition;
83-2 (6) the proposed transferee has failed to furnish all
83-3 information pertinent to the application reasonably required by the
83-4 banking commissioner; or
83-5 (7) the proposed transferee is not acting in good
83-6 faith.
83-7 (c) If an application filed under this section is approved
83-8 by the banking commissioner, the transaction may be consummated.
83-9 Any written commitment from the proposed transferee offered to and
83-10 accepted by the banking commissioner as a condition that the
83-11 application will be approved is enforceable against the bank and
83-12 the transferee and is considered for all purposes an agreement
83-13 under this Act.
83-14 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
83-15 has been held, the banking commissioner has entered an order
83-16 denying the application, and the order has become final, the
83-17 proposed transferee may appeal the final order by filing a petition
83-18 for judicial review under the substantial evidence rule in the
83-19 District Court of Travis County as provided by Chapter 2001,
83-20 Government Code.
83-21 (b) The filing of an appeal under this section does not stay
83-22 the order of the banking commissioner.
83-23 Sec. 4.005. EXEMPTIONS. The following acquisitions are
83-24 exempt from Section 4.001 of this Act:
83-25 (1) the acquisition of securities in connection with
83-26 the exercise of a security interest or otherwise in full or partial
83-27 satisfaction of a debt previously contracted for in good faith if
84-1 the acquiring person files written notice of acquisition with the
84-2 banking commissioner before the person votes the securities
84-3 acquired;
84-4 (2) the acquisition of voting securities in any class
84-5 or series by a controlling person who has previously complied with
84-6 and received approval under this subchapter or who was identified
84-7 as a controlling person in a prior application filed with and
84-8 approved by the banking commissioner;
84-9 (3) an acquisition or transfer by operation of law,
84-10 will, or intestate succession if the acquiring person files written
84-11 notice of acquisition with the banking commissioner before the
84-12 person votes the securities acquired;
84-13 (4) a transaction subject to Subchapter D, Chapter 8,
84-14 of this Act; or
84-15 (5) a transaction exempted by the banking commissioner
84-16 or by rules adopted under this Act because the transaction is not
84-17 within the purposes of this subchapter or the regulation of which
84-18 is not necessary or appropriate to achieve the objectives of this
84-19 subchapter.
84-20 Sec. 4.006. OBJECTION TO OTHER TRANSFER. This subchapter
84-21 may not be construed to prevent the banking commissioner from
84-22 investigating, commenting on, or seeking to enjoin or set aside a
84-23 transfer of voting securities that evidence a direct or indirect
84-24 interest in a state bank, regardless of whether the transfer is
84-25 included within this subchapter, if the banking commissioner
84-26 considers the transfer to be against the public interest.
84-27 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
85-1 the banking commissioner believes that a person has committed or is
85-2 about to commit a violation of this subchapter or a rule or order
85-3 of the banking commissioner pertaining to this subchapter, the
85-4 attorney general on behalf of the banking commissioner may apply to
85-5 the District Court of Travis County for an order enjoining the
85-6 violation and for other equitable relief the nature of the case
85-7 requires.
85-8 (b) A person who knowingly fails or refuses to file the
85-9 application required by Section 4.002 of this Act commits an
85-10 offense. An offense under this subsection is a Class A
85-11 misdemeanor.
85-12 (Sections 4.008-4.100 reserved for expansion)
85-13 SUBCHAPTER B. BOARD AND OFFICERS
85-14 Sec. 4.101. VOTING SECURITIES HELD BY BANK. (a) Voting
85-15 securities of a state bank held by the state bank in a fiduciary
85-16 capacity under a will or trust, whether registered in its own name
85-17 or in the name of its nominee, may not be voted in the election of
85-18 directors or managers or on a matter affecting the compensation of
85-19 directors, managers, officers, or employees of the bank in that
85-20 capacity, unless:
85-21 (1) under the terms of the will or trust, the manner
85-22 in which the voting securities are to be voted may be determined by
85-23 a donor or beneficiary of the will or trust and the donor or
85-24 beneficiary actually makes the determination in the matter at
85-25 issue;
85-26 (2) the terms of the will or trust expressly direct
85-27 the manner in which the securities must be voted to the extent that
86-1 no discretion is vested in the bank as fiduciary; or
86-2 (3) the securities are voted solely by a cofiduciary
86-3 that is not an affiliate of the bank, as if the cofiduciary were
86-4 the sole fiduciary.
86-5 (b) Voting securities of a state bank that cannot be voted
86-6 under this section are considered to be authorized but unissued for
86-7 purposes of determining the procedures for and results of the
86-8 affected vote.
86-9 Sec. 4.102. BYLAWS. (a) Each state bank shall adopt bylaws
86-10 and may amend its bylaws from time to time for the purposes and in
86-11 accordance with the procedures set forth in the Texas Business
86-12 Corporation Act.
86-13 (b) A limited banking association in which management is
86-14 retained by the participants is not required to adopt bylaws if
86-15 provisions required by law to be contained in the bylaws are
86-16 contained in the articles of association or the participation
86-17 agreement.
86-18 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
86-19 PARTICIPANTS. (a) The board of a state bank must consist of not
86-20 fewer than five or more than 25 directors, managers, or managing
86-21 participants, the majority of whom must be residents of this state.
86-22 Except for a limited banking association in which management has
86-23 been retained by its participants, the principal executive officer
86-24 of the bank is a member of the board. The principal executive
86-25 officer acting in the capacity of board member is the board's
86-26 presiding officer unless the board elects a different presiding
86-27 officer to perform the duties as designated by the board.
87-1 (b) Unless the banking commissioner consents otherwise in
87-2 writing, a person may not serve as director, manager, or managing
87-3 participant of a state bank if:
87-4 (1) the bank incurs an unreimbursed loss attributable
87-5 to a charged-off obligation of or holds a judgment against the
87-6 person or an entity that was controlled by the person at the time
87-7 of funding and at the time of default on the loan that gave rise to
87-8 the judgment or charged-off obligation; or
87-9 (2) the person has been convicted of a felony.
87-10 (c) If a state bank other than a limited banking association
87-11 operated by managing participants does not elect directors or
87-12 managers before the 61st day after the date of its regular annual
87-13 meeting, the banking commissioner may appoint a conservator under
87-14 Chapter 6 of this Act to operate the bank and elect directors or
87-15 managers, as appropriate. If the conservator is unable to locate
87-16 or elect persons willing and able to serve as directors or
87-17 managers, the banking commissioner may close the bank for
87-18 liquidation.
87-19 (d) A vacancy on the board that reduces the number of
87-20 directors, managers, or managing participants to fewer than five
87-21 must be filled not later than the 30th day after the date the
87-22 vacancy occurs. A limited banking association with fewer than five
87-23 managing participants must add one or more new participants or
87-24 elect a board of managers of not fewer than five persons to resolve
87-25 the vacancy. After 30 days after the date the vacancy occurs, the
87-26 banking commissioner may appoint a conservator under Chapter 6 of
87-27 this Act to operate the bank and elect a board of not fewer than
88-1 five persons to resolve the vacancy. If the conservator is unable
88-2 to locate or elect five persons willing and able to serve as
88-3 directors or managers, the banking commissioner may close the bank
88-4 for liquidation.
88-5 (e) Before each term to which a person is elected to serve
88-6 as a director or manager of a state bank, or annually for a person
88-7 who is a managing participant, the person shall submit an affidavit
88-8 for filing in the minutes of the bank stating that the person, to
88-9 the extent applicable:
88-10 (1) accepts the position and is not disqualified from
88-11 serving in the position;
88-12 (2) will not violate or knowingly permit an officer,
88-13 director, manager, managing participant, or employee of the bank to
88-14 violate any law applicable to the conduct of business of the bank;
88-15 and
88-16 (3) will diligently perform the duties of the
88-17 position.
88-18 (f) An advisory director or manager is not considered a
88-19 director if the advisory director or manager:
88-20 (1) is not elected by the shareholders or participants
88-21 of the bank;
88-22 (2) does not vote on matters before the board or a
88-23 committee of the board and is not counted for purposes of
88-24 determining a quorum of the board or committee; and
88-25 (3) provides solely general policy advice to the
88-26 board.
88-27 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) The board
89-1 of a state bank shall hold at least one regular meeting each month.
89-2 At each regular meeting the board shall review and approve the
89-3 minutes of the prior meeting and review the operations, activities,
89-4 and financial condition of the bank. The board may designate
89-5 committees from among its members to perform these duties and
89-6 approve or disapprove the committees' reports at each regular
89-7 meeting. All actions of the board must be recorded in its minutes.
89-8 (b) Periodically the board may vote to designate and record
89-9 the amount of certified surplus in its minutes. Except to absorb
89-10 losses in excess of undivided profits and uncertified surplus,
89-11 certified surplus may not be reduced without the prior written
89-12 approval of the banking commissioner.
89-13 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
89-14 the officers of the bank, who serve at the pleasure of the board.
89-15 The bank must have a principal executive officer primarily
89-16 responsible for the execution of board policies and operation of
89-17 the bank and an officer responsible for the maintenance and storage
89-18 of all corporate books and records of the bank and for required
89-19 attestation of signatures. These positions may not be held by the
89-20 same person. The board may appoint other officers of the bank as
89-21 the board considers necessary.
89-22 (b) Unless expressly authorized by a resolution of the board
89-23 recorded in its minutes, an officer or employee may not create or
89-24 dispose of a bank asset or create or incur a liability on behalf of
89-25 the bank.
89-26 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
89-27 director, manager, managing participant, employee, shareholder, or
90-1 participant of a state bank commits an offense if the person
90-2 knowingly:
90-3 (1) conceals information or a fact or removes,
90-4 destroys, or conceals a book or record of the bank for the purpose
90-5 of concealing information or a fact from the banking commissioner
90-6 or an agent of the banking commissioner; or
90-7 (2) removes, destroys, or conceals any book or record
90-8 of the bank that is material to a pending or anticipated legal or
90-9 administrative proceeding.
90-10 (b) An officer, director, manager, managing participant, or
90-11 employee of a state bank commits an offense if the person:
90-12 (1) knowingly makes a false entry in the books or
90-13 records or in any report or statement of the bank; or
90-14 (2) violates or knowingly participates in or permits
90-15 another of the bank's officers, directors, managers, managing
90-16 participants, or employees to violate the prohibition on lending
90-17 trust funds under Section 113.052, Property Code.
90-18 (c) An offense under this section is a felony of the third
90-19 degree.
90-20 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
90-21 (a) Without the prior approval of a disinterested majority of the
90-22 board recorded in the minutes, or if a disinterested majority
90-23 cannot be obtained the prior written approval of the banking
90-24 commissioner, a state bank may not directly or indirectly:
90-25 (1) sell or lease an asset of the bank to an officer,
90-26 director, manager, managing participant, or principal shareholder
90-27 or participant of the bank or an affiliate of the bank; or
91-1 (2) purchase or lease an asset in which an officer,
91-2 director, manager, managing participant, or principal shareholder
91-3 or participant of the bank or an affiliate of the bank has an
91-4 interest.
91-5 (b) Notwithstanding Subsection (a) of this section, a lease
91-6 transaction described in Subsection (a)(2) of this section
91-7 involving real property may not be consummated, renewed, or
91-8 extended without the prior written approval of the banking
91-9 commissioner. For purposes of this subsection only, an affiliate
91-10 of the bank does not include a subsidiary of the bank.
91-11 (c) An officer, director, manager, or managing participant
91-12 of the bank who knowingly participates in or permits a violation of
91-13 this section commits an offense. An offense under this subsection
91-14 is a felony of the third degree.
91-15 (Sections 4.108-4.200 reserved for expansion)
91-16 SUBCHAPTER C. SPECIAL PROVISIONS
91-17 FOR LIMITED BANKING ASSOCIATIONS
91-18 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
91-19 limited banking association shall file with the banking
91-20 commissioner a copy of any participation agreement by which a
91-21 participant of the limited banking association agrees to become a
91-22 full liability participant and the name and address of each full
91-23 liability participant. The filed copy is a public record.
91-24 (b) The banking commissioner may require a complete copy of
91-25 the participation agreement to be filed with the department,
91-26 regardless of whether the state bank has a full liability
91-27 participant, except that the provisions of the participation
92-1 agreement other than those by which a participant of the limited
92-2 banking association agrees to become a full liability participant
92-3 are confidential and subject to release only as provided by
92-4 Subchapter B, Chapter 2, of this Act.
92-5 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
92-6 (a) Except as provided by Subsection (b), the participants,
92-7 participant-transferees, and managers of a limited banking
92-8 association may not be held liable for a debt, obligation, or
92-9 liability of the limited banking association, including a debt,
92-10 obligation, or liability under a judgment, decree, or order of
92-11 court. A participant, other than a full liability participant, or
92-12 a manager of a limited banking association is not a proper party to
92-13 proceedings by or against a limited banking association, unless the
92-14 object of the proceeding is to enforce a participant's or manager's
92-15 right against or liability to a limited banking association.
92-16 (b) A full liability participant of a limited banking
92-17 association is liable under a judgment, decree, or order of court
92-18 for a debt, obligation, or liability of the limited banking
92-19 association that accrued during the participation of the full
92-20 liability participant in the limited banking association and before
92-21 the full liability participant or a successor in interest files a
92-22 notice of withdrawal as a full liability participant from the
92-23 limited banking association with the banking commissioner. The
92-24 filed notice of withdrawal is a public record.
92-25 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
92-26 provided by this section or the articles of association of the
92-27 limited banking association, debts, liabilities, and other
93-1 obligations may be contracted for or incurred on behalf of a
93-2 limited banking association by:
93-3 (1) a majority of the managers, if management of the
93-4 limited banking association has been vested in a board of managers;
93-5 (2) a majority of the managing participants; or
93-6 (3) an officer or other agent vested with actual or
93-7 apparent authority to contract for or incur the debt, liability, or
93-8 other obligation.
93-9 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
93-10 Management of a limited banking association is vested in the
93-11 participants in proportion to each participant's contribution to
93-12 capital, as adjusted periodically to properly reflect any
93-13 additional contribution. The articles of association may provide
93-14 that management of a limited banking association is vested in a
93-15 board of managers to be elected annually by the participants as
93-16 prescribed by the bylaws.
93-17 (b) Participants of a limited banking association may not
93-18 retain management and must elect a board of managers if:
93-19 (1) any participant is disqualified from serving as a
93-20 managing participant under Section 4.103 of this Act;
93-21 (2) the limited banking association has fewer than
93-22 five or more than 25 participants; or
93-23 (3) any participant has been removed by the banking
93-24 commissioner under Subchapter A, Chapter 6, of this Act.
