74R9066 DWS-F
By Marchant H.B. No. 1543
Substitute the following for H.B. No. 1543:
By Carona C.S.H.B. No. 1543
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of banking and of entities under the
1-3 jurisdiction of state banking regulatory officials; providing
1-4 administrative and criminal penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Banking Act is enacted to read as
1-7 follows:
1-8 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
1-9 SAVINGS AND LOAN DEPARTMENT
1-10 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
1-11 Sec. 1.001. SHORT TITLE ....................................... 2
1-12 Sec. 1.002. DEFINITIONS ....................................... 2
1-13 Sec. 1.003. FINANCE COMMISSION ................................ 16
1-14 Sec. 1.004. QUALIFICATIONS OF MEMBERS ......................... 17
1-15 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES ..................... 18
1-16 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS .............. 19
1-17 Sec. 1.007. DISQUALIFICATION OF MEMBERS ....................... 20
1-18 Sec. 1.008. MEETINGS .......................................... 20
1-19 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE ........... 21
1-20 Sec. 1.010. PRESIDING OFFICER ................................. 21
1-21 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES ................ 22
1-22 Sec. 1.012. BANKING RULES ..................................... 24
1-23 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
1-24 REGULATIONS ..................................... 25
2-1 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS ............. 26
2-2 Sec. 1.015. SUNSET PROVISION .................................. 26
2-3 (Sections 1.016-1.100 reserved for expansion)
2-4 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
2-5 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER ..................... 26
2-6 Sec. 1.102. DEPUTY COMMISSIONERS .............................. 27
2-7 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT .......... 27
2-8 Sec. 1.104. OATH OF OFFICE .................................... 28
2-9 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER ................. 28
2-10 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT ............... 28
2-11 Sec. 1.107. CONFLICTS OF LAW .................................. 29
2-12 Sec. 1.108. CONFLICTS OF INTEREST ............................. 29
2-13 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS ............... 30
2-14 Sec. 1.110. SUNSET PROVISION .................................. 31
2-15 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
2-16 SAVINGS AND LOAN DEPARTMENT
2-17 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
2-18 Sec. 1.001. SHORT TITLE. This Act may be cited as the Texas
2-19 Banking Act.
2-20 Sec. 1.002. DEFINITIONS. (a) In this Act:
2-21 (1) "Affiliate" means a company that directly or
2-22 indirectly controls, is controlled by, or is under common control
2-23 with a bank or other company.
2-24 (2) "Bank" means a state or national bank.
2-25 (3) "Bank holding company" has the meaning assigned by
2-26 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
2-27 seq.) or a successor to that act.
3-1 (4) "Banking" means the performance of the exclusive
3-2 depository institution functions of accepting deposits and
3-3 discounting loans and the performance of related activities that
3-4 are not exclusive to banks or other depository institutions,
3-5 including paying drafts or checks, lending money, and providing
3-6 related financial services authorized by this Act.
3-7 (5) "Banking association" means a state bank that is
3-8 organized as a banking association, authorized to issue shares of
3-9 stock, and controlled by its shareholders.
3-10 (6) "Banking commissioner" means the banking
3-11 commissioner of Texas or a person designated by the banking
3-12 commissioner and acting under the banking commissioner's direction
3-13 and authority.
3-14 (7) "Board" means the board of directors, managers, or
3-15 managing participants of, or a person or group of persons acting in
3-16 a comparable capacity for, a state bank or other entity.
3-17 (8) "Branch" means a location of a bank, other than
3-18 the bank's home office, at which the bank engages in the business
3-19 of banking. The term does not include:
3-20 (A) a drive-in facility located not more than
3-21 2,000 feet from the nearest wall of the home office or an approved
3-22 branch office of the bank;
3-23 (B) a night depository;
3-24 (C) an electronic terminal subject to Section
3-25 3.204 of this Act;
3-26 (D) a loan production office subject to Section
3-27 3.205 of this Act;
4-1 (E) a state or federally licensed armored car
4-2 service or other courier service transporting items for deposit or
4-3 payment, unless:
4-4 (i) the risk of loss of items in the
4-5 custody of the service is borne by the employing bank; or
4-6 (ii) the items in the custody of the
4-7 service are considered to be in customer accounts at the employing
4-8 bank or federally insured through the employing bank;
4-9 (F) a bank acting as an agent for a depository
4-10 institution affiliate as provided by Section 8.010(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
5-10 Subparagraphs (i) and (ii) that are attributable to the issuance of
5-11 securities by the state bank and that the banking commissioner
5-12 determines, after notice and an opportunity for hearing, should be
5-13 classified as debt rather than equity securities.
5-14 (10) "Certified surplus" means the part of surplus
5-15 designated by a vote of the board of a state bank under Section
5-16 4.104(b) of this Act and recorded in the board minutes as
5-17 certified.
5-18 (11) "Company" includes a bank, trust company,
5-19 corporation, partnership, association, business trust, or another
5-20 trust.
5-21 (12) "Conservator" means the banking commissioner or
5-22 an agent of the banking commissioner exercising the powers and
5-23 duties provided by Subchapter B, Chapter 6, of this Act.
5-24 (13) "Control" means:
5-25 (A) the ownership of or ability or power to
5-26 vote, directly, acting through one or more other persons, or
5-27 otherwise indirectly, 25 percent or more of the outstanding shares
6-1 of a class of voting securities of a bank or other company;
6-2 (B) the ability to control the election of a
6-3 majority of the board of a bank or other company;
6-4 (C) the power to exercise, directly or
6-5 indirectly, a controlling influence over the management or policies
6-6 of the bank or other company as determined by the banking
6-7 commissioner after notice and an opportunity for hearing; or
6-8 (D) the conditioning of the transfer of 25
6-9 percent or more of the outstanding shares or participation shares
6-10 of a class of voting securities of a bank or other company on the
6-11 transfer of 25 percent or more of the outstanding shares of a class
6-12 of voting securities of another bank or other company.
6-13 (14) "Department" means the Texas Department of
6-14 Banking.
6-15 (15) "Deposit" means the establishment of a
6-16 debtor-creditor relationship represented by the agreement of the
6-17 deposit debtor to act as a holding, paying, or disbursing agent for
6-18 the deposit creditor. The term:
6-19 (A) includes:
6-20 (i) an unpaid balance of money received by
6-21 the deposit debtor in the usual course of business in exchange for
6-22 conditional or unconditional credit to a commercial, checking,
6-23 savings, or time account of the deposit creditor or the creditor's
6-24 designee, or that is evidenced by a certificate of deposit or
6-25 similar instrument, a certified check or draft drawn against a
6-26 deposit account, or a letter of credit or a traveler's check on
6-27 which the deposit debtor is primarily liable, but excluding an
7-1 obligation arising under The Sale of Checks Act (Article 489d,
7-2 Vernon's Texas Civil Statutes);
7-3 (ii) money or credit given for money
7-4 received by the deposit debtor in the usual course of business for
7-5 a special purpose, including money:
7-6 (a) held as escrow funds, as
7-7 security for an obligation due to the deposit debtor or another
7-8 person, or as security for a loan;
7-9 (b) left with a deposit debtor by a
7-10 deposit creditor to meet maturing obligations that are not yet due;
7-11 and
7-12 (c) held by the deposit debtor to
7-13 meet an acceptance or letter of credit;
7-14 (iii) an outstanding draft, cashier's
7-15 check, money order, or other officer's check issued by the deposit
7-16 debtor in the usual course of business for any purpose, including
7-17 payment for services, dividends, or purchases; and
7-18 (iv) an obligation that the finance
7-19 commission by rule defines as a deposit liability, except that the
7-20 term may not include money received for immediate application to
7-21 reduction of an indebtedness; and
7-22 (B) does not include an obligation that this Act
7-23 or finance commission rule determines not to be a deposit
7-24 liability.
7-25 (16) "Depository institution" means an entity with the
7-26 power to accept deposits under applicable law.
7-27 (17) "Discount" means the retention by a lender of
8-1 advance interest from loan proceeds. The term does not include the
8-2 purchase of a promissory note or similar instrument at less than
8-3 its face value unless the party selling the note is liable on the
8-4 note as a maker, endorser, or guarantor.
8-5 (18) "Drive-in facility" means a facility offering one
8-6 or more banking services other than originating or establishing a
8-7 lending or deposit relationship solely to persons who remain
8-8 outside the facility.
8-9 (19) "Electronic terminal" means an electronic device,
8-10 other than a telephone or modem operated by a customer of a
8-11 depository institution, through which a person may initiate an
8-12 electronic fund transfer, as defined in 15 U.S.C. Section 1693a(6).
8-13 The term includes a point-of-sale terminal, automated teller
8-14 machine, or cash dispensing machine.
8-15 (20) "Equity capital" means the amount by which the
8-16 total assets of a state bank exceed the total liabilities of the
8-17 bank.
8-18 (21) "Equity security" means:
8-19 (A) stock, other than adjustable rate preferred
8-20 stock and money market (auction rate) preferred stock;
8-21 (B) a certificate of interest or participation
8-22 in a profit-sharing agreement, collateral-trust certificate,
8-23 preorganization certificate or subscription, transferable share or
8-24 participation share, investment contract, voting-trust certificate,
8-25 or partnership interest;
8-26 (C) a security immediately convertible at the
8-27 option of the holder without payment of substantial additional
9-1 consideration into a security described by this subdivision;
9-2 (D) a security carrying a warrant or right to
9-3 subscribe to or purchase a security described by this subdivision;
9-4 and
9-5 (E) a certificate of interest or participation
9-6 in, temporary or interim certificate for, or receipt for a security
9-7 described by this subdivision that evidences an existing or
9-8 contingent equity ownership interest.
9-9 (22) "Federal savings association" means a savings and
9-10 loan association organized under federal law.
9-11 (23) "Federal savings bank" means a savings bank
9-12 organized under federal law.
9-13 (24) "Finance commission" means the Finance Commission
9-14 of Texas.
9-15 (25) "Financial institution" means a bank, savings
9-16 association, or savings bank maintaining an office, branch, or
9-17 agency office in this state.
9-18 (26) "Foreign bank agency" means an agency established
9-19 and operating under Chapter 9 of this Act by a foreign bank
9-20 corporation.
9-21 (27) "Foreign bank corporation" means a banking
9-22 corporation or association incorporated or organized under the laws
9-23 of a jurisdiction other than the United States or a state,
9-24 territory, commonwealth, or other political subdivision of the
9-25 United States.
9-26 (28) "Full liability participant" means a participant
9-27 that agrees under the terms of a participation agreement to be
10-1 liable under a judgment, decree, or order of court for the entire
10-2 amount of all debts, obligations, or liabilities of a limited
10-3 banking association.
10-4 (29) "Hazardous condition" means:
10-5 (A) a refusal by a state bank to permit
10-6 examination of its books, papers, accounts, records, or affairs by
10-7 the banking commissioner;
10-8 (B) a circumstance or condition in which an
10-9 unreasonable risk of substantial loss is threatened to the
10-10 depositors, creditors, shareholders, or participants of a state
10-11 bank, including a circumstance or condition in which a state bank:
10-12 (i) has inadequate equity capital, or the
10-13 adequacy of its equity capital is threatened;
10-14 (ii) has concentrated an excessive or
10-15 unreasonable portion of its assets in a type or character of loan
10-16 or investment;
10-17 (iii) violates or refuses to comply with
10-18 this Act, another statute or rule applicable to state banks, or a
10-19 final and enforceable order of the banking commissioner;
10-20 (iv) is in a condition that renders the
10-21 continuation of a particular business practice hazardous to the
10-22 public or to its depositors and creditors;
10-23 (v) conducts business in an unsafe and
10-24 unsound manner; or
10-25 (vi) is insolvent; or
10-26 (C) a violation by a state bank of a condition
10-27 of its chartering or an agreement entered into between the bank and
11-1 the banking commissioner or the department.
11-2 (30) "Home office" means a location registered with
11-3 the banking commissioner as the bank's home office at which:
11-4 (A) the bank does business with the public;
11-5 (B) the bank keeps its corporate books and
11-6 records; and
11-7 (C) at least one officer of the bank maintains
11-8 an office.
11-9 (31) "Insolvent" means a circumstance or condition in
11-10 which a state bank:
11-11 (A) is unable or lacks the means to meet its
11-12 current obligations as they come due in the regular and ordinary
11-13 course of business, even if the value of its assets exceeds its
11-14 liabilities;
11-15 (B) has equity capital equal to two percent or
11-16 less of its assets, as determined under regulatory accounting
11-17 principles;
11-18 (C) fails to maintain deposit insurance with the
11-19 Federal Deposit Insurance Corporation or its successor if the
11-20 banking commissioner determines that deposit insurance is necessary
11-21 for the safe and sound operation of the bank;
11-22 (D) sells or attempts to sell substantially all
11-23 of its assets or merges or attempts to merge substantially all of
11-24 its assets or business with another entity other than as provided
11-25 by Chapter 3 of this Act; or
11-26 (E) attempts to dissolve or liquidate other than
11-27 as provided by Chapter 7 of this Act.
12-1 (32) "Investment security" means a marketable
12-2 obligation evidencing indebtedness of a person in the form of a
12-3 bond, note, debenture, or other debt instrument not otherwise
12-4 classified as a loan or extension of credit.
12-5 (33) "Limited banking association" means a state bank
12-6 that is organized as a limited banking association, authorized to
12-7 issue participation shares, and controlled by its participants.
12-8 (34) "Loans and extensions of credit" means direct or
12-9 indirect advances of funds by a state bank to a person that are
12-10 conditioned on the obligation of the person to repay the funds or
12-11 that are repayable from specific property pledged by or on behalf
12-12 of the person. The term includes a contractual liability of a
12-13 state bank to advance funds to or on behalf of a person,
12-14 indebtedness evidenced by a lease financing transaction in which
12-15 the bank is lessor, an overdraft funded by the bank on behalf of a
12-16 person except for an intra-day or daylight overdraft, or another
12-17 indebtedness not otherwise classified as an investment security.
12-18 The term does not include accrued and unpaid interest or discounted
12-19 interest.
12-20 (35) "Manager" means a person elected to the board of
12-21 a limited banking association.
12-22 (36) "Managing participant" means a participant in a
12-23 limited banking association in which management has been retained
12-24 by the participants.
12-25 (37) "National bank" means a banking association
12-26 organized under 12 U.S.C. Section 21.
12-27 (38) "Officer" means the presiding officer of the
13-1 board, the principal executive officer, or another officer
13-2 appointed by the board of a state bank or other company, or a
13-3 person or group of persons acting in a comparable capacity for the
13-4 state bank or other company.
13-5 (39) "Operating subsidiary" means a company for which
13-6 a state bank has the ownership, ability, or power to vote,
13-7 directly, acting through one or more other persons, or otherwise
13-8 indirectly, more than 50 percent of the outstanding shares of each
13-9 class of voting securities or its equivalent of the company.
13-10 (40) "Participant" means an owner of a participation
13-11 share in a limited banking association.
13-12 (41) "Participant-transferee" means a transferee of a
13-13 participation share who has not received the unanimous consent of
13-14 all participants to be a participant, or who becomes a
13-15 participant-transferee under Subchapter C, Chapter 4, of this Act.
13-16 (42) "Participation agreement" means the instrument
13-17 stating the agreement among the participants of a limited banking
13-18 association relating to the rights and duties of the participants
13-19 and participant-transferees, including allocations of income, loss,
13-20 deduction, credit, distributions, liquidation rights, redemption
13-21 rights, liabilities of participants, priority rights of
13-22 participant-transferees to transfer participation shares, rights of
13-23 participants to purchase participation shares of
13-24 participant-transferees, the procedures for elections and voting by
13-25 participants, and any other matter not prohibited by or
13-26 inconsistent with this Act.
13-27 (43) "Participation shares" means the units into which
14-1 the proprietary interests of a limited banking association are
14-2 divided or subdivided by means of classes, series, relative rights,
14-3 or preferences.
14-4 (44) "Person" means an individual or any legal entity.
14-5 (45) "Principal shareholder" means a person who owns
14-6 or has the ability or power to vote, directly, acting through one
14-7 or more other persons, or otherwise indirectly, 10 percent or more
14-8 of the outstanding shares or participation shares of any class of
14-9 voting securities of a bank or other company.
14-10 (46) "Regulatory accounting principles" means
14-11 generally accepted accounting principles as modified by rules
14-12 adopted under this Act or an applicable federal statute or
14-13 regulation.
14-14 (47) "Savings association" means a state or federal
14-15 savings association.
14-16 (48) "Savings bank" means a state or federal savings
14-17 bank.
14-18 (49) "Shareholder" means an owner of a share in a
14-19 banking association.
14-20 (50) "Shares" means the units into which the
14-21 proprietary interests of a banking association are divided or
14-22 subdivided by means of classes, series, relative rights, or
14-23 preferences.
14-24 (51) "State bank" means a banking association or
14-25 limited banking association organized or reorganized under this
14-26 Act, including an association organized under the laws of this
14-27 state before the effective date of this Act, with the express power
15-1 to receive and accept deposits and possessing other rights and
15-2 powers granted by this Act expressly or by implication. The term
15-3 does not include a savings association, savings bank, or credit
15-4 union.
15-5 (52) "State savings association" means a savings and
15-6 loan association organized under the laws of this state.
15-7 (53) "State savings bank" means a savings bank
15-8 organized under or subject to the Texas Savings Bank Act (Article
15-9 489e, Vernon's Texas Civil Statutes).
15-10 (54) "Subsidiary" means a bank or company that is
15-11 controlled by another person. The term includes a subsidiary of a
15-12 subsidiary.
15-13 (55) "Supervisor" means the banking commissioner or an
15-14 agent of the banking commissioner exercising the powers and duties
15-15 specified in Subchapter B, Chapter 6, of this Act.
15-16 (56) "Surplus" means the amount by which the assets of
15-17 a state bank exceed its liabilities, capital, and undivided
15-18 profits.
15-19 (57) "Unauthorized activity" means an act or practice
15-20 within this state by a person without a charter, license, permit,
15-21 registration, or other authority issued or granted by the banking
15-22 commissioner or other appropriate regulatory authority for which
15-23 such a charter, license, permit, registration, or other authority
15-24 is required.
15-25 (58) "Undivided profits" means the part of equity
15-26 capital of a state bank equal to the balance of its net profits,
15-27 income, gains, and losses since the date of its formation, minus
16-1 subsequent distributions to shareholders or participants and
16-2 transfers to surplus or capital under share dividends or
16-3 appropriate board resolutions. The term includes amounts allocated
16-4 to undivided profits as a result of a merger.
16-5 (59) "Voting security" means a share, participation
16-6 share, or other evidence of proprietary interest in a state bank or
16-7 other company that has as an attribute the right to vote or
16-8 participate in the election of the board of the state bank or other
16-9 company, regardless of whether the right is limited to the election
16-10 of fewer than all of the board members. The term includes a
16-11 security that is convertible or exchangeable into a voting security
16-12 and a nonvoting participation share of a managing participant.
16-13 (b) The definitions shall be liberally construed to
16-14 accomplish the purposes of this Act.
16-15 (c) The finance commission by rule may adopt other
16-16 definitions to accomplish the purposes of this Act.
16-17 Sec. 1.003. FINANCE COMMISSION. (a) The Finance Commission
16-18 of Texas is composed of nine members appointed by the governor with
16-19 the advice and consent of the senate.
16-20 (b) Members of the finance commission serve staggered terms
16-21 of six years with the terms of one-third of the members expiring on
16-22 February 1 of each even-numbered year.
16-23 (c) An appointment to the finance commission must be made
16-24 without regard to the race, color, age, sex, religion, disability,
16-25 or national origin of the appointee.
16-26 (d) On taking office a member of the finance commission
16-27 shall take an oath of office to discharge faithfully the duties of
17-1 the finance commission and uphold the constitution and laws of this
17-2 state and the United States.
17-3 Sec. 1.004. QUALIFICATIONS OF MEMBERS. (a) A member of the
17-4 finance commission must be a resident and registered voter of this
17-5 state. Not more than two members may be residents of the same
17-6 state senatorial district.
17-7 (b) Two members of the finance commission must be banking
17-8 executives and two members of the finance commission must be
17-9 savings executives.
17-10 (c) The five members of the finance commission who are not
17-11 banking executives or savings executives must be selected by the
17-12 governor on the basis of recognized business ability. Those
17-13 members may not be banking executives, savings executives, or
17-14 controlling shareholders in a bank, savings association, or savings
17-15 bank. At least one of those members must be a certified public
17-16 accountant.
17-17 (d) A member or employee of the finance commission may not
17-18 be:
17-19 (1) an officer, employee, or paid consultant of a
17-20 trade association representing an industry regulated by the finance
17-21 commission, the banking commissioner, the savings and loan
17-22 commissioner, or the consumer credit commissioner;
17-23 (2) a person required to register as a lobbyist under
17-24 Chapter 305, Government Code, because of activities for a member of
17-25 an industry described by Subdivision (1) of this subsection; or
17-26 (3) related within the second degree by affinity or
17-27 consanguinity, as determined under Chapter 573, Government Code, to
18-1 a person who is an officer, employee, or paid consultant of a trade
18-2 association representing an industry described by Subdivision (1)
18-3 of this subsection.
18-4 (e) For the purposes of this section:
18-5 (1) "Banking executive" means a person who:
18-6 (A) has had five years' or more executive
18-7 experience in a bank during the seven-year period preceding the
18-8 person's appointment; and
18-9 (B) at the time of the person's appointment is
18-10 an officer of a state bank.
18-11 (2) "Savings executive" means a person who:
18-12 (A) has had five years' or more executive
18-13 experience in a savings association or savings bank during the
18-14 seven-year period preceding the person's appointment; and
18-15 (B) at the time of the person's appointment is
18-16 an officer of a state savings association or savings bank.
18-17 (f) Experience as banking commissioner, deputy banking
18-18 commissioner, examiner, or supervisor of examiners for a state or
18-19 federal banking regulatory agency satisfies the executive
18-20 experience requirement of Subsection (e)(1)(A) of this section.
18-21 Experience as savings and loan commissioner, deputy savings and
18-22 loan commissioner, examiner, or supervisor of examiners for a state
18-23 or federal savings and loan regulatory agency satisfies the
18-24 executive experience requirement of Subsection (e)(2)(A) of this
18-25 section.
18-26 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES. (a) A ground
18-27 for removal from the finance commission exists if a member:
19-1 (1) did not have at the time of appointment the
19-2 qualifications required by Section 1.004 of this Act for
19-3 appointment to the finance commission;
19-4 (2) does not maintain the qualifications required by
19-5 Section 1.004 of this Act during service on the finance commission;
19-6 (3) violates a prohibition established by Section
19-7 1.007 of this Act;
19-8 (4) cannot discharge the member's duties for a
19-9 substantial part of the term for which the member is appointed
19-10 because of illness or disability; or
19-11 (5) is absent from more than half of the regularly
19-12 scheduled finance commission meetings that the member is eligible
19-13 to attend during a calendar year unless the absence is excused by
19-14 majority vote of the finance commission.
19-15 (b) If a vacancy occurs on the finance commission for any
19-16 cause, the governor shall appoint a qualified person to fill the
19-17 unexpired term.
19-18 (c) If the executive director of the finance commission has
19-19 knowledge that a potential ground for removal exists, the executive
19-20 director shall notify the presiding officer of the finance
19-21 commission of the ground. The presiding officer shall then notify
19-22 the governor that a potential ground for removal exists.
19-23 (d) The validity of an action of the finance commission is
19-24 not affected by the fact that it was taken when a ground for
19-25 removal of a member of the finance commission existed.
19-26 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS. A member
19-27 of the finance commission is entitled to:
20-1 (1) reimbursement for reasonable and necessary
20-2 expenses incidental to travel incurred in connection with the
20-3 performance of official duties; and
20-4 (2) per diem as set by legislative appropriation for
20-5 each day that the member engages in the business of the finance
20-6 commission.
20-7 Sec. 1.007. DISQUALIFICATION OF MEMBERS. A member of the
20-8 finance commission may not act or participate in the portion of a
20-9 finance commission meeting during which the matter under
20-10 consideration specifically relates to an entity of which the member
20-11 or the member's spouse is an officer, director, stockholder,
20-12 shareholder, manager, participant, participant-transferee, owner,
20-13 or otherwise financially interested.
20-14 Sec. 1.008. MEETINGS. (a) The finance commission shall
20-15 hold at least six regular public meetings during each calendar year
20-16 on dates set by the finance commission. The presiding officer or
20-17 three members of the finance commission may call special public
20-18 meetings of the finance commission. A majority of the members of
20-19 the finance commission constitutes a quorum for the purpose of
20-20 transacting any business coming before the finance commission.
20-21 (b) The finance commission may hold an open or closed
20-22 meeting by telephone conference call if:
20-23 (1) the meeting is a special called meeting and
20-24 immediate action is required;
20-25 (2) the convening at one location of a quorum of the
20-26 finance commission is difficult or impossible;
20-27 (3) notice is given for the telephone conference call
21-1 meeting as for other meetings, specifying a location for the
21-2 meeting at which the public may attend;
21-3 (4) each part of the telephone conference call meeting
21-4 that is required to be open to the public is audible to the public
21-5 at the location specified in the notice of the meeting; and
21-6 (5) the telephone conference call meeting is tape
21-7 recorded and the tape recording of each portion of the meeting that
21-8 is required to be open to the public is made available to the
21-9 public.
21-10 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. (a)
21-11 The finance commission is subject to Chapters 551 and 2001,
21-12 Government Code.
21-13 (b) Notwithstanding Subsection (a) of this section, the
21-14 finance commission is not required to conduct an open meeting to
21-15 deliberate a matter made confidential by law.
21-16 Sec. 1.010. PRESIDING OFFICER. The governor shall appoint a
21-17 member of the finance commission as presiding officer of the
21-18 finance commission. The presiding officer serves at the will of
21-19 the governor. Subject to Section 1.007 of this Act, the presiding
21-20 officer is entitled to vote on all matters. The presiding officer
21-21 shall preside at all public meetings of the finance commission and
21-22 provide for the keeping of minutes of the proceedings of those
21-23 meetings. The presiding officer may:
21-24 (1) adopt rules and procedures of the finance
21-25 commission as the presiding officer considers necessary for the
21-26 orderly operation of the finance commission and for communication
21-27 among the finance commission, the department, the Savings and Loan
22-1 Department, and the Office of Consumer Credit Commissioner;
22-2 (2) adopt internal procedures governing the time and
22-3 place of meetings, the character of notice of special public
22-4 meetings, the manner in which public meetings are to be conducted,
22-5 and other similar matters; and
22-6 (3) appoint committees composed of finance commission
22-7 members as the presiding officer considers necessary to carry out
22-8 the finance commission's business.
22-9 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES. (a) The
22-10 finance commission may designate the banking commissioner, the
22-11 savings and loan commissioner, the consumer credit commissioner, or
22-12 another person to serve full- or part-time as executive director of
22-13 the finance commission to facilitate its oversight of the
22-14 department, Savings and Loan Department, and Office of Consumer
22-15 Credit Commissioner. The executive director serves as executive
22-16 director at the pleasure of the finance commission, is responsible
22-17 for staff supervision, support, and coordination, and may be
22-18 separately compensated for those duties. The executive director
22-19 shall:
22-20 (1) develop the agenda for finance commission meetings
22-21 and supervise arrangements for the meetings;
22-22 (2) respond or coordinate responses to finance
22-23 commission requests for information and reports;
22-24 (3) coordinate the activities of committees of the
22-25 finance commission;
22-26 (4) supervise and evaluate the performance of staff
22-27 employed under this section; and
23-1 (5) maintain the permanent record of all finance
23-2 commission meetings and actions.
23-3 (b) The finance commission may employ a hearings officer and
23-4 an internal auditor to provide services to and facilitate finance
23-5 commission oversight and control over the department, Savings and
23-6 Loan Department, and Office of Consumer Credit Commissioner. For
23-7 the purposes of Section 2003.021, Government Code, a hearings
23-8 officer employed under this section is considered to be an employee
23-9 of each agency for which hearing services are provided and whose
23-10 only duty is to preside over matters related to contested cases
23-11 before the agency.
23-12 (c) The executive director, the hearings officer, the
23-13 internal auditor, and any other staff employed under this section
23-14 are not subject to direction by the department, Savings and Loan
23-15 Department, or Office of Consumer Credit Commissioner.
23-16 (d) The finance commission shall reduce administrative costs
23-17 through the sharing of support staff, equipment, and facilities
23-18 among the department, Savings and Loan Department, and Office of
23-19 Consumer Credit Commissioner to the extent that the sharing
23-20 contributes to cost efficiency without detracting from the staff
23-21 expertise needed for individual areas of agency responsibility.
23-22 The finance commission may employ staff and purchase equipment and
23-23 facilities to meet these objectives and fund its activities through
23-24 appropriations or as provided by Chapter 771, Government Code.
23-25 (e) An interagency agreement regarding shared staff must
23-26 provide that the fully allocated cost of each member of shared
23-27 staff other than the executive director will be charged to the
24-1 department, Savings and Loan Department, and Office of Consumer
24-2 Credit Commissioner in proportion to the amount of time devoted to
24-3 each agency's business. The cost of the executive director and the
24-4 unallocated cost of operation of the finance commission must be
24-5 shared by the department, Savings and Loan Department, and Office
24-6 of Consumer Credit Commissioner in proportion to the amount of cash
24-7 receipts of each of those agencies.
24-8 Sec. 1.012. BANKING RULES. (a) The finance commission may
24-9 adopt rules to accomplish the purposes of this Act, including rules
24-10 necessary or reasonable to:
24-11 (1) implement and clarify this Act;
24-12 (2) preserve or protect the safety and soundness of
24-13 state banks;
24-14 (3) grant the same rights and privileges to state
24-15 banks that are or may be granted to national banks domiciled in
24-16 this state;
24-17 (4) provide for recovery of the cost of maintenance
24-18 and operation of the department and the cost of enforcing this Act
24-19 through the imposition and collection of ratable and equitable fees
24-20 for notices, applications, and examinations; and
24-21 (5) facilitate the fair hearing and adjudication of
24-22 matters before the banking commissioner and the finance commission.
24-23 (b) In adopting the rules, the finance commission shall
24-24 consider the need to:
24-25 (1) promote a stable banking environment;
24-26 (2) provide the public with convenient, safe, and
24-27 competitive banking services;
25-1 (3) preserve and promote the competitive parity of
25-2 state banks with national banks and other depository institutions
25-3 in this state consistent with the safety and soundness of state
25-4 banks and the state bank system; and
25-5 (4) allow for economic development within this state.