93-25 (c) The articles of association, bylaws, and participation
93-26 agreement of a limited banking association may use the terms
93-27 "director" and "board" instead of "manager" and "board of
94-1 managers," respectively.
94-2 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
94-3 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
94-4 limited banking association any part of the participant's
94-5 contribution to capital until:
94-6 (1) all liabilities of the bank, except liabilities to
94-7 participants on account of contribution to capital, have been paid
94-8 or, if after the withdrawal or reduction, sufficient property of
94-9 the bank will remain to pay all liabilities of the bank, except
94-10 liabilities to participants on account of contribution to capital;
94-11 (2) all participants consent, unless the return of the
94-12 contribution to capital may be demanded as provided by this
94-13 chapter; or
94-14 (3) the articles of association are canceled or
94-15 amended to set out the withdrawal or reduction.
94-16 (b) A participant may demand the return of the participant's
94-17 contribution to capital on the dissolution of the association and
94-18 the failure by the full liability participants to exercise the
94-19 right for the business of the limited banking association to be
94-20 carried on by the remaining participants as provided by Section
94-21 4.207 of this Act.
94-22 (c) Unless allowed by the articles of association or by the
94-23 unanimous consent of all participants of the limited banking
94-24 association, a participant may demand the return of the
94-25 participant's contribution to capital only in cash.
94-26 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
94-27 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
95-1 participant-transferee in a limited banking association is the
95-2 personal estate of the participant or the participant-transferee
95-3 and may be transferred as provided by the bylaws or the
95-4 participation agreement. A transferee of a participant's interest
95-5 has the status of a participant-transferee and does not by the
95-6 transfer become a participant or obtain a right to participate in
95-7 the management of the limited banking association. A
95-8 participant-transferee is entitled to receive only a share of
95-9 profits, return of contribution, or other distributive benefit in
95-10 respect to the interest transferred to which the participant who
95-11 transferred the interest would have been entitled. A
95-12 participant-transferee may become a participant only as provided by
95-13 the bylaws or the participation agreement.
95-14 (b) A limited banking association may add additional
95-15 participants in the same manner as participant-transferees after
95-16 payment in full of the capital contribution to the limited banking
95-17 association payable for the issuance of additional participation
95-18 interests.
95-19 Sec. 4.207. DISSOLUTION. (a) A limited banking association
95-20 organized under this chapter is dissolved on:
95-21 (1) the expiration of the period fixed for the
95-22 duration of the limited banking association;
95-23 (2) a vote to dissolve or the execution of a written
95-24 consent to dissolve by all full liability participants, if any, and
95-25 a sufficient number of other participants that combined with all
95-26 full liability participants hold at least two-thirds of the
95-27 participation shares in each class in the association, or a greater
96-1 fraction as provided by the articles of association;
96-2 (3) except as provided by the articles of association,
96-3 the death, insanity, expulsion, bankruptcy, retirement, or
96-4 resignation of a participant unless a majority in interest of all
96-5 remaining participants elect in writing not later than the 90th day
96-6 after the date of the event to continue the business of the
96-7 association; or
96-8 (4) the occurrence of an event of dissolution
96-9 specified in the articles of association.
96-10 (b) A dissolution under this section is considered to be the
96-11 initiation of a voluntary liquidation under Subchapter B, Chapter
96-12 7, of this Act.
96-13 (c) An event of dissolution described by Subsection (a)(3)
96-14 of this section does not cancel or revoke a contract to which the
96-15 bank is a party, including a trust indenture or agreement or
96-16 voluntary dissolution under Subchapter B, Chapter 7, of this Act,
96-17 until the period for the remaining participants to continue the
96-18 business of the bank has expired without the remaining participants
96-19 having completed the necessary action to continue the business of
96-20 the bank.
96-21 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
96-22 and losses of a limited banking association may be allocated among
96-23 the participants and among classes of participants as provided by
96-24 the participation agreement. Without the prior written approval of
96-25 the banking commissioner, the profits and losses must be allocated
96-26 based on the relative interests of the participants as reflected in
96-27 the articles of association and related documents filed with and
97-1 approved by the banking commissioner.
97-2 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
97-3 Act, distributions of cash or other assets of a limited banking
97-4 association may be made to the participants as provided by the
97-5 participation agreement. Without the prior written approval of the
97-6 banking commissioner, distributions must be made to the
97-7 participants based on the relative interests of the participants as
97-8 reflected in the articles of association and related documents
97-9 filed with and approved by the banking commissioner.
97-10 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
97-11 ASSOCIATIONS. For purposes of the provisions of this Act other
97-12 than this subchapter, as the context requires:
97-13 (1) a manager and the board of managers are considered
97-14 to be a director and the board of directors, respectively;
97-15 (2) if there is not a board of managers, a participant
97-16 is considered to be a director and all of the participants are
97-17 considered to be the board of directors;
97-18 (3) a participant or participant-transferee is
97-19 considered to be a shareholder;
97-20 (4) a participation share is considered to be a share
97-21 of stock; and
97-22 (5) a distribution is considered to be a dividend.
97-23 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
97-24 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
97-25 OF BANK FACILITIES AND OTHER REAL ESTATE
97-26 Sec. 5.001. INVESTMENT IN BANK FACILITIES .................... 99
97-27 Sec. 5.002. OTHER REAL ESTATE ................................ 101
98-1 (Sections 5.003-5.100 reserved for expansion)
98-2 SUBCHAPTER B. INVESTMENTS
98-3 Sec. 5.101. SECURITIES ....................................... 102
98-4 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
98-5 SHARES ......................................... 105
98-6 Sec. 5.103. BANK SUBSIDIARIES ................................ 105
98-7 Sec. 5.104. MUTUAL FUNDS ..................................... 107
98-8 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS .................. 108
98-9 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE ................... 111
98-10 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED .................. 112
98-11 (Sections 5.108-5.200 reserved for expansion)
98-12 SUBCHAPTER C. LOANS
98-13 Sec. 5.201. LENDING LIMITS ................................... 112
98-14 Sec. 5.202. LOAN EXPENSES AND FEES ........................... 116
98-15 Sec. 5.203. LEASE FINANCING TRANSACTIONS ..................... 117
98-16 (Sections 5.204-5.300 reserved for expansion)
98-17 SUBCHAPTER D. DEPOSITS
98-18 Sec. 5.301. NATURE OF DEPOSIT CONTRACT ....................... 118
98-19 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT ................... 118
98-20 Sec. 5.303. FEES; DISCLOSURES ................................ 120
98-21 Sec. 5.304. SECURING DEPOSITS ................................ 120
98-22 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS ....................... 121
98-23 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION ........ 122
98-24 Sec. 5.307. RIGHT OF SET-OFF ................................. 124
98-25 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
98-26 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
98-27 OF BANK FACILITIES AND OTHER REAL ESTATE
99-1 Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) In this
99-2 subchapter, "bank facility" means real estate, including an
99-3 improvement, owned, or leased to the extent the lease or the
99-4 leasehold improvements are capitalized, by a state bank for the
99-5 purpose of:
99-6 (1) providing space for bank employees to perform
99-7 their duties and space for parking by bank employees and customers;
99-8 (2) conducting bank business, including meeting the
99-9 reasonable needs and convenience of the public and the bank's
99-10 customers, computer operations, document and other item processing,
99-11 maintenance and storage of foreclosed collateral pending disposal,
99-12 and record retention and storage;
99-13 (3) holding, improving, and occupying as an incident
99-14 to future expansion of the bank's facilities; or
99-15 (4) conducting another activity authorized by rules
99-16 adopted under this Act.
99-17 (b) Without the prior written approval of the banking
99-18 commissioner, a state bank may not directly or indirectly invest an
99-19 amount in excess of its capital and certified surplus in bank
99-20 facilities, furniture, fixtures, and equipment. Except as
99-21 otherwise provided by rules adopted under this Act, in computing
99-22 this limitation a state bank:
99-23 (1) shall include:
99-24 (A) its direct investment in bank facilities;
99-25 (B) any investment in equity or investment
99-26 securities of a company holding title to a facility used by the
99-27 bank for the purposes specified by Subsection (a) of this section;
100-1 (C) any loan made by the bank to or on the
100-2 security of equity or investment securities issued by a company
100-3 holding title to a facility used by the bank; and
100-4 (D) any indebtedness incurred on bank facilities
100-5 by a company:
100-6 (i) that holds title to the facility;
100-7 (ii) that is an affiliate of the bank; and
100-8 (iii) in which the bank is invested in the
100-9 manner described by Paragraph (B) or (C) of this subdivision; and
100-10 (2) may exclude an amount included under Subdivisions
100-11 (1)(B)-(D) of this subsection to the extent any lease of a facility
100-12 from the company holding title to the facility is capitalized on
100-13 the books of the bank.
100-14 (c) Real estate acquired under Subsection (a)(3) of this
100-15 section and not improved and occupied by the bank ceases to be a
100-16 bank facility on the third anniversary of the date of its
100-17 acquisition, unless the banking commissioner on application grants
100-18 written approval to further delay in the improvement and occupation
100-19 of the property by the bank.
100-20 (d) A bank shall comply with regulatory accounting
100-21 principles in accounting for its investment in and depreciation of
100-22 bank facilities, furniture, fixtures, and equipment.
100-23 Sec. 5.002. OTHER REAL ESTATE. (a) A state bank may not
100-24 acquire real estate except:
100-25 (1) as permitted by Section 5.001 of this Act or as
100-26 otherwise provided by this Act, including rules adopted under this
100-27 Act;
101-1 (2) with the prior written approval of the banking
101-2 commissioner; or
101-3 (3) if necessary to avoid or minimize a loss on a loan
101-4 or investment previously made in good faith.
101-5 (b) With the prior written approval of the banking
101-6 commissioner, a state bank may exchange real estate for other real
101-7 estate or personal property, invest additional funds in or improve
101-8 real estate acquired under this subsection or Subsection (a) of
101-9 this section, or acquire additional real estate to avoid or
101-10 minimize loss on real estate acquired as permitted by Subsection
101-11 (a) of this section.
101-12 (c) A state bank shall dispose of any real estate subject to
101-13 this section not later than:
101-14 (1) the fifth anniversary of the date:
101-15 (A) it was acquired, except as otherwise
101-16 provided by rules adopted under this Act; or
101-17 (B) it ceases to be used as a bank facility; or
101-18 (2) the second anniversary of the date it ceases to be
101-19 a bank facility as provided by Section 5.001(c) of this Act.
101-20 (d) The banking commissioner on application may grant one or
101-21 more extensions of time for disposing of real estate if the banking
101-22 commissioner determines that:
101-23 (1) the bank has made a good faith effort to dispose
101-24 of the real estate; or
101-25 (2) disposal of the real estate would be detrimental
101-26 to the bank.
101-27 (Sections 5.003-5.100 reserved for expansion)
102-1 SUBCHAPTER B. INVESTMENTS
102-2 Sec. 5.101. SECURITIES. (a) A state bank may purchase and
102-3 sell equity and investment securities without recourse, solely on
102-4 the order and for the account of a customer, and may not underwrite
102-5 an issue of securities except as otherwise provided by this Act or
102-6 rules adopted under this Act.
102-7 (b) Except as otherwise provided by this Act or rules
102-8 adopted under this Act, a state bank may not invest its funds in
102-9 equity securities except as necessary to avoid or minimize a loss
102-10 on a loan or investment previously made in good faith.
102-11 (c) A state bank may purchase investment securities for its
102-12 own account under limitations and restrictions prescribed by rules
102-13 adopted under this Act. Except as otherwise provided by this
102-14 section, the total amount of the investment securities of any one
102-15 obligor or maker, held by the bank for its own account, may not
102-16 exceed an amount equal to 15 percent of the bank's capital and
102-17 certified surplus.
102-18 (d) Notwithstanding Subsections (a)-(c) of this section, a
102-19 state bank may, with prudent banking judgment, deal in, underwrite,
102-20 or purchase for its own account:
102-21 (1) bonds and other legally created general
102-22 obligations of a state, an agency or political subdivision of a
102-23 state, the United States, or an agency or instrumentality of the
102-24 United States;
102-25 (2) an investment security that this state, an agency
102-26 or political subdivision of this state, the United States, or an
102-27 agency or instrumentality of the United States has unconditionally
103-1 agreed to purchase, insure, or guarantee;
103-2 (3) securities that are offered and sold under 15
103-3 U.S.C. Section 77d(5);
103-4 (4) mortgage related securities, as defined by 15
103-5 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
103-6 the Riegle Community Development and Regulatory Improvement Act of
103-7 1994, a note or obligation that is secured by a first lien on one
103-8 or more parcels of real estate on which is located one or more
103-9 commercial structures is subject to the limitations of Subsection
103-10 (c) of this section;
103-11 (5) investment securities issued or guaranteed by the
103-12 Federal Home Loan Mortgage Corporation, the Federal National
103-13 Mortgage Association, the Government National Mortgage Association,
103-14 the Federal Agriculture Mortgage Association, or the Federal Farm
103-15 Credit Banks Funding Corporation;
103-16 (6) investment securities issued or guaranteed by the
103-17 North American Development Bank; or
103-18 (7) securities issued by a Federal Home Loan Bank.
103-19 (e) Subsection (a) of this section does not apply to an
103-20 obligation issued by a state or an agency or political subdivision
103-21 of a state for housing, higher education, health care, or public
103-22 welfare purposes if the state bank evaluates the obligation, before
103-23 dealing in, underwriting, or purchasing the obligation, to
103-24 determine whether the obligation is of sufficient investment
103-25 quality and marketability for investment by the bank and whether
103-26 the obligation has been issued for the appropriate purpose by a
103-27 qualifying issuer. If the bank has made a firm commitment to
104-1 underwrite the obligation, the bank is considered to hold the
104-2 obligation for purposes of the limitations of Subsection (c) of
104-3 this section.
104-4 (f) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
104-5 (c) of this section applies to investments in small business
104-6 related securities as defined by 15 U.S.C. Section 78c(a).
104-7 (g) A state bank may not invest more than an amount equal to
104-8 25 percent of its capital and certified surplus in investment grade
104-9 adjustable rate preferred stock and money market (auction rate)
104-10 preferred stock.
104-11 (h) A state bank may deposit funds in a federally insured
104-12 financial institution, a Federal Reserve Bank, or a Federal Home
104-13 Loan Bank without limitation.
104-14 (i) The finance commission may adopt rules to administer and
104-15 carry out this section, including rules to define or further define
104-16 terms used by this section, establish limits, requirements, or
104-17 exemptions other than those specified by this section for
104-18 particular classes or categories of investment securities, or limit
104-19 or expand investment authority for state banks for particular
104-20 classes or categories of investment securities.
104-21 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
104-22 SHARES. (a) Except as otherwise provided by this section, a state
104-23 bank may not acquire a lien by pledge or otherwise on its own
104-24 shares or participation shares or otherwise purchase or acquire
104-25 title to its own shares or participation shares, except as
104-26 necessary to avoid or minimize a loss on a loan or investment
104-27 previously made in good faith.
105-1 (b) With the prior written approval of the banking
105-2 commissioner or as permitted by rules adopted under this Act, a
105-3 state bank may acquire title to its own shares or participation
105-4 shares and hold those shares or participation shares as treasury
105-5 stock. Treasury stock acquired under this subsection is not
105-6 considered an equity investment.
105-7 (c) If a state bank acquires a lien on or title to its own
105-8 shares or participation shares under this section, the lien may not
105-9 by its original terms extend for more than two years. Except with
105-10 the prior written approval of the banking commissioner, the bank
105-11 may not hold title to its own shares or participation shares for
105-12 more than one year.
105-13 (d) For purposes of this section and except as otherwise
105-14 provided by rules adopted under this Act, equity securities in a
105-15 bank holding company that are not publicly held and traded on a
105-16 national securities exchange or automated quotation system are
105-17 considered to be shares or participation shares of each of the bank
105-18 holding company's subsidiary state banks.
105-19 Sec. 5.103. BANK SUBSIDIARIES. (a) Except as otherwise
105-20 provided by this Act or rules adopted under this Act, a state bank
105-21 may conduct any activity or investment through an operating
105-22 subsidiary that a state bank or a bank holding company is
105-23 authorized to conduct under the laws of this state, if the
105-24 operating subsidiary is adequately empowered and appropriately
105-25 licensed to conduct its business.
105-26 (b) Except for investment in a subsidiary engaging solely in
105-27 activities that may be engaged in directly by the bank, a state
106-1 bank without the prior written approval of the banking commissioner
106-2 may not invest more than an amount equal to 10 percent of its
106-3 capital and certified surplus in a single subsidiary and may not
106-4 invest more than the amount of its equity capital in all
106-5 subsidiaries. The amount of a state bank's investment in a
106-6 subsidiary is the total amount of the bank's investment in equity
106-7 or investment securities issued by its subsidiary and any loans and
106-8 extensions of credit from the bank to its subsidiary.
106-9 (c) A state bank may establish or acquire a subsidiary as
106-10 provided by 12 CFR Section 337.4 to conduct securities activities
106-11 that the bank is prohibited from conducting directly.
106-12 (d) Except as otherwise provided by a rule adopted under
106-13 this Act, a state bank may make a minority investment indirectly
106-14 through an operating subsidiary in equity securities of:
106-15 (1) another bank;
106-16 (2) a company that engages solely in an activity that
106-17 is permissible for a bank service corporation or a bank holding
106-18 company subsidiary; or
106-19 (3) a company that engages solely in activities as
106-20 agent or trustee or in a brokerage, custodial, advisory, or
106-21 administrative capacity.
106-22 (e) A state bank that intends to acquire, establish, or
106-23 perform new activities through a subsidiary shall submit a letter
106-24 to the banking commissioner describing in detail the proposed
106-25 activities of the subsidiary.
106-26 (f) The bank may acquire or establish a subsidiary or
106-27 perform new activities in an existing subsidiary beginning on the
107-1 31st day after the date the banking commissioner receives the
107-2 bank's letter, unless the banking commissioner specifies an earlier
107-3 or later date. The banking commissioner may extend the 30-day
107-4 period on a determination that the bank's letter raises issues that
107-5 require additional information or additional time for analysis. If
107-6 the period is extended, the bank may acquire or establish a
107-7 subsidiary, or may perform new activities in an existing
107-8 subsidiary, only on prior written approval of the banking
107-9 commissioner.
107-10 (g) A subsidiary of a state bank is subject to regulation by
107-11 the banking commissioner to the extent provided by this Act or
107-12 rules adopted under this Act. In the absence of limiting rules,
107-13 the banking commissioner may regulate a subsidiary as if it were a
107-14 state bank.
107-15 Sec. 5.104. MUTUAL FUNDS. (a) A state bank may invest for
107-16 its own account in equity securities of an investment company
107-17 registered under the Investment Company Act of 1940 (15 U.S.C.
107-18 Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C.
107-19 Section 77a et seq.) if the portfolio of the investment company
107-20 consists wholly of investments in which the bank could invest
107-21 directly for its own account.
107-22 (b) If the portfolio of an investment company described by
107-23 Subsection (a) of this section consists wholly of investments in
107-24 which the bank could invest directly without limitation under
107-25 Section 5.101(d) of this Act, the bank may invest in the investment
107-26 company without limitation.
107-27 (c) If the portfolio of an investment company described by
108-1 Subsection (a) of this section contains an investment or obligation
108-2 that is subject to the limits of Section 5.101(c) or 5.201(a) of
108-3 this Act, the bank may invest in the investment company not more
108-4 than an amount equal to 15 percent of the bank's capital and
108-5 certified surplus.
108-6 (d) A state bank that invests in an investment company as
108-7 provided by Subsection (c) of this section shall periodically
108-8 determine that its pro rata share of any security in the portfolio
108-9 of the investment company is not in excess of applicable investment
108-10 and lending limits by reason of being combined with the bank's pro
108-11 rata share of that security held by all other investment companies
108-12 in which the bank has invested and with the bank's own direct
108-13 investment and loan holdings.
108-14 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) A state
108-15 bank may purchase for its own account equity securities of any
108-16 class issued by:
108-17 (1) a bank service corporation, except that not more
108-18 than an amount equal to 15 percent of the bank's capital and
108-19 certified surplus may be invested in a single bank service
108-20 corporation and not more than an amount equal to five percent of
108-21 its assets may be invested in all bank service corporations;
108-22 (2) an agricultural credit corporation, but the bank
108-23 may not invest more than an amount equal to 30 percent of the
108-24 bank's capital and certified surplus in the agricultural credit
108-25 corporation unless the bank owns at least 80 percent of the equity
108-26 securities of the agricultural credit corporation;
108-27 (3) a small business investment company if the
109-1 aggregate investment does not exceed an amount equal to 10 percent
109-2 of the bank's capital and certified surplus;
109-3 (4) a banker's bank if the aggregate investment does
109-4 not exceed an amount equal to 15 percent of the bank's capital and
109-5 certified surplus or result in the bank acquiring or retaining
109-6 ownership, control, or power to vote more than five percent of any
109-7 class of voting securities of the banker's bank; and
109-8 (5) a housing corporation if the sum of the amount of
109-9 investment and the amount of loans and commitments for loans to the
109-10 housing corporation does not exceed an amount equal to 10 percent
109-11 of the bank's capital and certified surplus.
109-12 (b) The banking commissioner may authorize investments in
109-13 excess of the limitations of Subsection (a) of this section in
109-14 response to a written application if the banking commissioner
109-15 concludes that:
109-16 (1) the excess investment is not precluded by other
109-17 applicable law; and
109-18 (2) the safety and soundness of the requesting bank
109-19 would not be adversely affected.
109-20 (c) For the purposes of this section:
109-21 (1) "Agricultural credit corporation" means a company
109-22 organized solely for the purpose of making loans to farmers and
109-23 ranchers for agriculture purposes, including the breeding, raising,
109-24 fattening, or marketing of livestock.
109-25 (2) "Banker's bank" means a bank insured by the
109-26 Federal Deposit Insurance Corporation or a bank holding company
109-27 that owns or controls such an insured bank, if:
110-1 (A) all equity securities of the bank or bank
110-2 holding company, other than director's qualifying shares or shares
110-3 issued under an employee compensation plan, are owned by depository
110-4 institutions or depository institution holding companies; and
110-5 (B) the bank or bank holding company and all its
110-6 subsidiaries are engaged exclusively in providing:
110-7 (i) services to or for other depository
110-8 institutions, depository institution holding companies, and the
110-9 directors, managers, managing participants, officers, and employees
110-10 of other depository institutions and depository institution holding
110-11 companies; and
110-12 (ii) correspondent banking services at the
110-13 request of other depository institutions, depository institution
110-14 holding companies, or their subsidiaries.
110-15 (3) "Bank service corporation" has the meaning
110-16 assigned by the Bank Service Corporation Act (12 U.S.C. Section
110-17 1861 et seq.) or a successor to that Act.
110-18 (4) "Housing corporation" means a corporation
110-19 organized under Title IX of the Housing and Urban Development Act
110-20 of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited
110-21 partnership, or joint venture organized under Section 907(a) or (c)
110-22 of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing
110-23 corporation organized pursuant to the laws of this state for the
110-24 purpose of engaging in or financing low- and moderate-income
110-25 housing developments or projects.
110-26 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) A state
110-27 bank may make investments of a predominantly civic, community, or
111-1 public nature designed primarily to promote the public welfare,
111-2 including the welfare of low and moderate income communities or
111-3 families, including investments providing housing, services, or
111-4 jobs. The state bank may make the investments directly or by
111-5 purchasing equity securities in an entity primarily engaged in
111-6 making those investments. The state bank may not make the
111-7 investment if it would expose the bank to unlimited liability. In
111-8 addition, a bank may serve as a community partner and make
111-9 investments in a community partnership, as those terms are defined
111-10 by the Riegle Community Development and Regulatory Improvement Act
111-11 of 1994.
111-12 (b) A bank's aggregate investments under this section,
111-13 including loans and commitments for loans, may not exceed an amount
111-14 equal to 10 percent of the bank's capital and certified surplus.
111-15 The banking commissioner may authorize investments in excess of
111-16 this limitation in response to a written application if the banking
111-17 commissioner concludes that:
111-18 (1) the excess investment is not precluded by other
111-19 applicable law; and
111-20 (2) the safety and soundness of the requesting bank
111-21 would not be adversely affected.
111-22 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Except as
111-23 otherwise provided by this Act or rules adopted under this Act, a
111-24 state bank may not invest its funds in trade or commerce by buying,
111-25 selling, or otherwise dealing in goods or by owning or operating a
111-26 business not part of the business of banking, except as necessary
111-27 to avoid or minimize a loss on a loan or investment previously made
112-1 in good faith.
112-2 (Sections 5.108-5.200 reserved for expansion)
112-3 SUBCHAPTER C. LOANS
112-4 Sec. 5.201. LENDING LIMITS. (a) Without the prior written
112-5 approval of the banking commissioner, the total loans and
112-6 extensions of credit by a state bank to a person outstanding at one
112-7 time may not exceed an amount equal to 25 percent of the bank's
112-8 capital and certified surplus. This limitation does not apply to:
112-9 (1) liability as endorser or guarantor of commercial
112-10 or business paper discounted by or assigned to the bank by its
112-11 owner who has acquired it in the ordinary course of business;
112-12 (2) indebtedness evidenced by bankers' acceptances as
112-13 described by 12 U.S.C. Section 372 and issued by other banks;
112-14 (3) indebtedness secured by a bill of lading,
112-15 warehouse receipt, or similar document transferring or securing
112-16 title to readily marketable goods, except that:
112-17 (A) the goods shall be insured if it is
112-18 customary to insure those goods; and
112-19 (B) the aggregate indebtedness of a person under
112-20 this subdivision may not exceed an amount equal to 50 percent of
112-21 the bank's capital and certified surplus;
112-22 (4) indebtedness evidenced by notes or other paper
112-23 secured by liens on agricultural products in secure and properly
112-24 documented storage in bonded warehouses or elevators if the value
112-25 of the collateral is not less than 125 percent of the amount of the
112-26 indebtedness and the bank's interest in the collateral is
112-27 adequately insured against loss, except that the aggregate
113-1 indebtedness of a person under this subdivision may not exceed an
113-2 amount equal to 50 percent of the bank's capital and certified
113-3 surplus;
113-4 (5) indebtedness of another depository institution
113-5 arising out of loans with settlement periods of less than one week;
113-6 (6) indebtedness arising out of the daily transaction
113-7 of the business of a clearinghouse association in this state;
113-8 (7) liability under an agreement by a third party to
113-9 repurchase from the bank an investment security listed in
113-10 Subsection 5.101(d) of this Act to the extent that the agreed
113-11 repurchase price does not exceed the original purchase price to the
113-12 bank or the market value of the investment security;
113-13 (8) that portion of an indebtedness that this state,
113-14 an agency or political subdivision of this state, the United
113-15 States, or an agency or instrumentality of the United States has
113-16 unconditionally agreed to purchase, insure, or guarantee;
113-17 (9) indebtedness secured by investment securities
113-18 listed in Subsection 5.101(d) of this Act to the extent that the
113-19 market value of the investment securities equals or exceeds the
113-20 indebtedness;
113-21 (10) that portion of an indebtedness that is fully
113-22 secured by a segregated deposit account in the lending bank;
113-23 (11) loans and extensions of credit arising from the
113-24 purchase of negotiable or nonnegotiable installment consumer paper
113-25 that carries a full recourse endorsement or unconditional guarantee
113-26 by the person transferring the paper if the bank's files or the
113-27 knowledge of its officers of the financial condition of each maker
114-1 of the consumer paper is reasonably adequate and if an officer of
114-2 the bank designated for that purpose by the board certifies in
114-3 writing that the bank is relying primarily on the responsibility of
114-4 each maker for payment of the loans or extensions of credit and not
114-5 on a full or partial recourse endorsement or guarantee by the
114-6 transferor;
114-7 (12) that portion of an indebtedness in excess of the
114-8 limitation of Subsection (a) of this section that is fully secured
114-9 by marketable securities or bullion with a market value at least
114-10 equal to the amount of the overage, as determined by reliable and
114-11 continuously available price quotations, except that the exempted
114-12 indebtedness or overage of a person under this subdivision may not
114-13 exceed an amount equal to 15 percent of the bank's capital and
114-14 certified surplus;
114-15 (13) indebtedness of an affiliate of the bank if the
114-16 transaction with the affiliate is subject to the restrictions and
114-17 limitations of 12 U.S.C. Section 371c;
114-18 (14) indebtedness of an operating subsidiary of the
114-19 bank; and
114-20 (15) that portion of the indebtedness of a person
114-21 secured in good faith by a purchase money lien taken by the bank in
114-22 exchange for the sale of real or personal property owned by the
114-23 bank if the sale is in the best interest of the bank.
114-24 (b) The finance commission may adopt rules to administer and
114-25 carry out this section, including rules to:
114-26 (1) define or further define terms used by this
114-27 section;
115-1 (2) establish limits, requirements, or exemptions
115-2 other than those specified by this section for particular classes
115-3 or categories of loans or extensions of credit; and
115-4 (3) establish collective lending and investment
115-5 limits.