25-6 (c) The presence or absence in this Act of a specific
25-7 reference to rules regarding a particular subject does not enlarge
25-8 or diminish the rulemaking authority conferred by this section.
25-9 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
25-10 REGULATIONS. (a) The finance commission may adopt rules
25-11 applicable to state savings associations or to savings banks and
25-12 may authorize state savings associations and savings banks to
25-13 invest their funds in any manner permitted for a federal savings
25-14 association or federal savings bank domiciled in this state. This
25-15 authority may not be construed to confer authority to abridge,
25-16 diminish, or limit a right or power specifically given to state
25-17 savings associations or savings banks by state law.
25-18 (b) The finance commission may also adopt rules to:
25-19 (1) prevent state savings associations or savings
25-20 banks from concentrating an excessive or unreasonable portion of
25-21 their resources in a type or character of loan or security
25-22 authorized by the Texas Savings and Loan Act (Article 852a,
25-23 Vernon's Texas Civil Statutes) or the Texas Savings Bank Act
25-24 (Article 489e, Vernon's Texas Civil Statutes); and
25-25 (2) establish standards for investments by state
25-26 savings associations or savings banks, including limits on the
25-27 amount that a state savings association or savings bank may invest
26-1 in a type or character of investment to an amount or percentage of
26-2 the savings association's or savings bank's assets or net worth.
26-3 (c) Information regarding the financial condition of a state
26-4 savings association or savings bank obtained through examination or
26-5 otherwise may not be disclosed to a member of the finance
26-6 commission, except that the savings and loan commissioner may
26-7 disclose to the finance commission a file or record pertinent to a
26-8 hearing or matter pending before the finance commission.
26-9 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS. The
26-10 finance commission may adopt rules necessary for supervising the
26-11 consumer credit commissioner and for ensuring compliance with Title
26-12 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
26-13 Civil Statutes).
26-14 Sec. 1.015. SUNSET PROVISION. The finance commission is
26-15 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
26-16 continued in existence as provided by that chapter, the commission
26-17 is abolished September 1, 2001.
26-18 (Sections 1.016-1.100 reserved for expansion)
26-19 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
26-20 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. The finance
26-21 commission, by at least five affirmative votes, shall appoint a
26-22 savings and loan commissioner, who serves at the pleasure of the
26-23 finance commission, as an employee of the commission, and subject
26-24 to its orders and direction. The savings and loan commissioner is
26-25 the chief executive officer of the Savings and Loan Department.
26-26 The savings and loan commissioner must have not less than seven
26-27 years' experience in the executive management of a savings
27-1 association or savings bank or in savings association or savings
27-2 bank supervision. The finance commission shall set the
27-3 compensation of the savings and loan commissioner, which shall be
27-4 paid from funds of the Savings and Loan Department.
27-5 Sec. 1.102. DEPUTY COMMISSIONERS. The savings and loan
27-6 commissioner shall appoint one or more deputy savings and loan
27-7 commissioners. One deputy savings and loan commissioner must have
27-8 the qualifications required of the savings and loan commissioner.
27-9 That deputy savings and loan commissioner has the powers and shall
27-10 perform the duties of the savings and loan commissioner during the
27-11 absence or inability of the savings and loan commissioner. The
27-12 savings and loan commissioner shall also appoint savings
27-13 association and savings bank examiners.
27-14 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
27-15 Subject to Subsection (b) of this section, each officer and
27-16 employee of the Savings and Loan Department is entitled to
27-17 compensation fixed by the finance commission, which shall be paid
27-18 from the funds of the Savings and Loan Department.
27-19 (b) Chapter 654, Government Code, applies to a position of
27-20 the Savings and Loan Department only if it is classified in salary
27-21 groups 1-10 under the General Appropriations Act. The legislature
27-22 in the General Appropriations Act may determine the total amount
27-23 appropriated to the Savings and Loan Department but may not
27-24 determine the number or salaries of employees other than the
27-25 positions specifically subject to Chapter 654, Government Code, as
27-26 provided by this section. The finance commission, subject to the
27-27 limits provided by this section, shall otherwise determine the
28-1 number of employees of the Savings and Loan Department and the
28-2 salaries of those employees. The Savings and Loan Department may
28-3 use funds appropriated to it for any purpose to pay the salaries
28-4 determined by the finance commission.
28-5 Sec. 1.104. OATH OF OFFICE. Before assuming the duties of
28-6 office, the savings and loan commissioner, each deputy savings and
28-7 loan commissioner, examiner, assistant examiner, conservator,
28-8 supervisor, and special agent, and each other officer or employee
28-9 specified by the savings and loan commissioner must take an oath of
28-10 office to discharge faithfully the duties assigned and uphold the
28-11 constitution and laws of this state and the United States.
28-12 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. The savings
28-13 and loan commissioner shall:
28-14 (1) supervise and regulate the organization,
28-15 operation, and liquidation of state savings associations, as
28-16 provided by the Texas Savings and Loan Act (Article 852a, Vernon's
28-17 Texas Civil Statutes), and state savings banks, as provided by the
28-18 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
28-19 Statutes); and
28-20 (2) enforce those acts in person or through a deputy
28-21 savings and loan commissioner, examiner, supervisor, conservator,
28-22 or other agent.
28-23 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a) The
28-24 savings and loan commissioner and the finance commission shall
28-25 establish reasonable and necessary fees for the administration of
28-26 the Texas Savings and Loan Act (Article 852a, Vernon's Texas Civil
28-27 Statutes) and the Texas Savings Bank Act (Article 489e, Vernon's
29-1 Texas Civil Statutes) and for the support of the finance commission
29-2 as provided by Section 1.011 of this Act.
29-3 (b) The savings and loan commissioner shall collect all
29-4 fees, penalties, charges, and revenues required to be paid by state
29-5 savings associations and savings banks and shall from time to time,
29-6 as directed by the finance commission, submit to the commission a
29-7 full and complete report of the receipts and expenditures of the
29-8 Savings and Loan Department.
29-9 (c) The financial transactions of the Savings and Loan
29-10 Department are subject to audit by the state auditor as provided by
29-11 Chapter 321, Government Code, and the actual costs of any audit
29-12 shall be paid to the state auditor from the funds of the Savings
29-13 and Loan Department.
29-14 (d) All money paid to the Savings and Loan Department from
29-15 all sources shall be deposited in the state treasury to the credit
29-16 of the Savings and Loan Department expense fund, which may be used
29-17 only for the expenses incurred by the Savings and Loan Department
29-18 and finance commission. All expenses incurred by the Savings and
29-19 Loan Department shall be paid only from the fund.
29-20 Sec. 1.107. CONFLICTS OF LAW. If this subchapter conflicts
29-21 with the Texas Savings and Loan Act (Article 852a, Vernon's Texas
29-22 Civil Statutes) or the Texas Savings Bank Act (Article 489e,
29-23 Vernon's Texas Civil Statutes), this subchapter controls.
29-24 Sec. 1.108. CONFLICTS OF INTEREST. (a) An officer or
29-25 employee of the Savings and Loan Department may not be an officer,
29-26 employee, or paid consultant of a trade association in the savings
29-27 association industry or the savings bank industry.
30-1 (b) An officer or employee of the Savings and Loan
30-2 Department may not be related within the second degree by affinity
30-3 or consanguinity, as determined under Chapter 573, Government Code,
30-4 to a person who is an officer, employee, or paid consultant of a
30-5 trade association in the savings association industry or the
30-6 savings bank industry.
30-7 (c) Before the 11th day after the date on which an employee
30-8 begins employment with the Savings and Loan Department, the
30-9 employee shall read the conflict-of-interest statutes applicable to
30-10 employees of the Savings and Loan Department and sign a notarized
30-11 affidavit stating that the employee has read those statutes.
30-12 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS. (a) The
30-13 savings and loan commissioner shall prepare information of consumer
30-14 interest describing the regulatory functions of the Savings and
30-15 Loan Department and describing the procedures by which consumer
30-16 complaints are filed with and resolved by the Savings and Loan
30-17 Department. The information must be made available to the general
30-18 public and appropriate state agencies.
30-19 (b) The Savings and Loan Department shall keep an
30-20 information file about each filed complaint relating to a state
30-21 savings association or savings bank.
30-22 (c) If a written complaint is filed with the Savings and
30-23 Loan Department relating to a state savings association or savings
30-24 bank, at least as frequently as quarterly and until final
30-25 disposition of the complaint, the Savings and Loan Department shall
30-26 notify the parties to the complaint of the status of the complaint
30-27 unless the notice would jeopardize an undercover investigation.
31-1 Sec. 1.110. SUNSET PROVISION. The office of savings and
31-2 loan commissioner and the Savings and Loan Department are subject
31-3 to Chapter 325, Government Code (Texas Sunset Act). Unless
31-4 continued in existence as provided by that chapter, the office and
31-5 department are abolished September 1, 2001.
31-6 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
31-7 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
31-8 Sec. 2.001. BANKING COMMISSIONER .............................. 32
31-9 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT ............... 32
31-10 Sec. 2.003. DEPUTY BANKING COMMISSIONER ....................... 33
31-11 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS ........... 33
31-12 Sec. 2.005. DUTIES OF BANKING COMMISSIONER .................... 33
31-13 Sec. 2.006. AUDITS; FEES AND REVENUES ......................... 33
31-14 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS .............. 34
31-15 Sec. 2.008. EXAMINATION ....................................... 35
31-16 Sec. 2.009. CALL REPORTS ...................................... 37
31-17 Sec. 2.010. LIABILITIES ....................................... 37
31-18 Sec. 2.011. OFFENSES .......................................... 38
31-19 Sec. 2.012. CONFLICT OF INTEREST .............................. 39
31-20 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS ............... 39
31-21 Sec. 2.014. SUNSET PROVISION .................................. 40
31-22 (Sections 2.015-2.100 reserved for expansion)
31-23 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
31-24 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED ............... 40
31-25 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION .................. 41
31-26 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES ...................... 41
31-27 Sec. 2.104. OTHER DISCLOSURE PROHIBITED ....................... 42
32-1 Sec. 2.105. CIVIL DISCOVERY ................................... 42
32-2 Sec. 2.106. INVESTIGATIVE INFORMATION ......................... 42
32-3 Sec. 2.107. EMPLOYMENT INFORMATION ............................ 43
32-4 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS ..................... 43
32-5 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
32-6 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
32-7 Sec. 2.001. BANKING COMMISSIONER. The finance commission,
32-8 by at least five affirmative votes, shall appoint a banking
32-9 commissioner who serves at the pleasure of the finance commission,
32-10 as an employee of the finance commission, and subject to the
32-11 finance commission's orders and directions. The banking
32-12 commissioner must have not less than seven years' experience in
32-13 banking or bank supervision and shall serve as the chief executive
32-14 officer of the Texas Department of Banking. The finance commission
32-15 shall set the compensation of the banking commissioner, which shall
32-16 be paid from funds of the department.
32-17 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Chapter
32-18 654, Government Code, applies to a position of the department only
32-19 if it is classified in salary groups 1-10 under the currently
32-20 effective General Appropriations Act. The legislature in the
32-21 General Appropriations Act may determine the total amount
32-22 appropriated to the department but may not determine the number or
32-23 salaries of employees of the department other than positions
32-24 subject to Chapter 654, Government Code. The finance commission,
32-25 subject to the limits provided by this section, shall otherwise
32-26 determine the number of employees of the department and the
32-27 salaries of those employees. The department may use funds
33-1 appropriated to it for any purpose to pay the salaries determined
33-2 by the finance commission.
33-3 Sec. 2.003. DEPUTY BANKING COMMISSIONER. The banking
33-4 commissioner shall appoint a deputy banking commissioner who must
33-5 have the qualifications required of the banking commissioner.
33-6 During the absence or inability of the banking commissioner, the
33-7 deputy banking commissioner has the powers and shall perform the
33-8 duties of the banking commissioner.
33-9 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS. Before
33-10 assuming the duties of office, the banking commissioner, the deputy
33-11 banking commissioner, and each examiner, assistant examiner,
33-12 conservator, supervisor, special agent, and other officer or
33-13 employee specified by the banking commissioner must take an oath of
33-14 office to discharge faithfully the duties assigned and uphold the
33-15 constitution and laws of this state and of the United States.
33-16 Sec. 2.005. DUTIES OF BANKING COMMISSIONER. The banking
33-17 commissioner shall:
33-18 (1) supervise and regulate, as provided by this Act,
33-19 state banks, trust companies, and state-licensed foreign bank
33-20 agencies;
33-21 (2) administer and enforce this Act in person or
33-22 through the deputy banking commissioner or an examiner, supervisor,
33-23 conservator, or other agent; and
33-24 (3) administer and enforce laws other than this Act as
33-25 directed by the legislature.
33-26 Sec. 2.006. AUDITS; FEES AND REVENUES. (a) The department
33-27 is subject to audit by the state auditor as provided by Chapter
34-1 321, Government Code, and the actual costs of an audit shall be
34-2 paid to the state auditor from the funds of the department.
34-3 (b) The finance commission shall establish reasonable and
34-4 necessary fees for the administration of this Act.
34-5 (c) All money paid to the department under this Act shall be
34-6 deposited in the state treasury to the credit of the Department of
34-7 Banking expense fund and may be used only for the administration of
34-8 the statutory duties of the department and finance commission under
34-9 this Act. All expenses incurred by the department in administering
34-10 this Act shall be paid only from the fund.
34-11 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
34-12 banking commissioner may issue interpretive statements containing
34-13 matters of general policy for the guidance of state banks. The
34-14 banking commissioner shall file the statements for publication in
34-15 the Texas Register. The banking commissioner may amend or repeal a
34-16 published interpretive statement by issuing an amended statement or
34-17 notice of repeal of a statement and filing the statement or notice
34-18 for publication in the Texas Register. The secretary of state
34-19 shall publish the filed statements and notices in the Texas
34-20 Register and in a designated chapter of the Texas Administrative
34-21 Code.
34-22 (b) The banking commissioner may issue opinions in response
34-23 to specific requests from members of the public or the banking
34-24 industry directly or through the deputy banking commissioner or the
34-25 department's attorneys. If the banking commissioner determines
34-26 that the opinion is useful for the general guidance of state banks
34-27 or trust companies, the banking commissioner may file the opinion
35-1 for publication in the Texas Register. A published opinion must be
35-2 redacted in a manner that preserves the confidentiality of the
35-3 requesting party, unless the requesting party consents to be
35-4 identified in the published opinion. The banking commissioner may
35-5 amend or repeal a published opinion by issuing an amended opinion
35-6 or notice of repeal of an opinion and filing the opinion or notice
35-7 for publication in the Texas Register, except that the requesting
35-8 party may rely on the original opinion if all material facts were
35-9 originally disclosed to the banking commissioner, considerations of
35-10 safety and soundness of the affected bank are not implicated with
35-11 respect to further and prospective reliance on the original
35-12 opinion, and the text and interpretation of relevant, governing
35-13 provisions of this Act have not been changed by legislative or
35-14 judicial action. The secretary of state shall publish the filed
35-15 opinions and notices in the Texas Register and a designated chapter
35-16 of the Texas Administrative Code.
35-17 (c) An interpretive statement or opinion issued under this
35-18 section does not have the force of law and is not a rule for the
35-19 purposes of Chapter 2001, Government Code, unless adopted by the
35-20 finance commission as provided by Chapter 2001, Government Code.
35-21 An interpretive statement or opinion is an administrative
35-22 construction of this Act entitled to great weight if the
35-23 construction is reasonable and does not conflict with this Act.
35-24 Sec. 2.008. EXAMINATION. (a) The banking commissioner
35-25 shall examine each state bank annually or more often as the banking
35-26 commissioner considers necessary to safeguard the interests of
35-27 depositors, creditors, shareholders, participants, and
36-1 participant-transferees and to enforce this Act. The banking
36-2 commissioner may defer an examination for not more than six months
36-3 if the banking commissioner considers the deferment necessary for
36-4 the efficient enforcement of this Act. The banking commissioner
36-5 may accept examinations of a state bank by a federal or other
36-6 governmental agency in lieu of an examination under this section or
36-7 may conduct examinations of a state bank jointly with a federal or
36-8 other governmental agency.
36-9 (b) Each state bank shall pay the cost of examination, the
36-10 equitable or proportionate cost of maintenance and operation of the
36-11 department, and the cost of enforcement of this Act through the
36-12 imposition and collection of fees established by the finance
36-13 commission under Section 1.012(a)(4) of this Act.
36-14 (c) The performance of data processing, electronic fund
36-15 transfers, or other bank services on behalf of a state bank by a
36-16 third-party contractor, other than a national bank, and the
36-17 activities of a state bank affiliate are subject to regulation and
36-18 examination by the banking commissioner to the same extent as if
36-19 the services or activities were performed by that state bank on its
36-20 own premises. The banking commissioner may collect a fee from an
36-21 examined contractor or affiliate in connection with each
36-22 examination to cover the cost of the examination or may collect
36-23 that fee from the state banks using the third-party contractor.
36-24 For purposes of this subsection, a state bank affiliate does not
36-25 include a company in which ownership or membership is limited to
36-26 individuals and conditioned by law on the existence and maintenance
36-27 of professional licensing.
37-1 (d) The banking commissioner may administer oaths and
37-2 examine persons under oath on any subject that the banking
37-3 commissioner considers pertinent to the financial condition or the
37-4 safety and soundness of the activities of a state bank.
37-5 Sec. 2.009. CALL REPORTS. (a) Except as provided by
37-6 Subsection (b) of this section, each state bank shall periodically
37-7 file with the banking commissioner a copy of its call report
37-8 stating the bank's financial condition and results of operation.
37-9 (b) The finance commission may by rule:
37-10 (1) specify the form of a call report, including
37-11 specified confidential and public information to be in the call
37-12 report;
37-13 (2) require public information in call reports of
37-14 state banks to be published at the times and in the publications
37-15 and locations the finance commission determines; and
37-16 (3) require call reports to be filed with the banking
37-17 commissioner at the intervals the finance commission determines.
37-18 (c) A state bank that fails to timely file its call report
37-19 as required by this section is subject to a penalty not exceeding
37-20 $500 a day to be collected by suit by the attorney general on
37-21 behalf of the banking commissioner.
37-22 Sec. 2.010. LIABILITIES. (a) The banking commissioner,
37-23 each member of the finance commission, the deputy banking
37-24 commissioner, or an examiner, assistant examiner, supervisor,
37-25 conservator, agent, or other officer or employee of the department,
37-26 is not personally liable for damages arising from the person's
37-27 official act or omission, unless the act or omission is corrupt or
38-1 malicious.
38-2 (b) The attorney general shall defend an action brought
38-3 against a person because of an official act or omission under
38-4 Subsection (a) of this section, regardless of whether the defendant
38-5 has terminated service with the department before the action
38-6 commences.
38-7 Sec. 2.011. OFFENSES. (a) The banking commissioner or an
38-8 officer or employee of the department commits an offense if the
38-9 person knowingly:
38-10 (1) discloses information or permits access to a file
38-11 or record of the department in violation of Subchapter B of this
38-12 chapter;
38-13 (2) becomes directly or indirectly indebted to, or
38-14 financially interested in, a state bank, foreign bank agency, or
38-15 trust company; or
38-16 (3) purchases an asset owned by a state bank or trust
38-17 company in the possession of the banking commissioner or other
38-18 receiver for purposes of liquidation.
38-19 (b) An offense under this section is a Class A misdemeanor.
38-20 (c) A department employee, other than the banking
38-21 commissioner and deputy banking commissioner, does not commit an
38-22 offense under Subsection (a)(2) solely because the spouse of or
38-23 other person related to the officer or employee is employed by a
38-24 state bank and participates in an employee benefit plan, including
38-25 an employee stock option, bonus, or ownership plan, or other plan
38-26 the sole purpose of which is to compensate employees of the bank
38-27 for services rendered with an ownership interest in the bank.
39-1 (d) The banking commissioner shall adopt a policy requiring
39-2 each employee of the department to notify the banking commissioner
39-3 in writing of an employment relationship described by Subsection
39-4 (c) of this section, and to be recused from all matters affecting
39-5 the employing bank until the employment relationship is terminated
39-6 or the spouse or related person no longer owns equity securities
39-7 issued by the bank. Not later than one year after the date the
39-8 employment relationship described by Subsection (c) of this section
39-9 ends, the spouse or related person must divest ownership of equity
39-10 securities issued by the bank.
39-11 Sec. 2.012. CONFLICT OF INTEREST. (a) An officer or
39-12 employee of the department may not be an officer, employee, or paid
39-13 consultant of a trade association in an industry regulated by the
39-14 department.
39-15 (b) An officer or employee of the department may not be
39-16 related within the second degree by affinity or consanguinity, as
39-17 determined under Chapter 573, Government Code, to a person who is
39-18 an officer, employee, or paid consultant of a trade association in
39-19 an industry regulated by the department.
39-20 (c) Before the 11th day after the date on which an employee
39-21 begins employment with the department, the employee shall read the
39-22 conflict of interest statutes applicable to employees of the
39-23 department and sign a notarized affidavit stating that the employee
39-24 has read those statutes.
39-25 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a) The
39-26 banking commissioner shall prepare information of consumer interest
39-27 describing the regulatory functions of the department and
40-1 describing the department's procedures by which consumer complaints
40-2 are filed with and resolved by the department. The banking
40-3 commissioner shall make the information available to the general
40-4 public and appropriate state agencies.
40-5 (b) The banking commissioner shall keep an information file
40-6 about each complaint filed with the banking commissioner relating
40-7 to any entity regulated by the department.
40-8 (c) If a written complaint is filed with the banking
40-9 commissioner relating to any entity regulated by the department,
40-10 the banking commissioner, at least as frequently as quarterly and
40-11 until final disposition of the complaint, shall notify the parties
40-12 to the complaint of the status of the complaint unless the notice
40-13 would jeopardize an undercover investigation.
40-14 Sec. 2.014. SUNSET PROVISION. The office of banking
40-15 commissioner is subject to Chapter 325, Government Code (Texas
40-16 Sunset Act). Unless continued in existence as provided by that
40-17 chapter, the office is abolished September 1, 2001.
40-18 (Sections 2.015-2.100 reserved for expansion)
40-19 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
40-20 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
40-21 (a) Information obtained directly or indirectly by the department
40-22 relative to the financial condition or business affairs of a
40-23 financial institution, or a present, former, or prospective
40-24 shareholder, participant, officer, director, manager, affiliate, or
40-25 service provider of a financial institution, other than the public
40-26 portions of call reports and profit and loss statements, whether
40-27 obtained through application, examination, or otherwise, except
41-1 published statements, and all related files and records of the
41-2 department are confidential and may not be disclosed by the banking
41-3 commissioner or an employee of the department except as expressly
41-4 provided otherwise by this Act or rules adopted under this Act.
41-5 (b) Information obtained by the department from a federal or
41-6 state regulatory agency that is confidential under federal or state
41-7 law may not be disclosed except as provided by federal or state
41-8 law.
41-9 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
41-10 information may not be disclosed to a member of the finance
41-11 commission, and a member of the finance commission may not be given
41-12 access to the files and records of the department except that the
41-13 banking commissioner may disclose to the finance commission
41-14 information, files, and records pertinent to a hearing or matter
41-15 pending before the finance commission.
41-16 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
41-17 and execution of an appropriate confidentiality agreement approved
41-18 by the banking commissioner, the banking commissioner may disclose
41-19 to a federal banking regulatory agency confidential information
41-20 relative to a financial institution within the agency's
41-21 jurisdiction, or an affiliate or service provider of the financial
41-22 institution, and may permit the agency access to files and records
41-23 or reports relating to the financial institution or its affiliate
41-24 or service provider.
41-25 (b) The banking commissioner may, if the banking
41-26 commissioner considers it necessary or proper to the enforcement of
41-27 the laws of this state, another state, the United States, or a
42-1 foreign sovereign state, or to the best interest of the public,
42-2 disclose or authorize release of confidential information to
42-3 another department of this state, another state, the United States,
42-4 a foreign sovereign state, or any related agency or
42-5 instrumentality.
42-6 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
42-7 information that is provided to a financial institution, affiliate,
42-8 or service provider of a financial institution, whether in the form
42-9 of a report of examination or otherwise, is the confidential
42-10 property of the department. The information may not be made public
42-11 or disclosed by the recipient or by its officers, directors,
42-12 managers, employees, or agents to a person not officially connected
42-13 to the recipient as officer, director, employee, attorney, auditor,
42-14 or independent auditor except as authorized by rules adopted under
42-15 this Act. A disclosure or use of the information in violation of
42-16 this section is an offense punishable as provided for an offense
42-17 under Section 37.10, Penal Code.
42-18 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
42-19 information from a person subject to this subchapter pursuant to
42-20 subpoena or other legal process must comply with rules adopted
42-21 under this Act and other applicable law. The rules may restrict
42-22 release of confidential information to solely that portion directly
42-23 relevant to the legal dispute at issue and may require that a
42-24 protective order, in form and under circumstances specified by the
42-25 rules, be issued by a court of competent jurisdiction before
42-26 release of the confidential information.
42-27 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
43-1 other law, the banking commissioner may refuse to release
43-2 information or records in the custody of the department if, in the
43-3 opinion of the banking commissioner, release of the information or
43-4 records might jeopardize an ongoing investigation of potentially
43-5 unlawful activities.
43-6 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
43-7 employment information to a financial institution or to a person
43-8 providing employment information to a financial institution
43-9 concerning the known or suspected involvement of a present or
43-10 former employee, officer, or director in a violation of any state
43-11 or federal law, rule, or regulation that has been reported to
43-12 appropriate state or federal authorities. The person may not be
43-13 held liable for providing that information unless the information
43-14 provided is false and the person provided the information with
43-15 disregard for the truth.
43-16 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
43-17 Notwithstanding Article 2.44, Texas Business Corporation Act, a
43-18 shareholder or participant of a state bank may not examine:
43-19 (1) a report of examination or other confidential
43-20 property of the department that is in the possession of the state
43-21 bank; or
43-22 (2) a book or record of the state bank that directly
43-23 or indirectly pertains to financial or other information maintained
43-24 by the bank on behalf of its customers, including a specific item
43-25 in the minutes of the board or a committee of the board regarding
43-26 loan review and approval or a loan delinquency report that would
43-27 tend to identify the bank's customer.
44-1 (b) This section does not affect the rights of a shareholder
44-2 or participant of a state bank when acting in another capacity.
44-3 CHAPTER 3. POWERS; ORGANIZATION AND
44-4 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
44-5 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
44-6 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS ............ 46
44-7 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK ............. 47
44-8 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER ................ 49
44-9 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER
44-10 APPLICATION ..................................... 50
44-11 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION ....... 51
44-12 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY .............. 52
44-13 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL
44-14 BUSINESS CORPORATIONS ........................... 53
44-15 Sec. 3.008. BANKING COMMISSIONER HEARINGS ..................... 54
44-16 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS .............. 54
44-17 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS ........... 56
44-18 (Sections 3.011-3.100 reserved for expansion)
44-19 SUBCHAPTER B. AMENDMENT OF ARTICLES;
44-20 CHANGES IN CAPITAL AND SURPLUS
44-21 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
44-22 OF ASSOCIATION .................................. 59
44-23 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR
44-24 PARTICIPATION SHARES ............................ 61
44-25 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS ......... 62
44-26 Sec. 3.104. CAPITAL NOTES OR DEBENTURES ....................... 62
44-27 (Sections 3.105-3.200 reserved for expansion)
45-1 SUBCHAPTER C. BANK OFFICES
45-2 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING ............... 63
45-3 Sec. 3.202. HOME OFFICE ....................................... 64
45-4 Sec. 3.203. BRANCH OFFICES .................................... 65
45-5 Sec. 3.204. ELECTRONIC TERMINALS .............................. 66
45-6 Sec. 3.205. LOAN PRODUCTION OFFICES ........................... 67
45-7 (Sections 3.206-3.300 reserved for expansion)
45-8 SUBCHAPTER D. MERGER
45-9 Sec. 3.301. MERGER AUTHORITY .................................. 67
45-10 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER .................. 68
45-11 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER .................... 70
45-12 (Sections 3.304-3.400 reserved for expansion)
45-13 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
45-14 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
45-15 FINANCIAL INSTITUTION ........................... 70
45-16 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT .............. 70
45-17 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION ................ 71
45-18 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS ............... 72
45-19 Sec. 3.405. SALE OF ASSETS .................................... 72
45-20 (Sections 3.406-3.500 reserved for expansion)
45-21 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
45-22 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
45-23 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
45-24 BANK INTO NATIONAL BANK OR SAVINGS BANK OR
45-25 SAVINGS ASSOCIATION ............................. 73
45-26 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
45-27 BANK ............................................ 75
46-1 CHAPTER 3. POWERS; ORGANIZATION AND
46-2 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
46-3 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
46-4 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
46-5 One or more persons, a majority of whom are residents of this
46-6 state, may organize a state bank as a banking association or a
46-7 limited banking association. A state bank may:
46-8 (1) receive and pay deposits with or without interest,
46-9 discount and negotiate promissory notes, borrow or lend money with
46-10 or without security or interest, invest and deal in securities, buy
46-11 and sell exchange, coin, and bullion and exercise incidental powers
46-12 as necessary to carry on the business of banking as provided by
46-13 this Act;
46-14 (2) act as agent, including a fiscal agent, registrar,
46-15 or transfer agent and, in that capacity, receive and disburse money
46-16 and transfer securities;
46-17 (3) act in a fiduciary capacity, without giving bond,
46-18 as guardian, receiver, executor, administrator, or trustee,
46-19 including a mortgage or indenture trustee; and
46-20 (4) engage in any other activity, directly or through
46-21 a subsidiary, authorized by this Act or rules adopted under this
46-22 Act or determined by the banking commissioner to be closely related
46-23 to banking.
46-24 (b) Subject to Section 3.007 of this Act, a state bank may
46-25 exercise the powers of a Texas business corporation reasonably
46-26 necessary to enable exercise of its specific powers under this Act.
46-27 (c) A state bank may contribute to community funds, or to
47-1 charitable, philanthropic, or benevolent instrumentalities
47-2 conducive to public welfare, amounts that its board considers
47-3 expedient and in the interests of the bank.