115-6 (c) The banking commissioner may determine whether a loan or
115-7 extension of credit putatively made to a person will be attributed
115-8 to another person for purposes of this section.
115-9 (d) An officer, director, manager, managing participant, or
115-10 employee of a state bank who approves or participates in the
115-11 approval of a loan with actual knowledge that the loan violates
115-12 this section is jointly and severally liable to the bank for the
115-13 lesser of the amount by which the loan exceeded applicable lending
115-14 limits or the bank's actual loss, and remains liable for that
115-15 amount until the loan and all prior indebtedness of the borrower to
115-16 the bank have been fully repaid. The bank may initiate a
115-17 proceeding to collect an amount due under this subsection at any
115-18 time before four years after the date the borrower defaults on the
115-19 subject loan or any prior indebtedness. A person that is liable
115-20 for and pays amounts to the bank under this subsection is entitled
115-21 to an assignment of the bank's claim against the borrower to the
115-22 extent of the payments. For purposes of this subsection, an
115-23 officer, director, manager, managing participant, or employee of a
115-24 state bank is presumed to know the amount of the bank's lending
115-25 limit under Subsection (a) of this section and the amount of the
115-26 borrower's aggregate outstanding indebtedness to the bank
115-27 immediately before a new loan or extension of credit to that
116-1 borrower.
116-2 Sec. 5.202. LOAN EXPENSES AND FEES. (a) A bank may require
116-3 a borrower to pay all reasonable expenses and fees incurred in
116-4 connection with the making, closing, disbursing, extending,
116-5 readjusting, or renewing of a loan, regardless of whether those
116-6 expenses or fees are paid to third parties. A fee charged by the
116-7 bank under this section may not exceed the cost the bank reasonably
116-8 expects to incur in connection with the transaction to which the
116-9 fee relates. Payment for these expenses may be collected by the
116-10 bank from the borrower and retained by the bank or paid to a person
116-11 rendering services for which a charge has been made, or the
116-12 payments may be paid directly by the borrower to a third party to
116-13 whom they are payable. This section does not authorize the bank to
116-14 charge its borrower for payment of fees and expenses to an officer,
116-15 director, manager, or managing participant of the bank for services
116-16 rendered in the person's capacity as an officer, director, manager,
116-17 or managing participant.
116-18 (b) A bank may charge a penalty for prepayment or late
116-19 payment. Only one penalty may be charged by the bank on each past
116-20 due payment. Unless otherwise agreed in writing, prepayment of
116-21 principal must be applied on the final installment of the note or
116-22 other obligation until that installment is fully paid, and further
116-23 prepayments must be applied on installments in the inverse order of
116-24 their maturity.
116-25 (c) Fees and expenses charged and collected as provided by
116-26 this section are not considered a part of the interest or
116-27 compensation charged by the bank for the use, forbearance, or
117-1 detention of money.
117-2 (d) To the extent of any conflict between this section and a
117-3 provision of Subtitle 2, Title 79, Revised Statutes (Article
117-4 5069-2.01 et seq., Vernon's Texas Civil Statutes), or Chapter 15,
117-5 Title 79, Revised Statutes (Article 5069-15.01 et seq., Vernon's
117-6 Texas Civil Statutes), the provision of Title 79, Revised Statutes,
117-7 prevails.
117-8 Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) A state bank
117-9 may purchase or construct a public facility and, as holder of legal
117-10 title, lease the facility to a public authority having sufficient
117-11 resources to pay all rentals as they become due. A lease under
117-12 this subsection must provide that legal title to the property
117-13 transfers to the lessee on consummation and expiration of the
117-14 lease.
117-15 (b) Subject to rules adopted under this Act, a state bank
117-16 may become the owner and lessor of tangible personal property for
117-17 lease financing transactions on a net lease basis on the specific
117-18 request and for the use of a customer. Without the written
117-19 approval of the banking commissioner to continue holding property
117-20 acquired for leasing purposes under this subsection, the bank may
117-21 not hold the property more than six months after the date of
117-22 expiration of the original or any extended or renewed lease period
117-23 agreed to by the customer for whom the property was acquired or by
117-24 a subsequent lessee.
117-25 (c) Rental payments received by the bank in a lease
117-26 financing transaction under this section are considered to be rent
117-27 and not interest or compensation for the use, forbearance, or
118-1 detention of money. However, a lease financing transaction is
118-2 considered to be a loan or extension of credit for purposes of
118-3 Section 5.201 of this Act.
118-4 (Sections 5.204-5.300 reserved for expansion)
118-5 SUBCHAPTER D. DEPOSITS
118-6 Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) A deposit
118-7 contract between a bank and an account holder is considered a
118-8 contract in writing for all purposes and may be evidenced by one or
118-9 more agreements, deposit tickets, signature cards, or notices as
118-10 provided by Section 5.302 of this Act, or by other documentation as
118-11 provided by law.
118-12 (b) A cause of action for denial of deposit liability on a
118-13 deposit contract without a maturity date does not accrue until the
118-14 bank has denied liability and given notice of the denial to the
118-15 account holder. A bank that provides an account statement or
118-16 passbook to the account holder is considered to have denied
118-17 liability and given the notice as to any amount not shown on the
118-18 statement or passbook.
118-19 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) A bank and
118-20 its account holder may amend the deposit contract as permitted by
118-21 Subsection (b) of this section, by agreement, or as otherwise
118-22 permitted by law.
118-23 (b) A bank may amend a deposit contract by mailing a written
118-24 notice of the amendment to the account holder, separately or as an
118-25 enclosure with or part of the account holder's statement of account
118-26 or passbook. The notice must include the text and effective date
118-27 of the amendment. The bank is required to deliver the notice to
119-1 only one of the account holders of a deposit account that has more
119-2 than one account holder. The effective date may not be earlier
119-3 than the 30th day after the date of mailing the notice, unless the
119-4 amendment:
119-5 (1) is made to comply with a statute or rule that
119-6 authorizes an earlier effective date;
119-7 (2) does not reduce the interest rate on the account
119-8 or otherwise adversely affect the account holder; or
119-9 (3) is made for reasons relating to security of
119-10 accounts.
119-11 (c) Except for a disclosure required to be made under
119-12 Section 5.303 of this Act or the Truth in Savings Act (12 U.S.C.
119-13 Section 4301 et seq.) or other federal law, before renewal of an
119-14 account, a notice of amendment is not required under Subsection
119-15 (b) of this section for:
119-16 (1) a change in the interest rate on a variable-rate
119-17 account, including a money market or negotiable order of withdrawal
119-18 account;
119-19 (2) a change in a term for a time account with a
119-20 maturity of one month or less, if the deposit contract authorizes
119-21 the change in the term; or
119-22 (3) a change contemplated and permitted by the
119-23 original contract.
119-24 (d) An amendment under Subsection (b) of this section may
119-25 reduce the rate of interest or eliminate interest on an account
119-26 without a maturity date.
119-27 (e) Amendment of a deposit contract made in compliance with
120-1 this section is not a violation of the Deceptive Trade
120-2 Practices-Consumer Protection Act (Section 17.41 et seq., Business
120-3 & Commerce Code).
120-4 Sec. 5.303. FEES; DISCLOSURES. (a) Except as otherwise
120-5 provided by law, a bank may charge an account holder a fee, service
120-6 charge, or penalty relating to service or activity of a deposit
120-7 account, including a fee for an overdraft, insufficient fund check,
120-8 or stop payment order.
120-9 (b) Except as otherwise provided by the Truth in Savings Act
120-10 (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall
120-11 disclose the amount of each fee, charge, or penalty related to an
120-12 account, or if the amount of a fee, charge, or penalty cannot be
120-13 stated, the method of computing the fee, charge, or penalty, by
120-14 written notice delivered or mailed to each customer opening an
120-15 account not later than the 10th business day after the date the
120-16 account is opened. A bank that increases or adds a new fee,
120-17 charge, or penalty shall give notice of the change to each affected
120-18 account holder in the manner provided by Section 5.302(b) of this
120-19 Act for notice of an amendment of a deposit contract.
120-20 Sec. 5.304. SECURING DEPOSITS. (a) A state bank may not
120-21 pledge or create a lien on its assets or secure the repayment of a
120-22 deposit except as authorized or required by this section, rules
120-23 adopted under this Act, or other law.
120-24 (b) A state bank may pledge its assets to secure a deposit
120-25 of this state, an agency or political subdivision of this state,
120-26 the United States, or an instrumentality of the United States.
120-27 (c) This section does not prohibit the pledge of assets to
121-1 secure the repayment of money borrowed or the purchase of excess
121-2 deposit insurance from a private insurance company. An act, deed,
121-3 conveyance, pledge, or contract in violation of this section is
121-4 void.
121-5 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Except as
121-6 otherwise provided by this section, a bank lawfully doing business
121-7 in this state may enter a deposit account with a minor as the sole
121-8 and absolute owner of the account and may pay checks and
121-9 withdrawals and otherwise act with respect to the account on the
121-10 order of the minor. A payment or delivery of rights to a minor who
121-11 holds a deposit account evidenced by a receipt or acquittance
121-12 signed by the minor discharges the bank to the extent of the
121-13 payment made or rights delivered.
121-14 (b) If the minor is the sole and absolute owner of the
121-15 deposit account, the disabilities of minority are removed for the
121-16 limited purpose of enabling:
121-17 (1) the minor to enter into a depository contract with
121-18 the bank; and
121-19 (2) the bank to enforce the contract against the
121-20 minor, including collection of overdrafts and account fees and
121-21 submission of account history to account reporting agencies and
121-22 credit reporting bureaus.
121-23 (c) A parent or legal guardian of a minor may deny the
121-24 minor's authority to control, transfer, draft on, or make
121-25 withdrawals from the minor's deposit account by notifying the bank
121-26 in writing. On receipt of the notice by the bank, the minor may
121-27 not control, transfer, draft on, or make withdrawals from the
122-1 account during minority except with the joinder of a parent or
122-2 legal guardian of the minor.
122-3 (d) If a minor with a deposit account dies, the receipt or
122-4 acquittance of the minor's parent or legal guardian discharges the
122-5 liability of the bank to the extent of the receipt or acquittance,
122-6 except that the aggregate discharges under this subsection may not
122-7 exceed $3,000.
122-8 (e) Subsection (a) of this section does not authorize a loan
122-9 to the minor by the bank, whether on pledge of the minor's savings
122-10 account or otherwise, or bind the minor to repay a loan made except
122-11 as provided by Subsection (b) of this section or other law or
122-12 unless the depository institution has obtained the express consent
122-13 and joinder of a parent or legal guardian of the minor. This
122-14 subsection does not apply to an inadvertent extension of credit
122-15 because of an overdraft from insufficient funds, returned checks or
122-16 deposits, or other shortages in a depository account resulting from
122-17 normal banking operations.
122-18 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION.
122-19 (a) If a deposit account is opened with a bank by one or more
122-20 persons expressly as a trustee for one or more other named persons
122-21 and further notice of the existence and terms of a legal and valid
122-22 trust is not given in writing to the bank, the bank may accept and
122-23 administer the account, subject to Chapter XI, Probate Code.
122-24 (b) If a deposit account is opened with a bank by one or
122-25 more persons expressly as a trustee for one or more other named
122-26 persons pursuant to or purporting to be pursuant to a written trust
122-27 agreement, the trustee may provide the bank with a certificate of
123-1 trust to evidence the trust relationship. The certificate must be
123-2 an affidavit of the trustee and must include the effective date of
123-3 the trust, the name of the trustee, the name or method for choosing
123-4 successor trustees, the name and address of each beneficiary, the
123-5 authority granted to the trustee, the disposition of the account on
123-6 the death of the trustee or the survivor of two or more trustees,
123-7 other information required by the bank, and an indemnification of
123-8 the bank. The bank may accept and administer the account, subject
123-9 to Chapter XI, Probate Code, in accordance with the certificate of
123-10 trust without requiring a copy of the trust agreement. The bank is
123-11 not liable for administering the account as provided by the
123-12 certificate of trust, even if the certificate of trust is contrary
123-13 to the terms of the trust agreement, unless the bank has actual
123-14 knowledge of the terms of the trust agreement.
123-15 (c) On the death of the trustee or the survivor of two or
123-16 more trustees, the bank may pay all or part of the withdrawal value
123-17 of the account with interest as provided by the certificate of
123-18 trust. If the trustee did not deliver a certificate of trust, the
123-19 bank's right to treat the account as owned by a trustee ceases on
123-20 the death of the trustee. On the death of the trustee or the
123-21 survivor of two or more trustees, the bank shall, unless the
123-22 certificate of trust provides otherwise, pay the withdrawal value
123-23 of the account with interest in equal shares to the persons who
123-24 survived the trustee, are named as beneficiaries in the certificate
123-25 of trust, and can be located by the bank from its own records. If
123-26 there is not a certificate of trust, payment of the withdrawal
123-27 value and interest shall be made as provided by Chapter XI, Probate
124-1 Code. Any payment made under this section for all or part of the
124-2 withdrawal value and interest discharges any liability of the bank
124-3 to the extent of the payment. The bank may pay all or part of the
124-4 withdrawal value and interest in the manner provided by this
124-5 section, regardless of whether it has knowledge of a competing
124-6 claim, unless the bank receives actual knowledge that payment has
124-7 been restrained by order of a court of competent jurisdiction.
124-8 (d) This section does not obligate a bank to accept a
124-9 deposit account from a trustee who does not furnish a copy of the
124-10 trust agreement or to search beyond its own records for the
124-11 location of a named beneficiary.
124-12 (e) This section does not affect a contractual provision to
124-13 the contrary that otherwise complies with the laws of this state.
124-14 Sec. 5.307. RIGHT OF SET-OFF. (a) Except as otherwise
124-15 provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
124-16 seq.) or other federal law, a bank has a right of set-off, without
124-17 further agreement or action, against all accounts owned by a
124-18 depositor to whom or on whose behalf the bank has made an advance
124-19 of money by loan, overdraft, or otherwise, if the bank has
124-20 previously disclosed this right to the depositor. If the depositor
124-21 defaults in the repayment or satisfaction of the obligation, the
124-22 bank may, without notice to or consent of the depositor, set off or
124-23 cancel on its books all or part of the accounts owned by the
124-24 depositor and apply the value of the accounts in payment of and to
124-25 the extent of the obligation.
124-26 (b) For purposes of this section, a default occurs when an
124-27 obligor has failed to make a payment as provided by the terms of
125-1 the loan or other credit obligation and a grace period provided for
125-2 by the agreement or law has expired. An obligation is not required
125-3 to be accelerated or matured for a default to authorize set-off of
125-4 the depositor's obligation against the defaulted payment.
125-5 (c) A bank may not exercise its right of set-off under this
125-6 section against an account unless the account is due and owing to
125-7 the depositor in the same capacity as the defaulted credit
125-8 obligation. A trust account for which a depositor is trustee,
125-9 including a trustee under a certificate of trust delivered under
125-10 Section 5.306(b) of this Act, is not subject to the right of
125-11 set-off under this section unless the trust relationship is solely
125-12 evidenced by the account card as provided by Chapter XI, Probate
125-13 Code.
125-14 (d) This section does not limit or prohibit the exercise of
125-15 another right of set-off, including a right under contract or
125-16 common law.
125-17 CHAPTER 6. ENFORCEMENT ACTIONS
125-18 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
125-19 Sec. 6.001. DETERMINATION LETTER ............................. 127
125-20 Sec. 6.002. CEASE AND DESIST ORDER ........................... 128
125-21 Sec. 6.003. REMOVAL OR PROHIBITION ORDER ..................... 129
125-22 Sec. 6.004. HEARING ON PROPOSED ORDER ........................ 131
125-23 Sec. 6.005. EMERGENCY ORDERS ................................. 132
125-24 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS .......... 133
125-25 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION
125-26 ORDER .......................................... 133
125-27 Sec. 6.008. LIMITATION ON ACTION ............................. 135
126-1 Sec. 6.009. ENFORCEMENT OF FINAL ORDER ....................... 135
126-2 Sec. 6.010. ADMINISTRATIVE PENALTIES ......................... 135
126-3 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE
126-4 PENALTIES ...................................... 136
126-5 Sec. 6.012. CONFIDENTIALITY OF RECORDS ....................... 137
126-6 Sec. 6.013. COLLECTION OF FEES ............................... 137
126-7 (Sections 6.014-6.100 reserved for expansion)
126-8 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
126-9 Sec. 6.101. ORDER OF SUPERVISION ............................. 138
126-10 Sec. 6.102. ORDER OF CONSERVATORSHIP ......................... 138
126-11 Sec. 6.103. HEARING .......................................... 138
126-12 Sec. 6.104. POST-HEARING ORDER ............................... 139
126-13 Sec. 6.105. CONFIDENTIALITY OF RECORDS ....................... 140
126-14 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION ................. 141
126-15 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR ................. 141
126-16 Sec. 6.108. QUALIFICATIONS OF APPOINTEE ...................... 142
126-17 Sec. 6.109. EXPENSES ......................................... 142
126-18 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR
126-19 DECISIONS ...................................... 143
126-20 Sec. 6.111. VENUE ............................................ 144
126-21 Sec. 6.112. DURATION ......................................... 145
126-22 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES .............. 145
126-23 (Sections 6.114-6.200 reserved for expansion)
126-24 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
126-25 INVESTIGATION AND ENFORCEMENT
126-26 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY ........... 145
126-27 Sec. 6.202. SUBPOENA AUTHORITY ............................... 147
127-1 Sec. 6.203. ENFORCEMENT OF SUBPOENA .......................... 148
127-2 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS ............ 149
127-3 Sec. 6.205. EVIDENCE ......................................... 150
127-4 Sec. 6.206. CEASE AND DESIST ORDER REGARDING
127-5 UNAUTHORIZED ACTIVITY .......................... 150
127-6 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER
127-7 REGARDING UNAUTHORIZED ACTIVITY ................ 151
127-8 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER
127-9 REGARDING UNAUTHORIZED ACTIVITY ................ 153
127-10 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
127-11 REGARDING UNAUTHORIZED ACTIVITY ................ 153
127-12 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY .......... 154
127-13 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER .............. 155
127-14 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER ................. 157
127-15 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND .................. 158
127-16 CHAPTER 6. ENFORCEMENT ACTIONS
127-17 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
127-18 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
127-19 commissioner determines from examination or other credible evidence
127-20 that a state bank is in a condition that may warrant the issuance
127-21 of an enforcement order under this chapter, the banking
127-22 commissioner may, by personal delivery or by registered or
127-23 certified mail, return receipt requested, notify the bank in
127-24 writing of the determination, the requirements the bank must
127-25 satisfy to abate the determination, and the time in which the
127-26 requirements must be satisfied to avert further administrative
127-27 action.
128-1 (b) The determination letter may be issued in connection
128-2 with the issuance of a cease and desist, removal, or prohibition
128-3 order under this subchapter or an order of supervision or
128-4 conservatorship under Subchapter B of this chapter.
128-5 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
128-6 commissioner has grounds to issue a cease and desist order to an
128-7 officer, employee, director, manager, or managing participant of a
128-8 state bank, or the bank itself acting through an authorized person,
128-9 if the banking commissioner determines from examination or other
128-10 credible evidence that the bank or person, directly or indirectly:
128-11 (1) has violated this Act or another applicable law or
128-12 rule;
128-13 (2) has engaged in a breach of trust or other
128-14 fiduciary duty;
128-15 (3) has refused to submit to examination or
128-16 examination under oath;
128-17 (4) has conducted business in an unsafe or unsound
128-18 manner; or
128-19 (5) has violated a condition of the bank's charter or
128-20 an agreement between the bank or the person and the banking
128-21 commissioner or the department.
128-22 (b) If the banking commissioner has grounds for action under
128-23 Subsection (a) of this section and further finds that an order to
128-24 cease and desist from a violation appears to be necessary and in
128-25 the best interest of the bank involved and its depositors,
128-26 creditors, and shareholders or participants, the banking
128-27 commissioner, by personal delivery or by registered or certified
129-1 mail, return receipt requested, may serve a proposed cease and
129-2 desist order on the bank and each person who committed or
129-3 participated in the violation. The proposed order must state the
129-4 grounds for the proposed order with reasonable certainty. The
129-5 proposed order must state its effective date, which may not be
129-6 before the 21st day after the date the proposed order is mailed or
129-7 delivered. The order takes effect for the bank if the bank does
129-8 not request a hearing in writing before the effective date and
129-9 takes effect for each other person against whom the proposed order
129-10 is directed if that person does not request a hearing in writing
129-11 before the effective date. After taking effect the order is final
129-12 and nonappealable as to that bank or other person.
129-13 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
129-14 commissioner has grounds to remove a present or former officer,
129-15 director, manager, managing participant, or employee of a state
129-16 bank from office or employment in, or prohibit a controlling
129-17 shareholder or participant or other person participating in the
129-18 affairs of a state bank from further participation in the affairs
129-19 of, a state bank, trust company, or other entity chartered or
129-20 licensed by the banking commissioner under the laws of this state,
129-21 if the banking commissioner determines from examination or other
129-22 credible evidence that:
129-23 (1) the person committed, participated, or acted, in
129-24 other than an inadvertent or unintentional manner, as described by
129-25 Section 6.002(a) of this Act with regard to the affairs of the
129-26 bank, or violated a final cease and desist order issued in response
129-27 to the same or a similar act; and
130-1 (2) because of this action by the person:
130-2 (A) the bank has suffered or will probably
130-3 suffer financial loss or other damage;
130-4 (B) the interests of the bank's depositors have
130-5 been or could be prejudiced; or
130-6 (C) the person has received financial gain or
130-7 other benefit by reason of the violation; and
130-8 (3) this action by the person:
130-9 (A) involves personal dishonesty on the part of
130-10 the person; or
130-11 (B) demonstrates wilful or continuing disregard
130-12 for the safety or soundness of the bank.
130-13 (b) If the banking commissioner finds grounds for action
130-14 under Subsection (a) of this section and further finds that a
130-15 removal or prohibition order appears to be necessary and in the
130-16 best interest of the bank involved and its depositors, creditors,
130-17 and shareholders or participants, the banking commissioner, by
130-18 personal delivery or by registered or certified mail, return
130-19 receipt requested, may serve a proposed removal or prohibition
130-20 order, as appropriate, on an officer, employee, director, manager
130-21 or managing participant, controlling shareholder or participant, or
130-22 other person alleged to have committed or participated in the
130-23 violation. The proposed order must state the grounds for removal
130-24 or prohibition with reasonable certainty. The proposed order must
130-25 state its effective date, which may not be before the 21st day
130-26 after the date the proposed order is mailed or delivered. The
130-27 order takes effect for a person against whom the proposed order is
131-1 directed if the person does not request a hearing in writing before
131-2 the effective date. After taking effect the order is final and
131-3 nonappealable as to that person.
131-4 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
131-5 hearing on a proposed order shall be held not later than the 30th
131-6 day after the date the first request for a hearing on the order was
131-7 received by the department unless the parties agree to a later
131-8 hearing date. Each party shall be given written notice by personal
131-9 delivery or by registered or certified mail, return receipt
131-10 requested, of the date set by the banking commissioner for the
131-11 hearing not later than the 11th day before that date. The hearing
131-12 shall be conducted as provided by Chapter 2001, Government Code.
131-13 At the hearing, the department has the burden of proof and each
131-14 person against whom the proposed order is directed may
131-15 cross-examine and present evidence to show why the proposed order
131-16 should not be issued.
131-17 (b) After the hearing, the banking commissioner shall issue
131-18 or decline to issue the proposed order. The proposed order may be
131-19 modified as necessary to conform to the findings at the hearing and
131-20 to require the board to take necessary affirmative action to
131-21 correct the conditions cited in the order.
131-22 (c) An order issued under this section is immediately final
131-23 for purposes of enforcement and appeal. The order may be appealed
131-24 as provided by Section 3.009 of this Act.
131-25 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
131-26 commissioner believes that immediate action is needed to prevent
131-27 immediate and irreparable harm to the bank and its depositors,
132-1 creditors, and shareholders or participants, the banking
132-2 commissioner may issue one or more cease and desist, removal, or
132-3 prohibition orders as emergency orders to become effective
132-4 immediately on service without prior notice or hearing. Service
132-5 must be by personal delivery or by registered or certified mail,
132-6 return receipt requested.
132-7 (b) In each emergency order the banking commissioner shall
132-8 notify the bank and any person against whom the emergency order is
132-9 directed of the specific conduct, activity, or omission requiring
132-10 the order, the citation of each statute or rule alleged to have
132-11 been violated, the immediate and irreparable harm alleged to be
132-12 threatened, and the right to a hearing. A hearing on the order may
132-13 be requested in writing not later than the 10th day after the date
132-14 that the order is served. Unless a person against whom the
132-15 emergency order is directed requests a hearing in writing before
132-16 the 11th day after the date it is served on the person, the
132-17 emergency order is final and nonappealable as to that person.
132-18 (c) A hearing on an emergency order, if requested, must be
132-19 given priority over all other matters pending before the banking
132-20 commissioner and must be held not later than the 20th day after the
132-21 date that it is requested unless the parties agree to a later
132-22 hearing date.
132-23 (d) Until the hearing, an emergency order continues in
132-24 effect unless the order is stayed by the banking commissioner. The
132-25 banking commissioner may impose any condition before granting a
132-26 stay of the emergency order.
132-27 (e) After the hearing, the banking commissioner may affirm,
133-1 modify, or set aside in whole or part the emergency order. An
133-2 order affirming or modifying the emergency order is immediately
133-3 final for purposes of enforcement and appeal. The order may be
133-4 appealed as provided by Section 3.009 of this Act.
133-5 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS. A copy
133-6 of any determination letter, proposed order, emergency order, or
133-7 final order issued by the banking commissioner under this
133-8 subchapter shall be immediately brought to the attention of the
133-9 board of the affected bank, regardless of whether the bank is a
133-10 party, and filed in the minutes of the board. Each director,
133-11 manager, or managing participant shall immediately certify to the
133-12 banking commissioner in writing that the certifying person has read
133-13 and understood the determination letter, proposed order, emergency
133-14 order, or final order. The required certification may not be
133-15 considered an admission of a person in a subsequent legal or
133-16 administrative proceeding.
133-17 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
133-18 (a) Without the prior written approval of the banking
133-19 commissioner, a person subject to a final and enforceable removal
133-20 or prohibition order issued by the banking commissioner:
133-21 (1) may not serve as a director, officer, or employee
133-22 of any state bank, trust company, or other entity chartered or
133-23 licensed by the banking commissioner under the laws of this state
133-24 while the order is in effect;
133-25 (2) may not directly or indirectly participate in any
133-26 manner in the management of such an entity;
133-27 (3) may not directly or indirectly vote for a director
134-1 of such an entity;
134-2 (4) may not solicit, procure, transfer, attempt to
134-3 transfer, vote, or attempt to vote a proxy, consent, or
134-4 authorization with respect to voting rights in such an entity; and
134-5 (5) remains entitled to receive dividends or a share
134-6 of profits, return of contribution, or other distributive benefit
134-7 from such an entity with respect to voting securities in the entity
134-8 owned by the person.
134-9 (b) If voting securities of an entity identified in
134-10 Subsection (a)(1) of this section cannot be voted under this
134-11 section, the voting securities are considered to be authorized but
134-12 unissued for purposes of determining the procedures for and results
134-13 of the affected vote<code>. A trust company may incorporate for the
239-23 following purpose: to act as a trustee, executor, administrator,
239-24 or guardian when designated by any person, corporation, or court to
239-25 do so and as agent for the performance of any lawful act, including
239-26 the right to receive deposits made by agencies of the United States
239-27 of America for the authorized account of any individual, and to
240-1 lend and accumulate money without banking privileges, when licensed
240-2 under provisions of Subtitle 2, Title 79, Revised Statutes.
240-3 (b) The Banking Commissioner <State Banking Board> shall
240-4 hear and determine applications for state trust company charters.
240-5 A final order of the Banking Commissioner on a charter application
240-6 may be appealed as provided by Section 3.009, Texas Banking Act.
240-7 Sec. 2. (a) Subject to Subsection (b), every trust company
240-8 with a capital of not less than $1 million <$500,000> shall, in
240-9 addition to all other powers conferred by law, have the power: to
240-10 purchase, sell, discount, and negotiate, with or without its
240-11 endorsement or guaranty, notes, drafts, checks, bills of exchange,
240-12 acceptances, including bankers' acceptances, cable transfers, and
240-13 other evidences of indebtedness; to purchase and sell, with or
240-14 without its endorsement or guaranty, stocks, bonds, securities,
240-15 including the obligations of the United States or of any states
240-16 thereof; to issue debentures, bonds, and promissory notes, to
240-17 accept bills or drafts drawn upon it, but in no event having
240-18 liabilities outstanding thereon at any one time exceeding five
240-19 times its capital stock and surplus; provided, however, that with
240-20 the consent in writing of the Banking Commissioner it may have
240-21 outstanding at any one time 10 times the capital stock and surplus;
240-22 and generally, to exercise such powers as are incidental to the
240-23 powers conferred by this article.