47-4 (d) A state bank may be organized or reorganized as a
47-5 community development financial institution, as defined by the
47-6 Riegle Community Development and Regulatory Improvement Act of
47-7 1994.
47-8 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. The
47-9 articles of association of a state bank must be signed and
47-10 acknowledged by each organizer and must contain:
47-11 (1) the name of the state bank, except that the
47-12 banking commissioner may determine that a proposed bank name is
47-13 potentially misleading to the public and require the organizers to
47-14 select a different name;
47-15 (2) the period of its duration, which may be
47-16 perpetual, except that a state bank, other than a private bank,
47-17 organized before August 31, 1993, is considered to have perpetual
47-18 existence, notwithstanding a contrary statement in its articles of
47-19 association, unless after the effective date of this Act the bank
47-20 amends its articles of association to reaffirm its limited
47-21 duration;
47-22 (3) the powers of the state bank, which may be stated
47-23 as:
47-24 (A) all powers granted by law to a state bank;
47-25 or
47-26 (B) a list of the specific powers under Section
47-27 3.001 of this Act that the state bank chooses to exercise;
48-1 (4) the aggregate number of shares or participation
48-2 shares that the bank will be authorized to issue, the number of
48-3 classes of shares or participation shares, which may be one or
48-4 more, the number of shares or participation shares of each class if
48-5 more than one class, and a statement of the par value of the shares
48-6 or participation shares of each class or that the shares or
48-7 participation shares are to be without par value;
48-8 (5) if the shares or participation shares are to be
48-9 divided into classes, the designation of each class and statement
48-10 of the preferences, limitations, and relative rights of the shares
48-11 or participation shares of each class, which in the case of a
48-12 limited banking association may be more fully set forth in the
48-13 participation agreement;
48-14 (6) any provision limiting or denying to shareholders
48-15 or participants the preemptive right to acquire additional or
48-16 treasury shares or participation shares of the bank;
48-17 (7) any provision granting the right of shareholders
48-18 or participants to cumulative voting in the election of directors
48-19 or managers;
48-20 (8) the aggregate amount of consideration to be
48-21 received for all shares or participation shares initially issued by
48-22 the bank, and a statement that all authorized shares or
48-23 participation shares have been subscribed and that all
48-24 subscriptions received provide for the consideration to be fully
48-25 paid in cash before issuance of the charter;
48-26 (9) any provision consistent with law that the
48-27 organizers elect to set forth in the articles of association for
49-1 the regulation of the internal affairs of the bank or that is
49-2 otherwise required by this Act to be set forth in the articles of
49-3 association;
49-4 (10) the street address of the bank's initial home
49-5 office required to be maintained under Section 3.202 of this Act;
49-6 and
49-7 (11) the number of directors or managers constituting
49-8 the initial board, which may be no fewer than five or more than 25,
49-9 and the names and street addresses of the persons who are to serve
49-10 as directors or managers until the first annual meeting of
49-11 shareholders or participants or until successor directors or
49-12 managers have been elected and qualified; or, at the option of the
49-13 organizers of a limited banking association that will have no fewer
49-14 than five or more than 25 participants, a statement that management
49-15 is vested in a board comprised of all participants, with management
49-16 authority vested in each participant in proportion to the
49-17 participant's contribution to capital as adjusted from time to time
49-18 to properly reflect any additional contribution, and the names and
49-19 street addresses of the persons who are to be managing
49-20 participants.
49-21 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a) An
49-22 application for a state bank charter must be made under oath and in
49-23 the form required by the banking commissioner, who shall inquire
49-24 fully into the identity and character of each proposed director,
49-25 manager, officer, managing participant, and principal shareholder
49-26 or participant. The application must be accompanied by all charter
49-27 fees and deposits required by law or regulation.
50-1 (b) The banking commissioner shall grant a state bank
50-2 charter only if the commissioner determines that the organizers
50-3 have established that:
50-4 (1) a public necessity exists for the proposed state
50-5 bank;
50-6 (2) the proposed organizational and capital structure
50-7 and amount of initial capitalization is adequate for the proposed
50-8 business and location;
50-9 (3) the anticipated volume of business indicates
50-10 profitable operation;
50-11 (4) the proposed officers, directors, and managers, or
50-12 managing participants, as a group have sufficient banking
50-13 experience, ability, standing, competence, trustworthiness, and
50-14 integrity to justify a belief that the proposed state bank will
50-15 operate in compliance with law and that success of the proposed
50-16 state bank is probable;
50-17 (5) each principal shareholder or participant has
50-18 sufficient experience, ability, standing, competence,
50-19 trustworthiness, and integrity to justify a belief that the
50-20 proposed state bank will be free from improper or unlawful
50-21 influence or interference with respect to the bank's operation in
50-22 compliance with law; and
50-23 (6) the organizers are acting in good faith.
50-24 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
50-25 (a) The banking commissioner shall notify the organizers when the
50-26 application is complete and accepted for filing and all required
50-27 fees and deposits have been paid. Promptly after this notification
51-1 the organizers shall publish notice of the application and solicit
51-2 comments and protests, in the form specified by the banking
51-3 commissioner, in a newspaper of general circulation in the county
51-4 where the proposed state bank is to be located.
51-5 (b) At the expense of the organizers, the banking
51-6 commissioner shall thoroughly investigate the application. The
51-7 banking commissioner shall prepare a written report of the
51-8 investigation, and any person, other than a person protesting under
51-9 Section 3.005 of this Act, may request a copy of the
51-10 nonconfidential portions of the application and written report as
51-11 provided by Chapter 552, Government Code. Rules adopted under
51-12 this Act may specify the confidential or nonconfidential character
51-13 of information obtained by the department under this chapter.
51-14 Except as provided by Subchapter B, Chapter 2, of this Act or in
51-15 rules regarding confidential information, the financial statement
51-16 of a proposed officer, director, manager, or managing participant
51-17 is confidential and not subject to public disclosure.
51-18 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
51-19 (a) Any person may file a protest to an application.
51-20 (b) If a protest of the application is not filed before the
51-21 15th day after the date the organizers publish notice under Section
51-22 3.004(a) of this Act, the banking commissioner may immediately
51-23 determine whether the necessary conditions set forth in Section
51-24 3.003(b) of this Act have been established, based on the
51-25 application and investigation. The banking commissioner shall
51-26 approve the application for charter or set the charter application
51-27 for hearing.
52-1 (c) If a protest of the application is timely filed,
52-2 accompanied by the fees and deposits required by statute or rules,
52-3 or if the banking commissioner sets a hearing, the banking
52-4 commissioner shall conduct a public hearing and one or more
52-5 prehearing conferences and opportunities for discovery as the
52-6 banking commissioner considers advisable and consistent with the
52-7 applicable statutes and rules. A person protesting the application
52-8 is entitled to the confidential portion of the application, subject
52-9 to a protective order that restricts the use of confidential
52-10 information to the charter proceedings.
52-11 (d) Based on the record of the hearing, the banking
52-12 commissioner shall determine whether the application meets the
52-13 requirements of Section 3.003(b) of this Act and shall enter an
52-14 order granting or denying the charter.
52-15 (e) The banking commissioner may make approval of an
52-16 application conditional. The banking commissioner shall include
52-17 any conditions in the order approving the application.
52-18 (f) Chapter 2001, Government Code, does not apply to a
52-19 charter application filed for the purpose of assuming the assets
52-20 and liabilities of a financial institution considered by the
52-21 banking commissioner to be in hazardous condition.
52-22 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) A
52-23 state bank may not engage in the business of banking until it
52-24 receives a certificate of authority from the banking commissioner.
52-25 The banking commissioner may not deliver the certificate of
52-26 authority until the bank has:
52-27 (1) received cash for the issuance of all authorized
53-1 shares or participation shares in the full amount subscribed;
53-2 (2) elected or qualified the initial officers and
53-3 directors or managers, as appropriate, named in the application for
53-4 charter or other officers and directors or managers approved by the
53-5 banking commissioner; and
53-6 (3) complied with all the other requirements of this
53-7 Act relating to the organization of state banks.
53-8 (b) If the state bank does not open and engage in the
53-9 business of banking within six months after the date of the
53-10 granting of its charter, the banking commissioner may forfeit the
53-11 charter or cancel the conditional approval of application for
53-12 charter without judicial action.
53-13 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
53-14 CORPORATIONS. (a) The Texas Business Corporation Act and the
53-15 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
53-16 seq., Vernon's Texas Civil Statutes) apply to a state bank to the
53-17 extent not inconsistent with this Act or the proper business of a
53-18 state bank, except that:
53-19 (1) a reference in those Acts to the secretary of
53-20 state means the banking commissioner unless the context requires
53-21 otherwise; and
53-22 (2) the right of shareholders or participants to
53-23 cumulative voting in the election of directors or managers exists
53-24 only if granted by the state bank's articles of association.
53-25 (b) The finance commission may adopt rules to limit or
53-26 refine the applicability of Subsection (a) of this section to a
53-27 state bank or to alter or supplement the procedures and
54-1 requirements of the Texas Business Corporation Act applicable to an
54-2 action taken under this chapter.
54-3 (c) Unless expressly authorized by this Act or a rule
54-4 adopted under this Act, a state bank may not take an action
54-5 authorized by the Texas Business Corporation Act regarding its
54-6 corporate status, capital structure, or a matter of corporate
54-7 governance, of the type for which the Texas Business Corporation
54-8 Act would require a filing with the secretary of state if the bank
54-9 was a business corporation, without submitting the filing to the
54-10 banking commissioner and obtaining the banking commissioner's prior
54-11 written approval of the action.
54-12 Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) This
54-13 section does not grant a right to hearing to a person that is not
54-14 otherwise granted by governing law.
54-15 (b) The banking commissioner may convene a hearing to
54-16 receive evidence and argument regarding any matter before the
54-17 banking commissioner for decision or review under this Act. The
54-18 hearing must be conducted under Chapter 2001, Government Code.
54-19 (c) A hearing before the banking commissioner that is
54-20 required or authorized by law may be conducted by a hearing officer
54-21 on behalf of the banking commissioner. A matter made confidential
54-22 by law must be considered by the banking commissioner in a closed
54-23 hearing.
54-24 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
54-25 Except as expressly provided otherwise by this Act, a decision or
54-26 order of the banking commissioner made under this Act after hearing
54-27 may be appealed directly to the District Court of Travis County as
55-1 provided by Subsection (c) of this section or, at the option of the
55-2 appellant, to the finance commission for review.
55-3 (b) The finance commission shall consider the questions
55-4 raised by the application for review and may also consider
55-5 additional matters pertinent to the appeal. An order of the
55-6 banking commissioner continues in effect pending review unless the
55-7 order is stayed by the finance commission. The finance commission
55-8 may impose any condition before granting a stay of the appealed
55-9 order. The finance commission may not be required to accept
55-10 additional evidence or hold an evidentiary hearing if a hearing was
55-11 held and a record made before the banking commissioner. The
55-12 finance commission shall remand the proceeding to the banking
55-13 commissioner for the purpose of receiving any additional evidence
55-14 the finance commission chooses to consider. A hearing before the
55-15 finance commission that is required or authorized by law may be
55-16 conducted by a hearing officer on behalf of the finance commission.
55-17 A matter made confidential by law must be considered by the finance
55-18 commission in a closed hearing.
55-19 (c) A person affected by a final order of the banking
55-20 commissioner that elects to appeal directly to district court, or a
55-21 person affected by a final order of the finance commission under
55-22 this section, may appeal the final order by filing a petition for
55-23 judicial review under the substantial evidence rule in the District
55-24 Court of Travis County as provided by Chapter 2001, Government
55-25 Code. A petition for appeal filed in the district court does not
55-26 stay or vacate the appealed order unless the court, after notice
55-27 and hearing, expressly stays or vacates the order.
56-1 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS.
56-2 (a) Section 16(a), Article XVI, Texas Constitution, empowers the
56-3 legislature to authorize the incorporation of state banks and
56-4 provide for a system of state regulation and control of state banks
56-5 that will adequately protect and secure depositors and creditors.
56-6 Section 16(c), Article XVI, Texas Constitution, grants to state
56-7 banks, created by virtue of the power vested in the legislature by
56-8 Section 16(a) of that article, the same rights and privileges that
56-9 are or may be granted to national banks domiciled in this state.
56-10 The legislature finds that Section 16(c) of that article does not
56-11 restrict the legislature's power to provide a system of state
56-12 regulation pursuant to Section 16(a) of that article that differs
56-13 from the regulatory scheme imposed on national banks under federal
56-14 law or prevent the finance commission, acting under authority
56-15 granted by the legislature for the purpose of implementing this
56-16 Act, from adopting rules that differ from federal statutes and
56-17 regulations or that reasonably regulate the method or manner by
56-18 which a state bank exercises its rights and privileges, if the
56-19 rules are adopted after due consideration of the factors listed in
56-20 Section 1.012(b) of this Act. The legislature further finds that
56-21 Section 16(c) does not diminish or limit any rights or powers
56-22 specifically given to state banks by the laws of this state.
56-23 (b) A state bank that intends to exercise a right or
56-24 privilege granted to national banks that is not authorized for
56-25 state banks under the statutes and rules of this state shall submit
56-26 a letter to the banking commissioner, describing in detail the
56-27 activity in which the state bank intends to engage and the specific
57-1 authority of a national bank that authorizes the activity for a
57-2 national bank and shall attach copies, if available, of relevant
57-3 federal law, regulations, and interpretive letters. The bank may
57-4 begin to perform the proposed activity after the 30th day after the
57-5 date the banking commissioner receives the bank's letter unless the
57-6 banking commissioner specifies an earlier or later date or
57-7 prohibits the activity. The banking commissioner may prohibit the
57-8 state bank from performing the activity only if the banking
57-9 commissioner finds that:
57-10 (1) a national bank domiciled in this state does not
57-11 possess the specific right or privilege to perform the activity the
57-12 state bank seeks to perform; or
57-13 (2) the performance of the activity by the state bank
57-14 would adversely affect the safety and soundness of the requesting
57-15 state bank.
57-16 (c) The banking commissioner may extend the 30-day period
57-17 under Subsection (b) of this section if the banking commissioner
57-18 determines that the bank's letter raises issues requiring
57-19 additional information or additional time for analysis. If the
57-20 30-day period is extended, the bank may perform the proposed
57-21 activity only on prior written approval by the banking
57-22 commissioner, except that the banking commissioner must approve or
57-23 prohibit the proposed activity or convene a hearing under Section
57-24 3.008 of this Act not later than the 60th day after the date the
57-25 commissioner receives the bank's letter. If a hearing is convened
57-26 under Section 3.008 of this Act, the banking commissioner must
57-27 approve or prohibit the proposed activity not later than the 30th
58-1 day after the date the hearing is completed.
58-2 (d) A state bank that is denied the requested right or
58-3 privilege to engage in an activity by the banking commissioner
58-4 under this section may appeal as provided by Section 3.009 of this
58-5 Act or may resubmit a letter under this subsection with additional
58-6 information or authority relevant to the banking commissioner's
58-7 determination. A denial is immediately final for purposes of
58-8 appeal.
58-9 (e) To effectuate the Texas Constitution, the finance
58-10 commission may adopt rules implementing the method or manner in
58-11 which a state bank exercises specific rights and privileges granted
58-12 pursuant to Section 16(c), Article XVI, Texas Constitution,
58-13 including rules regarding the exercise of rights and privileges
58-14 that would be prohibited to state banks but for Section 16(c). The
58-15 finance commission may not adopt rules under this subsection unless
58-16 it considers the factors listed in Section 1.012(b) of this Act and
58-17 finds that:
58-18 (1) national banks domiciled in this state possess the
58-19 rights or privileges to perform activities the rule would permit
58-20 state banks to perform; and
58-21 (2) the rules contain adequate safeguards and
58-22 controls, consistent with safety and soundness, to address the
58-23 concern of the legislature evidenced by the state law the rules
58-24 would impact.
58-25 (f) The exercise of rights and privileges by a state bank in
58-26 compliance with and in the manner authorized by this section is not
58-27 a violation of any statute of this state.
59-1 (Sections 3.011-3.100 reserved for expansion)
59-2 SUBCHAPTER B. AMENDMENT OF ARTICLES;
59-3 CHANGES IN CAPITAL AND SURPLUS
59-4 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
59-5 OF ASSOCIATION. (a) A state bank that has been granted a
59-6 certificate of authority under Section 3.006 of this Act may amend
59-7 or restate its articles of association for any lawful purpose,
59-8 including the creation of authorized but unissued shares or
59-9 participation shares in one or more classes or series.
59-10 (b) An amendment authorizing the issuance of shares or
59-11 participation shares in series must contain:
59-12 (1) the designation of each series and a statement of
59-13 any variations in the preferences, limitations, and relative rights
59-14 among series to the extent that the preferences, limitations, and
59-15 relative rights are to be established in the articles of
59-16 association; and
59-17 (2) a statement of any authority to be vested in the
59-18 board to establish series and determine the preferences,
59-19 limitations, and relative rights of each series.
59-20 (c) A limited banking association may not amend its articles
59-21 of association to extend its period of existence for a perpetual
59-22 period or for any period of years, unless the period of existence
59-23 is expressly contingent on those events resulting in dissolution of
59-24 the limited banking association under Section 4.207 of this Act.
59-25 (d) Amendment or restatement of the articles of association
59-26 of a state bank and approval of the board and shareholders or
59-27 participants must be made or obtained in accordance with provisions
60-1 of the Texas Business Corporation Act for the amendment or
60-2 restatement of articles of incorporation except as otherwise
60-3 provided by this Act or rules adopted under this Act. The original
60-4 and one copy of the articles of amendment or restated articles of
60-5 association must be filed with the banking commissioner for
60-6 approval. Unless the submission presents novel or unusual
60-7 questions, the banking commissioner shall approve or reject the
60-8 amendment or restatement not later than the 31st day after the date
60-9 the banking commissioner considers the submission informationally
60-10 complete and accepted for filing. The banking commissioner may
60-11 require the submission of additional information as considered
60-12 necessary to an informed decision to approve or reject any
60-13 amendment or restatement of articles of association under this
60-14 section. If the banking commissioner finds that the amendment or
60-15 restatement conforms to law and any conditions imposed by the
60-16 banking commissioner, and any required filing fee has been paid,
60-17 the banking commissioner shall:
60-18 (1) endorse the face of the original and copy of the
60-19 amendment or restatement with the date of approval and the word
60-20 "Approved";
60-21 (2) file the original of the amendment or restatement
60-22 in the department's records; and
60-23 (3) deliver a certified copy of the amendment or
60-24 restatement to the state bank.
60-25 (e) An amendment or restatement, if approved, takes effect
60-26 on the date of approval, unless the amendment or restatement
60-27 provides for a different effective date.
61-1 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
61-2 SHARES. (a) If the articles of association expressly give the
61-3 board authority to establish series and determine the preferences,
61-4 limitations, and relative rights of each series, the board may do
61-5 so only on compliance with this section and any rules adopted under
61-6 this Act.
61-7 (b) A series of shares or participation shares may be
61-8 established in the manner provided by the Texas Business
61-9 Corporation Act as if the state bank were a domestic corporation,
61-10 but the shares or participation shares of the series may not be
61-11 issued and sold without the prior written approval of the banking
61-12 commissioner under Section 3.103 of this Act. The state bank shall
61-13 file the original and one copy of the statement of action required
61-14 by the Texas Business Corporation Act with the banking
61-15 commissioner. Unless the submission presents novel or unusual
61-16 questions, the banking commissioner shall approve or reject the
61-17 series not later than the 31st day after the date the banking
61-18 commissioner considers the submission informationally complete and
61-19 accepted for filing. The banking commissioner may require the
61-20 submission of additional information as considered necessary to an
61-21 informed decision to approve or reject a proposed series under this
61-22 section. If the banking commissioner finds that the interests of
61-23 depositors and creditors will not be adversely affected by the
61-24 series, that the series conforms to law and any conditions imposed
61-25 by the banking commissioner, and that any required filing fee has
61-26 been paid, the banking commissioner shall:
61-27 (1) endorse the face of the original and copy of the
62-1 statement with the date of approval and the word "Approved";
62-2 (2) file the original of the statement in the
62-3 department's records; and
62-4 (3) deliver a certified copy of the statement to the
62-5 state bank.
62-6 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
62-7 A state bank may not reduce or increase its outstanding capital and
62-8 surplus through dividend, redemption, issuance of shares or
62-9 participation shares, or otherwise, without the prior written
62-10 approval of the banking commissioner, except as permitted by this
62-11 section or rules adopted under this Act.
62-12 (b) Unless otherwise restricted by rules, prior written
62-13 approval is not required for an increase in capital and surplus
62-14 accomplished through:
62-15 (1) issuance of shares of common stock or their
62-16 equivalent in participation shares for cash;
62-17 (2) declaration and payment of pro rata share
62-18 dividends as defined in the Texas Business Corporation Act; or
62-19 (3) adoption by the board of a resolution directing
62-20 that all or part of undivided profits be transferred to capital or
62-21 surplus.
62-22 (c) Prior approval is not required for a decrease in capital
62-23 or surplus caused by losses in excess of undivided profits.
62-24 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
62-25 prior written approval of the banking commissioner a state bank
62-26 may, at any time, through action of its board, and without
62-27 requiring action of its shareholders or participants, issue and
63-1 sell its capital notes or debentures, which must be subordinate to
63-2 the claims of depositors and may be subordinate to other claims,
63-3 including the claims of other creditors or the shareholders or
63-4 participants.
63-5 (b) Capital notes or debentures may be convertible into
63-6 shares or participation shares of any class or series. The
63-7 issuance and sale of convertible capital notes or debentures are
63-8 subject to satisfaction of preemptive rights, if any, to the extent
63-9 provided by law.
63-10 (c) Without the prior written approval of the banking
63-11 commissioner, interest due or principal repayable on outstanding
63-12 capital notes or debentures may not be paid by a state bank at a
63-13 time when the bank is in hazardous condition or is insolvent, or to
63-14 the extent that payment will cause the bank to be in hazardous
63-15 condition or insolvent, as determined by the banking commissioner.
63-16 (d) The amount of any outstanding capital notes or
63-17 debentures that meet the requirements of this section and that are
63-18 subordinated to unsecured creditors of the bank may be included in
63-19 equity capital of the bank for purposes of determining hazardous
63-20 condition or insolvency and for other purposes provided by rules
63-21 adopted under this Act.
63-22 (Sections 3.105-3.200 reserved for expansion)
63-23 SUBCHAPTER C. BANK OFFICES
63-24 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
63-25 state bank may engage in the banking business at its home office,
63-26 at an approved branch office location, and through electronic
63-27 terminals. A drive-in facility must be approved as a branch if it
64-1 is more than 2,000 feet from the nearest wall of the bank's home
64-2 office or another approved branch office.
64-3 (b) A function of a state bank that does not involve banking
64-4 contact with the public may be conducted at any location without
64-5 prior written approval of the banking commissioner. The finance
64-6 commission may adopt rules further defining functions of a state
64-7 bank that are not required to be conducted at an approved location.
64-8 (c) Under Section 3.010 of this Act the finance commission
64-9 may by rule authorize a new form of banking facility. The banking
64-10 commissioner may approve a new form of banking facility other than
64-11 as provided in this subchapter if the banking commissioner does not
64-12 have a significant supervisory or regulatory concern regarding the
64-13 proposed facility.
64-14 Sec. 3.202. HOME OFFICE. (a) Each state bank must have and
64-15 continuously maintain in this state a home office, which must be a
64-16 location at which the bank does business with the public and keeps
64-17 its corporate books and records. At least one officer of the bank
64-18 must maintain an office at the home office and each officer at the
64-19 home office is an agent for service of process for the bank.
64-20 (b) A state bank may change its home office to one of its
64-21 previously established branch locations within this state, if the
64-22 location that is the home office before the change is to remain as
64-23 a branch of the bank, by filing a written notice with the banking
64-24 commissioner setting forth the name of the state bank, the street
64-25 address of its home office before the change, the street address of
64-26 the location to which the home office is to be changed, and a copy
64-27 of the resolution adopted by the board authorizing the change. The
65-1 change of home office takes effect on the 31st day after the date
65-2 the banking commissioner receives the notice unless the banking
65-3 commissioner consents to a different effective date.
65-4 (c) A state bank may change its home office to any location
65-5 within this state, other than as permitted by Subsection (b) of
65-6 this section, on prior written approval of the banking
65-7 commissioner. The banking commissioner shall grant an application
65-8 under this subsection if the banking commissioner does not have a
65-9 significant supervisory or regulatory concern regarding the
65-10 proposed banking facility, the applicant, or an affiliate of the
65-11 applicant. Any standard established by the banking commissioner or
65-12 the finance commission regarding the establishment of a branch
65-13 under Section 3.203 of this Act applies to an application for a
65-14 change of home office that is subject to this subsection, except as
65-15 otherwise provided by rules adopted under this Act.
65-16 (d) If the proposed relocation of the bank's home office
65-17 would effect an abandonment of all or part of the community served
65-18 by the bank, the bank must also establish to the satisfaction of
65-19 the banking commissioner that the abandonment is consistent with
65-20 the original determination of public necessity for the
65-21 establishment of a bank at that location.
65-22 Sec. 3.203. BRANCH OFFICES. A state bank may establish and
65-23 maintain branch offices at any location on prior written approval
65-24 of the banking commissioner. If the banking commissioner does not
65-25 have a significant supervisory or regulatory concern regarding the
65-26 proposed branch, the applicant, or an affiliate, the banking
65-27 commissioner shall approve the application. The finance commission
66-1 may adopt rules establishing additional standards for the approval
66-2 of branch offices.
66-3 Sec. 3.204. ELECTRONIC TERMINALS. (a) A person or group of
66-4 persons, for the convenience of customers of depository
66-5 institutions, may install, maintain, and operate one or more
66-6 electronic terminals at any location within this state.
66-7 (b) Depository institutions may agree in writing to share in
66-8 the use of an electronic terminal on a reasonable,
66-9 nondiscriminatory basis and on the condition that a depository
66-10 institution using one or more electronic terminals may be required
66-11 to meet necessary and reasonable technical standards and to pay
66-12 charges for the use of the electronic terminal. The standards or
66-13 charges imposed must be reasonable, fair, equitable, and
66-14 nondiscriminatory among the depository institutions. Any charges
66-15 imposed must:
66-16 (1) not exceed an equitable proportion of the cost of
66-17 establishing the electronic terminal, including provisions for
66-18 amortization of development costs and capital expenditures over a
66-19 reasonable period, and the cost of operation and maintenance of the
66-20 electronic terminal, plus a reasonable return on those costs; and
66-21 (2) be related to the services provided to the
66-22 depository institution or its customers.
66-23 (c) This section does not apply to:
66-24 (1) an electronic terminal located at the domicile or
66-25 home office or a branch of a depository institution; or
66-26 (2) the use by a person of an electronic terminal,
66-27 regardless of location, solely to withdraw cash, make account
67-1 balance inquiries, or make transfers among the person's accounts
67-2 within the same depository institution.
67-3 Sec. 3.205. LOAN PRODUCTION OFFICES. (a) A state bank may
67-4 establish one or more loan production offices solely for the
67-5 purpose of soliciting loans, accepting loan applications, and
67-6 performing ministerial duties related to consummating a granted
67-7 loan such as execution of loan documents and dispensing of loan
67-8 proceeds by draft or check, including a certified or cashier's
67-9 check, but not by cash. A credit decision, commitment to make a
67-10 loan, and preparation of a check or draft to dispense loan proceeds
67-11 must occur at the bank's home office or a branch office and may not
67-12 occur at a loan production office.
67-13 (b) The bank shall notify the banking commissioner in
67-14 writing before the 31st day preceding the date of establishment of
67-15 a loan production office, except that the banking commissioner may
67-16 waive or shorten the period if the banking commissioner does not
67-17 have a significant supervisory or regulatory concern regarding the
67-18 bank or its planned loan production office.
67-19 (Sections 3.206-3.300 reserved for expansion)
67-20 SUBCHAPTER D. MERGER
67-21 Sec. 3.301. MERGER AUTHORITY. (a) Two or more financial
67-22 institutions, corporations, or other entities with all requisite
67-23 legal authority to participate in a merger, at least one of which
67-24 is a state bank, may adopt and implement a plan of merger in
67-25 accordance with this section. The merger may not be made without
67-26 the prior written approval of the banking commissioner if any
67-27 surviving, new, or acquiring entity that is a party to the merger
68-1 or created by the terms of the merger is a state bank or is not a
68-2 financial institution.
68-3 (b) Implementation of the merger by the parties and approval
68-4 of the board, shareholders, participants, or owners of the parties
68-5 must be made or obtained in accordance with the Texas Business
68-6 Corporation Act as if the state bank were a domestic corporation
68-7 and all other parties to the merger were foreign corporations and
68-8 other entities, except as may be otherwise provided by applicable
68-9 rules.
68-10 (c) A consummated merger has the effect provided by the
68-11 Texas Business Corporation Act. A separate application is not
68-12 required to relocate the home office of a surviving state bank or
68-13 to grant authority to a surviving bank to operate new branch
68-14 offices that previously existed as part of a merging financial
68-15 institution if the intent of the surviving bank is clearly stated
68-16 as part of the plan of merger.
68-17 (d) A merger under this subchapter does not confer
68-18 additional powers on a state bank beyond the powers conferred by
68-19 other provisions of this Act.
68-20 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) If the
68-21 transaction is subject to the prior written approval of the banking
68-22 commissioner, the original articles of merger and a number of
68-23 copies of the articles equal to the number of surviving, new, and
68-24 acquiring entities must be filed with the banking commissioner. On
68-25 this filing, the banking commissioner shall investigate the
68-26 condition of the merging parties. The banking commissioner may
68-27 require the submission of additional information the banking
69-1 commissioner determines necessary to an informed decision to
69-2 approve or reject a merger under this subchapter.
69-3 (b) The banking commissioner shall approve the merger only
69-4 if:
69-5 (1) each resulting state bank will be solvent and have
69-6 adequate capitalization for its business and location;
69-7 (2) each resulting state bank has in all respects
69-8 complied with the laws of this state relative to the organization
69-9 and operation of state banks;
69-10 (3) all deposit and other liabilities of every state
69-11 bank that is a party to the merger have been properly discharged or
69-12 otherwise assumed or retained by a financial institution;
69-13 (4) each surviving, new, or acquiring entity that is
69-14 not a depository institution will not be engaged in the
69-15 unauthorized business of banking, and each state bank will not be
69-16 engaged in a business other than banking or a business incidental
69-17 to banking;
69-18 (5) the parties have in all respects complied with the
69-19 laws of this state; and
69-20 (6) all conditions imposed by the banking commissioner
69-21 have been satisfied or otherwise resolved.