240-24 (b) The <Banking Section of The> Finance Commission of Texas
240-25 shall prescribe regulations pursuant to which the Banking
240-26 Commissioner may require such additional capital over and above the
240-27 minimum amount of $1 million <$500,000> prescribed in Subsection
241-1 (a) as may be necessary to assure the safety and soundness of trust
241-2 companies engaging in activities under Subsection (a). The
241-3 proposed effective date of an order requiring a trust company to
241-4 increase its capital must be stated in the order as on or after the
241-5 21st day after the date the proposed order is mailed or delivered.
241-6 Unless the trust company requests a hearing before the Banking
241-7 Commissioner in writing before the effective date of the proposed
241-8 order, the order becomes effective and is final and nonappealable.
241-9 (b) Article 2, Chapter XI, The Texas Banking Code (Article
241-10 342-1102, Vernon's Texas Civil Statutes), is amended to read as
241-11 follows:
241-12 Art. 2. Applicability of State Banking Code; Venue
241-13 Sec. 1. Unless otherwise provided in this chapter, a trust
241-14 company is subject to the provisions of Chapters 1-4, 6-8, and
241-15 Subchapters A and B, Chapter 5, Texas Banking Act, <I, II, III, IV,
241-16 V, VIII, and IX of this code> as if the trust company were a state
241-17 bank; provided, however, that Section 3.001 of that Act <Article 1,
241-18 Chapter III>, relating to banking powers, and Section 8.008 of that
241-19 Act <Article 11a, Chapter IV>, relating to securities law
241-20 exemption, <Article 4a, Chapter VIII, relating to priority of
241-21 distribution in liquidation, and Article 3, Chapter IX, relating to
241-22 limited branch banking> shall not apply.
241-23 Sec. 2. Venue for an action instituted to effect, contest,
241-24 or otherwise intervene in the liquidation of a trust company as
241-25 provided in this chapter and Chapter 7, Texas Banking Act, <VIII of
241-26 this code (Article 342-801 et seq., Vernon's Texas Civil Statutes)>
241-27 is in Travis County, except that on motion filed and served
242-1 concurrently with or before the filing of the answer, the court
242-2 may, upon a finding of good cause, transfer the action to the
242-3 county of the trust company's principal place of business.
242-4 (c) Sections 1 and 5, Article 3, Chapter XI, The Texas
242-5 Banking Code (Article 342-1103, Vernon's Texas Civil Statutes), are
242-6 amended to read as follows:
242-7 Sec. 1. Annual Statement. (a) Every trust company shall be
242-8 subject to regulation by the Banking Commissioner of Texas and
242-9 shall file with the banking commissioner on or before March 1 of
242-10 each year a statement of its condition on the previous December 31,
242-11 in such form as may be required by the banking commissioner,
242-12 showing under oath its assets and liabilities, together with a fee
242-13 of $50 for filing; and such statement shall be published in a
242-14 newspaper of general circulation published in the county in which
242-15 the trust company is located. The banking commissioner may, for
242-16 good cause shown, extend the time for filing such statement for not
242-17 more than 60 days. In addition, each trust company shall make and
242-18 publish statements of its financial condition as provided by
242-19 Section 2.009, Texas Banking Act <Article 9 of Chapter II of this
242-20 code>.
242-21 (b) Each trust company annually may be required by the
242-22 commissioner to obtain an external audit of its books and records
242-23 by a certified public accountant and provide the commissioner a
242-24 copy of the audit report.
242-25 Sec. 5. Confidentiality. The confidentiality provisions of
242-26 Subchapter B, Chapter 2, Texas Banking Act, <Article 10, Chapter
242-27 II, of this code> apply to all information obtained by the
243-1 Department relative to the financial condition of trust companies
243-2 other than the annual statements required under Section 1 of this
243-3 article.
243-4 (d) Article 4, Chapter XI, The Texas Banking Code (Article
243-5 342-1104, Vernon's Texas Civil Statutes), is amended to read as
243-6 follows:
243-7 Art. 4. Action by Banking Commissioner; Officers and
243-8 Directors; Cease and Desist Orders; Removal; Review. (a) With
243-9 regard to a trust company, the Banking Commissioner of Texas may
243-10 take action in accordance with Subchapter A, Chapter 6, Texas
243-11 Banking Act <Article 12, Chapter IV, of this code>, as if the trust
243-12 company were a state bank if the banking commissioner finds that an
243-13 officer, director, or employee of the trust company, or the trust
243-14 company itself acting through any authorized person:
243-15 (1) violates any law or rule applicable to the trust
243-16 company;
243-17 (2) refuses to comply with any law or rule applicable
243-18 to the trust company;
243-19 (3) wilfully neglects to perform his or its duties or
243-20 commits a breach of trust or of fiduciary duty;
243-21 (4) commits any fraudulent or questionable practice in
243-22 the conduct of the trust company's business that threatens the
243-23 trust company's solvency;
243-24 (5) refuses to submit to examination under oath;
243-25 (6) conducts business in an unsafe or unauthorized
243-26 manner; or
243-27 (7) violates any conditions of the trust company's
244-1 charter or of any agreement entered with the Banking Commissioner
244-2 of the Banking Department.
244-3 (b) An individual or trust company against which action is
244-4 taken under this section may request review of that action in
244-5 accordance with Subchapter A, Chapter 6, Texas Banking Act <Article
244-6 12, Chapter IV, of this code>, as if the trust company were a state
244-7 bank.
244-8 (e) Sections (a) and (b), Article 5, Chapter XI, The Texas
244-9 Banking Code (Article 342-1105, Vernon's Texas Civil Statutes), are
244-10 amended to read as follows:
244-11 (a) With regard to a trust company, the Banking Commissioner
244-12 of Texas may take action in accordance with Subchapter B, Chapter
244-13 6, Texas Banking Act <Article 1a, Chapter VIII, of this code>, as
244-14 if the trust company were a state bank if:
244-15 (1) it appears to the banking commissioner that the
244-16 trust company is in a condition that would be a hazardous <an
244-17 unsafe> condition for a state bank <under Article 1a> and the trust
244-18 company's condition renders the continuance of its business
244-19 hazardous to the public or to the shareholders or creditors of the
244-20 trust company;
244-21 (2) it appears to the banking commissioner
244-22 <considering Article 1a> that the trust company has exceeded its
244-23 powers;
244-24 (3) the trust company had failed to comply with the
244-25 law; or
244-26 (4) the trust company gives written consent to
244-27 supervision or conservatorship under this section.
245-1 (b) A trust company against which action is taken under this
245-2 section may request review of that action in accordance with
245-3 Subchapter B, Chapter 6, Texas Banking Act <Article 1a, Chapter
245-4 VIII, of this code>, as if it were a state bank.
245-5 (f) Section (a), Article 6, Chapter XI, The Texas Banking
245-6 Code (Article 342-1106, Vernon's Texas Civil Statutes), is amended
245-7 to read as follows:
245-8 (a) The Finance Commission <State Banking Board> shall
245-9 promulgate and adopt such rules and procedural regulations as may
245-10 be necessary to facilitate the fair hearing and adjudication of
245-11 charter applications.
245-12 (g) Article 8, Chapter XI, The Texas Banking Code (Article
245-13 342-1108, Vernon's Texas Civil Statutes), is amended to read as
245-14 follows:
245-15 Art. 8. PAID-IN CAPITAL. (a) A trust company shall have
245-16 and maintain a fully paid-in capital of not less than $1 million
245-17 <$500,000>.
245-18 (b) The banking commissioner may require additional capital
245-19 of a trust company if the banking commissioner <he> determines it
245-20 necessary to protect the safety and soundness of the trust company.
245-21 The proposed effective date of an order requiring a trust company
245-22 to increase its capital must be stated in the order as on or after
245-23 the 21st day after the date the proposed order is mailed or
245-24 delivered. Unless the trust company requests a hearing before the
245-25 banking commissioner in writing before the effective date of the
245-26 proposed order, the order becomes effective and is final and
245-27 nonappealable.
246-1 (c) The banking commissioner on application may authorize a
246-2 trust company to have and maintain capital of less than the amount
246-3 required by Subsection (a) of this section if the banking
246-4 commissioner finds that the safety and soundness of the trust
246-5 company will be adequately protected by the lower capital
246-6 requirement.
246-7 (h) Article 13, Chapter XI, The Texas Banking Code (Article
246-8 342-1113, Vernon's Texas Civil Statutes), is amended to read as
246-9 follows:
246-10 Art. 13. Exemptions. The provisions of this chapter shall
246-11 not affect or apply to:
246-12 (1) any state or federal credit union doing business
246-13 in this state provided that such credit union is otherwise
246-14 authorized to exercise trust powers;
246-15 (2) a public, private, or independent institution of
246-16 higher education or a university system, as those terms are defined
246-17 by Section 61.003, Education Code, including its affiliated
246-18 foundations or corporations, acting as trustee as provided by the
246-19 Education Code; or
246-20 (3) a corporation serving as trustee of a charitable
246-21 trust as provided by Article 2.31, Texas Non-Profit Corporation Act
246-22 (Article 1396-2.31, Vernon's Texas Civil Statutes).
246-23 (i) Section 2, Article 14, Chapter XI, The Texas Banking
246-24 Code (Article 342-1114, Vernon's Texas Civil Statutes), is amended
246-25 to read as follows:
246-26 Sec. 2. Subject to the provisions of Sections 7.310 and
246-27 7.313, Texas Banking Act <Articles 14 and 15 of Chapter VIII of
247-1 this Act>, after fully satisfying all timely filed and approved
247-2 claims of a higher priority, the commissioner may make a ratable
247-3 distribution to approved claimants within a particular class or
247-4 priority if there are insufficient funds to fully satisfy all of
247-5 those claims, after reserving funds for administrative expenses, if
247-6 necessary.
247-7 (j) A trust company that possesses a charter on September 1,
247-8 1995, and that has capital and surplus of less than the amount
247-9 required by Article 8, Chapter XI, The Texas Banking Code, as
247-10 amended by this section, shall increase its capital and surplus to
247-11 the amount required by that article before September 1, 2000. The
247-12 Finance Commission of Texas may adopt rules specifying procedures
247-13 for ratable increases in capital and surplus under this section and
247-14 for deferrals and extensions of time for a trust company acting in
247-15 good faith to achieve minimum required capital and surplus.
247-16 SECTION 3. Chapter 30, Civil Practice and Remedies Code, is
247-17 amended by adding Section 30.007 to read as follows:
247-18 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
247-19 (a) In this section:
247-20 (1) "Customer" means a person who uses, purchases, or
247-21 obtains an account, extension of credit, or product of a financial
247-22 institution or for whom a financial institution acts as a
247-23 fiduciary, agent, or custodian or in another representative
247-24 capacity.
247-25 (2) "Financial institution" means a state or national
247-26 bank, state or federal savings and loan association, state or
247-27 federal savings bank, state or federal credit union, foreign bank,
248-1 foreign bank agency, or trust company.
248-2 (3) "Record" means financial or other information of a
248-3 customer maintained by a financial institution.
248-4 (4) "Record request" means a valid and enforceable
248-5 subpoena, request for production, or other instrument issued under
248-6 authority of a tribunal that compels production of a customer
248-7 record.
248-8 (5) "Tribunal" means a court or other adjudicatory
248-9 tribunal with jurisdiction to issue a request for records,
248-10 including a government agency exercising adjudicatory functions and
248-11 an alternative dispute resolution mechanism, voluntary or required,
248-12 under which a party may compel the production of records.
248-13 (b) This section provides the exclusive method for compelled
248-14 discovery of a record of a financial institution relating to one or
248-15 more customers, does not create a right of privacy in a record, and
248-16 does not apply to:
248-17 (1) a demand or inquiry from a state or federal
248-18 government agency authorized by law to conduct an examination of
248-19 the financial institution;
248-20 (2) a record request from a state or federal
248-21 government agency or instrumentality under statutory or
248-22 administrative authority that provides for, or is accompanied by, a
248-23 specific mechanism for discovery and protection of a customer
248-24 record of a financial institution, including a record request from
248-25 a federal agency subject to the Right to Financial Privacy Act of
248-26 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
248-27 Service under 26 U.S.C. Section 7609;
249-1 (3) a record request from or report to a government
249-2 agency arising out of the investigation or prosecution of a
249-3 criminal offense;
249-4 (4) a record request in connection with a garnishment
249-5 proceeding in which the financial institution is garnishee and the
249-6 customer is debtor;
249-7 (5) an investigative demand or inquiry from a state
249-8 legislative investigating committee;
249-9 (6) an investigative demand or inquiry from the
249-10 attorney general of this state as authorized by law other than the
249-11 procedural law governing discovery in civil cases; or
249-12 (7) the voluntary use or disclosure of a record by a
249-13 financial institution subject to other applicable state or federal
249-14 law.
249-15 (c) A financial institution shall produce a record in
249-16 response to a record request only if:
249-17 (1) it is served with the record request not later
249-18 than the 24th day before the date that compliance with the record
249-19 request is required;
249-20 (2) before the financial institution complies with the
249-21 record request the requesting party pays the financial
249-22 institution's reasonable costs of complying with the record
249-23 request, including costs of reproduction, postage, research,
249-24 delivery, and attorney's fees, or posts a cost bond in an amount
249-25 estimated by the financial institution to cover those costs; and
249-26 (3) when the customer is not a party to the proceeding
249-27 in which the request was issued, the requesting party complies with
250-1 Subsections (d) and (e) and:
250-2 (A) the financial institution receives the
250-3 customer's written consent to release the record after a request
250-4 under Subsection (d)(3); or
250-5 (B) the tribunal takes further action based on
250-6 action initiated by the requesting party under Subsection (e).
250-7 (d) If the affected customer is not a party to the
250-8 proceeding in which the record request was issued, in addition to
250-9 serving the financial institution with a record request, the
250-10 requesting party shall:
250-11 (1) give notice stating the rights of the customer
250-12 under Subsection (f) and a copy of the request to each affected
250-13 customer in the manner and within the time provided by Rule 21a,
250-14 Texas Rules of Civil Procedure;
250-15 (2) file a certificate of service indicating that the
250-16 customer has been mailed or served with the notice and a copy of
250-17 the record request as required by this subsection with the tribunal
250-18 and the financial institution; and
250-19 (3) request the customer's written consent authorizing
250-20 the financial institution to comply with the request.