69-22 (c) If the banking commissioner approves the merger and
69-23 finds that all required filing fees and investigative costs have
69-24 been paid, the banking commissioner shall:
69-25 (1) endorse the face of the original and each copy
69-26 with the date of approval and the word "Approved";
69-27 (2) file the original of the articles of merger in the
70-1 department's records; and
70-2 (3) deliver a certified copy of the articles of merger
70-3 to each surviving, new, or acquiring entity.
70-4 (d) An approved merger takes effect on the date of approval,
70-5 unless the merger agreement provides for a different effective
70-6 date.
70-7 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
70-8 participant, or participant-transferee may dissent from the merger
70-9 to the extent and by following the procedure provided by the Texas
70-10 Business Corporation Act or any rules adopted under this Act.
70-11 (Sections 3.304-3.400 reserved for expansion)
70-12 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
70-13 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
70-14 FINANCIAL INSTITUTION. A state bank with the prior written
70-15 approval of the banking commissioner may purchase all or
70-16 substantially all of the assets of another financial institution.
70-17 Except as otherwise expressly provided by another statute, the
70-18 purchase of all or part of the assets of the selling institution
70-19 does not make the purchasing bank responsible for any liability or
70-20 obligation of the selling institution that the purchasing bank does
70-21 not expressly assume. Except as otherwise provided by this Act,
70-22 this subchapter does not govern or prohibit the purchase by a state
70-23 bank of all or part of the assets of a corporation or other entity
70-24 that is not a financial institution.
70-25 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
70-26 purchasing bank may hold the purchase price and any additional
70-27 funds delivered to it by the selling institution in trust for, or
71-1 as a deposit to the credit of, the selling institution and may act
71-2 as agent of the selling institution in disbursing those funds in
71-3 trust or on deposit by paying the depositors and creditors of the
71-4 selling institution. If the purchasing bank acts under written
71-5 contract of agency approved by the banking commissioner that
71-6 specifically names each depositor and creditor and the amount to be
71-7 paid each, and if the agency is limited to the purely ministerial
71-8 act of paying those depositors and creditors the amounts due them
71-9 as determined by the selling institution and reflected in the
71-10 contract of agency and does not involve discretionary duties or
71-11 authority other than the identification of the depositors and
71-12 creditors named, the purchasing bank:
71-13 (1) may rely on the contract of agency and the
71-14 instructions included in it; and
71-15 (2) is not responsible for:
71-16 (A) any error made by the selling institution in
71-17 determining its liabilities, the depositors and creditors to whom
71-18 the liabilities are due, or the amounts due the depositors and
71-19 creditors; or
71-20 (B) any preference that results from the
71-21 payments made under the contract of agency and the instructions
71-22 included in it.
71-23 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
71-24 selling financial institution is at any time after the sale of
71-25 assets voluntarily or involuntarily closed for liquidation by a
71-26 state or federal regulatory agency, the purchasing bank shall pay
71-27 to the receiver of the selling institution the balance of the funds
72-1 held by it in trust or on deposit for the selling institution and
72-2 not yet paid to the depositors and creditors of the selling
72-3 institution. Without further action the purchasing bank is
72-4 discharged of all responsibilities to the selling institution, its
72-5 receiver, or its depositors, creditors, shareholders, participants,
72-6 or participant-transferees.
72-7 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Payment to
72-8 a depositor or creditor of the selling institution of the amount to
72-9 be paid the person under the terms of the contract of agency may be
72-10 made by the purchasing bank by opening an account in the name of
72-11 the depositor or creditor, crediting the account with the amount to
72-12 be paid the depositor or creditor under the terms of the agency
72-13 contract, and mailing or personally delivering a duplicate deposit
72-14 ticket evidencing the credit to the depositor or creditor at the
72-15 person's address shown in the records of the selling institution.
72-16 The relationship between the purchasing bank and the depositor or
72-17 creditor is that of debtor to creditor only to the extent of the
72-18 credit reflected by the deposit ticket.
72-19 Sec. 3.405. SALE OF ASSETS. (a) The board of a state bank,
72-20 with the prior written approval of the banking commissioner, may
72-21 cause a bank to sell all or substantially all of its assets without
72-22 shareholder or participant approval if:
72-23 (1) the banking commissioner finds the interests of
72-24 depositors and creditors are jeopardized because of insolvency or
72-25 imminent insolvency and that the sale is in their best interest;
72-26 and
72-27 (2) the Federal Deposit Insurance Corporation or its
73-1 successor approves the transaction and agrees to provide assistance
73-2 to the prospective buyer under 12 U.S.C. Section 1823(c) or a
73-3 comparable law unless the deposits of the bank are not insured.
73-4 (b) A sale under this section must include an assumption and
73-5 promise by the buyer to pay or otherwise discharge:
73-6 (1) all of the bank's liabilities to depositors;
73-7 (2) all of the bank's liabilities for salaries of the
73-8 bank's employees incurred before the date of the sale;
73-9 (3) obligations incurred by the banking commissioner
73-10 arising out of the supervision or sale of the bank; and
73-11 (4) fees and assessments due the department.
73-12 (c) This section does not affect the banking commissioner's
73-13 right to take action under another law. The sale by a state bank
73-14 of all or substantially all of its assets with shareholder or
73-15 participant approval is considered a voluntary dissolution and
73-16 liquidation and is governed by Subchapter B, Chapter 7, of this
73-17 Act.
73-18 (Sections 3.406-3.500 reserved for expansion)
73-19 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
73-20 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
73-21 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
73-22 BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS ASSOCIATION.
73-23 (a) A state bank may act as necessary under the laws of the United
73-24 States or this state to merge, reorganize, or convert into a
73-25 national bank, state or federal savings bank, or state or federal
73-26 savings association.
73-27 (b) The merger, reorganization, or conversion by the state
74-1 bank must be made and approval of its board, shareholders, or
74-2 participants must be obtained in accordance with the Texas Business
74-3 Corporation Act as if the state bank were a domestic corporation
74-4 and all other parties to the transaction, if any, were foreign
74-5 corporations and other entities, except as may be otherwise
74-6 provided by rules. For purposes of this subsection, a conversion
74-7 is considered a merger into the successor form of financial
74-8 institution.
74-9 (c) The state bank does not cease to be a state bank subject
74-10 to the supervision of the banking commissioner unless:
74-11 (1) the banking commissioner has been given written
74-12 notice of the intention to merge, reorganize, or convert before the
74-13 31st day preceding the date of the proposed transaction;
74-14 (2) the bank has published notice of the transaction,
74-15 in the form and frequency specified by the banking commissioner, in
74-16 a newspaper of general circulation published in the county of its
74-17 home office, or, if such a newspaper is not published in the
74-18 county, in an adjacent county and in other locations that the
74-19 banking commissioner considers appropriate;
74-20 (3) the bank has filed with the banking commissioner:
74-21 (A) a copy of the application filed with the
74-22 successor regulatory authority, including a copy of each contract
74-23 evidencing or implementing the merger, reorganization, or
74-24 conversion, or other documents sufficient to show compliance with
74-25 applicable law;
74-26 (B) a certified copy of all minutes of board
74-27 meetings and shareholder or participant meetings at which action
75-1 was taken regarding the merger, reorganization, or conversion; and
75-2 (C) a publisher's certificate showing
75-3 publication of the required notice;
75-4 (4) the banking commissioner determines that:
75-5 (A) all deposit and other liabilities of the
75-6 state bank are fully discharged, assumed, or otherwise retained by
75-7 the successor form of financial institution;
75-8 (B) any conditions imposed by the banking
75-9 commissioner for the protection of depositors and creditors have
75-10 been met or otherwise resolved; and
75-11 (C) any required filing fees have been paid; and
75-12 (5) the bank has received a certificate of authority
75-13 to do business as a national bank, state or federal savings bank,
75-14 or state or federal savings association.
75-15 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
75-16 BANK. (a) A financial institution may apply to the banking
75-17 commissioner for conversion into a state bank on a form prescribed
75-18 by the banking commissioner accompanied by any required fee, if the
75-19 institution follows the procedures prescribed by the laws of the
75-20 United States or this state governing the exit of the institution
75-21 for the purpose of conversion into a state bank from the regulatory
75-22 system applicable before the conversion. A banking association or
75-23 limited banking association may convert its organizational form
75-24 under this section.
75-25 (b) An institution applying to convert into a state bank may
75-26 receive a certificate of authority to do business as a state bank
75-27 if the banking commissioner finds that:
76-1 (1) the institution is not engaging in a pattern or
76-2 practice of unsafe and unsound banking practices;
76-3 (2) the institution has adequate capitalization for a
76-4 state bank to engage in business at the same locations as the
76-5 institution is engaged in business before the conversion;
76-6 (3) the institution can be expected to operate
76-7 profitably after the conversion;
76-8 (4) the officers, directors, managers and managing
76-9 participants of the institution as a group have sufficient banking
76-10 experience, ability, standing, competence, trustworthiness, and
76-11 integrity to justify a belief that the institution will operate in
76-12 compliance with law; and
76-13 (5) each principal shareholder or participant has
76-14 sufficient experience, ability, standing, competence,
76-15 trustworthiness, and integrity to justify a belief that the
76-16 institution will be free from improper or unlawful influence or
76-17 interference with respect to the institution's operation in
76-18 compliance with law.
76-19 (c) The banking commissioner may:
76-20 (1) request additional or supplemental information
76-21 considered necessary to an informed decision under this section;
76-22 (2) perform an examination of the converting
76-23 institution at the expense of the converting institution; and
76-24 (3) require that examination fees be paid before a
76-25 certificate of authority is issued.
76-26 (d) In connection with the application, the converting
76-27 institution must submit a statement of the law governing the exit
77-1 of the institution from the regulatory system applicable before the
77-2 conversion and the terms of the transition into a state bank. The
77-3 financial institution must also demonstrate that all applicable law
77-4 has been fully satisfied.
77-5 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
77-6 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
77-7 SUBCHAPTER A. TRANSFER OF OWNERSHIP
77-8 INTERESTS IN STATE BANK
77-9 Sec. 4.001. ACQUISITION OF CONTROL ............................ 78
77-10 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL ...... 79
77-11 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL .... 80
77-12 Sec. 4.004. APPEAL FROM ADVERSE DECISION ...................... 82
77-13 Sec. 4.005. EXEMPTIONS ........................................ 83
77-14 Sec. 4.006. OBJECTION TO OTHER TRANSFER ....................... 83
77-15 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES ............. 84
77-16 (Sections 4.008-4.100 reserved for expansion)
77-17 SUBCHAPTER B. BOARD AND OFFICERS
77-18 Sec. 4.101. VOTING SECURITIES HELD BY BANK .................... 84
77-19 Sec. 4.102. BYLAWS ............................................ 85
77-20 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
77-21 PARTICIPANTS .................................... 85
77-22 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS ................... 88
77-23 Sec. 4.105. OFFICERS .......................................... 88
77-24 Sec. 4.106. CERTAIN CRIMINAL OFFENSES ......................... 89
77-25 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES ....... 89
77-26 (Sections 4.108-4.200 reserved for expansion)
77-27 SUBCHAPTER C. SPECIAL PROVISIONS
78-1 FOR LIMITED BANKING ASSOCIATIONS
78-2 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY ................ 90
78-3 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS ............ 91
78-4 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS ................. 92
78-5 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION ......... 92
78-6 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
78-7 CONTRIBUTION TO CAPITAL ......................... 93
78-8 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
78-9 TRANSFERABILITY OF INTEREST ..................... 94
78-10 Sec. 4.207. DISSOLUTION ....................................... 94
78-11 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES .................. 96
78-12 Sec. 4.209. DISTRIBUTIONS ..................................... 96
78-13 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
78-14 ASSOCIATIONS .................................... 96
78-15 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
78-16 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
78-17 SUBCHAPTER A. TRANSFER OF OWNERSHIP
78-18 INTERESTS IN STATE BANK
78-19 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
78-20 expressly otherwise permitted by this Act, a person may not without
78-21 the prior written approval of the banking commissioner directly or
78-22 indirectly acquire a legal or beneficial interest in voting
78-23 securities of a state bank or a corporation or other entity owning
78-24 voting securities of a state bank if, after the acquisition, the
78-25 person would control the state bank. For purposes of this
78-26 subchapter and except as otherwise provided by rules adopted under
78-27 this Act, the principal shareholder or principal participant of a
79-1 state bank that directly or indirectly owns or has the power to
79-2 vote a greater percentage of voting securities of the bank than any
79-3 other shareholder or participant is considered to control the state
79-4 bank.
79-5 (b) This subchapter does not prohibit a person from
79-6 negotiating to acquire, but not acquiring, control of a state bank
79-7 or a person that controls a state bank.
79-8 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
79-9 (a) An application for approval to acquire control of a state bank
79-10 or a person that controls a state bank must be filed under oath by
79-11 the proposed transferee on a form prescribed by the banking
79-12 commissioner and accompanied by any filing fee required by statute
79-13 or rule. The application must contain all information required by
79-14 rules adopted under this Act or that the banking commissioner
79-15 requires in a particular application as necessary to an informed
79-16 decision to approve or reject the proposed acquisition.
79-17 (b) If a person or proposed transferee proposing to acquire
79-18 voting securities subject to this section includes any group of
79-19 individuals or entities acting in concert, the information required
79-20 by the banking commissioner may be required of each member of the
79-21 group.
79-22 (c) Information obtained by the banking commissioner under
79-23 this section is confidential and may not be disclosed by the
79-24 banking commissioner or any employee of the department except as
79-25 provided by Subchapter B, Chapter 2, of this Act.
79-26 (d) The applicants shall publish notice of the application,
79-27 its date of filing, and the identity of each applicant, in the form
80-1 specified by the banking commissioner, in a newspaper of general
80-2 circulation in the county where the bank's home office is located,
80-3 promptly after the applicants are notified by the banking
80-4 commissioner that the application is complete and accepted for
80-5 filing. Publication of notice of an application filed in
80-6 contemplation of a public tender offer subject to the requirements
80-7 of 15 U.S.C. Section 78n(d)(1) may be deferred for not more than 34
80-8 days after the date the application is filed if:
80-9 (1) the applicant requests confidential treatment and
80-10 represents that a public announcement of the tender offer and the
80-11 filing of appropriate forms with the Securities and Exchange
80-12 Commission or the appropriate federal banking agency, as
80-13 applicable, will occur within the period of deferral; and
80-14 (2) the banking commissioner determines that the
80-15 public interest will not be harmed by the requested confidential
80-16 treatment.
80-17 (e) The banking commissioner may waive the requirement that
80-18 a notice be published or permit delayed publication on a
80-19 determination that waiver or delay is in the public interest. If
80-20 publication of notice is waived under this subsection, the
80-21 information that would be contained in a published notice becomes
80-22 public information under Chapter 552, Government Code, on the 35th
80-23 day after the date the application is filed.
80-24 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
80-25 (a) Not later than the 60th day after the date the notice is
80-26 published, the banking commissioner shall approve the application
80-27 or set the application for hearing. If the banking commissioner
81-1 sets a hearing, the department shall participate as the opposing
81-2 party and the banking commissioner shall conduct a hearing and one
81-3 or more prehearing conferences and opportunities for discovery as
81-4 the banking commissioner considers advisable and consistent with
81-5 governing statutes and rules. A hearing held under this section is
81-6 confidential and closed to the public.
81-7 (b) Based on the record, the banking commissioner may issue
81-8 an order denying an application if:
81-9 (1) the acquisition would substantially lessen
81-10 competition, be in restraint of trade, result in a monopoly, or be
81-11 in furtherance of a combination or conspiracy to monopolize or
81-12 attempt to monopolize the banking industry in any part of this
81-13 state, unless:
81-14 (A) the anticompetitive effects of the proposed
81-15 acquisition are clearly outweighed in the public interest by the
81-16 probable effect of acquisition in meeting the convenience and needs
81-17 of the community to be served; and
81-18 (B) the proposed acquisition is not in violation
81-19 of law of this state or the United States;
81-20 (2) the financial condition of the proposed
81-21 transferee, or any member of a group comprising the proposed
81-22 transferee, might jeopardize the financial stability of the bank
81-23 being acquired;
81-24 (3) plans or proposals to operate, liquidate, or sell
81-25 the bank or its assets are not in the best interests of the bank;
81-26 (4) the experience, ability, standing, competence,
81-27 trustworthiness, and integrity of the proposed transferee, or any
82-1 member of a group comprising the proposed transferee, are
82-2 insufficient to justify a belief that the bank will be free from
82-3 improper or unlawful influence or interference with respect to the
82-4 bank's operation in compliance with law;
82-5 (5) the bank will not be solvent, have adequate
82-6 capitalization, or be in compliance with the laws of this state
82-7 after the acquisition;
82-8 (6) the proposed transferee has failed to furnish all
82-9 information pertinent to the application reasonably required by the
82-10 banking commissioner; or
82-11 (7) the proposed transferee is not acting in good
82-12 faith.
82-13 (c) If an application filed under this section is approved
82-14 by the banking commissioner, the transaction may be consummated.
82-15 Any written commitment from the proposed transferee offered to and
82-16 accepted by the banking commissioner as a condition that the
82-17 application will be approved is enforceable against the bank and
82-18 the transferee and is considered for all purposes an agreement
82-19 under this Act.
82-20 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
82-21 has been held, the banking commissioner has entered an order
82-22 denying the application, and the order has become final, the
82-23 proposed transferee may appeal the final order by filing a petition
82-24 for judicial review under the substantial evidence rule in the
82-25 District Court of Travis County as provided by Chapter 2001,
82-26 Government Code.
82-27 (b) The filing of an appeal under this section does not stay
83-1 the order of the banking commissioner.
83-2 Sec. 4.005. EXEMPTIONS. The following acquisitions are
83-3 exempt from Section 4.001 of this Act:
83-4 (1) the acquisition of securities in connection with
83-5 the exercise of a security interest or otherwise in full or partial
83-6 satisfaction of a debt previously contracted for in good faith if
83-7 the acquiring person files written notice of acquisition with the
83-8 banking commissioner before the person votes the securities
83-9 acquired;
83-10 (2) the acquisition of voting securities in any class
83-11 or series by a controlling person who has previously complied with
83-12 and received approval under this subchapter or who was identified
83-13 as a controlling person in a prior application filed with and
83-14 approved by the banking commissioner;
83-15 (3) an acquisition or transfer by operation of law,
83-16 will, or intestate succession if the acquiring person files written
83-17 notice of acquisition with the banking commissioner before the
83-18 person votes the securities acquired;
83-19 (4) a transaction subject to Subchapter D, Chapter 8,
83-20 of this Act; or
83-21 (5) a transaction exempted by the banking commissioner
83-22 or by rules adopted under this Act because the transaction is not
83-23 within the purposes of this subchapter or the regulation of which
83-24 is not necessary or appropriate to achieve the objectives of this
83-25 subchapter.
83-26 Sec. 4.006. OBJECTION TO OTHER TRANSFER. This subchapter
83-27 may not be construed to prevent the banking commissioner from
84-1 investigating, commenting on, or seeking to enjoin or set aside a
84-2 transfer of voting securities that evidence a direct or indirect
84-3 interest in a state bank, regardless of whether the transfer is
84-4 included within this subchapter, if the banking commissioner
84-5 considers the transfer to be against the public interest.
84-6 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
84-7 the banking commissioner believes that a person has committed or is
84-8 about to commit a violation of this subchapter or a rule or order
84-9 of the banking commissioner pertaining to this subchapter, the
84-10 attorney general on behalf of the banking commissioner may apply to
84-11 the District Court of Travis County for an order enjoining the
84-12 violation and for other equitable relief the nature of the case
84-13 requires.
84-14 (b) A person who knowingly fails or refuses to file the
84-15 application required by Section 4.002 of this Act commits an
84-16 offense. An offense under this subsection is a Class A
84-17 misdemeanor.
84-18 (Sections 4.008-4.100 reserved for expansion)
84-19 SUBCHAPTER B. BOARD AND OFFICERS
84-20 Sec. 4.101. VOTING SECURITIES HELD BY BANK. (a) Voting
84-21 securities of a state bank held by the state bank in a fiduciary
84-22 capacity under a will or trust, whether registered in its own name
84-23 or in the name of its nominee, may not be voted in the election of
84-24 directors or managers or on a matter affecting the compensation of
84-25 directors, managers, officers, or employees of the bank in that
84-26 capacity, unless:
84-27 (1) under the terms of the will or trust, the manner
85-1 in which the voting securities are to be voted may be determined by
85-2 a donor or beneficiary of the will or trust and the donor or
85-3 beneficiary actually makes the determination in the matter at
85-4 issue;
85-5 (2) the terms of the will or trust expressly direct
85-6 the manner in which the securities must be voted to the extent that
85-7 no discretion is vested in the bank as fiduciary; or
85-8 (3) the securities are voted solely by a cofiduciary
85-9 that is not an affiliate of the bank, as if the cofiduciary were
85-10 the sole fiduciary.
85-11 (b) Voting securities of a state bank that cannot be voted
85-12 under this section are considered to be authorized but unissued for
85-13 purposes of determining the procedures for and results of the
85-14 affected vote.
85-15 Sec. 4.102. BYLAWS. (a) Each state bank shall adopt bylaws
85-16 and may amend its bylaws from time to time for the purposes and in
85-17 accordance with the procedures set forth in the Texas Business
85-18 Corporation Act.
85-19 (b) A limited banking association in which management is
85-20 retained by the participants is not required to adopt bylaws if
85-21 provisions required by law to be contained in the bylaws are
85-22 contained in the articles of association or the participation
85-23 agreement.
85-24 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
85-25 PARTICIPANTS. (a) The board of a state bank must consist of not
85-26 fewer than five or more than 25 directors, managers, or managing
85-27 participants, the majority of whom must be residents of this state.
86-1 Except for a limited banking association in which management has
86-2 been retained by its participants, the principal executive officer
86-3 of the bank is a member of the board. The principal executive
86-4 officer acting in the capacity of board member is the board's
86-5 presiding officer unless the board elects a different presiding
86-6 officer to perform the duties as designated by the board.
86-7 (b) Unless the banking commissioner consents otherwise in
86-8 writing, a person may not serve as director, manager, or managing
86-9 participant of a state bank if:
86-10 (1) the bank incurs an unreimbursed loss attributable
86-11 to a charged-off obligation of or holds a judgment against the
86-12 person or an entity that was controlled by the person at the time
86-13 of funding and at the time of default on the loan that gave rise to
86-14 the judgment or charged-off obligation; or
86-15 (2) the person has been convicted of a felony.
86-16 (c) If a state bank other than a limited banking association
86-17 operated by managing participants does not elect directors or
86-18 managers before the 61st day after the date of its regular annual
86-19 meeting, the banking commissioner may appoint a conservator under
86-20 Chapter 6 of this Act to operate the bank and elect directors or
86-21 managers, as appropriate. If the conservator is unable to locate
86-22 or elect persons willing and able to serve as directors or
86-23 managers, the banking commissioner may close the bank for
86-24 liquidation.
86-25 (d) A vacancy on the board that reduces the number of
86-26 directors, managers, or managing participants to fewer than five
86-27 must be filled not later than the 30th day after the date the
87-1 vacancy occurs. A limited banking association with fewer than five
87-2 managing participants must add one or more new participants or
87-3 elect a board of managers of not fewer than five persons to resolve
87-4 the vacancy. After 30 days after the date the vacancy occurs, the
87-5 banking commissioner may appoint a conservator under Chapter 6 of
87-6 this Act to operate the bank and elect a board of not fewer than
87-7 five persons to resolve the vacancy. If the conservator is unable
87-8 to locate or elect five persons willing and able to serve as
87-9 directors or managers, the banking commissioner may close the bank
87-10 for liquidation.
87-11 (e) Before each term to which a person is elected to serve
87-12 as a director or manager of a state bank, or annually for a person
87-13 who is a managing participant, the person shall submit an affidavit
87-14 for filing in the minutes of the bank stating that the person, to
87-15 the extent applicable:
87-16 (1) accepts the position and is not disqualified from
87-17 serving in the position;
87-18 (2) will not violate or knowingly permit an officer,
87-19 director, manager, managing participant, or employee of the bank to
87-20 violate any law applicable to the conduct of business of the bank;
87-21 and
87-22 (3) will diligently perform the duties of the
87-23 position.
87-24 (f) An advisory director or manager is not considered a
87-25 director if the advisory director or manager:
87-26 (1) is not elected by the shareholders or participants
87-27 of the bank;
88-1 (2) does not vote on matters before the board or a
88-2 committee of the board and is not counted for purposes of
88-3 determining a quorum of the board or committee; and
88-4 (3) provides solely general policy advice to the
88-5 board.
88-6 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) The board
88-7 of a state bank shall hold at least one regular meeting each month.
88-8 At each regular meeting the board shall review and approve the
88-9 minutes of the prior meeting and review the operations, activities,
88-10 and financial condition of the bank. The board may designate
88-11 committees from among its members to perform these duties and
88-12 approve or disapprove the committees' reports at each regular
88-13 meeting. All actions of the board must be recorded in its minutes.
88-14 (b) Periodically the board may vote to designate and record
88-15 the amount of certified surplus in its minutes. Except to absorb
88-16 losses in excess of undivided profits and uncertified surplus,
88-17 certified surplus may not be reduced without the prior written
88-18 approval of the banking commissioner.
88-19 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
88-20 the officers of the bank, who serve at the pleasure of the board.
88-21 The bank must have a principal executive officer primarily
88-22 responsible for the execution of board policies and operation of
88-23 the bank and an officer responsible for the maintenance and storage
88-24 of all corporate books and records of the bank and for required
88-25 attestation of signatures. These positions may not be held by the
88-26 same person. The board may appoint other officers of the bank as
88-27 the board considers necessary.
89-1 (b) Unless expressly authorized by a resolution of the board
89-2 recorded in its minutes, an officer or employee may not create or
89-3 dispose of a bank asset or create or incur a liability on behalf of
89-4 the bank.
89-5 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
89-6 director, manager, managing participant, employee, shareholder or
89-7 participant of a state bank commits an offense if the person
89-8 knowingly:
89-9 (1) conceals information or a fact or removes,
89-10 destroys, or conceals a book or record of the bank for the purpose
89-11 of concealing information or a fact from the banking commissioner
89-12 or an agent of the banking commissioner; or
89-13 (2) removes, destroys, or conceals any book or record
89-14 of the bank that is material to a pending or anticipated legal or
89-15 administrative proceeding.
89-16 (b) An officer, director, manager, managing participant, or
89-17 employee of a state bank commits an offense if the person:
89-18 (1) knowingly makes a false entry in the books or
89-19 records or in any report or statement of the bank; or
89-20 (2) violates or knowingly participates in or permits
89-21 another of the bank's officers, directors, managers, managing
89-22 participants, or employees to violate the prohibition on lending
89-23 trust funds under Section 113.052, Property Code.
89-24 (c) An offense under this section is a felony of the third
89-25 degree.
89-26 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
89-27 (a) Without the prior approval of a disinterested majority of the
90-1 board recorded in the minutes, or if a disinterested majority
90-2 cannot be obtained the prior written approval of the banking
90-3 commissioner, a state bank may not directly or indirectly:
90-4 (1) sell or lease an asset of the bank to an officer,
90-5 director, manager, managing participant, or principal shareholder
90-6 or participant of the bank or an affiliate of the bank; or
90-7 (2) purchase or lease an asset in which an officer,
90-8 director, manager, managing participant, or principal shareholder
90-9 or participant of the bank or an affiliate of the bank has an
90-10 interest.
90-11 (b) Notwithstanding Subsection (a) of this section, a lease
90-12 transaction described in Subsection (a)(2) of this section
90-13 involving real property may not be consummated, renewed, or
90-14 extended without the prior written approval of the banking
90-15 commissioner. For purposes of this subsection only, an affiliate
90-16 of the bank does not include a subsidiary of the bank.
90-17 (c) An officer, director, manager, or managing participant
90-18 of the bank who knowingly participates in or permits a violation of
90-19 this section commits an offense. An offense under this subsection
90-20 is a felony of the third degree.
90-21 (Sections 4.108-4.200 reserved for expansion)
90-22 SUBCHAPTER C. SPECIAL PROVISIONS
90-23 FOR LIMITED BANKING ASSOCIATIONS
90-24 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
90-25 limited banking association shall file with the banking
90-26 commissioner a copy of any participation agreement by which a
90-27 participant of the limited banking association agrees to become a
91-1 full liability participant and the name and address of each full
91-2 liability participant. The filed copy is a public record.
91-3 (b) The banking commissioner may require a complete copy of
91-4 the participation agreement to be filed with the department,
91-5 regardless of whether the state bank has a full liability
91-6 participant, except that the provisions of the participation
91-7 agreement other than those by which a participant of the limited
91-8 banking association agrees to become a full liability participant
91-9 are confidential and subject to release only as provided by
91-10 Subchapter B, Chapter 2, of this Act.
91-11 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
91-12 (a) Except as provided by Subsection (b), the participants,
91-13 participant-transferees, and managers of a limited banking
91-14 association may not be held liable for a debt, obligation, or
91-15 liability of the limited banking association, including a debt,
91-16 obligation, or liability under a judgment, decree, or order of
91-17 court. A participant, other than a full liability participant, or
91-18 a manager of a limited banking association is not a proper party to
91-19 proceedings by or against a limited banking association, unless the
91-20 object of the proceeding is to enforce a participant's or manager's
91-21 right against or liability to a limited banking association.
91-22 (b) A full liability participant of a limited banking
91-23 association is liable under a judgment, decree, or order of court
91-24 for a debt, obligation, or liability of the limited banking
91-25 association that accrued during the participation of the full
91-26 liability participant in the limited banking association and before
91-27 the full liability participant or a successor in interest files a
92-1 notice of withdrawal as a full liability participant from the
92-2 limited banking association with the banking commissioner. The
92-3 filed notice of withdrawal is a public record.
92-4 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
92-5 provided by this section or the articles of association of the
92-6 limited banking association, debts, liabilities, and other
92-7 obligations may be contracted for or incurred on behalf of a
92-8 limited banking association by:
92-9 (1) a majority of the managers, if management of the
92-10 limited banking association has been vested in a board of managers;
92-11 (2) a majority of the managing participants; or
92-12 (3) an officer or other agent vested with actual or
92-13 apparent authority to contract for or incur the debt, liability, or
92-14 other obligation.
92-15 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
92-16 Management of a limited banking association is vested in the
92-17 participants in proportion to each participant's contribution to
92-18 capital, as adjusted periodically to properly reflect any
92-19 additional contribution. The articles of association may provide
92-20 that management of a limited banking association is vested in a
92-21 board of managers to be elected annually by the participants as
92-22 prescribed by the bylaws.
92-23 (b) Participants of a limited banking association may not
92-24 retain management and must elect a board of managers if:
92-25 (1) any participant is disqualified from serving as a
92-26 managing participant under Section 4.103 of this Act;
92-27 (2) the limited banking association has fewer than
93-1 five or more than 25 participants; or
93-2 (3) any participant has been removed by the banking
93-3 commissioner under Subchapter A, Chapter 6, of this Act.
93-4 (c) The articles of association, bylaws, and participation
93-5 agreement of a limited banking association may use the terms
93-6 "director" and "board" instead of "manager" and "board of
93-7 managers," respectively.
93-8 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
93-9 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
93-10 limited banking association any part of the participant's
93-11 contribution to capital until:
93-12 (1) all liabilities of the bank, except liabilities to
93-13 participants on account of contribution to capital, have been paid
93-14 or, if after the withdrawal or reduction, sufficient property of
93-15 the bank will remain to pay all liabilities of the bank, except
93-16 liabilities to participants on account of contribution to capital;
93-17 (2) all participants consent, unless the return of the
93-18 contribution to capital may be demanded as provided by this
93-19 chapter; or
93-20 (3) the articles of association are canceled or
93-21 amended to set out the withdrawal or reduction.
93-22 (b) A participant may demand the return of the participant's
93-23 contribution to capital on the dissolution of the association and
93-24 the failure by the full liability participants to exercise the
93-25 right for the business of the limited banking association to be
93-26 carried on by the remaining participants as provided by Section
93-27 4.207 of this Act.
94-1 (c) Unless allowed by the articles of association or by the
94-2 unanimous consent of all participants of the limited banking
94-3 association, a participant may demand the return of the
94-4 participant's contribution to capital only in cash.
94-5 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
94-6 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
94-7 participant-transferee in a limited banking association is the
94-8 personal estate of the participant or the participant-transferee
94-9 and may be transferred as provided by the bylaws or the
94-10 participation agreement. A transferee of a participant's interest
94-11 has the status of a participant-transferee and does not by the
94-12 transfer become a participant or obtain a right to participate in
94-13 the management of the limited banking association. A
94-14 participant-transferee is entitled to receive only a share of
94-15 profits, return of contribution, or other distributive benefit in
94-16 respect to the interest transferred to which the participant who
94-17 transferred the interest would have been entitled. A
94-18 participant-transferee may become a participant only as provided by
94-19 the bylaws or the participation agreement.
94-20 (b) A limited banking association may add additional
94-21 participants in the same manner as participant-transferees after
94-22 payment in full of the capital contribution to the limited banking
94-23 association payable for the issuance of additional participation
94-24 interests.
94-25 Sec. 4.207. DISSOLUTION. (a) A limited banking association
94-26 organized under this chapter is dissolved on:
94-27 (1) the expiration of the period fixed for the
95-1 duration of the limited banking association;
95-2 (2) a vote to dissolve or the execution of a written
95-3 consent to dissolve by all full liability participants, if any, and
95-4 a sufficient number of other participants that combined with all
95-5 full liability participants hold at least two-thirds of the
95-6 participation shares in each class in the association, or a greater
95-7 fraction as provided by the articles of association;
95-8 (3) except as provided by the articles of association,
95-9 the death, insanity, expulsion, bankruptcy, retirement, or
95-10 resignation of a participant unless a majority in interest of all
95-11 remaining participants elect in writing not later than the 90th day
95-12 after the date of the event to continue the business of the
95-13 association; or
95-14 (4) the occurrence of an event of dissolution
95-15 specified in the articles of association.
95-16 (b) A dissolution under this section is considered to be the
95-17 initiation of a voluntary liquidation under Subchapter B, Chapter
95-18 7, of this Act.
95-19 (c) An event of dissolution described by Subsection (a)(3)
95-20 of this section does not cancel or revoke a contract to which the
95-21 bank is a party, including a trust indenture or agreement or
95-22 voluntary dissolution under Subchapter B, Chapter 7, of this Act,
95-23 until the period for the remaining participants to continue the
95-24 business of the bank has expired without the remaining participants
95-25 having completed the necessary action to continue the business of
95-26 the bank.
95-27 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
96-1 and losses of a limited banking association may be allocated among
96-2 the participants and among classes of participants as provided by
96-3 the participation agreement. Without the prior written approval of
96-4 the banking commissioner, the profits and losses must be allocated
96-5 based on the relative interests of the participants as reflected in
96-6 the articles of association and related documents filed with and
96-7 approved by the banking commissioner.
96-8 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
96-9 Act, distributions of cash or other assets of a limited banking
96-10 association may be made to the participants as provided by the
96-11 participation agreement. Without the prior written approval of the
96-12 banking commissioner, distributions must be made to the
96-13 participants based on the relative interests of the participants as
96-14 reflected in the articles of association and related documents
96-15 filed with and approved by the banking commissioner.
96-16 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
96-17 ASSOCIATIONS. For purposes of the provisions of this Act other
96-18 than this subchapter, as the context requires:
96-19 (1) a manager and the board of managers are considered
96-20 to be a director and the board of directors, respectively;
96-21 (2) if there is not a board of managers, a participant
96-22 is considered to be a director and all of the participants are
96-23 considered to be the board of directors;
96-24 (3) a participant or participant-transferee is
96-25 considered to be a shareholder;
96-26 (4) a participation share is considered to be a share
96-27 of stock; and
97-1 (5) a distribution is considered to be a dividend.
97-2 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
97-3 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
97-4 OF BANK FACILITIES AND OTHER REAL ESTATE
97-5 Sec. 5.001. INVESTMENT IN BANK FACILITIES .................... 98
97-6 Sec. 5.002. OTHER REAL ESTATE ................................ 100
97-7 (Sections 5.003-5.100 reserved for expension)
97-8 SUBCHAPTER B. INVESTMENTS
97-9 Sec. 5.101. SECURITIES ....................................... 101
97-10 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
97-11 SHARES ......................................... 104
97-12 Sec. 5.103. BANK SUBSIDIARIES ................................ 104
97-13 Sec. 5.104. MUTUAL FUNDS ..................................... 106
97-14 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS .................. 107
97-15 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE ................... 110
97-16 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED .................. 111
97-17 (Sections 5.108-5.200 reserved for expansion)
97-18 SUBCHAPTER C. LOANS
97-19 Sec. 5.201. LENDING LIMITS ................................... 111
97-20 Sec. 5.202. LOAN EXPENSES AND FEES ........................... 115
97-21 Sec. 5.203. LEASE FINANCING TRANSACTIONS ..................... 116
97-22 (Sections 5.204-5.300 reserved for expansion)
97-23 SUBCHAPTER D. DEPOSITS
97-24 Sec. 5.301. NATURE OF DEPOSIT CONTRACT ....................... 117
97-25 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT ................... 117
97-26 Sec. 5.303. FEES; DISCLOSURES ................................ 119
97-27 Sec. 5.304. SECURING DEPOSITS ................................ 119
98-1 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS ....................... 120
98-2 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION ........ 121
98-3 Sec. 5.307. RIGHT OF SET-OFF ................................. 123
98-4 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
98-5 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
98-6 OF BANK FACILITIES AND OTHER REAL ESTATE
98-7 Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) In this
98-8 subchapter, "bank facility" means real estate, including an
98-9 improvement, owned, or leased to the extent the lease or the
98-10 leasehold improvements are capitalized, by a state bank for the
98-11 purpose of:
98-12 (1) providing space for bank employees to perform
98-13 their duties and space for parking by bank employees and customers;
98-14 (2) conducting bank business, including meeting the
98-15 reasonable needs and convenience of the public and the bank's
98-16 customers, computer operations, document and other item processing,
98-17 maintenance and storage of foreclosed collateral pending disposal,
98-18 and record retention and storage;
98-19 (3) holding, improving, and occupying as an incident
98-20 to future expansion of the bank's facilities; or
98-21 (4) conducting another activity authorized by rules
98-22 adopted under this Act.
98-23 (b) Without the prior written approval of the banking
98-24 commissioner, a state bank may not directly or indirectly invest an
98-25 amount in excess of its capital and certified surplus in bank
98-26 facilities, furniture, fixtures, and equipment. Except as
98-27 otherwise provided by rules adopted under this Act, in computing
99-1 this limitation a state bank:
99-2 (1) shall include:
99-3 (A) its direct investment in bank facilities;
99-4 (B) any investment in equity or investment
99-5 securities of a company holding title to a facility used by the
99-6 bank for the purposes specified by Subsection (a) of this section;
99-7 (C) any loan made by the bank to or on the
99-8 security of equity or investment securities issued by a company
99-9 holding title to a facility used by the bank; and
99-10 (D) any indebtedness incurred on bank facilities
99-11 by a company:
99-12 (i) that holds title to the facility;
99-13 (ii) that is an affiliate of the bank; and
99-14 (iii) in which the bank is invested in the
99-15 manner described by Paragraph (B) or (C) of this subdivision; and
99-16 (2) may exclude an amount included under Subdivisions
99-17 (1)(B)-(D) of this subsection to the extent any lease of a facility
99-18 from the company holding title to the facility is capitalized on
99-19 the books of the bank.
99-20 (c) Real estate acquired under Subsection (a)(3) of this
99-21 section and not improved and occupied by the bank ceases to be a
99-22 bank facility on the third anniversary of the date of its
99-23 acquisition, unless the banking commissioner on application grants
99-24 written approval to further delay in the improvement and occupation
99-25 of the property by the bank.
99-26 (d) A bank shall comply with regulatory accounting
99-27 principles in accounting for its investment in and depreciation of
100-1 bank facilities, furniture, fixtures, and equipment.
100-2 Sec. 5.002. OTHER REAL ESTATE. (a) A state bank may not
100-3 acquire real estate except:
100-4 (1) as permitted by Section 5.001 of this Act or as
100-5 otherwise provided by this Act, including rules adopted under this
100-6 Act;
100-7 (2) with the prior written approval of the banking
100-8 commissioner; or
100-9 (3) if necessary to avoid or minimize a loss on a loan
100-10 or investment previously made in good faith.
100-11 (b) With the prior written approval of the banking
100-12 commissioner, a state bank may exchange real estate for other real
100-13 estate or personal property, invest additional funds in or improve
100-14 real estate acquired under this subsection or Subsection (a) of
100-15 this section, or acquire additional real estate to avoid or
100-16 minimize loss on real estate acquired as permitted by Subsection
100-17 (a) of this section.
100-18 (c) A state bank shall dispose of any real estate subject to
100-19 this section not later than:
100-20 (1) the fifth anniversary of the date:
100-21 (A) it was acquired, except as otherwise
100-22 provided by rules adopted under this Act; or
100-23 (B) it ceases to be used as a bank facility; or
100-24 (2) the second anniversary of the date it ceases to be
100-25 a bank facility as provided by Section 5.001(c) of this Act.
100-26 (d) The banking commissioner on application may grant one or
100-27 more extensions of time for disposing of real estate if the banking
101-1 commissioner determines that:
101-2 (1) the bank has made a good faith effort to dispose
101-3 of the real estate; or
101-4 (2) disposal of the real estate would be detrimental
101-5 to the bank.
101-6 (Sections 5.003-5.100 reserved for expansion)
101-7 SUBCHAPTER B. INVESTMENTS
101-8 Sec. 5.101. SECURITIES. (a) A state bank may purchase and
101-9 sell equity and investment securities without recourse, solely on
101-10 the order and for the account of a customer, and may not underwrite
101-11 an issue of securities except as otherwise provided by this Act or
101-12 rules adopted under this Act.
101-13 (b) Except as otherwise provided by this Act or rules
101-14 adopted under this Act, a state bank may not invest its funds in
101-15 equity securities except as necessary to avoid or minimize a loss
101-16 on a loan or investment previously made in good faith.
101-17 (c) A state bank may purchase investment securities for its
101-18 own account under limitations and restrictions prescribed by rules
101-19 adopted under this Act. Except as otherwise provided by this
101-20 section, the total amount of the investment securities of any one
101-21 obligor or maker, held by the bank for its own account, may not
101-22 exceed an amount equal to 15 percent of the bank's capital and
101-23 certified surplus.
101-24 (d) Notwithstanding Subsections (a)-(c) of this section, a
101-25 state bank may, with prudent banking judgment, deal in, underwrite,
101-26 or purchase for its own account:
101-27 (1) bonds and other legally created general
102-1 obligations of a state, an agency or political subdivision of a
102-2 state, the United States, or an agency or instrumentality of the
102-3 United States;
102-4 (2) an investment security that this state, an agency
102-5 or political subdivision of this state, the United States, or an
102-6 agency or instrumentality of the United States has unconditionally
102-7 agreed to purchase, insure, or guarantee;
102-8 (3) securities that are offered and sold under 15
102-9 U.S.C. Section 77d(5);
102-10 (4) mortgage related securities, as defined by 15
102-11 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
102-12 the Riegle Community Development and Regulatory Improvement Act of
102-13 1994, a note or obligation that is secured by a first lien on one
102-14 or more parcels of real estate on which is located one or more
102-15 commercial structures is subject to the limitations of Subsection
102-16 (c) of this section;
102-17 (5) investment securities issued or guaranteed by the
102-18 Federal Home Loan Mortgage Corporation, the Federal National
102-19 Mortgage Association, the Government National Mortgage Association,
102-20 the Federal Agriculture Mortgage Association, or the Federal Farm
102-21 Credit Banks Funding Corporation;
102-22 (6) investment securities issued or guaranteed by the
102-23 North American Development Bank; or
102-24 (7) securities issued by a Federal Home Loan Bank.
102-25 (e) Subsection (a) of this section does not apply to an
102-26 obligation issued by a state or an agency or political subdivision
102-27 of a state for housing, higher education, health care, or public
103-1 welfare purposes if the state bank evaluates the obligation, before
103-2 dealing in, underwriting, or purchasing the obligation, to
103-3 determine whether the obligation is of sufficient investment
103-4 quality and marketability for investment by the bank, and whether
103-5 the obligation has been issued for the appropriate purpose by a
103-6 qualifying issuer. If the bank has made a firm commitment to
103-7 underwrite the obligation, the bank is considered to hold the
103-8 obligation for purposes of the limitations of Subsection (c) of
103-9 this section.
103-10 (f) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
103-11 (c) of this section applies to investments in small business
103-12 related securities as defined by 15 U.S.C. Section 78c(a).
103-13 (g) A state bank may not invest more than an amount equal to
103-14 25 percent of its capital and certified surplus in investment grade
103-15 adjustable rate preferred stock and money market (auction rate)
103-16 preferred stock.
103-17 (h) A state bank may deposit funds in a federally insured
103-18 financial institution, a Federal Reserve Bank, or a Federal Home
103-19 Loan Bank without limitation.
103-20 (i) The finance commission may adopt rules to administer and
103-21 carry out this section, including rules to define or further define
103-22 terms used by this section, establish limits, requirements, or
103-23 exemptions other than those specified by this section for
103-24 particular classes or categories of investment securities, or limit
103-25 or expand investment authority for state banks for particular
103-26 classes or categories of investment securities.
103-27 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
104-1 SHARES. (a) Except as otherwise provided by this section, a state
104-2 bank may not acquire a lien by pledge or otherwise on its own
104-3 shares or participation shares or otherwise purchase or acquire
104-4 title to its own shares or participation shares, except as
104-5 necessary to avoid or minimize a loss on a loan or investment
104-6 previously made in good faith.
104-7 (b) With the prior written approval of the banking
104-8 commissioner or as permitted by rules adopted under this Act, a
104-9 state bank may acquire title to its own shares or participation
104-10 shares and hold those shares or participation shares as treasury
104-11 stock. Treasury stock acquired under this subsection is not
104-12 considered an equity investment.
104-13 (c) If a state bank acquires a lien on or title to its own
104-14 shares or participation shares under this section, the lien may not
104-15 by its original terms extend for more than two years. Except with
104-16 the prior written approval of the banking commissioner, the bank
104-17 may not hold title to its own shares or participation shares for
104-18 more than one year.
104-19 (d) For purposes of this section and except as otherwise
104-20 provided by rules adopted under this Act, equity securities in a
104-21 bank holding company that are not publicly held and traded on a
104-22 national securities exchange or automated quotation system are
104-23 considered to be shares or participation shares of each of the bank
104-24 holding company's subsidiary state banks.
104-25 Sec. 5.103. BANK SUBSIDIARIES. (a) Except as otherwise
104-26 provided by this Act or rules adopted under this Act, a state bank
104-27 may conduct any activity or investment through an operating
105-1 subsidiary that a state bank or a bank holding company is
105-2 authorized to conduct under the laws of this state, if the
105-3 operating subsidiary is adequately empowered and appropriately
105-4 licensed to conduct its business.
105-5 (b) Except for investment in a subsidiary engaging solely in
105-6 activities that may be engaged in directly by the bank, a state
105-7 bank without the prior written approval of the banking commissioner
105-8 may not invest more than an amount equal to 10 percent of its
105-9 capital and certified surplus in a single subsidiary and may not
105-10 invest more than the amount of its equity capital in all
105-11 subsidiaries. The amount of a state bank's investment in a
105-12 subsidiary is the total amount of the bank's investment in equity
105-13 or investment securities issued by its subsidiary and any loans and
105-14 extensions of credit from the bank to its subsidiary.
105-15 (c) A state bank may establish or acquire a subsidiary as
105-16 provided by 12 C.F.R. Section 337.4 to conduct securities
105-17 activities that the bank is prohibited from conducting directly.
105-18 (d) Except as otherwise provided by a rule adopted under
105-19 this Act, a state bank may make a minority investment indirectly
105-20 through an operating subsidiary in equity securities of:
105-21 (1) another bank;
105-22 (2) a company that engages solely in an activity that
105-23 is permissible for a bank service corporation or a bank holding
105-24 company subsidiary; or
105-25 (3) a company that engages solely in activities as
105-26 agent or trustee or in a brokerage, custodial, advisory, or
105-27 administrative capacity.
106-1 (e) A state bank that intends to acquire, establish, or
106-2 perform new activities through a subsidiary shall submit a letter
106-3 to the banking commissioner describing in detail the proposed
106-4 activities of the subsidiary.
106-5 (f) The bank may acquire or establish a subsidiary or
106-6 perform new activities in an existing subsidiary beginning on the
106-7 31st day after the date the banking commissioner receives the
106-8 bank's letter, unless the banking commissioner specifies an earlier
106-9 or later date. The banking commissioner may extend the 30-day
106-10 period on a determination that the bank's letter raises issues that
106-11 require additional information or additional time for analysis. If
106-12 the period is extended, the bank may acquire or establish a
106-13 subsidiary, or may perform new activities in an existing
106-14 subsidiary, only on prior written approval of the banking
106-15 commissioner.
106-16 (g) A subsidiary of a state bank is subject to regulation by
106-17 the banking commissioner to the extent provided by this Act or
106-18 rules adopted under this Act. In the absence of limiting rules,
106-19 the banking commissioner may regulate a subsidiary as if it were a
106-20 state bank.
106-21 Sec. 5.104. MUTUAL FUNDS. (a) A state bank may invest for
106-22 its own account in equity securities of an investment company
106-23 registered under the Investment Company Act of 1940 (15 U.S.C.
106-24 Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C.
106-25 Section 77a et seq.) if the portfolio of the investment company
106-26 consists wholly of investments in which the bank could invest
106-27 directly for its own account.
107-1 (b) If the portfolio of an investment company described by
107-2 Subsection (a) of this section consists wholly of investments in
107-3 which the bank could invest directly without limitation under
107-4 Section 5.101(d) of this Act, the bank may invest in the investment
107-5 company without limitation.
107-6 (c) If the portfolio of an investment company described by
107-7 Subsection (a) of this section contains an investment or obligation
107-8 that is subject to the limits of Section 5.101(c) or 5.201(a) of
107-9 this Act, the bank may invest in the investment company not more
107-10 than an amount equal to 15 percent of the bank's capital and
107-11 certified surplus.
107-12 (d) A state bank that invests in an investment company as
107-13 provided by Subsection (c) of this section shall periodically
107-14 determine that its pro rata share of any security in the portfolio
107-15 of the investment company is not in excess of applicable investment
107-16 and lending limits by reason of being combined with the bank's pro
107-17 rata share of that security held by all other investment companies
107-18 in which the bank has invested and with the bank's own direct
107-19 investment and loan holdings.
107-20 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) A state
107-21 bank may purchase for its own account equity securities of any
107-22 class issued by:
107-23 (1) a bank service corporation, except that not more
107-24 than an amount equal to 15 percent of the bank's capital and
107-25 certified surplus may be invested in a single bank service
107-26 corporation and not more than an amount equal to five percent of
107-27 its assets may be invested in all bank service corporations;
108-1 (2) an agricultural credit corporation, but the bank
108-2 may not invest more than an amount equal to 30 percent of the
108-3 bank's capital and certified surplus in the agricultural credit
108-4 corporation unless the bank owns at least 80 percent of the equity
108-5 securities of the agricultural credit corporation;
108-6 (3) a small business investment company if the
108-7 aggregate investment does not exceed an amount equal to 10 percent
108-8 of the bank's capital and certified surplus;
108-9 (4) a banker's bank if the aggregate investment does
108-10 not exceed an amount equal to 15 percent of the bank's capital and
108-11 certified surplus or result in the bank acquiring or retaining
108-12 ownership, control, or power to vote more than five percent of any
108-13 class of voting securities of the banker's bank; and
108-14 (5) a housing corporation if the sum of the amount of
108-15 investment and the amount of loans and commitments for loans to the
108-16 housing corporation does not exceed an amount equal to 10 percent
108-17 of the bank's capital and certified surplus.
108-18 (b) The banking commissioner may authorize investments in
108-19 excess of the limitations of Subsection (a) of this section in
108-20 response to a written application if the banking commissioner
108-21 concludes that:
108-22 (1) the excess investment is not precluded by other
108-23 applicable law; and
108-24 (2) the safety and soundness of the requesting bank
108-25 would not be adversely affected.
108-26 (c) For the purposes of this section:
108-27 (1) "Agricultural credit corporation" means a company
109-1 organized solely for the purpose of making loans to farmers and
109-2 ranchers for agriculture purposes, including the breeding, raising,
109-3 fattening, or marketing of livestock.
109-4 (2) "Banker's bank" means a bank insured by the
109-5 Federal Deposit Insurance Corporation or a bank holding company
109-6 that owns or controls such an insured bank, if:
109-7 (A) all equity securities of the bank or bank
109-8 holding company, other than director's qualifying shares or shares
109-9 issued under an employee compensation plan, are owned by depository
109-10 institutions or depository institution holding companies; and
109-11 (B) the bank or bank holding company and all its
109-12 subsidiaries are engaged exclusively in providing:
109-13 (i) services to or for other depository
109-14 institutions, depository institution holding companies, and the
109-15 directors, managers, managing participants, officers, and employees
109-16 of other depository institutions and depository institution holding
109-17 companies; and
109-18 (ii) correspondent banking services at the
109-19 request of other depository institutions, depository institution
109-20 holding companies, or their subsidiaries.
109-21 (3) "Bank service corporation" has the meaning
109-22 assigned by the Bank Service Corporation Act (12 U.S.C. Section
109-23 1861 et seq.) or a successor to that Act.
109-24 (4) "Housing corporation" means a corporation
109-25 organized under Title IX of the Housing and Urban Development Act
109-26 of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited
109-27 partnership, or joint venture organized under Section 907(a) or (c)
110-1 of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing
110-2 corporation organized pursuant to the laws of this state for the
110-3 purpose of engaging in or financing low- and moderate-income
110-4 housing developments or projects.
110-5 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) A state
110-6 bank may make investments of a predominantly civic, community, or
110-7 public nature designed primarily to promote the public welfare,
110-8 including the welfare of low and moderate income communities or
110-9 families, including investments providing housing, services, or
110-10 jobs. The state bank may make the investments directly or by
110-11 purchasing equity securities in an entity primarily engaged in
110-12 making those investments. The state bank may not make the
110-13 investment if it would expose the bank to unlimited liability. In
110-14 addition, a bank may serve as a community partner and make
110-15 investments in a community partnership, as those terms are defined
110-16 by the Riegle Community Development and Regulatory Improvement Act
110-17 of 1994.
110-18 (b) A bank's aggregate investments under this section,
110-19 including loans and commitments for loans, may not exceed an amount
110-20 equal to 10 percent of the bank's capital and certified surplus.
110-21 The banking commissioner may authorize investments in excess of
110-22 this limitation in response to a written application if the banking
110-23 commissioner concludes that:
110-24 (1) the excess investment is not precluded by other
110-25 applicable law; and
110-26 (2) the safety and soundness of the requesting bank
110-27 would not be adversely affected.
111-1 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Except as
111-2 otherwise provided by this Act or rules adopted under this Act, a
111-3 state bank may not invest its funds in trade or commerce by buying,
111-4 selling, or otherwise dealing in goods or by owning or operating a
111-5 business not part of the business of banking, except as necessary
111-6 to avoid or minimize a loss on a loan or investment previously made
111-7 in good faith.
111-8 (Sections 5.108-5.200 reserved for expansion)
111-9 SUBCHAPTER C. LOANS
111-10 Sec. 5.201. LENDING LIMITS. (a) Without the prior written
111-11 approval of the banking commissioner, the total loans and
111-12 extensions of credit by a state bank to a person outstanding at one
111-13 time may not exceed an amount equal to 25 percent of the bank's
111-14 capital and certified surplus. This limitation does not apply to:
111-15 (1) liability as endorser or guarantor of commercial
111-16 or business paper discounted by or assigned to the bank by its
111-17 owner who has acquired it in the ordinary course of business;
111-18 (2) indebtedness evidenced by bankers' acceptances as
111-19 described by 12 U.S.C. Section 372 and issued by other banks;
111-20 (3) indebtedness secured by a bill of lading,
111-21 warehouse receipt, or similar document transferring or securing
111-22 title to readily marketable goods, except that:
111-23 (A) the goods shall be insured if it is
111-24 customary to insure those goods; and
111-25 (B) the aggregate indebtedness of a person under
111-26 this paragraph may not exceed an amount equal to 50 percent of the
111-27 bank's capital and certified surplus;
112-1 (4) indebtedness evidenced by notes or other paper
112-2 secured by liens on agricultural products in secure and properly
112-3 documented storage in bonded warehouses or elevators if the value
112-4 of the collateral is not less than 125 percent of the amount of the
112-5 indebtedness and the bank's interest in the collateral is
112-6 adequately insured against loss, except that the aggregate
112-7 indebtedness of a person under this subdivision may not exceed an
112-8 amount equal to 50 percent of the bank's capital and certified
112-9 surplus;
112-10 (5) indebtedness of another depository institution
112-11 arising out of loans with settlement periods of less than one week;
112-12 (6) indebtedness arising out of the daily transaction
112-13 of the business of a clearinghouse association in this state;
112-14 (7) liability under an agreement by a third party to
112-15 repurchase from the bank an investment security listed in
112-16 Subsection 5.101(d) of this Act to the extent that the agreed
112-17 repurchase price does not exceed the original purchase price to the
112-18 bank or the market value of the investment security;
112-19 (8) that portion of an indebtedness that this state,
112-20 an agency or political subdivision of this state, the United
112-21 States, or an agency or instrumentality of the United States has
112-22 unconditionally agreed to purchase, insure, or guarantee;
112-23 (9) indebtedness secured by investment securities
112-24 listed in Subsection 5.101(d) of this Act to the extent that the
112-25 market value of the investment securities equals or exceeds the
112-26 indebtedness;
112-27 (10) that portion of an indebtedness that is fully
113-1 secured by a segregated deposit account in the lending bank;
113-2 (11) loans and extensions of credit arising from the
113-3 purchase of negotiable or nonnegotiable installment consumer paper
113-4 that carries a full recourse endorsement or unconditional guarantee
113-5 by the person transferring the paper if the bank's files or the
113-6 knowledge of its officers of the financial condition of each maker
113-7 of the consumer paper is reasonably adequate and if an officer of
113-8 the bank designated for that purpose by the board certifies in
113-9 writing that the bank is relying primarily on the responsibility of
113-10 each maker for payment of the loans or extensions of credit and not
113-11 on a full or partial recourse endorsement or guarantee by the
113-12 transferor;
113-13 (12) that portion of an indebtedness in excess of the
113-14 limitation of Subsection (a) of this section that is fully secured
113-15 by marketable securities or bullion with a market value at least
113-16 equal to the amount of the overage, as determined by reliable and
113-17 continuously available price quotations, except that the exempted
113-18 indebtedness or overage of a person under this subdivision may not
113-19 exceed an amount equal to 15 percent of the bank's capital and
113-20 certified surplus;
113-21 (13) indebtedness of an affiliate of the bank if the
113-22 transaction with the affiliate is subject to the restrictions and
113-23 limitations of 12 U.S.C. Section 371c;
113-24 (14) indebtedness of an operating subsidiary of the
113-25 bank; and
113-26 (15) that portion of the indebtedness of a person
113-27 secured in good faith by a purchase money lien taken by the bank in
114-1 exchange for the sale of real or personal property owned by the
114-2 bank if the sale is in the best interest of the bank.
114-3 (b) The finance commission may adopt rules to administer and
114-4 carry out this section, including rules to:
114-5 (1) define or further define terms used by this
114-6 section;
114-7 (2) establish limits, requirements, or exemptions
114-8 other than those specified by this section for particular classes
114-9 or categories of loans or extensions of credit; and
114-10 (3) establish collective lending and investment
114-11 limits.
114-12 (c) The banking commissioner may determine whether a loan or
114-13 extension of credit putatively made to a person will be attributed
114-14 to another person for purposes of this section.