250-21 (e) If the customer refuses to execute the written consent
250-22 or fails to respond to the requesting party's request under
250-23 Subsection (d)(3) on or before the date that compliance with the
250-24 request is required, the requesting party may by written motion
250-25 seek an in camera inspection of the requested record as its sole
250-26 means of obtaining access to the requested record. In response to
250-27 a motion for in camera inspection, the tribunal may inspect the
251-1 requested record to determine its relevance to the matter before
251-2 the tribunal. The tribunal may order redaction of portions of the
251-3 records that the tribunal determines should not be produced and
251-4 shall enter a protective order preventing the record that it orders
251-5 produced from being:
251-6 (1) disclosed to a person who is not a party to the
251-7 proceeding before the tribunal; and
251-8 (2) used by a person for any purpose other than
251-9 resolving the dispute before the tribunal.
251-10 (f) The customer bears the burden of preventing or limiting
251-11 the financial institution's compliance with a record request
251-12 subject to this section by seeking an appropriate remedy, including
251-13 filing a motion to quash the record request or a motion for a
251-14 protective order. The customer has standing to appear before the
251-15 tribunal for that purpose if the customer is not otherwise a party.
251-16 Any motion filed shall be served on the financial institution and
251-17 the requesting party before the date that compliance with the
251-18 request is required. A financial institution is not liable to its
251-19 customer or another person for disclosure of a record in compliance
251-20 with this section.
251-21 (g) A financial institution may not be required to produce a
251-22 record under this section before the later of:
251-23 (1) the 24th day after the date of receipt of the
251-24 record request as provided by Subsection (c)(1);
251-25 (2) the 15th day after the date of receipt of a
251-26 customer consent to disclose a record as provided by Subsection
251-27 (c)(3); or
252-1 (3) the 15th day after the date a court orders
252-2 production of a record after an in camera inspection of a requested
252-3 record as provided by Subsection (e).
252-4 (h) An order to quash or for protection or other remedy
252-5 entered or denied by the tribunal under Subsection (e) or (f) is
252-6 not a final order and an interlocutory appeal may not be taken.
252-7 SECTION 4. Section 2001.223, Government Code, is amended to
252-8 read as follows:
252-9 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
252-10 Enforcement, and Contested Case Provisions. Section 2001.038 and
252-11 Subchapters C through H do not apply to:
252-12 (1) the granting, payment, denial, or withdrawal of
252-13 financial or medical assistance or benefits under service programs
252-14 of the Texas Department of Human Services;
252-15 (2) action by the Banking Commissioner or the Finance
252-16 Commission of Texas <State Banking Board> regarding the issuance of
252-17 a state bank charter for a bank to assume the assets and
252-18 liabilities of a financial institution <state bank> that the
252-19 commissioner considers <determines> to be in hazardous <an unsafe>
252-20 condition as defined by Section 1.002(a), <Section 1, Article 1a,
252-21 Chapter VIII, The> Texas Banking Act <Code (Article 342-801a,
252-22 Vernon's Texas Civil Statutes)>;
252-23 (3) a hearing or interview conducted by the Board of
252-24 Pardons and Paroles or the pardons and paroles division of the
252-25 Texas Department of Criminal Justice relating to the grant,
252-26 rescission, or revocation of parole or other form of administrative
252-27 release; or
253-1 (4) the suspension, revocation, or termination of the
253-2 certification of a breath analysis operator or technical supervisor
253-3 under the rules of the Department of Public Safety.
253-4 SECTION 5. Sections 2257.002(1) and (3), Government Code,
253-5 are amended to read as follows:
253-6 (1) "Bank holding company" has the meaning assigned by
253-7 Section 1.002(a), Texas Banking Act <Article 2, Chapter I, The
253-8 Texas Banking Code (Article 342-102, Vernon's Texas Civil
253-9 Statutes)>.
253-10 (3) "Control" has the meaning assigned by Section
253-11 1.002(a), Texas Banking Act <Article 2, Chapter I, The Texas
253-12 Banking Code (Article 342-102, Vernon's Texas Civil Statutes)>.
253-13 SECTION 6. Section 712.042(b), Health and Safety Code, is
253-14 amended to read as follows:
253-15 (b) The banking department shall receive and disburse
253-16 revenues collected under this chapter in accordance with Section
253-17 2.006, Texas Banking Act <Article 12, Chapter I, The Texas Banking
253-18 Code of 1943 (Article 342-112, Vernon's Texas Civil Statutes)>.
253-19 SECTION 7. Section 1(c), Article 1.19-1, Insurance Code, is
253-20 amended to read as follows:
253-21 (c) A subpoena issued to a bank or other financial
253-22 institution as part of a criminal investigation is not subject to
253-23 Section 30.007, Civil Practice and Remedies Code <Article 5,
253-24 Chapter VII, The Texas Banking Code (Article 342-705, Vernon's
253-25 Texas Civil Statutes)>.
253-26 SECTION 8. Section 1, Article 9.05, Insurance Code, is
253-27 amended to read as follows:
254-1 Sec. 1. Any corporation heretofore chartered under the
254-2 provisions of Article 9.03 of this Act, or its antecedents, Article
254-3 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
254-4 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
254-5 having as one of its powers "to act as trustee under any lawful
254-6 trust committed to it by contract or will, appointment by any court
254-7 having jurisdiction of the subject matter, as trustee, receiver or
254-8 guardian and as executor or guardian under the terms of any will
254-9 and as any administrator of the estates of decedents under the
254-10 appointment of the court" may transfer and assign to a state bank
254-11 or trust company created under the provisions of the Texas Banking
254-12 Act or a predecessor of that Act <Code of 1943>, as amended, all of
254-13 its fiduciary business in which such corporation is named or acting
254-14 as guardian, trustee, executor, administrator or in any other
254-15 fiduciary capacity, whereupon said state bank or trust company
254-16 shall, without the necessity of any judicial action in the courts
254-17 of the State of Texas or any action by the creator or beneficiary
254-18 of such trust or estate, continue the guardianship, trusteeship,
254-19 executorship, administration or other fiduciary relationship, and
254-20 perform all of the duties and obligations of such corporation, and
254-21 exercise all of the powers and authority relative thereto now being
254-22 exercised by such corporation, and provided further that the
254-23 transfer or assignment by such corporation of such fiduciary
254-24 business being conducted by it under the powers granted in its
254-25 original charter, as amended, shall not constitute or be deemed a
254-26 resignation or refusal to act upon the part of such corporation as
254-27 to any such guardianship, trust, executorship, administration, or
255-1 any other fiduciary capacity; and provided further that the naming
255-2 or designation by a testator or the creator of a living trust of
255-3 such corporation to act as trustee, guardian, executor, or in any
255-4 other fiduciary capacity, shall be considered the naming or
255-5 designation of the state bank or trust company and authorizing such
255-6 state bank or trust company to act in said fiduciary capacity. All
255-7 transfers and assignments of fiduciary business by such
255-8 corporations to a state bank or trust company consistent with the
255-9 provisions of this Act are hereby validated.
255-10 SECTION 9. Section 105.001(13), Local Government Code, is
255-11 amended to read as follows:
255-12 (13) "State bank" has the meaning assigned by Section
255-13 1.002(a), Texas Banking Act <The Texas Banking Code (Article
255-14 342-101 et seq., Vernon's Texas Civil Statutes)>.
255-15 SECTION 10. Sections 105A(c) and (d), Texas Probate Code,
255-16 are amended to read as follows:
255-17 (c) No foreign bank or trust company shall establish or
255-18 maintain any branch office, agency or other place of business
255-19 within this state, or shall in any way solicit, directly or
255-20 indirectly, any fiduciary business in this state of the types
255-21 embraced by subdivision (a) hereof. Except as authorized herein or
255-22 as may otherwise be authorized by the laws of this state, no
255-23 foreign bank or trust company shall act in a fiduciary capacity in
255-24 this state. Nothing in this Section shall be construed to
255-25 authorize foreign banks and trust companies to issue or to sell or
255-26 otherwise market or distribute in this state any investment
255-27 certificates, trust certificates, or other types of securities
256-1 (including without limiting the generality of the foregoing any
256-2 securities of the types authorized by Chapter 7 of the Insurance
256-3 Code of 1951 prior to the repeal thereof), or to conduct any
256-4 activities or exercise any powers of the type embraced and
256-5 regulated by the Texas Banking Act <Code of 1943> other than those
256-6 conducted and exercised in a fiduciary capacity under the terms and
256-7 conditions hereof.
256-8 (d) Any foreign bank or trust company acting in a fiduciary
256-9 capacity in this state in strict accordance with the provisions of
256-10 this Section shall not be deemed to be doing business in the State
256-11 of Texas within the meaning of Article 8.01 of the Texas Business
256-12 Corporation Act; shall be deemed qualified to serve in such
256-13 capacity under the provisions of Section 105 of this Code; and
256-14 notwithstanding other law shall not be prohibited <by the
256-15 provisions of Chapter 137, Acts of the 55th Legislature, Regular
256-16 Session, 1957, amending Article 342-902 of the Texas Banking Code
256-17 of 1943,> from using in its name and stationery the terms "bank,"
256-18 "trust," or "bank and trust."
256-19 SECTION 11. Section 73.003(c), Property Code, is amended to
256-20 read as follows:
256-21 (c) This section does not affect the provisions of
256-22 Subchapter B, Chapter 8, Texas Banking Act <Article 6, Chapter IX,
256-23 The Texas Banking Code of 1943 (Article 342-906, Vernon's Texas
256-24 Civil Statutes)>.
256-25 SECTION 12. Section 171.001(b)(1), Tax Code, is amended to
256-26 read as follows:
256-27 (1) "Banking corporation" means each state, national,
257-1 domestic, or foreign bank, including a limited banking association,
257-2 as defined by Section 1.002(a), Texas Banking Act <organized under
257-3 Subchapter C, Chapter III, The Texas Banking Code (Article 342-360
257-4 et seq., Vernon's Texas Civil Statutes)>, and each bank organized
257-5 under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
257-6 (edge corporations), but does not include a bank holding company as
257-7 that term is defined by Section 2, Bank Holding Company Act of 1956
257-8 (12 U.S.C. Sec. 1841).
257-9 SECTION 13. Section 171.1031(c), Tax Code, is amended to
257-10 read as follows:
257-11 (c) To the extent that this subsection is not preempted by
257-12 federal law, the Texas Department of Banking <does not conflict
257-13 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
257-14 342-908, Vernon's Texas Civil Statutes), the Banking Department of
257-15 Texas> is required to appoint a conservator under Subchapter B,
257-16 Chapter 6, Texas Banking Act, to pay the franchise tax <revoke the
257-17 chapter> of any banking corporation certified by the Comptroller as
257-18 being delinquent in the payment of its franchise tax.
257-19 SECTION 14. Section 2.13, Texas Savings Bank Act (Article
257-20 489e, Vernon's Texas Civil Statutes), is amended to read as
257-21 follows:
257-22 Sec. 2.13. Corporate Name. The name of a savings bank must
257-23 include the words "State Savings Bank" or the abbreviation "SSB."
257-24 These words or the abbreviation must be preceded by an appropriate
257-25 descriptive word or words approved by the commissioner. The
257-26 commissioner may not approve the incorporation of a savings bank
257-27 having the same name as another financial institution authorized to
258-1 do business in this state under this Act, the Texas Savings and
258-2 Loan Act (Article 852a, Vernon's Texas Civil Statutes), or the
258-3 Texas Banking Act <The Texas Banking Code (Article 342-101 et seq.,
258-4 Vernon's Texas Civil Statutes)> or a name so nearly resembling the
258-5 name of another financial institution as to be calculated to
258-6 deceive unless the savings bank is formed by the reincorporation,
258-7 reorganization, or consolidation of the other financial institution
258-8 or on the sale of the property or franchise of the other savings
258-9 bank. A person or company, either domestic or foreign, other than
258-10 a state or federal savings bank, may not do business under a name
258-11 or title that contains the words "savings bank," that indicates or
258-12 reasonably implies that the business is the character or kind of
258-13 business carried on or transacted by a savings bank, or that is
258-14 calculated to lead any person to believe that its business is that
258-15 of a savings bank. On application by the commissioner or any
258-16 savings bank, a court of competent jurisdiction may issue an
258-17 injunction to restrain a person or company from violating this
258-18 section.
258-19 SECTION 15. Section 4.07, Texas Savings Bank Act (Article
258-20 489e, Vernon's Texas Civil Statutes), is amended to read as
258-21 follows:
258-22 Sec. 4.07. Fees. The commissioner and the finance
258-23 commission, acting under the rulemaking power delegated by Section
258-24 1.106, Texas Banking Act <Article 5, Chapter II, The Texas Banking
258-25 Code (Article 342-205, Vernon's Texas Civil Statutes)>, and Section
258-26 4.04 of this Act, shall establish the amount of the fees to be
258-27 charged by the commissioner for supervision and examination of
259-1 savings banks, for filing an application or other documents, for
259-2 conducting a hearing, and for other services performed by the
259-3 commissioner and the commission's office and the time and manner of
259-4 payment of the fees. Fees collected by the commissioner shall be
259-5 deposited and used in accordance with Section 1.106, Texas Banking
259-6 Act <(h), Article 5, Chapter II, The Texas Banking Code (Article
259-7 342-205, Vernon's Texas Civil Statutes)>.
259-8 SECTION 16. Section 12.07, Texas Savings Bank Act (Article
259-9 489e, Vernon's Texas Civil Statutes), is amended to read as
259-10 follows:
259-11 Sec. 12.07. Initiation of Rulemaking by Savings Banks. If
259-12 20 percent or more of the savings banks subject to this Act
259-13 petition the commissioner in writing requesting the adoption,
259-14 amendment, or repeal of a rule, the commissioner shall initiate
259-15 rulemaking proceedings under Chapter 2001, Government Code
259-16 <Subsection (e), Article 5, Chapter II, The Texas Banking Code
259-17 (Article 342-205, Vernon's Texas Civil Statutes)>.
259-18 SECTION 17. Section 12.12(b), Texas Savings Bank Act
259-19 (Article 489e, Vernon's Texas Civil Statutes), is amended to read
259-20 as follows:
259-21 (b) Subsection (a) of this section does not apply to this
259-22 Act, the Texas Savings and Loan Act (Article 852a, Vernon's Texas
259-23 Civil Statutes), the Texas Banking Act <The Texas Banking Code
259-24 (Article 342-101 et seq., Vernon's Texas Civil Statutes)>, or the
259-25 Penal Code.