114-15 (d) An officer, director, manager, managing participant, or
114-16 employee of a state bank who approves or participates in the
114-17 approval of a loan with actual knowledge that the loan violates
114-18 this section is jointly and severally liable to the bank for the
114-19 lesser of the amount by which the loan exceeded applicable lending
114-20 limits or the bank's actual loss, and remains liable for that
114-21 amount until the loan and all prior indebtedness of the borrower to
114-22 the bank have been fully repaid. The bank may initiate a
114-23 proceeding to collect an amount due under this subsection at any
114-24 time before four years after the date the borrower defaults on the
114-25 subject loan or any prior indebtedness. A person that is liable
114-26 for and pays amounts to the bank under this subsection is entitled
114-27 to an assignment of the bank's claim against the borrower to the
115-1 extent of the payments. For purposes of this subsection, an
115-2 officer, director, manager, managing participant, or employee of a
115-3 state bank is presumed to know the amount of the bank's lending
115-4 limit under Subsection (a) of this section and the amount of the
115-5 borrower's aggregate outstanding indebtedness to the bank
115-6 immediately before a new loan or extension of credit to that
115-7 borrower.
115-8 Sec. 5.202. LOAN EXPENSES AND FEES. (a) A bank may require
115-9 a borrower to pay all reasonable expenses and fees incurred in
115-10 connection with the making, closing, disbursing, extending,
115-11 readjusting, or renewing of a loan, regardless of whether those
115-12 expenses or fees are paid to third parties. A fee charged by the
115-13 bank under this section may not exceed the cost the bank reasonably
115-14 expects to incur in connection with the transaction to which the
115-15 fee relates. Payment for these expenses may be collected by the
115-16 bank from the borrower and retained by the bank or paid to a person
115-17 rendering services for which a charge has been made, or the
115-18 payments may be paid directly by the borrower to a third party to
115-19 whom they are payable. This section does not authorize the bank to
115-20 charge its borrower for payment of fees and expenses to an officer,
115-21 director, manager, or managing participant of the bank for services
115-22 rendered in the person's capacity as an officer, director, manager,
115-23 or managing participant.
115-24 (b) A bank may charge a penalty for prepayment or late
115-25 payment. Only one penalty may be charged by the bank on each past
115-26 due payment. Unless otherwise agreed in writing, prepayment of
115-27 principal must be applied on the final installment of the note or
116-1 other obligation until that installment is fully paid, and further
116-2 prepayments must be applied on installments in the inverse order of
116-3 their maturity.
116-4 (c) Fees and expenses charged and collected as provided by
116-5 this section are not considered a part of the interest or
116-6 compensation charged by the bank for the use, forbearance, or
116-7 detention of money.
116-8 (d) To the extent of any conflict between this section and a
116-9 provision of Subtitle 2, Title 79, Revised Statutes (Article
116-10 5069-2.01 et seq., Vernon's Texas Civil Statutes), or Chapter 15,
116-11 Title 79, Revised Statutes (Article 5069-15.01 et seq., Vernon's
116-12 Texas Civil Statutes), the provision of Title 79, Revised Statutes,
116-13 prevails.
116-14 Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) A state bank
116-15 may purchase or construct a public facility and, as holder of legal
116-16 title, lease the facility to a public authority having sufficient
116-17 resources to pay all rentals as they become due. A lease under
116-18 this subsection must provide that legal title to the property
116-19 transfers to the lessee on consummation and expiration of the
116-20 lease.
116-21 (b) Subject to rules adopted under this Act, a state bank
116-22 may become the owner and lessor of tangible personal property for
116-23 lease financing transactions on a net lease basis on the specific
116-24 request and for the use of a customer. Without the written
116-25 approval of the banking commissioner to continue holding property
116-26 acquired for leasing purposes under this subsection, the bank may
116-27 not hold the property more than six months after the date of
117-1 expiration of the original or any extended or renewed lease period
117-2 agreed to by the customer for whom the property was acquired or by
117-3 a subsequent lessee.
117-4 (c) Rental payments received by the bank in a lease
117-5 financing transaction under this section are considered to be rent
117-6 and not interest or compensation for the use, forbearance, or
117-7 detention of money. However, a lease financing transaction is
117-8 considered to be a loan or extension of credit for purposes of
117-9 Section 5.201 of this Act.
117-10 (Sections 5.204-5.300 reserved for expansion)
117-11 SUBCHAPTER D. DEPOSITS
117-12 Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) A deposit
117-13 contract between a bank and an account holder is considered a
117-14 contract in writing for all purposes and may be evidenced by one or
117-15 more agreements, deposit tickets, signature cards, or notices as
117-16 provided by Section 5.302 of this Act, or by other documentation as
117-17 provided by law.
117-18 (b) A cause of action for denial of deposit liability on a
117-19 deposit contract without a maturity date does not accrue until the
117-20 bank has denied liability and given notice of the denial to the
117-21 account holder. A bank that provides an account statement or
117-22 passbook to the account holder is considered to have denied
117-23 liability and given the notice as to any amount not shown on the
117-24 statement or passbook.
117-25 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) A bank and
117-26 its account holder may amend the deposit contract as permitted by
117-27 Subsection (b) of this section, by agreement, or as otherwise
118-1 permitted by law.
118-2 (b) A bank may amend a deposit contract by mailing a written
118-3 notice of the amendment to the account holder, separately or as an
118-4 enclosure with or part of the account holder's statement of account
118-5 or passbook. The notice must include the text and effective date
118-6 of the amendment. The bank is required to deliver the notice to
118-7 only one of the account holders of a deposit account that has more
118-8 than one account holder. The effective date may not be earlier
118-9 than the 30th day after the date of mailing the notice, unless the
118-10 amendment:
118-11 (1) is made to comply with a statute or rule that
118-12 authorizes an earlier effective date;
118-13 (2) does not reduce the interest rate on the account
118-14 or otherwise adversely affect the account holder; or
118-15 (3) is made for reasons relating to security of
118-16 accounts.
118-17 (c) Except for a disclosure required to be made under
118-18 Section 5.303 of this Act or the Truth in Savings Act (12 U.S.C.
118-19 Section 4301 et seq.) or other federal law, before renewal of an
118-20 account, a notice of amendment is not required under Subsection
118-21 (b) of this section for:
118-22 (1) a change in the interest rate on a variable-rate
118-23 account, including a money market or negotiable order of withdrawal
118-24 account;
118-25 (2) a change in a term for a time account with a
118-26 maturity of one month or less, if the deposit contract authorizes
118-27 the change in the term; or
119-1 (3) a change contemplated and permitted by the
119-2 original contract.
119-3 (d) An amendment under Subsection (b) of this section may
119-4 reduce the rate of interest or eliminate interest on an account
119-5 without a maturity date.
119-6 (e) Amendment of a deposit contract made in compliance with
119-7 this section is not a violation of the Deceptive Trade
119-8 Practices-Consumer Protection Act (Section 17.41 et seq., Business
119-9 & Commerce Code).
119-10 Sec. 5.303. FEES; DISCLOSURES. (a) Except as otherwise
119-11 provided by law, a bank may charge an account holder a fee, service
119-12 charge, or penalty relating to service or activity of a deposit
119-13 account, including a fee for an overdraft, insufficient fund check,
119-14 or stop payment order.
119-15 (b) Except as otherwise provided by the Truth in Savings Act
119-16 (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall
119-17 disclose the amount of each fee, charge, or penalty related to an
119-18 account, or if the amount of a fee, charge, or penalty cannot be
119-19 stated, the method of computing the fee, charge, or penalty, by
119-20 written notice delivered or mailed to each customer opening an
119-21 account not later than the 10th business day after the date the
119-22 account is opened. A bank that increases or adds a new fee,
119-23 charge, or penalty shall give notice of the change to each affected
119-24 account holder in the manner provided by Section 5.302(b) of this
119-25 Act for notice of an amendment of a deposit contract.
119-26 Sec. 5.304. SECURING DEPOSITS. (a) A state bank may not
119-27 pledge or create a lien on its assets or secure the repayment of a
120-1 deposit except as authorized or required by this section, rules
120-2 adopted under this Act, or other law.
120-3 (b) A state bank may pledge its assets to secure a deposit
120-4 of this state, an agency or political subdivision of this state,
120-5 the United States, or an instrumentality of the United States.
120-6 (c) This section does not prohibit the pledge of assets to
120-7 secure the repayment of money borrowed or the purchase of excess
120-8 deposit insurance from a private insurance company. An act, deed,
120-9 conveyance, pledge, or contract in violation of this section is
120-10 void.
120-11 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Except as
120-12 otherwise provided by this section, a bank lawfully doing business
120-13 in this state may enter a deposit account with a minor as the sole
120-14 and absolute owner of the account and may pay checks and
120-15 withdrawals and otherwise act with respect to the account on the
120-16 order of the minor. A payment or delivery of rights to a minor who
120-17 holds a deposit account evidenced by a receipt or acquittance
120-18 signed by the minor discharges the bank to the extent of the
120-19 payment made or rights delivered.
120-20 (b) If the minor is the sole and absolute owner of the
120-21 deposit account, the disabilities of minority are removed for the
120-22 limited purpose of enabling:
120-23 (1) the minor to enter into a depository contract with
120-24 the bank; and
120-25 (2) the bank to enforce the contract against the
120-26 minor, including collection of overdrafts and account fees and
120-27 submission of account history to account reporting agencies and
121-1 credit reporting bureaus.
121-2 (c) A parent or legal guardian of a minor may deny the
121-3 minor's authority to control, transfer, draft on, or make
121-4 withdrawals from the minor's deposit account by notifying the bank
121-5 in writing. On receipt of the notice by the bank, the minor may
121-6 not control, transfer, draft on, or make withdrawals from the
121-7 account during minority except with the joinder of a parent or
121-8 legal guardian of the minor.
121-9 (d) If a minor with a deposit account dies, the receipt or
121-10 acquittance of the minor's parent or legal guardian discharges the
121-11 liability of the bank to the extent of the receipt or acquittance,
121-12 except that the aggregate discharges under this subsection may not
121-13 exceed $3,000.
121-14 (e) Subsection (a) of this section does not authorize a loan
121-15 to the minor by the bank, whether on pledge of the minor's savings
121-16 account or otherwise, or bind the minor to repay a loan made except
121-17 as provided by Subsection (b) of this section or other law or
121-18 unless the depository institution has obtained the express consent
121-19 and joinder of a parent or legal guardian of the minor. This
121-20 subsection does not apply to an inadvertent extension of credit
121-21 because of an overdraft from insufficient funds, returned checks or
121-22 deposits, or other shortages in a depository account resulting from
121-23 normal banking operations.
121-24 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION.
121-25 (a) If a deposit account is opened with a bank by one or more
121-26 persons expressly as a trustee for one or more other named persons
121-27 and further notice of the existence and terms of a legal and valid
122-1 trust is not given in writing to the bank, the bank may accept and
122-2 administer the account, subject to Chapter XI, Probate Code.
122-3 (b) If a deposit account is opened with a bank by one or
122-4 more persons expressly as a trustee for one or more other named
122-5 persons pursuant to or purporting to be pursuant to a written trust
122-6 agreement, the trustee may provide the bank with a certificate of
122-7 trust to evidence the trust relationship. The certificate must be
122-8 an affidavit of the trustee and must include the effective date of
122-9 the trust, the name of the trustee, the name or method for choosing
122-10 successor trustees, the name and address of each beneficiary, the
122-11 authority granted to the trustee, the disposition of the account on
122-12 the death of the trustee or the survivor of two or more trustees,
122-13 other information required by the bank, and an indemnification of
122-14 the bank. The bank may accept and administer the account, subject
122-15 to Chapter XI, Probate Code, in accordance with the certificate of
122-16 trust without requiring a copy of the trust agreement. The bank is
122-17 not liable for administering the account as provided by the
122-18 certificate of trust, even if the certificate of trust is contrary
122-19 to the terms of the trust agreement, unless the bank has actual
122-20 knowledge of the terms of the trust agreement.
122-21 (c) On the death of the trustee or the survivor of two or
122-22 more trustees, the bank may pay all or part of the withdrawal value
122-23 of the account with interest as provided by the certificate of
122-24 trust. If the trustee did not deliver a certificate of trust, the
122-25 bank's right to treat the account as owned by a trustee ceases on
122-26 the death of the trustee. On the death of the trustee or the
122-27 survivor of two or more trustees, the bank shall, unless the
123-1 certificate of trust provides otherwise, pay the withdrawal value
123-2 of the account with interest in equal shares to the persons who
123-3 survived the trustee, are named as beneficiaries in the certificate
123-4 of trust, and can be located by the bank from its own records. If
123-5 there is not a certificate of trust, payment of the withdrawal
123-6 value and interest shall be made as provided by Chapter XI, Probate
123-7 Code. Any payment made under this section for all or part of the
123-8 withdrawal value and interest discharges any liability of the bank
123-9 to the extent of the payment. The bank may pay all or part of the
123-10 withdrawal value and interest in the manner provided by this
123-11 section, regardless of whether it has knowledge of a competing
123-12 claim, unless the bank receives actual knowledge that payment has
123-13 been restrained by order of a court of competent jurisdiction.
123-14 (d) This section does not obligate a bank to accept a
123-15 deposit account from a trustee who does not furnish a copy of the
123-16 trust agreement or to search beyond its own records for the
123-17 location of a named beneficiary.
123-18 (e) This section does not affect a contractual provision to
123-19 the contrary that otherwise complies with the laws of this state.
123-20 Sec. 5.307. RIGHT OF SET-OFF. (a) Except as otherwise
123-21 provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
123-22 seq.) or other federal law, a bank has a right of set-off, without
123-23 further agreement or action, against all accounts owned by a
123-24 depositor to whom or on whose behalf the bank has made an advance
123-25 of money by loan, overdraft, or otherwise, if the bank has
123-26 previously disclosed this right to the depositor. If the depositor
123-27 defaults in the repayment or satisfaction of the obligation, the
124-1 bank may, without notice to or consent of the depositor, set off or
124-2 cancel on its books all or part of the accounts owned by the
124-3 depositor and apply the value of the accounts in payment of and to
124-4 the extent of the obligation.
124-5 (b) For purposes of this section, a default occurs when an
124-6 obligor has failed to make a payment as provided by the terms of
124-7 the loan or other credit obligation and a grace period provided for
124-8 by the agreement or law has expired. An obligation is not required
124-9 to be accelerated or matured for a default to authorize set-off of
124-10 the depositor's obligation against the defaulted payment.
124-11 (c) A bank may not exercise its right of set-off under this
124-12 section against an account unless the account is due and owing to
124-13 the depositor in the same capacity as the defaulted credit
124-14 obligation. A trust account for which a depositor is trustee,
124-15 including a trustee under a certificate of trust delivered under
124-16 Section 5.306(b) of this Act, is not subject to the right of
124-17 set-off under this section unless the trust relationship is solely
124-18 evidenced by the account card as provided by Chapter XI, Probate
124-19 Code.
124-20 (d) This section does not limit or prohibit the exercise of
124-21 another right of set-off, including a right under contract or
124-22 common law.
124-23 CHAPTER 6. ENFORCEMENT ACTIONS
124-24 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
124-25 Sec. 6.001. DETERMINATION LETTER ............................. 126
124-26 Sec. 6.002. CEASE AND DESIST ORDER ........................... 127
124-27 Sec. 6.003. REMOVAL OR PROHIBITION ORDER ..................... 128
125-1 Sec. 6.004. HEARING ON PROPOSED ORDER ........................ 130
125-2 Sec. 6.005. EMERGENCY ORDERS ................................. 131
125-3 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS .......... 132
125-4 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION
125-5 ORDER .......................................... 132
125-6 Sec. 6.008. LIMITATION ON ACTION ............................. 134
125-7 Sec. 6.009. ENFORCEMENT OF FINAL ORDER ....................... 134
125-8 Sec. 6.010. ADMINISTRATIVE PENALTIES ......................... 134
125-9 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE
125-10 PENALTIES ...................................... 135
125-11 Sec. 6.012. CONFIDENTIALITY OF RECORDS ....................... 136
125-12 Sec. 6.013. COLLECTION OF FEES ............................... 136
125-13 (Sections 6.014-6.100 reserved for expansion)
125-14 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
125-15 Sec. 6.101. ORDER OF SUPERVISION ............................. 137
125-16 Sec. 6.102. ORDER OF CONSERVATORSHIP ......................... 137
125-17 Sec. 6.103. HEARING .......................................... 137
125-18 Sec. 6.104. POST-HEARING ORDER ............................... 138
125-19 Sec. 6.105. CONFIDENTIALITY OF RECORDS ....................... 139
125-20 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION ................. 140
125-21 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR ................. 140
125-22 Sec. 6.108. QUALIFICATIONS OF APPOINTEE ...................... 141
125-23 Sec. 6.109. EXPENSES ......................................... 141
125-24 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR
125-25 DECISIONS ...................................... 142
125-26 Sec. 6.111. VENUE ............................................ 143
125-27 Sec. 6.112. DURATION ......................................... 144
126-1 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES .............. 144
126-2 (Sections 6.114-6.200 reserved for expansion)
126-3 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
126-4 INVESTIGATION AND ENFORCEMENT
126-5 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY ........... 144
126-6 Sec. 6.202. SUBPOENA AUTHORITY ............................... 146
126-7 Sec. 6.203. ENFORCEMENT OF SUBPOENA .......................... 147
126-8 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS ............ 148
126-9 Sec. 6.205. EVIDENCE ......................................... 149
126-10 Sec. 6.206. CEASE AND DESIST ORDER REGARDING
126-11 UNAUTHORIZED ACTIVITY .......................... 149
126-12 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER
126-13 REGARDING UNAUTHORIZED ACTIVITY ................ 150
126-14 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER
126-15 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-16 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
126-17 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-18 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY .......... 153
126-19 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER .............. 154
126-20 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER ................. 156
126-21 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND .................. 157
126-22 CHAPTER 6. ENFORCEMENT ACTIONS
126-23 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
126-24 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
126-25 commissioner determines from examination or other credible evidence
126-26 that a state bank is in a condition that may warrant the issuance
126-27 of an enforcement order under this chapter, the banking
127-1 commissioner may, by personal delivery or by registered or
127-2 certified mail, return receipt requested, notify the bank in
127-3 writing of the determination, the requirements the bank must
127-4 satisfy to abate the determination, and the time in which the
127-5 requirements must be satisfied to avert further administrative
127-6 action.
127-7 (b) The determination letter may be issued in connection
127-8 with the issuance of a cease and desist, removal, or prohibition
127-9 order under this subchapter or an order of supervision or
127-10 conservatorship under Subchapter B of this chapter.
127-11 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
127-12 commissioner has grounds to issue a cease and desist order to an
127-13 officer, employee, director, manager, or managing participant of a
127-14 state bank, or the bank itself acting through an authorized person,
127-15 if the banking commissioner determines from examination or other
127-16 credible evidence that the bank or person, directly or indirectly:
127-17 (1) has violated this Act or another applicable law or
127-18 rule;
127-19 (2) has engaged in a breach of trust or other
127-20 fiduciary duty;
127-21 (3) has refused to submit to examination or
127-22 examination under oath;
127-23 (4) has conducted business in an unsafe or unsound
127-24 manner; or
127-25 (5) has violated a condition of the bank's charter or
127-26 an agreement between the bank or the person and the banking
127-27 commissioner or the department.
128-1 (b) If the banking commissioner has grounds for action under
128-2 Subsection (a) of this section and further finds that an order to
128-3 cease and desist from a violation appears to be necessary and in
128-4 the best interest of the bank involved and its depositors,
128-5 creditors, and shareholders or participants, the banking
128-6 commissioner, by personal delivery or by registered or certified
128-7 mail, return receipt requested, may serve a proposed cease and
128-8 desist order on the bank and each person who committed or
128-9 participated in the violation. The proposed order must state the
128-10 grounds for the proposed order with reasonable certainty. The
128-11 proposed order must state its effective date, which may not be
128-12 before the 21st day after the date the proposed order is mailed or
128-13 delivered. The order takes effect for the bank if the bank does
128-14 not request a hearing in writing before the effective date and
128-15 takes effect for each other person against whom the proposed order
128-16 is directed if that person does not request a hearing in writing
128-17 before the effective date. After taking effect the order is final
128-18 and nonappealable as to that bank or other person.
128-19 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
128-20 commissioner has grounds to remove a present or former officer,
128-21 director, manager, managing participant, or employee of a state
128-22 bank from office or employment in, or prohibit a controlling
128-23 shareholder or participant or other person participating in the
128-24 affairs of a state bank from further participation in the affairs
128-25 of, a state bank, trust company, or other entity chartered or
128-26 licensed by the banking commissioner under the laws of this state,
128-27 if the banking commissioner determines from examination or other
129-1 credible evidence that:
129-2 (1) the person committed, participated, or acted, in
129-3 other than an inadvertent or unintentional manner, as described by
129-4 Section 6.002(a) of this Act with regard to the affairs of the
129-5 bank, or violated a final cease and desist order issued in response
129-6 to the same or a similar act; and
129-7 (2) because of this action by the person:
129-8 (A) the bank has suffered or will probably
129-9 suffer financial loss or other damage;
129-10 (B) the interests of the bank's depositors have
129-11 been or could be prejudiced; or
129-12 (C) the person has received financial gain or
129-13 other benefit by reason of the violation; and
129-14 (3) this action by the person:
129-15 (A) involves personal dishonesty on the part of
129-16 the person; or
129-17 (B) demonstrates wilful or continuing disregard
129-18 for the safety or soundness of the bank.
129-19 (b) If the banking commissioner finds grounds for action
129-20 under Subsection (a) of this section and further finds that a
129-21 removal or prohibition order appears to be necessary and in the
129-22 best interest of the bank involved and its depositors, creditors,
129-23 and shareholders or participants, the banking commissioner, by
129-24 personal delivery or by registered or certified mail, return
129-25 receipt requested, may serve a proposed removal or prohibition
129-26 order, as appropriate, on an officer, employee, director, manager
129-27 or managing participant, controlling shareholder or participant, or
130-1 other person alleged to have committed or participated in the
130-2 violation. The proposed order must state the grounds for removal
130-3 or prohibition with reasonable certainty. The proposed order must
130-4 state its effective date, which may not be before the 21st day
130-5 after the date the proposed order is mailed or delivered. The
130-6 order takes effect for a person against whom the proposed order is
130-7 directed if the person does not request a hearing in writing before
130-8 the effective date. After taking effect the order is final and
130-9 nonappealable as to that person.
130-10 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
130-11 hearing on a proposed order shall be held not later than the 30th
130-12 day after the date the first request for a hearing on the order was
130-13 received by the department unless the parties agree to a later
130-14 hearing date. Each party shall be given written notice by personal
130-15 delivery or by registered or certified mail, return receipt
130-16 requested, of the date set by the banking commissioner for the
130-17 hearing not later than the 11th day before that date. The hearing
130-18 shall be conducted as provided by Chapter 2001, Government Code.
130-19 At the hearing, the department has the burden of proof and each
130-20 person against whom the proposed order is directed may
130-21 cross-examine and present evidence to show why the proposed order
130-22 should not be issued.
130-23 (b) After the hearing, the banking commissioner shall issue
130-24 or decline to issue the proposed order. The proposed order may be
130-25 modified as necessary to conform to the findings at the hearing and
130-26 to require the board to take necessary affirmative action to
130-27 correct the conditions cited in the order.
131-1 (c) An order issued under this section is immediately final
131-2 for purposes of enforcement and appeal. The order may be appealed
131-3 as provided by Section 3.009 of this Act.
131-4 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
131-5 commissioner believes that immediate action is needed to prevent
131-6 immediate and irreparable harm to the bank and its depositors,
131-7 creditors, and shareholders or participants, the banking
131-8 commissioner may issue one or more cease and desist, removal, or
131-9 prohibition orders as emergency orders to become effective
131-10 immediately on service without prior notice or hearing. Service
131-11 must be by personal delivery or by registered or certified mail,
131-12 return receipt requested.
131-13 (b) In each emergency order the banking commissioner shall
131-14 notify the bank and any person against whom the emergency order is
131-15 directed of the specific conduct, activity, or omission requiring
131-16 the order, the citation of each statute or rule alleged to have
131-17 been violated, the immediate and irreparable harm alleged to be
131-18 threatened, and the right to a hearing. A hearing on the order may
131-19 be requested in writing not later than the 10th day after the date
131-20 that the order is served. Unless a person against whom the
131-21 emergency order is directed requests a hearing in writing before
131-22 the 11th day after the date it is served on the person, the
131-23 emergency order is final and nonappealable as to that person.
131-24 (c) A hearing on an emergency order, if requested, must be
131-25 given priority over all other matters pending before the banking
131-26 commissioner and must be held not later than the 20th day after the
131-27 date that it is requested unless the parties agree to a later
132-1 hearing date.
132-2 (d) Until the hearing, an emergency order continues in
132-3 effect unless the order is stayed by the banking commissioner. The
132-4 banking commissioner may impose any condition before granting a
132-5 stay of the emergency order.
132-6 (e) After the hearing, the banking commissioner may affirm,
132-7 modify, or set aside in whole or part the emergency order. An
132-8 order affirming or modifying the emergency order is immediately
132-9 final for purposes of enforcement and appeal. The order may be
132-10 appealed as provided by Section 3.009 of this Act.
132-11 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS. A copy
132-12 of any determination letter, proposed order, emergency order, or
132-13 final order issued by the banking commissioner under this
132-14 subchapter shall be immediately brought to the attention of the
132-15 board of the affected bank, regardless of whether the bank is a
132-16 party, and filed in the minutes of the board. Each director,
132-17 manager, or managing participant shall immediately certify to the
132-18 banking commissioner in writing that the certifying person has read
132-19 and understood the determination letter, proposed order, emergency
132-20 order, or final order. The required certification may not be
132-21 considered an admission of a person in a subsequent legal or
132-22 administrative proceeding.
132-23 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
132-24 (a) Without the prior written approval of the banking
132-25 commissioner, a person subject to a final and enforceable removal
132-26 or prohibition order issued by the banking commissioner:
132-27 (1) may not serve as a director, officer, or employee
133-1 of any state bank, trust company, or other entity chartered or
133-2 licensed by the banking commissioner under the laws of this state
133-3 while the order is in effect;
133-4 (2) may not directly or indirectly participate in any
133-5 manner in the management of such an entity;
133-6 (3) may not directly or indirectly vote for a director
133-7 of such an entity;
133-8 (4) may not solicit, procure, transfer, attempt to
133-9 transfer, vote, or attempt to vote a proxy, consent, or
133-10 authorization with respect to voting rights in such an entity; and
133-11 (5) remains entitled to receive dividends or a share
133-12 of profits, return of contribution, or other distributive benefit
133-13 from such an entity with respect to voting securities in the entity
133-14 owned by the person.
133-15 (b) If voting securities of an entity identified in
133-16 Subsection (a)(1) of this section cannot be voted under this
133-17 section, the voting securities are considered to be authorized but
133-18 unissued for purposes of determining the procedures for and results
133-19 of the affected vote<>.
133-20 (c) Participants of a limited banking association in which a
133-21 participant has been finally removed or prohibited from
133-22 participation in the bank's affairs under this subchapter shall
133-23 elect a board of managers.
133-24 (d) This section and Section 6.008 of this Act do not
133-25 prohibit a removal or prohibition order that has indefinite
133-26 duration or that by its terms is perpetual.
133-27 Sec. 6.008. LIMITATION ON ACTION. The banking commissioner
134-1 may not initiate an enforcement action under this subchapter later
134-2 than the fifth anniversary of the date the conduct or acts involved
134-3 were discovered or reasonably should have been discovered by the
134-4 banking commissioner.
134-5 Sec. 6.009. ENFORCEMENT OF FINAL ORDER. (a) If the banking
134-6 commissioner reasonably believes that a bank or person has violated
134-7 a final and enforceable cease and desist, removal, or prohibition
134-8 order issued under this subchapter, the banking commissioner may:
134-9 (1) initiate administrative penalty proceedings
134-10 against the bank under Section 6.010 of this Act;
134-11 (2) refer the matter to the attorney general for
134-12 enforcement by injunction or other available remedy; or
134-13 (3) pursue any other action the banking commissioner
134-14 considers appropriate under applicable law.
134-15 (b) If the attorney general prevails in an action brought
134-16 under Subsection (a)(2) of this section, the attorney general is
134-17 entitled to recover reasonable attorney's fees from the bank or
134-18 person violating the order.
134-19 Sec. 6.010. ADMINISTRATIVE PENALTIES. (a) The banking
134-20 commissioner may initiate a proceeding for an administrative
134-21 penalty against a bank under Section 6.009(a)(1) of this Act by
134-22 serving on the bank, by personal delivery or registered or
134-23 certified mail, return receipt requested, notice of the time and
134-24 place of a hearing on the penalty. The hearing may not be held
134-25 earlier than the 20th day after the date the notice is served and
134-26 shall be conducted under Chapter 2001, Government Code. The notice
134-27 must contain a statement of the acts or conduct alleged to be in
135-1 violation of the order.
135-2 (b) In determining whether an order has been violated, the
135-3 banking commissioner shall consider the maintenance of procedures
135-4 reasonably adopted to ensure compliance with the order.
135-5 (c) If the banking commissioner determines after the hearing
135-6 that the order has been violated, the banking commissioner may
135-7 impose an administrative penalty against the bank in an amount not
135-8 to exceed $500 for each day the bank is in violation of the final
135-9 order.
135-10 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES.
135-11 (a) When a penalty order under Section 6.010 of this Act becomes
135-12 final, the bank shall pay the penalty or appeal by filing a
135-13 petition for judicial review under the substantial evidence rule in
135-14 the district court of Travis County.
135-15 (b) The petition for judicial review stays the penalty order
135-16 during the period preceding the decision of the court. If the
135-17 court sustains the order, the court shall order the bank to pay the
135-18 full amount of the penalty or a lower amount determined by the
135-19 court. If the court does not sustain the order, a penalty is not
135-20 owed. If the final judgment of the court requires payment of a
135-21 penalty, interest accrues on the penalty, at the rate charged on
135-22 loans to depository institutions by the New York Federal Reserve
135-23 Bank, beginning on the date the judgment is final and ending on the
135-24 date the penalty and interest are paid.
135-25 (c) If the bank does not pay a final and nonappealable
135-26 penalty order, the banking commissioner shall refer the matter to
135-27 the attorney general for enforcement. The attorney general is
136-1 entitled to recover reasonable attorney's fees from the bank if the
136-2 attorney general prevails in judicial action necessary for
136-3 collection of the penalty.
136-4 (d) A penalty collected under this section shall be remitted
136-5 to the comptroller for deposit to the credit of the general revenue
136-6 fund.
136-7 Sec. 6.012. CONFIDENTIALITY OF RECORDS. A copy of a notice,
136-8 correspondence, transcript, pleading, or other document in the
136-9 records of the department relating to an order issued under this
136-10 subchapter is confidential and may be released only as provided by
136-11 Subchapter B, Chapter 2, of this Act, except that the banking
136-12 commissioner shall publish all final removal and prohibition orders
136-13 on a periodic basis. The banking commissioner may publish a final
136-14 cease and desist order or information regarding the existence of
136-15 the order to the public if the banking commissioner concludes that
136-16 effective enforcement of the order would be enhanced by the
136-17 release.
136-18 Sec. 6.013. COLLECTION OF FEES. The department may sue to
136-19 enforce the collection of a fee owed to the department under a law
136-20 administered by the department. In the suit a certificate by the
136-21 banking commissioner showing the delinquency is prima facie
136-22 evidence of:
136-23 (1) the levy of the fee or the delinquency of the
136-24 stated fee amount; and
136-25 (2) compliance by the department with the law relating
136-26 to the computation and levy of the fee.
136-27 (Sections 6.014-6.100 reserved for expansion)
137-1 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
137-2 Sec. 6.101. ORDER OF SUPERVISION. If the banking
137-3 commissioner determines from examination or other credible evidence
137-4 that a state bank is in hazardous condition and that an order of
137-5 supervision appears to be necessary and in the best interest of the
137-6 bank and its depositors, creditors, and shareholders or
137-7 participants, or the public, the banking commissioner may without
137-8 prior notice issue an order appointing a supervisor over the bank.
137-9 The supervisor serves until the earlier of the expiration of the
137-10 period stated in the order of supervision or the date the banking
137-11 commissioner determines that the requirements for abatement of the
137-12 order have been satisfied.
137-13 Sec. 6.102. ORDER OF CONSERVATORSHIP. In addition to the
137-14 grounds for conservatorship provided by Sections 4.103 and 6.104 of
137-15 this Act, if the banking commissioner determines from examination
137-16 or other credible evidence that a state bank is in hazardous
137-17 condition and immediate and irreparable harm is threatened to the
137-18 bank, its depositors, creditors, or shareholders or participants,
137-19 or the public, the banking commissioner may without prior notice
137-20 issue an order appointing a conservator at any time before, during,
137-21 or after the period of supervision. An order of conservatorship
137-22 issued under this section must specifically state the basis for the
137-23 order.
137-24 Sec. 6.103. HEARING. (a) An order issued under Section
137-25 6.101 or 6.102 of this Act must contain or be accompanied by a
137-26 notice that a hearing before the banking commissioner will be held
137-27 at the request of the bank at which the bank may cross-examine and
138-1 present evidence to contest the order or show that it has satisfied
138-2 all requirements for abatement of the order. The department has
138-3 the burden of proof for any continuation of the order or the
138-4 issuance of a new order.
138-5 (b) A bank that seeks to contest or modify the order or
138-6 demonstrate that it has satisfied all requirements for abatement of
138-7 the order shall submit a written request for a hearing to the
138-8 banking commissioner. The request must state the grounds for the
138-9 request to set aside or modify the order. On receiving a request
138-10 for hearing, the banking commissioner shall serve notice by
138-11 personal delivery or by registered or certified mail, return
138-12 receipt requested, of the time and place of the hearing, which must
138-13 be not later than the 10th day after the date the banking
138-14 commissioner receives the request for a hearing unless the parties
138-15 agree to a later hearing date.
138-16 (c) The banking commissioner may delay a decision for a
138-17 prompt examination of the bank and may reopen the record as
138-18 necessary to allow presentation of the results of the examination
138-19 and appropriate opportunity for cross-examination and presentation
138-20 of other relevant evidence.
138-21 Sec. 6.104. POST-HEARING ORDER. (a) If the banking
138-22 commissioner after the hearing finds that the bank has been
138-23 rehabilitated, its hazardous condition has been remedied,
138-24 irreparable harm is no longer threatened, or that the bank should
138-25 otherwise be released from the order, the banking commissioner
138-26 shall release the bank, subject to conditions the banking
138-27 commissioner from the evidence believes are warranted to preserve
139-1 the safety and soundness of the bank.
139-2 (b) If the banking commissioner after the hearing finds that
139-3 the bank has failed to comply with the lawful requirements of the
139-4 banking commissioner, has not been rehabilitated, is insolvent, or
139-5 otherwise continues in hazardous condition, the banking
139-6 commissioner by order shall:
139-7 (1) appoint or reappoint a supervisor pursuant to
139-8 Section 6.101 of this Act;
139-9 (2) appoint or reappoint a conservator pursuant to
139-10 Section 6.102 of this Act; or
139-11 (3) take other appropriate action authorized by law.
139-12 (c) An order issued under Subsection (b) of this section is
139-13 immediately final for purposes of appeal. The order may be
139-14 appealed as provided by Section 3.009 of this Act.
139-15 (d) This subchapter does not prevent release of the bank
139-16 from supervision or conservatorship before a hearing if the banking
139-17 commissioner is satisfied that requirements for abatement have been
139-18 adequately satisfied.
139-19 Sec. 6.105. CONFIDENTIALITY OF RECORDS. An order issued
139-20 under this subchapter and a copy of a notice, correspondence,
139-21 transcript, pleading, or other document in the records of the
139-22 department relating to the order are confidential and may be
139-23 released only as provided by Subchapter B, Chapter 2, of this Act,
139-24 except that the banking commissioner may release an order or
139-25 information regarding the existence of an order to the public if
139-26 the banking commissioner concludes that effective enforcement of
139-27 the order would be enhanced by the release.
140-1 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION. During the
140-2 period of supervision the bank may not, without the prior approval
140-3 of the banking commissioner or the supervisor or as otherwise
140-4 permitted or restricted by the order of supervision:
140-5 (1) dispose of, sell, transfer, convey, or encumber
140-6 the bank's assets;
140-7 (2) lend or invest the bank's funds;
140-8 (3) incur a debt, obligation, or liability; or
140-9 (4) pay a cash dividend to the bank's shareholders or
140-10 participants.
140-11 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR. (a) A
140-12 conservator appointed under this subchapter shall immediately take
140-13 charge of the bank and all of its property, books, records, and
140-14 affairs on behalf and at the direction and control of the banking
140-15 commissioner.
140-16 (b) Subject to any limitation contained in the order of
140-17 appointment or other direction of the banking commissioner, the
140-18 conservator has all the powers of the directors, managers, managing
140-19 participants, officers, and shareholders or participants of the
140-20 bank and shall conduct the business of the bank and take all steps
140-21 the conservator considers appropriate to remove the causes and
140-22 conditions that required the appointment of a conservator. During
140-23 the conservatorship, the board may not direct or participate in the
140-24 affairs of the bank.
140-25 (c) Except as otherwise provided by this subchapter, rules
140-26 adopted under this Act, or Section 2.010 of this Act, the
140-27 conservator has the rights and privileges and is subject to the
141-1 duties, restrictions, penalties, conditions, and limitations of the
141-2 directors, officers, and employees of state banks.
141-3 Sec. 6.108. QUALIFICATIONS OF APPOINTEE. The banking
141-4 commissioner may appoint any person as a supervisor or conservator
141-5 who in the sole judgment of the banking commissioner is qualified
141-6 to serve. The banking commissioner may serve or may appoint an
141-7 employee of the department to serve as supervisor or conservator.
141-8 Sec. 6.109. EXPENSES. (a) The banking commissioner shall
141-9 determine and approve the reasonable expenses attributable to the
141-10 service of a supervisor or conservator, including costs incurred by
141-11 the department and the compensation and expenses of the supervisor
141-12 or conservator and any professional employees appointed to
141-13 represent or assist the supervisor or conservator. The banking
141-14 commissioner or an employee of the department may not receive
141-15 compensation in addition to salary for serving as supervisor or
141-16 conservator, but the department may receive reimbursement for the
141-17 fully allocated personnel cost associated with service of the
141-18 banking commissioner or an employee as supervisor or conservator.
141-19 (b) All approved expenses shall be paid by the bank as the
141-20 banking commissioner determines. The banking commissioner has a
141-21 lien against the assets and funds of the bank to secure payment of
141-22 approved expenses. The lien has a higher priority than any other
141-23 lien against the bank.
141-24 (c) Notwithstanding any other provision of this subchapter,
141-25 the bank may employ an attorney and other persons the bank selects
141-26 to assist the bank in contesting or satisfying the requirements of
141-27 an order of supervision or conservatorship. The banking
142-1 commissioner shall authorize the payment of reasonable fees and
142-2 expenses from the bank for the attorney or other persons as
142-3 expenses of the supervision or conservatorship.
142-4 (d) The banking commissioner may defer collection of
142-5 assessment and examination fees by the department from the bank
142-6 during a period of supervision or conservatorship, if deferral
142-7 would appear to aid prospects for rehabilitation. As a condition
142-8 of release from supervision or conservatorship, the banking
142-9 commissioner may require the rehabilitated bank to pay or develop a
142-10 reasonable plan for payment of deferred fees.
142-11 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS.
142-12 (a) Notwithstanding Section 6.107(b) of this Act, a majority of
142-13 the bank's board, acting directly or through counsel who
142-14 affirmatively represents that the requisite majority has been
142-15 obtained, may request in writing that the banking commissioner
142-16 review an action taken or proposed by the supervisor or
142-17 conservator. The request must specify why the action would not be
142-18 in the best interest of the bank. The banking commissioner shall
142-19 investigate to the extent necessary and make a prompt written
142-20 ruling on the request. If the action is proposed rather than
142-21 already taken or if the effect of the action can be postponed, the
142-22 banking commissioner may stay the action on request pending review.
142-23 (b) If a majority of the bank's board objects to the banking
142-24 commissioner's ruling, the majority may, not later than the 10th
142-25 day after the date the bank is notified of the ruling, request a
142-26 hearing before the banking commissioner.
142-27 (c) The banking commissioner shall give the board notice of
143-1 the time and place of the hearing by personal delivery or by
143-2 registered or certified mail, return receipt requested. The
143-3 hearing may not be held later than the 10th day after the date the
143-4 banking commissioner receives the request for a hearing unless the
143-5 parties agree to a later hearing date. At the hearing the board
143-6 has the burden of proof to demonstrate that the action is not in
143-7 the best interest of the bank.
143-8 (d) After the hearing, the banking commissioner may affirm,
143-9 modify, or set aside in whole or part the prior ruling. An order
143-10 supporting the action contested by the board is immediately final
143-11 for purposes of appeal. The order may be appealed as provided by
143-12 Section 3.009 of this Act. If the order is appealed to the finance
143-13 commission, the finance commission may affirm, terminate, or modify
143-14 the order, continue or end supervision or conservatorship, and
143-15 order further relief as justice, equity, and protection of
143-16 depositors, creditors, and the public require.
143-17 Sec. 6.111. VENUE. A suit filed against a bank while the
143-18 bank is under an order of conservatorship, or a suit filed against
143-19 a person in connection with an action taken or decision made by
143-20 that person as a supervisor or conservator of a bank, regardless of
143-21 whether the bank remains under an order of supervision or
143-22 conservatorship, must be brought in Travis County. A conservator
143-23 may sue a person on the bank's behalf to preserve, protect, or
143-24 recover bank assets, including claims or causes of action. The
143-25 suit may be in:
143-26 (1) Travis County; or
143-27 (2) another location where jurisdiction and venue
144-1 against that person may be obtained under law.
144-2 Sec. 6.112. DURATION. A supervisor or conservator shall
144-3 serve for the period necessary to accomplish the purposes of the
144-4 supervision or conservatorship as intended by this subchapter. A
144-5 rehabilitated bank shall be returned to its former or new
144-6 management under conditions reasonable and necessary to prevent
144-7 recurrence of the conditions causing the supervision or
144-8 conservatorship.
144-9 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES. If the
144-10 banking commissioner determines that a bank should be closed and
144-11 liquidated under Chapter 7 of this Act, the banking commissioner
144-12 may take any action authorized under that chapter regardless of the
144-13 existence of supervision or conservatorship. A period of
144-14 supervision or conservatorship is not required before a bank is
144-15 closed for liquidation or other remedial action is taken.
144-16 (Sections 6.114-6.200 reserved for expansion)
144-17 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
144-18 INVESTIGATION AND ENFORCEMENT
144-19 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY. (a) If
144-20 the banking commissioner has reason to believe that a person has
144-21 engaged, is engaging, or is likely to engage in an unauthorized
144-22 activity, the banking commissioner may:
144-23 (1) make any investigation necessary inside or outside
144-24 this state to determine whether the unauthorized activity has
144-25 occurred or is likely to occur, or to aid in the enforcement of the
144-26 laws administered by the banking commissioner;
144-27 (2) initiate appropriate disciplinary action as
145-1 provided by this subchapter; and
145-2 (3) report any unauthorized activity to a law
145-3 enforcement agency or another regulatory agency with appropriate
145-4 jurisdiction.
145-5 (b) The banking commissioner may furnish any materials,
145-6 documents, reports, complaints, or other evidence the banking
145-7 commissioner has compiled in connection with the unauthorized
145-8 activity to a law enforcement agency on written request and may
145-9 assist the law enforcement agency or other regulatory agency as
145-10 requested.
145-11 (c) A person acting without malice, fraudulent intent, or
145-12 bad faith is not subject to liability, including liability for
145-13 libel, slander, or other relevant tort, because the person files a
145-14 report or furnishes, orally or in writing, information concerning a
145-15 suspected, anticipated, or completed unauthorized activity to a law
145-16 enforcement agency, the banking commissioner or another regulatory
145-17 agency with appropriate jurisdiction, or an agent or employee of a
145-18 law enforcement agency, the banking commissioner, or other
145-19 regulatory agency. The person is entitled to attorney's fees and
145-20 court costs if the person prevails in an action for libel, slander,
145-21 or any other relevant tort based on the report or other information
145-22 the person furnished as provided by this subchapter. This section
145-23 does not:
145-24 (1) affect or modify a common law or statutory
145-25 privilege or immunity;
145-26 (2) preempt the authority or relieve the duty of a law
145-27 enforcement agency or other regulatory agency with appropriate
146-1 jurisdiction to investigate and prosecute suspected criminal acts;
146-2 (3) prohibit a person from voluntarily disclosing
146-3 information to a law enforcement agency or other regulatory agency;
146-4 or
146-5 (4) limit a power or duty granted to the banking
146-6 commissioner under this Act or other law.
146-7 (d) This subchapter does not apply to a state or national
146-8 bank, a state or federal savings bank, a state or federal savings
146-9 association, or a state or federal credit union.
146-10 Sec. 6.202. SUBPOENA AUTHORITY. (a) This section applies
146-11 only to an investigation of an unauthorized activity as provided by
146-12 Section 6.201 of this Act, and does not affect the conduct of a
146-13 contested case under Chapter 2001, Government Code.
146-14 (b) The banking commissioner may issue a subpoena to compel
146-15 the attendance and testimony of a witness and the production of a
146-16 book, account, record, paper, or correspondence relating to a
146-17 matter that the banking commissioner has authority to consider or
146-18 investigate at the department's offices in Austin or at another
146-19 place the banking commissioner designates.
146-20 (c) The banking commissioner or the deputy banking
146-21 commissioner shall sign and issue the subpoena.
146-22 (d) A person who is required by subpoena to attend a
146-23 proceeding before the banking commissioner is entitled to receive:
146-24 (1) reimbursement for mileage, in the amount provided
146-25 for travel by state employees, for traveling to or returning from a
146-26 proceeding that is more than 25 miles from the witness's residence;
146-27 and
147-1 (2) a fee for each day or part of a day the witness is
147-2 necessarily present as a witness in an amount equal to the per diem
147-3 travel allowance of a state employee.
147-4 (e) The banking commissioner may serve the subpoena or have
147-5 it served by an authorized agent of the banking commissioner, a
147-6 sheriff, or a constable. The sheriff's or constable's fee for
147-7 serving the subpoena must be the same as the fee paid the sheriff
147-8 or constable for similar services.
147-9 (f) A person possessing materials located outside this state
147-10 that are requested by the banking commissioner may make the
147-11 materials available to the banking commissioner or a representative
147-12 of the banking commissioner for examination at the place where the
147-13 materials are located. The banking commissioner may designate a
147-14 representative, including an official of the state in which the
147-15 materials are located, to examine the materials and may respond to
147-16 similar requests from an official of another state, the United
147-17 States, or a foreign country.
147-18 (g) A subpoena issued under this section to a financial
147-19 institution is not subject to Section 30.007, Civil Practice and
147-20 Remedies Code.
147-21 (h) The authority granted under this section is in addition
147-22 to other law authorizing the banking commissioner to obtain or
147-23 require information.
147-24 Sec. 6.203. ENFORCEMENT OF SUBPOENA. (a) If necessary the
147-25 banking commissioner may apply to the district court of Travis
147-26 County or of the county in which the subpoena was served for
147-27 enforcement of the subpoena and the court may issue an order
148-1 compelling compliance.
148-2 (b) If the court orders compliance with the subpoena or
148-3 finds the person in contempt for failure to obey the order, the
148-4 banking commissioner, or the attorney general if representing the
148-5 banking commissioner, may recover reasonable court costs,
148-6 attorney's fees, and investigative costs incurred in the
148-7 proceeding.
148-8 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS. (a) A
148-9 book, account, record, paper, correspondence, or other document
148-10 subpoenaed and produced under this section that is otherwise made
148-11 privileged or confidential by law remains privileged or
148-12 confidential unless admitted into evidence at an administrative
148-13 hearing or in a court. The banking commissioner may issue an order
148-14 protecting the confidentiality or privilege of the document and
148-15 restricting its use or distribution by any person or in any
148-16 proceeding, other than a proceeding before the banking
148-17 commissioner.
148-18 (b) Subject to Subchapter B, Chapter 2, of this Act and
148-19 confidentiality provisions of other law administered by the banking
148-20 commissioner, information or material acquired under this section
148-21 under a subpoena is not a public record for the period the banking
148-22 commissioner considers reasonably necessary to complete the
148-23 investigation, protect the person being investigated from
148-24 unwarranted injury, or serve the public interest. The information
148-25 or material is not subject to a subpoena, except a valid grand jury
148-26 subpoena, until released for public inspection by the banking
148-27 commissioner or, after notice and a hearing, a district court
149-1 determines that the public interest and any investigation by the
149-2 banking commissioner would not be jeopardized by obeying the
149-3 subpoena. The district court order may not apply to:
149-4 (1) a record or communication received from another
149-5 law enforcement or regulatory agency except on compliance with the
149-6 confidentiality laws governing the records of the other agency; or
149-7 (2) an internal note, memorandum, report, or
149-8 communication made in connection with a matter that the banking
149-9 commissioner has the authority to consider or investigate, except
149-10 on good cause and compliance with applicable confidentiality laws.
149-11 Sec. 6.205. EVIDENCE. (a) On certification by the banking
149-12 commissioner, a book, record, paper, or document produced or
149-13 testimony taken as provided by Section 6.203 of this Act and held
149-14 by the department is admissible as evidence in any case without
149-15 prior proof of its correctness and without other proof. The
149-16 certified book, record, document, or paper, or a certified copy, is
149-17 prima facie evidence of the facts it contains.
149-18 (b) This section does not limit another provision of this
149-19 Act or a law that provides for the admission of evidence or its
149-20 evidentiary value.
149-21 Sec. 6.206. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED
149-22 ACTIVITY. (a) If the banking commissioner believes a person is
149-23 engaging or is likely to engage in an unauthorized activity, the
149-24 banking commissioner may serve on the person, by personal delivery
149-25 or registered or certified mail, return receipt requested, to the
149-26 person's last known address, a proposed cease and desist order.
149-27 The proposed order must state the acts or practices alleged to be
150-1 an unauthorized activity. The proposed order must state its
150-2 effective date, which may not be before the 21st day after the date
150-3 the proposed order is mailed or delivered. Unless the person
150-4 against whom the proposed order is directed requests a hearing in
150-5 writing before the effective date of the proposed order, the order
150-6 takes effect and is final and nonappealable as to that person.
150-7 (b) A requested hearing on a proposed order shall be held
150-8 not later than the 30th day after the date the first written
150-9 request for a hearing on the order is received by the department
150-10 unless the parties agree to a later hearing date. At the hearing,
150-11 the department has the burden of proof and must present evidence in
150-12 support of the order. Each person against whom the order is
150-13 directed may cross-examine and show cause why the order should not
150-14 be issued.
150-15 (c) After the hearing, the banking commissioner shall issue
150-16 or decline to issue a cease and desist order. The proposed order
150-17 may be modified as necessary to conform to the findings at the
150-18 hearing. An order issued under this section is immediately final
150-19 for purposes of enforcement and appeal and must require the person
150-20 to immediately cease and desist from the unauthorized activity.
150-21 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER REGARDING
150-22 UNAUTHORIZED ACTIVITY. (a) The banking commissioner may issue an
150-23 emergency cease and desist order if the banking commissioner
150-24 reasonably believes a person is engaging in a continuing
150-25 unauthorized activity that is fraudulent or threatens immediate and
150-26 irreparable public harm.
150-27 (b) On issuance of an emergency cease and desist order the
151-1 banking commissioner shall serve on each person affected by the
151-2 order, by personal delivery or registered or certified mail, return
151-3 receipt requested, to the person's last known address, an order
151-4 that states the specific charges and requires the person
151-5 immediately to cease and desist from the unauthorized activity.
151-6 The order must contain a notice that a request for hearing may be
151-7 filed under this section.
151-8 (c) A person affected by an emergency cease and desist order
151-9 may request a hearing before the banking commissioner not later
151-10 than the 10th day after the date on which the person receives the
151-11 order. A request for a hearing must be in writing and directed to
151-12 the banking commissioner and must state the grounds for the request
151-13 to set aside or modify the order. Unless a person against whom the
151-14 emergency order is directed requests a hearing in writing before
151-15 the 11th day after the date it is served on the person, the
151-16 emergency order is final and nonappealable as to that person.
151-17 (d) On receiving a request for a hearing, the banking
151-18 commissioner shall serve notice of the time and place of the
151-19 hearing by personal delivery or registered or certified mail,
151-20 return receipt requested. The hearing must be held not later than
151-21 the 10th day after the date the banking commissioner receives the
151-22 request for a hearing unless the parties agree to a later hearing
151-23 date. At the hearing, the department has the burden of proof and
151-24 must present evidence in support of the order. The person
151-25 requesting the hearing may cross-examine witnesses and show cause
151-26 why the order should not be affirmed.
151-27 (e) Until the hearing, an emergency cease and desist order
152-1 continues in effect unless the order is stayed by the banking
152-2 commissioner. The banking commissioner may impose any condition
152-3 before granting a stay of the order.
152-4 (f) After the hearing, the banking commissioner shall
152-5 affirm, modify, or set aside in whole or part the emergency cease
152-6 and desist order. An order affirming or modifying the emergency
152-7 cease and desist order is immediately final for purposes of
152-8 enforcement and appeal.
152-9 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER REGARDING
152-10 UNAUTHORIZED ACTIVITY. (a) A person affected by a cease and
152-11 desist order issued, affirmed, or modified after a hearing may file
152-12 a petition for judicial review in the district court of Travis
152-13 County under the substantial evidence rule as provided by Chapter
152-14 2001, Government Code.
152-15 (b) A filed petition for judicial review does not stay or
152-16 vacate the order unless the court, after hearing, specifically
152-17 stays or vacates the order.
152-18 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
152-19 REGARDING UNAUTHORIZED ACTIVITY. (a) If the banking commissioner
152-20 reasonably believes that a person has violated a final and
152-21 enforceable cease and desist order, the banking commissioner may:
152-22 (1) initiate administrative penalty proceedings under
152-23 Section 6.210 of this Act;
152-24 (2) refer the matter to the attorney general for
152-25 enforcement by injunction and any other available remedy; or
152-26 (3) pursue any other action the banking commissioner
152-27 considers appropriate under applicable law.
153-1 (b) If the attorney general prevails in an action brought
153-2 under Subsection (a)(2) of this section, the attorney general is
153-3 entitled to reasonable attorney's fees.
153-4 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY. (a)
153-5 The banking commissioner may initiate an action for an
153-6 administrative penalty against a person under Section 6.209(a)(1)
153-7 of this Act by serving on the person, by personal delivery or
153-8 certified mail, return receipt requested, to the person's last
153-9 known address, notice of the time and place of a hearing on the
153-10 penalty. The hearing may not be held earlier than the 20th day
153-11 after the date the notice is served and shall be conducted under
153-12 Chapter 2001, Government Code. The notice must contain a statement
153-13 of the facts or conduct alleged to be in violation of the cease and
153-14 desist order.
153-15 (b) In determining whether a cease and desist order has been
153-16 violated, the banking commissioner shall consider the maintenance
153-17 of procedures reasonably adopted to ensure compliance with the
153-18 order.
153-19 (c) If the banking commissioner after the hearing determines
153-20 that a cease and desist order has been violated, the banking
153-21 commissioner may:
153-22 (1) impose an administrative penalty in an amount not
153-23 to exceed $25,000 for each discrete act of unauthorized activity;
153-24 (2) direct the person against whom the order was
153-25 issued to make complete restitution, in the form and amount and
153-26 within the period determined by the banking commissioner, to each
153-27 resident of this state and entity operating in this state damaged
154-1 by the violation; or
154-2 (3) both impose the penalty and direct restitution.
154-3 (d) In determining the amount of the penalty and whether to
154-4 impose restitution, the banking commissioner shall consider:
154-5 (1) the seriousness of the violation, including the
154-6 nature, circumstances, extent, and gravity of any prohibited act;
154-7 (2) the economic harm caused by the violation;
154-8 (3) the history of previous violations;
154-9 (4) the amount necessary to deter future violations;
154-10 (5) efforts to correct the violation;
154-11 (6) whether the violation was intentional or
154-12 unintentional;
154-13 (7) the financial ability of the person against whom
154-14 the penalty is to be assessed; and
154-15 (8) any other matter that justice may require.
154-16 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER. (a) When
154-17 a penalty order under Section 6.210 of this Act becomes final, a
154-18 person affected by the order shall, within the time permitted by
154-19 law for appeal:
154-20 (1) pay the amount of the penalty;
154-21 (2) pay the amount of the penalty and file a petition
154-22 for judicial review contesting the occurrence of the violation, the
154-23 amount of the penalty, or both; or
154-24 (3) without paying the amount of the penalty, file a
154-25 petition for judicial review contesting the occurrence of the
154-26 violation, the amount of the penalty, or both.
154-27 (b) Within the time permitted by law for appeal, a person
155-1 who acts under Subsection (a)(3) may:
155-2 (1) stay enforcement of the penalty by:
155-3 (A) paying the amount of the penalty to the
155-4 court for placement in an escrow account; or
155-5 (B) giving the court a supersedeas bond that is
155-6 approved by the court for the amount of the penalty and that is
155-7 effective until all judicial review of the order is final; or
155-8 (2) request the court to stay enforcement of the
155-9 penalty by:
155-10 (A) filing with the court a sworn affidavit of
155-11 the person stating that the person is financially unable to pay the
155-12 amount of the penalty and is financially unable to give the
155-13 supersedeas bond; and
155-14 (B) giving a copy of the affidavit to the
155-15 banking commissioner by certified mail.
155-16 (c) If the banking commissioner receives a copy of an
155-17 affidavit under Subsection (b)(2) of this section, the banking
155-18 commissioner may file with the court, within five days after the
155-19 date the copy is received, a contest to the affidavit. The court
155-20 shall hold a hearing on the facts alleged in the affidavit as soon
155-21 as practicable and shall stay the enforcement of the penalty on
155-22 finding that the alleged facts are true. The person who files an
155-23 affidavit has the burden of proving that the person is financially
155-24 unable to pay the amount of the penalty and to give a supersedeas
155-25 bond.
155-26 (d) If the person does not pay the amount of the penalty and
155-27 the enforcement of the penalty is not stayed, the banking
156-1 commissioner may refer the matter to the attorney general for
156-2 collection of the amount of the penalty.
156-3 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER. (a) Judicial
156-4 review of a penalty order of the banking commissioner:
156-5 (1) is instituted by filing a petition as provided by
156-6 Chapter 2001, Government Code; and
156-7 (2) is under the substantial evidence rule.
156-8 (b) If the court sustains the order, the court shall order
156-9 the person to pay the full amount of the penalty or a lower amount
156-10 determined by the court. If the court does not sustain the order,
156-11 a penalty is not owed.
156-12 (c) When the judgment of the court becomes final, if the
156-13 person paid the amount of the penalty and if that amount is reduced
156-14 or is not upheld by the court, the court shall order that the
156-15 appropriate amount plus accrued interest computed at the annual
156-16 rate of 10 percent be remitted to the department. The interest
156-17 shall be paid for the period beginning on the date the penalty was
156-18 paid and ending on the date the penalty is remitted. If the person
156-19 gave a supersedeas bond and if the amount of the penalty is not
156-20 upheld by the court, the court shall order the release of the bond.
156-21 If the person gave a supersedeas bond and if the amount of the
156-22 penalty is reduced, the court shall order the release of the bond
156-23 after the person pays the amount.
156-24 (d) If the judgment of the court requires payment of a
156-25 penalty that has not previously been paid, the court shall order as
156-26 part of its judgment that interest accrues on the penalty at the
156-27 annual rate of 10 percent, beginning on the date the judgment is
157-1 final and ending on the date the penalty and interest are paid.
157-2 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND. A penalty
157-3 collected under this subchapter shall be remitted to the
157-4 comptroller for deposit to the credit of the general revenue fund.