259-26 SECTION 18. Section 11.05, Texas Savings and Loan Act
259-27 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
260-1 as follows:
260-2 Sec. 11.05. Fees. The amount of the fees to be charged by
260-3 the Commissioner for supervision and examination of associations,
260-4 filing of applications and other documents and for other services
260-5 performed by the Commissioner and his office and the time and
260-6 manner of payment thereof shall be fixed by rule and regulation
260-7 adopted by the Commissioner and the Finance Commission, acting
260-8 pursuant to the rule-making power delegated by Section 1.106, Texas
260-9 Banking Act <Article 5, Chapter II, the Texas Banking Code of 1943
260-10 (Article 342-205, Vernon's Texas Civil Statutes)>. All fees
260-11 collected by the Commissioner shall be deposited and used in
260-12 accordance with Section 1.106, Texas Banking Act <(h), Article 5,
260-13 Chapter II, The Texas Banking Code of 1943 (Article 342-205,
260-14 Vernon's Texas Civil Statutes)>.
260-15 SECTION 19. Section 11.20(l), Texas Savings and Loan Act
260-16 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
260-17 as follows:
260-18 (l) The Finance Commission of Texas by rule shall adopt a
260-19 schedule of fees for the filing of applications and the holding of
260-20 hearings. The schedule may be graduated so that those applications
260-21 and hearings that are more difficult to review or administer will
260-22 require a larger fee. An application fee is not refundable on
260-23 denial of the application, but the commissioner may refund a
260-24 portion of the fee if the application is withdrawn before he
260-25 completes review of it. Fees collected under this section shall be
260-26 deposited and used in accordance with Section 1.106, Texas Banking
260-27 Act <(h), Article 5, Chapter II, The Texas Banking Code of 1943
261-1 (Article 342-205, Vernon's Texas Civil Statutes)>.
261-2 SECTION 20. Section A(2), Article 7.06, Texas Miscellaneous
261-3 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
261-4 Statutes), is amended to read as follows:
261-5 (2) "Corporation" means:
261-6 (a) Any corporation, association, or other
261-7 organization incorporated or organized under the Texas Business
261-8 Corporation Act, the Texas Non-Profit Corporation Act (Article
261-9 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
261-10 Banking Act or a predecessor of that Act <The Texas Banking Code of
261-11 1943 (Article 342-1.01 et seq., Vernon's Texas Civil Statutes)>,
261-12 the Insurance Code, the Texas Savings and Loan Act (Article 852a,
261-13 Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
261-14 Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
261-15 Texas Civil Statutes), the Texas Credit Union Act (Article
261-16 2461-1.01 et seq., Vernon's Texas Civil Statutes), the Cooperative
261-17 Association Act (Article 1396-50.01, Vernon's Texas Civil
261-18 Statutes), Articles 1399 through 1407, Revised Statutes, Article
261-19 1448, Revised Statutes, Section 2, Chapter 42, Acts of the 42nd
261-20 Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
261-21 Texas Civil Statutes), the State Housing Law (Article 1528a,
261-22 Vernon's Texas Civil Statutes), the Electric Cooperative
261-23 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
261-24 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
261-25 Statutes), the Automobile Club Services Act (Article 1528d,
261-26 Vernon's Texas Civil Statutes), The Texas Professional Corporation
261-27 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
262-1 Professional Association Act (Article 1528f, Vernon's Texas Civil
262-2 Statutes), the Texas Mutual Trust Investment Company Act (Article
262-3 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
262-4 Safety Code, the Texas Transportation Corporation Act (Article
262-5 1528l, Vernon's Texas Civil Statutes), the Cultural Education
262-6 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
262-7 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
262-8 and Safety Code, Title 4, Agricultural Code, Subchapter A, Chapter
262-9 301, Health and Safety Code, Subchapter B, Chapter 301, Health and
262-10 Safety Code, or the Higher Education Authority Act, Chapter 53,
262-11 Education Code;
262-12 (b) Any corporation, association, or other
262-13 organization incorporated or organized under the laws of this state
262-14 that is governed in whole or in part by the Texas Business
262-15 Corporation Act, the Texas Non-Profit Corporation Act (Article
262-16 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
262-17 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
262-18 Vernon's Texas Civil Statutes); or
262-19 (c) To the extent permitted by federal law, any
262-20 federally chartered bank, savings and loan association, or credit
262-21 union.
262-22 SECTION 21. The Texas Non-Profit Corporation Act (Article
262-23 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
262-24 adding Article 2.31 to read as follows:
262-25 Art. 2.31. POWER TO SERVE AS TRUSTEE. A corporation that is
262-26 described by Section 501(c)(3) or 170(c), Internal Revenue Code of
262-27 1986, or a corresponding provision of a subsequent federal tax law,
263-1 may serve as the trustee of a trust:
263-2 (1) of which the corporation is a beneficiary; or
263-3 (2) benefiting another organization described by one
263-4 of those sections of the Internal Revenue Code of 1986, if the
263-5 service as trustee is in furtherance of the purposes for which the
263-6 corporation was formed.
263-7 SECTION 22. Subsections (d) and (k), Article 2.01, Title 79,
263-8 Revised Statutes (Article 5069-2.01, Vernon's Texas Civil
263-9 Statutes), are amended to read as follows:
263-10 (d) "Bank" shall mean any person doing business under the
263-11 authority of and as permitted by the Texas Banking Act <Code of
263-12 1943, as amended,> or any person organized under the provisions of
263-13 Title 12, United States Code, Section 21 (U.S.Rev.Statutes 5133)
263-14 and the amendments thereto.
263-15 (k) "Finance Commission" means the Finance Commission of
263-16 Texas <created by the Texas Banking Code of 1943>, or any
263-17 subcommittee created by any rule or regulation of the Finance
263-18 Commission of Texas.
263-19 SECTION 23. Section (1), Article 2.02B, Title 79, Revised
263-20 Statutes (Article 5069-2.02B, Vernon's Texas Civil Statutes), is
263-21 amended to read as follows:
263-22 (1) All money collected under this Act shall be deposited in
263-23 the Office of the Consumer Credit Commissioner expense fund, which
263-24 is created as a special fund in the State Treasury. Money in the
263-25 fund may be used only for the administration of this Act and
263-26 support of The Finance Commission of Texas as provided by Section
263-27 1.011, Texas Banking Act <Article 11C, Chapter I, The Texas Banking
264-1 Code (Article 342-111C, Vernon's Texas Civil Statutes)>. Income
264-2 earned on money deposited in the expense fund shall be credited to
264-3 that fund.
264-4 SECTION 24. Subsection (d), Article 15.01, Title 79, Revised
264-5 Statutes (Article 5069-15.01, Vernon's Texas Civil Statutes), is
264-6 amended to read as follows:
264-7 (d) "Bank" means a person doing business under the
264-8 authority of and as permitted by the Texas Banking Act <The Texas
264-9 Banking Code of 1943, as amended (Article 342-101 et seq., Vernon's
264-10 Texas Civil Statutes)>, and any person organized under Title 12,
264-11 United States Code, as amended.
264-12 SECTION 25. Section 6, Acts of the 60th Legislature, Regular
264-13 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
264-14 is amended to read as follows:
264-15 Sec. 6. ACT CUMULATIVE. The provisions of this Act are
264-16 cumulative of the Texas Banking Act <Code of 1943, as amended>; the
264-17 "Texas Savings and Loan Act," as amended; and Articles 2461 through
264-18 2484, Revised Civil Statutes of Texas, 1925, as amended and the
264-19 amendments thereto, and Section 5 of House Bill No. 47, Acts of the
264-20 46th Legislature, Regular Session, 1939, and Chapter 173, Acts of
264-21 the 51st Legislature, Regular Session, 1949, relating to Credit
264-22 Unions and the amendments thereto.
264-23 SECTION 26. The following laws are repealed:
264-24 (1) Chapters I-X, The Texas Banking Code (Article
264-25 342-101 et seq., Vernon's Texas Civil Statutes);
264-26 (2) Chapter 183, General Laws, Acts of the 44th
264-27 Legislature, Regular Session, 1935 (Article 489b, Vernon's Texas
265-1 Civil Statutes); and
265-2 (3) Article 3921, Revised Statutes.
265-3 SECTION 27. A change in law made by this Act does not
265-4 affect:
265-5 (1) the validity of any action taken by the Finance
265-6 Commission of Texas, banking commissioner of Texas, savings and
265-7 loan commissioner, or State Banking Board before the effective date
265-8 of this Act; or
265-9 (2) a civil, criminal, or administrative proceeding
265-10 completed before the effective date of this Act.
265-11 SECTION 28. A state bank or private bank that exists on the
265-12 effective date of this Act retains the powers provided by its
265-13 charter and is subject to the jurisdiction and control of the
265-14 Banking Commissioner of Texas as if it were a state bank chartered
265-15 under the Texas Banking Act, as added by this Act.
265-16 SECTION 29. (a) The changes in criminal law made by this
265-17 Act apply only to an offense committed on or after the effective
265-18 date of this Act. For purposes of this section, an offense is
265-19 committed before the effective date of this Act if any element of
265-20 the offense occurs before that date.
265-21 (b) The repeal of a criminal law made by this Act does not
265-22 apply to an offense committed under the repealed law before the
265-23 effective date of this Act.
265-24 (c) An offense committed before the effective date of this
265-25 Act is covered by the law in effect when the offense was committed,
265-26 and the former law is continued in effect for that purpose.
265-27 SECTION 30. (a) The change in law made by this Act does not
266-1 affect the standards for approval to be applied to an application
266-2 accepted for filing by the Texas Department of Banking before the
266-3 effective date of this Act under:
266-4 (1) Article 6, Chapter III, The Texas Banking Code
266-5 (Article 342-306, Vernon's Texas Civil Statutes);
266-6 (2) Article 7, Chapter III, The Texas Banking Code
266-7 (Article 342-307, Vernon's Texas Civil Statutes);
266-8 (3) Article 9, Chapter III, The Texas Banking Code
266-9 (Article 342-309, Vernon's Texas Civil Statutes);
266-10 (4) Article 10, Chapter III, The Texas Banking Code
266-11 (Article 342-310, Vernon's Texas Civil Statutes);
266-12 (5) Article 11, Chapter III, The Texas Banking Code
266-13 (Article 342-311, Vernon's Texas Civil Statutes);
266-14 (6) Article 31, Chapter III, The Texas Banking Code
266-15 (Article 342-331, Vernon's Texas Civil Statutes);
266-16 (7) Article 32, Chapter III, The Texas Banking Code
266-17 (Article 342-332, Vernon's Texas Civil Statutes);
266-18 (8) Article 63, Chapter III, The Texas Banking Code
266-19 (Article 342-363, Vernon's Texas Civil Statutes);
266-20 (9) Article 68, Chapter III, The Texas Banking Code
266-21 (Article 342-368, Vernon's Texas Civil Statutes);
266-22 (10) Article 1a, Chapter IV, The Texas Banking Code
266-23 (Article 342-401a, Vernon's Texas Civil Statutes);
266-24 (11) Article 12, Chapter IX, The Texas Banking Code
266-25 (Article 342-912, Vernon's Texas Civil Statutes);
266-26 (12) Article 6, Chapter X, The Texas Banking Code
266-27 (Article 342-1006, Vernon's Texas Civil Statutes).
267-1 (b) The standards for approval under former law applicable
267-2 to the applications listed in Subsection (a) of this section
267-3 continue in effect as if this Act had not been enacted.
267-4 SECTION 31. (a) A principal shareholder or participant that
267-5 is considered to control a state bank under Section 4.001(a), Texas
267-6 Banking Act, as added by this Act, is not required to file a change
267-7 of control application under Section 4.002, Texas Banking Act, as
267-8 added by this Act, until the person acquires one or more additional
267-9 shares or participation shares of the state bank on or after the
267-10 effective date of this Act.
267-11 (b) With respect to an office of an out-of-state bank that
267-12 exists on the effective date of this Act, the out-of-state bank
267-13 must file the documentation and information required by Section
267-14 8.003, Texas Banking Act, as added by this Act, before September 1,
267-15 1996.
267-16 (c) With respect to a representative office of a foreign
267-17 bank corporation in this state that exists as of the effective date
267-18 of this Act, the foreign bank corporation must file before
267-19 September 1, 1996:
267-20 (1) a registration of the representative office with
267-21 the banking commissioner containing the information required by
267-22 Section 9.006(a), Texas Banking Act, as added by this Act; and
267-23 (2) with the secretary of state the fees,
267-24 documentation, and information required by Section 9.007, Texas
267-25 Banking Act, as added by this Act.
267-26 SECTION 32. The changes in civil enforcement provisions,
267-27 penalties, and procedures made by Chapter 6, Texas Banking Act, as
268-1 added by this Act, do not apply to a civil enforcement proceeding
268-2 begun by the service of a notice for hearing or proposed civil
268-3 enforcement order by the banking commissioner before the effective
268-4 date of this Act. That proceeding is governed by the law in effect
268-5 when the proceeding was begun, and that law is continued in effect
268-6 for that purpose.
268-7 SECTION 33. Subdivision (3), Article 13, Chapter XI, The
268-8 Texas Banking Code (Article 342-1113, Vernon's Texas Civil
268-9 Statutes), as added by Section 2(h) of this Act, and Article 2.31,
268-10 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
268-11 Vernon's Texas Civil Statutes), as added by Section 21 of this Act,
268-12 are clarification of the law existing before the effective date of
268-13 this Act. An act of a nonprofit corporation serving as trustee
268-14 before the effective date of this Act is valid if consistent with
268-15 law as amended by this Act.
268-16 SECTION 34. (a) If this Act conflicts with another Act of
268-17 the 74th Legislature, Regular Session, 1995:
268-18 (1) the change in law made in the other Act prevails
268-19 and the substance of the change is given effect as part of the
268-20 Texas Banking Act adopted by this Act unless:
268-21 (A) this Act or the conflicting Act expressly
268-22 provides otherwise; or
268-23 (B) it is not possible to give the conflicting
268-24 law effect within the context of the Texas Banking Act, in which
268-25 event the Texas Banking Act prevails; and
268-26 (2) the text of a law that is reenacted in the other
268-27 Act only because of the constitutional requirement that the amended
269-1 law be reenacted at length is superseded by this Act.
269-2 (b) If this Act and another Act of the 74th Legislature,
269-3 Regular Session, 1995, make the same substantive change from the
269-4 current law but differ in text, this Act prevails regardless of the
269-5 relative dates of enactment.
269-6 SECTION 35. This Act takes effect September 1, 1995, except
269-7 that Section 2(h), Section 21, Section 33 of this Act, and Chapter
269-8 9 of the Texas Banking Act as added by this Act take effect
269-9 immediately.
269-10 SECTION 36. The importance of this legislation and the
269-11 crowded condition of the calendars in both houses create an
269-12 emergency and an imperative public necessity that the
269-13 constitutional rule requiring bills to be read on three several
269-14 days in each house be suspended, and this rule is hereby suspended,
269-15 and that this Act take effect and be in force from and after its
269-16 passage, and it is so enacted.