157-5 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
157-6 SUBCHAPTER A. GENERAL PROVISIONS
157-7 Sec. 7.001. DEFINITION ....................................... 159
157-8 Sec. 7.002. REMEDIES EXCLUSIVE ............................... 160
157-9 Sec. 7.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS
157-10 LIQUIDATOR ..................................... 160
157-11 Sec. 7.004. APPOINTMENT OF INDEPENDENT RECEIVER .............. 161
157-12 Sec. 7.005. SUCCESSION OF TRUST POWERS ....................... 161
157-13 (Sections 7.006-7.100 reserved for expansion)
157-14 SUBCHAPTER B. VOLUNTARY DISSOLUTION
157-15 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY
157-16 DISSOLUTION .................................... 162
157-17 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION .................. 163
157-18 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS ................ 164
157-19 Sec. 7.104. FIDUCIARY ACTIVITIES ............................. 165
157-20 Sec. 7.105. FINAL LIQUIDATION ................................ 166
157-21 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF
157-22 REMEDIES ....................................... 167
157-23 (Sections 7.107-7.200 reserved for expansion)
157-24 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
157-25 Sec. 7.201. ACTION TO CLOSE STATE BANK ....................... 168
157-26 Sec. 7.202. INVOLUNTARY CLOSING .............................. 168
157-27 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP .............. 169
158-1 Sec. 7.204. CONTEST OF LIQUIDATION ........................... 170
158-2 Sec. 7.205. NOTICE OF BANK CLOSING ........................... 171
158-3 Sec. 7.206. INVENTORY ........................................ 172
158-4 Sec. 7.207. TITLE IN RECEIVER ................................ 172
158-5 Sec. 7.208. RIGHTS FIXED ..................................... 173
158-6 Sec. 7.209. DEPOSITORIES ..................................... 173
158-7 Sec. 7.210. PENDING LAWSUITS ................................. 174
158-8 Sec. 7.211. NEW LAWSUITS ..................................... 174
158-9 Sec. 7.212. RECORDS WITH THIRD PARTIES ....................... 175
158-10 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION ................. 175
158-11 Sec. 7.214. SUBPOENA ......................................... 176
158-12 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS ............. 178
158-13 Sec. 7.216. PREFERENCES ...................................... 179
158-14 Sec. 7.217. OTHER POWERS OF THE RECEIVER;
158-15 ADMINISTRATIVE EXPENSES ........................ 180
158-16 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS ............ 181
158-17 Sec. 7.219. DISCRETION OF THE COURT .......................... 182
158-18 Sec. 7.220. FILING REPORTS; EXPENSES ......................... 182
158-19 Sec. 7.221. COURT-ORDERED AUDIT .............................. 183
158-20 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS ................ 183
158-21 Sec. 7.223. FIDUCIARY ACTIVITIES ............................. 184
158-22 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS ........... 185
158-23 Sec. 7.225. RECORDS ADMITTED ................................. 186
158-24 Sec. 7.226. RESUMPTION OF BUSINESS ........................... 187
158-25 Sec. 7.227. AFTER-DISCOVERED ASSETS .......................... 187
158-26 (Sections 7.228-7.300 reserved for expansion)
158-27 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
159-1 Sec. 7.301. FILING CLAIMS .................................... 188
159-2 Sec. 7.302. PROOF OF CLAIM ................................... 189
159-3 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM ....................... 190
159-4 Sec. 7.304. SECURED CLAIMS ................................... 190
159-5 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS .............. 191
159-6 Sec. 7.306. SET-OFF .......................................... 192
159-7 Sec. 7.307. ACTION ON CLAIMS ................................. 193
159-8 Sec. 7.308. OBJECTION TO APPROVED CLAIM ...................... 194
159-9 Sec. 7.309. APPEAL OF REJECTED CLAIM ......................... 194
159-10 Sec. 7.310. PAYMENT OF CLAIMS ................................ 194
159-11 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED BANK .......... 195
159-12 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED
159-13 BANK ........................................... 195
159-14 Sec. 7.313. EXCESS ASSETS .................................... 196
159-15 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY ..................... 197
159-16 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
159-17 SUBCHAPTER A. GENERAL PROVISIONS
159-18 Sec. 7.001. DEFINITION. In this chapter, "administrative
159-19 expense" means:
159-20 (1) an expense designated as an administrative expense
159-21 by Subchapter C or D of this chapter;
159-22 (2) court costs and expenses of operation and
159-23 liquidation of the bank estate;
159-24 (3) wages owed to an employee of a bank for services
159-25 rendered within three months before the date the bank was closed
159-26 for liquidation and not exceeding:
159-27 (A) $2,000 to each employee; or
160-1 (B) another amount set by rules adopted under
160-2 this Act;
160-3 (4) current wages owed to an employee of a bank whose
160-4 services are retained by the receiver for services rendered after
160-5 the date the bank is closed for liquidation;
160-6 (5) an unpaid expense of supervision or
160-7 conservatorship of the bank before its closing for liquidation; and
160-8 (6) any unpaid fees or assessments owed to the
160-9 department.
160-10 Sec. 7.002. REMEDIES EXCLUSIVE. (a) Unless the banking
160-11 commissioner requests, a court may not:
160-12 (1) order the closing or suspension of operation of
160-13 any state bank; or
160-14 (2) appoint for a state bank a receiver, supervisor,
160-15 conservator, or liquidator, or other manager or overseer with
160-16 similar responsibility.
160-17 (b) A person may not be designated receiver, supervisor,
160-18 conservator, or liquidator without the voluntary approval and
160-19 concurrence of the banking commissioner.
160-20 (c) This chapter prevails over any other conflicting law of
160-21 this state.
160-22 Sec. 7.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS
160-23 LIQUIDATOR. The banking commissioner without court action may
160-24 tender a state bank that has been closed for liquidation to the
160-25 Federal Deposit Insurance Corporation or its successor as receiver
160-26 and liquidating agent if the deposits of the bank were insured by
160-27 the Federal Deposit Insurance Corporation or its successor on the
161-1 date of closing. After acceptance of tender of the bank, the
161-2 Federal Deposit Insurance Corporation or its successor shall
161-3 perform the acts and duties as receiver of the bank that it
161-4 considers necessary or desirable and that are permitted or required
161-5 by federal law or this chapter. If the Federal Deposit Insurance
161-6 Corporation or its successor refuses to accept tender of the bank,
161-7 the banking commissioner shall act as receiver.
161-8 Sec. 7.004. APPOINTMENT OF INDEPENDENT RECEIVER. (a) On
161-9 request of the banking commissioner, the court in which the
161-10 liquidation proceeding is pending may appoint an independent
161-11 receiver and may require a suitable bond of the independent
161-12 receiver.
161-13 (b) If an independent receiver is appointed, the banking
161-14 commissioner is discharged as receiver but shall remain a party to
161-15 the liquidation proceeding with standing to initiate or contest any
161-16 motion. The views of the banking commissioner are entitled to
161-17 deference if not contrary to the plain meaning of this chapter.
161-18 Sec. 7.005. SUCCESSION OF TRUST POWERS. (a) If any state
161-19 bank in the process of voluntary or involuntary dissolution and
161-20 liquidation is acting as trustee, guardian, executor,
161-21 administrator, or escrow agent, or in another fiduciary or
161-22 custodial capacity, the banking commissioner may authorize the sale
161-23 of the bank's administration of fiduciary accounts to a successor
161-24 entity with fiduciary powers.
161-25 (b) The successor entity shall, without the necessity of
161-26 action by a court or the creator or a beneficiary of the fiduciary
161-27 relationship, continue the office, trust, or fiduciary relationship
162-1 and shall perform all the duties and exercise all the powers
162-2 connected with or incidental to the fiduciary relationship in the
162-3 same manner as if the successor entity had been originally
162-4 designated as the fiduciary.
162-5 (c) This section applies to all fiduciary relationships,
162-6 including a trust established for the benefit of a minor by court
162-7 order under Section 142.005, Property Code. This section does not
162-8 affect any right of a court or a party to the instrument governing
162-9 the fiduciary relationship to subsequently designate another
162-10 trustee as the successor fiduciary.
162-11 (Sections 7.006-7.100 reserved for expansion)
162-12 SUBCHAPTER B. VOLUNTARY DISSOLUTION
162-13 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION.
162-14 (a) A state bank may initiate voluntary dissolution and surrender
162-15 its charter as provided by this subchapter:
162-16 (1) with the approval of the banking commissioner;
162-17 (2) after complying with the provisions of the Texas
162-18 Business Corporation Act regarding board and shareholder approval
162-19 for voluntary dissolution; and
162-20 (3) by filing the notice of dissolution as provided by
162-21 Section 7.102(a) of this Act.
162-22 (b) Unless the banking commissioner directs or consents
162-23 otherwise, the home office and all branch offices of the bank shall
162-24 remain open for business during normal business hours until the
162-25 last date specified in published notices for presentation of
162-26 claims, withdrawal of accounts, and redemption of property.
162-27 (c) The shareholders or participants of a state bank
163-1 initiating voluntary dissolution shall by resolution appoint one or
163-2 more persons to act as liquidating agent or committee who shall
163-3 conduct the liquidation as provided by law and under the
163-4 supervision of the board. The board, in consultation with the
163-5 banking commissioner, shall require the liquidating agent or
163-6 committee to give a suitable bond.
163-7 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION. (a) After
163-8 resolutions to dissolve and liquidate the bank have been adopted by
163-9 the board and shareholders or participants, a majority of the
163-10 directors, managers, or managing participants shall verify and file
163-11 duplicate certified copies with the banking commissioner of:
163-12 (1) the resolutions of the shareholders or
163-13 participants that are adopted at a meeting for which proper notice
163-14 was given or by unanimous written consent and that approve the
163-15 dissolution and liquidation of the bank;
163-16 (2) if the bank is operated by a board of directors or
163-17 managers, the resolutions of the board approving the dissolution
163-18 and liquidation of the bank; and
163-19 (3) a copy of the notice to the shareholders or
163-20 participants informing them of the meeting.
163-21 (b) The banking commissioner shall review the submitted
163-22 documentation and conduct any necessary investigation or
163-23 examination. If the proceedings appear to have been properly
163-24 conducted and the bond to be given by the liquidating agent or
163-25 committee is adequate for its purposes, the banking commissioner
163-26 shall consent to dissolution and direct the bank to publish notice
163-27 of its pending dissolution.
164-1 (c) The bank shall publish notice in a newspaper of general
164-2 circulation in each community where its home office or a branch is
164-3 located at least once each week for eight consecutive weeks or at
164-4 other times specified by the banking commissioner or rules adopted
164-5 under this Act. The notice must state that the bank is
164-6 liquidating, that depositors and creditors must present their
164-7 claims for payment on or before a specific date, and that all safe
164-8 deposit box holders and bailors of property left with the bank
164-9 should remove their property on or before a specified date. The
164-10 dates selected by the bank must be approved by the banking
164-11 commissioner and must allow the affairs of the bank to be wound up
164-12 as quickly as feasible and allow creditors, depositors, and owners
164-13 of property adequate time for presentation of claims, withdrawal of
164-14 accounts, and redemption of property. The banking commissioner may
164-15 adjust the dates with or without republication of notice if
164-16 additional time appears needed for these activities.
164-17 (d) At the same time as or promptly after publication of the
164-18 notice, the bank shall mail to each of the bank's known depositors,
164-19 creditors, safe deposit box holders, and bailors of property left
164-20 with the bank, at the mailing address shown on the bank's records,
164-21 an individual notice containing the information required in a
164-22 notice under Subsection (c) of this section and specific
164-23 information pertinent to the account or property of the addressee.
164-24 (e) A notice under this section must be in the form and
164-25 include the information required by the banking commissioner.
164-26 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
164-27 contract between the bank and a person for bailment, or of deposit
165-1 for hire, or for the lease of a safe, vault, or box, ceases on the
165-2 date specified as the date for removal of property in the notices
165-3 or a later date approved by the banking commissioner. A person who
165-4 has paid rental or storage charges for a period extending beyond
165-5 the date designated for removal of property has an unsecured claim
165-6 against the bank for a refund of any unearned amount paid.
165-7 (b) If the property is not removed by the date specified in
165-8 the notices or by the banking commissioner, an officer of the bank,
165-9 in the presence of a notary public who is not an officer or
165-10 employee of the bank and who is bonded in an amount and by sureties
165-11 approved by the banking commissioner, shall inventory the property
165-12 and may open a safe, vault, or box, or any package, parcel, or
165-13 receptacle, in the custody or possession of the bank, to make the
165-14 inventory. The property shall be marked to identify, to the extent
165-15 possible, its owner or the person who left it with the bank. After
165-16 all property belonging to others that is in the bank's custody and
165-17 control has been inventoried, a master list certified by the bank
165-18 officer and the notary public shall be furnished to the banking
165-19 commissioner. The master list shall be kept in a place and dealt
165-20 with in a manner the banking commissioner specifies pending
165-21 delivery of the property to its owner or to the state treasurer as
165-22 unclaimed property.
165-23 Sec. 7.104. FIDUCIARY ACTIVITIES. (a) As soon after
165-24 publication of the notice of dissolution as is practicable, the
165-25 bank shall terminate all fiduciary positions it holds, surrender
165-26 all property held by it as a fiduciary, and settle its fiduciary
165-27 accounts.
166-1 (b) Unless all fiduciary accounts are settled and
166-2 transferred by the last date specified in published notices or by
166-3 the banking commissioner and unless the banking commissioner
166-4 directs otherwise, the bank shall mail individual notices to each
166-5 trustor and beneficiary of any remaining trust, escrow arrangement,
166-6 or other fiduciary relationship advising the person of an office
166-7 location open during normal business hours and a telephone number
166-8 at that location where administration of the remaining fiduciary
166-9 accounts will continue until settled or transferred.
166-10 Sec. 7.105. FINAL LIQUIDATION. (a) After the bank has
166-11 taken all of the actions specified by Sections 7.102, 7.103, and
166-12 7.104 of this Act and has paid all its debts and obligations and
166-13 transferred all property for which a legal claimant has been found
166-14 after the time for presentation of claims has expired, the bank
166-15 shall, under oath or affirmation of a majority of its board or
166-16 managing participants, make a list from its books of the names of
166-17 each depositor, creditor, owner of personal property in the bank's
166-18 possession or custody, or lessee of any safe, vault, or box, who
166-19 has not claimed or has not received a deposit, debt, dividend,
166-20 interest, balance, or other amount or property due to the person.
166-21 (b) The list, accompanied by any necessary identifying
166-22 information, shall be filed with the banking commissioner. The
166-23 bank shall pay any unclaimed funds and deliver any unclaimed
166-24 property to the state treasurer as provided by Chapter 74, Property
166-25 Code, and certify to the banking commissioner that the unclaimed
166-26 funds and property have been paid or delivered.
166-27 (c) After the banking commissioner has reviewed the list and
167-1 has reconciled the unclaimed cash and property with the amounts of
167-2 money and property reported and transferred to the state treasurer,
167-3 the banking commissioner shall allow the bank to distribute the
167-4 bank's remaining assets, if any, among its shareholders,
167-5 participants, or participant-transferees as their ownership
167-6 interests appear.
167-7 (d) After distribution of all remaining assets, the bank
167-8 shall:
167-9 (1) file with the department, under the oath or
167-10 affirmation of a majority of its board or managing participants,
167-11 another affidavit accompanied by schedules showing the distribution
167-12 to each shareholder, participant, or participant-transferee; and
167-13 (2) tender to the department:
167-14 (A) all copies of reports of examination of the
167-15 bank in its possession; and
167-16 (B) its original charter or an affidavit stating
167-17 that the original charter is lost.
167-18 (e) After verifying the submitted information and documents,
167-19 the banking commissioner shall issue a certificate cancelling the
167-20 charter of the bank.
167-21 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES.
167-22 (a) A state bank in the process of voluntary dissolution and
167-23 liquidation remains subject to this Act, including provisions for
167-24 examination by the banking commissioner, and the bank shall furnish
167-25 reports required by the banking commissioner.
167-26 (b) The banking commissioner may authorize a deviation from
167-27 the procedures for voluntary dissolution in this subchapter if the
168-1 banking commissioner determines that the interests of claimants are
168-2 not jeopardized by the deviation.
168-3 (c) If the banking commissioner determines that the
168-4 voluntary liquidation is being conducted in an improper or illegal
168-5 manner or is not in the best interests of the bank's depositors and
168-6 creditors or that the bank is insolvent or imminently insolvent,
168-7 the banking commissioner may close the bank for involuntary
168-8 dissolution and liquidation under this chapter.
168-9 (d) After a state bank's charter has been voluntarily
168-10 surrendered and canceled, the bank may not resume business or
168-11 reopen except on application for and approval of a new charter.
168-12 (Sections 7.107-7.200 reserved for expansion)
168-13 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
168-14 Sec. 7.201. ACTION TO CLOSE STATE BANK. (a) The banking
168-15 commissioner may close and liquidate a state bank on finding that:
168-16 (1) the interests of its depositors and creditors are
168-17 jeopardized by the bank's insolvency or imminent insolvency; and
168-18 (2) the best interests of depositors and creditors
168-19 would be served by requiring that the bank be closed and its assets
168-20 liquidated.
168-21 (b) A majority of the bank's directors, managers, or
168-22 managing participants may voluntarily close the bank and place it
168-23 with the banking commissioner for liquidation.
168-24 Sec. 7.202. INVOLUNTARY CLOSING. (a) After closing a state
168-25 bank under Section 7.201 of this Act, the banking commissioner
168-26 shall place a sign at its main entrance stating that the bank has
168-27 been closed and the findings on which the closing of the bank is
169-1 based. A correspondent bank of the closed bank may not pay an item
169-2 drawn on the account of the closed bank that is presented for
169-3 payment after the correspondent has received actual notice of
169-4 closing unless it previously certified the item for payment.
169-5 (b) As soon as practicable after posting the sign at the
169-6 bank's main entrance, the banking commissioner shall tender the
169-7 bank to the Federal Deposit Insurance Corporation as provided by
169-8 Section 7.003 of this Act or initiate a receivership proceeding by
169-9 filing a copy of the notice contained on the sign in a district
169-10 court in the county where the bank's home office is located. The
169-11 court in which the notice is filed shall docket it as a case
169-12 styled, "In re liquidation of ____" (inserting the name of the
169-13 bank). As soon as this notice is filed, the court has constructive
169-14 custody of all the bank's assets, and any action initiated that
169-15 seeks to directly or indirectly affect bank assets is considered to
169-16 be an intervention in the receivership proceeding and subject to
169-17 this subchapter and Subchapter D of this chapter.
169-18 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP. (a) The
169-19 court may not require a bond from the banking commissioner as
169-20 receiver. Any reference in this chapter to the receiver is a
169-21 reference to the banking commissioner as receiver and any
169-22 successors in office, the Federal Deposit Insurance Corporation if
169-23 acting as receiver as provided by Section 7.003 of this Act and
169-24 federal law, or an independent receiver appointed at the request of
169-25 the banking commissioner as provided by Section 7.004 of this Act.
169-26 The receiver and all employees and agents acting on behalf of the
169-27 receiver are acting in an official capacity and subject to the
170-1 protection of Section 2.010 of this Act. The acts of the receiver
170-2 are the acts of the bank in liquidation and this state and its
170-3 political subdivisions are not liable and may not be held
170-4 accountable for any debt or obligation of a state bank in
170-5 receivership.
170-6 (b) The receiver has all the powers of the directors,
170-7 managers, managing participants, officers, and shareholders or
170-8 participants of the bank as necessary to support an action taken on
170-9 behalf of the bank.
170-10 (c) Section 64.072, Civil Practice and Remedies Code,
170-11 applies to the receivership of a bank except as provided by this
170-12 subsection. A bank receivership shall be administered continuously
170-13 for the length of time necessary to complete its purposes, and a
170-14 period prescribed by other law limiting the time for the
170-15 administration of receiverships or of corporate affairs generally,
170-16 including Subsection 64.072(d), Civil Practice and Remedies Code,
170-17 does not apply.
170-18 Sec. 7.204. CONTEST OF LIQUIDATION. (a) A state bank,
170-19 acting through a majority of its directors, managers, or managing
170-20 participants, may intervene in the action filed by the banking
170-21 commissioner to challenge the banking commissioner's closing of the
170-22 bank and to enjoin the banking commissioner or other receiver from
170-23 liquidating its assets. The intervenors must file the intervention
170-24 not later than the second business day after the closing of the
170-25 bank, excluding legal holidays. The court may issue an ex parte
170-26 order restraining the receiver from liquidating bank assets pending
170-27 a hearing on the injunction. The receiver shall comply with the
171-1 restraining order but may petition the court for permission to
171-2 liquidate an asset as necessary to prevent its loss or diminution
171-3 pending the outcome of the injunction.
171-4 (b) The court shall hear this action as quickly as possible
171-5 and shall give it priority over other business.
171-6 (c) The bank or receiver may appeal the court's judgment as
171-7 in other civil cases, except that the receiver shall retain all
171-8 bank assets pending a final appellate court order even if the
171-9 banking commissioner does not prevail in the trial court. If the
171-10 banking commissioner prevails in the trial court, liquidation of
171-11 the bank may proceed unless the trial court or appellate court
171-12 orders otherwise. If liquidation is enjoined or stayed pending
171-13 appeal, the trial court retains jurisdiction to permit liquidation
171-14 of an asset as necessary to prevent its loss or diminution pending
171-15 the outcome of the appeal.
171-16 Sec. 7.205. NOTICE OF BANK CLOSING. (a) As soon as
171-17 reasonably practicable after initiation of the receivership
171-18 proceeding, the receiver shall publish notice, in a newspaper of
171-19 general circulation in each community where the bank's home office
171-20 and a branch are located. The notice must state that the bank has
171-21 been closed for liquidation, that depositors and creditors must
171-22 present their claims for payment on or before a specific date, and
171-23 that all safe deposit box holders and bailors of property left with
171-24 the bank should remove their property not later than a specified
171-25 date. The receiver shall select the dates to allow the affairs of
171-26 the bank to be wound up as quickly as feasible while allowing
171-27 creditors, depositors, and owners of property adequate time for
172-1 presentation of claims, withdrawal of accounts, and redemption of
172-2 property, but may not select a date before the 121st day after the
172-3 date of the notice. The receiver may adjust the dates with the
172-4 approval of the court with or without republication of notice if
172-5 additional time appears needed for these activities.
172-6 (b) As soon as reasonably practicable given the state of
172-7 bank records and the adequacy of staffing, the receiver shall mail
172-8 to each of the bank's known depositors, creditors, safe deposit box
172-9 holders, and bailors of property left with the bank, at the mailing
172-10 address shown on the bank's records, an individual notice
172-11 containing the information required in a notice under Subsection
172-12 (a) of this section and specific information pertinent to the
172-13 account or property of the addressee.
172-14 (c) The receiver may determine the form and content notices
172-15 under this section.
172-16 Sec. 7.206. INVENTORY. As soon as reasonably practicable
172-17 given the state of bank records and the adequacy of staffing, the
172-18 receiver shall prepare a comprehensive inventory of the bank's
172-19 assets for filing with the court. The inventory shall be open to
172-20 inspection.
172-21 Sec. 7.207. TITLE IN RECEIVER. (a) The receiver has the
172-22 title to all the bank's property, contracts, and rights of action,
172-23 wherever located, beginning on the date the bank is closed for
172-24 liquidation.
172-25 (b) The rights of the receiver have priority over a
172-26 contractual lien or statutory landlord's lien under Chapter 54,
172-27 Property Code, judgment lien, attachment lien, or voluntary lien
173-1 that arises after the date of the closing of the bank for
173-2 liquidation.
173-3 (c) The filing or recording of a receivership order in a
173-4 record office of this state gives the same notice that would be
173-5 given by a deed, bill of sale, or other evidence of title duly
173-6 filed or recorded by the bank in liquidation. The recording clerk
173-7 shall index a recorded receivership order in the records to which
173-8 the order relates.
173-9 Sec. 7.208. RIGHTS FIXED. The rights and liabilities of the
173-10 bank in liquidation and of a depositor, creditor, officer,
173-11 director, manager, managing participant, employee, shareholder,
173-12 participant, participant-transferee, agent, or other person
173-13 interested in the bank's estate are fixed on the date of closing of
173-14 the bank for liquidation except as otherwise directed by the court
173-15 or as expressly provided otherwise by this subchapter or Subchapter
173-16 D of this chapter.
173-17 Sec. 7.209. DEPOSITORIES. (a) The receiver may deposit
173-18 funds collected on behalf of the bank estate in:
173-19 (1) the Texas Treasury Safekeeping Trust Company in
173-20 accordance with procedures established by the state treasurer or
173-21 successor official; or
173-22 (2) one or more state banks in this state, the
173-23 deposits of which are insured by the Federal Deposit Insurance
173-24 Corporation or its successor, if the receiver, using sound
173-25 financial judgment, determines that it would be advantageous to do
173-26 so.
173-27 (b) If receivership funds deposited in an account at a state
174-1 bank exceed the maximum insured amount, the receiver shall require
174-2 the excess deposit to be adequately secured through pledge of
174-3 securities or otherwise, without approval of the court. The
174-4 depository bank may secure the deposits of the bank in liquidation
174-5 on behalf of the receiver, notwithstanding any other provision of
174-6 this Act.
174-7 Sec. 7.210. PENDING LAWSUITS. (a) A judgment or order of a
174-8 court of this state or of any other jurisdiction in an action
174-9 pending by or against the bank, rendered after the date the bank
174-10 was closed for liquidation, is not binding on the receiver unless
174-11 the receiver was made a party to the suit.
174-12 (b) Before the first anniversary of the date the bank was
174-13 closed for liquidation, the receiver may not be required to plead
174-14 to any suit pending against the bank in a court in this state on
174-15 the date the bank was closed for liquidation and in which the
174-16 receiver is a proper plaintiff or defendant.
174-17 (c) Sections 64.052, 64.053, and 64.056, Civil Practice and
174-18 Remedies Code, do not apply to a bank estate being administered
174-19 under this subchapter and Subchapter D of this chapter.
174-20 Sec. 7.211. NEW LAWSUITS. (a) Except as otherwise provided
174-21 by this section, the court in which the receivership proceeding is
174-22 pending under this subchapter has exclusive jurisdiction to hear
174-23 and determine all actions or proceedings instituted by or against
174-24 the bank or receiver after the receivership proceeding starts.
174-25 (b) The receiver may file in any jurisdiction an ancillary
174-26 suit that may be helpful to obtain jurisdiction or venue over a
174-27 person or property.
175-1 (c) Exclusive venue of an action or proceeding instituted
175-2 against the receiver or the receiver's employee, including an
175-3 employee of the department, that asserts personal liability on the
175-4 part of the receiver or employee lies in Travis County.
175-5 Sec. 7.212. RECORDS WITH THIRD PARTIES. (a) Each bank
175-6 affiliate, officer, director, manager, managing participant,
175-7 employee, shareholder, participant, participant-transferee,
175-8 trustee, agent, servant, employee, attorney, attorney-in-fact, or
175-9 correspondent shall immediately deliver to the receiver any
175-10 property, book, record, account, document, or other writing of the
175-11 bank or that relates to the business of the bank without cost to
175-12 the receiver.
175-13 (b) If by contract or otherwise any book, record, account,
175-14 document, or other property that can be copied is the property of a
175-15 person listed in Subsection (a) of this section, it shall be
175-16 copied, the copy shall be delivered to the receiver, and the
175-17 original shall be retained by the owner until notification by the
175-18 receiver that it is no longer required in the administration of the
175-19 bank's estate or at another time the court, after notice and
175-20 hearing, directs. A copy is considered to be a record of the bank
175-21 in liquidation under Section 7.226 of this Act.
175-22 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION. (a) On
175-23 application by the receiver, the court may with or without notice
175-24 issue an injunction:
175-25 (1) restraining each bank officer, director, manager,
175-26 managing participant, employee, shareholder, participant,
175-27 participant-transferee, trustee, agent, servant, employee,
176-1 attorney, attorney-in-fact, correspondent, or another person from
176-2 transacting the bank's business or wasting or disposing of its
176-3 property; or
176-4 (2) requiring the delivery of its property or assets
176-5 to the receiver subject to the further order of the court.
176-6 (b) The court, at any time during a proceeding under this
176-7 subchapter, may issue another injunction or order considered
176-8 necessary or desirable to prevent:
176-9 (1) interference with the receiver or the proceeding;
176-10 (2) waste of the assets of the bank;
176-11 (3) the beginning or prosecution of an action;
176-12 (4) the obtaining of a preference, judgment,
176-13 attachment, garnishment, or other lien; or
176-14 (5) the making of a levy against the bank or against
176-15 its assets.
176-16 Sec. 7.214. SUBPOENA. (a) In addition to the authority
176-17 granted by law to the receiver relating to the taking of a
176-18 deposition of a witness in a civil action, the receiver may request
176-19 the court ex parte to issue a subpoena to compel the attendance and
176-20 testimony of a witness before the receiver and the production of a
176-21 book, account, record, paper, or correspondence or other record
176-22 relating to the receivership estate. For this purpose the receiver
176-23 or the receiver's designated representative may administer an oath
176-24 or affirmation, examine a witness, or receive evidence. The court
176-25 has statewide subpoena power and may compel attendance and
176-26 production of a record before the receiver at the bank, the office
176-27 of the receiver, or another location.
177-1 (b) A person served with a subpoena under this section may
177-2 file a motion with the court for a protective order as provided by
177-3 Rule 166b, Texas Rules of Civil Procedure. In a case of
177-4 disobedience of a subpoena, or of the contumacy of a witness
177-5 appearing before the receiver or the receiver's designated
177-6 representative, the receiver may request and the court may issue an
177-7 order requiring the person subpoenaed to obey the subpoena, give
177-8 evidence, or produce a book, account, record, paper, or
177-9 correspondence or other record relating to the matter in question.
177-10 (c) Each witness who is required to appear before the
177-11 receiver is entitled to receive:
177-12 (1) reimbursement for mileage, in the amount for
177-13 travel by state employees, for traveling to or returning from a
177-14 proceeding that is more than 25 miles from the witness's
177-15 residence; and
177-16 (2) a fee of not less than $10 a day and not more than
177-17 an amount equal to the per diem travel allowance of a state
177-18 employee for each day or part of a day the witness is necessarily
177-19 present as a witness, as established by the receiver with the
177-20 approval of the court.
177-21 (d) All disbursements made in the payment of fees under
177-22 Subsection (c) of this section are administrative expenses of
177-23 liquidation.
177-24 (e) The receiver may serve the subpoena or have it served by
177-25 the receiver's authorized agent, a sheriff, or a constable. The
177-26 sheriff's or constable's fee for serving a subpoena must be the
177-27 same as the fee paid the sheriff or constable for similar services.
178-1 (f) A subpoena issued under this section to a financial
178-2 institution is not subject to Section 30.007, Civil Practice and
178-3 Remedies Code.
178-4 (g) On certification by the receiver under official seal, a
178-5 book, account, record, paper, correspondence, or other record or
178-6 document produced or testimony taken as provided by this section
178-7 and held by the receiver is admissible in evidence in any case
178-8 without prior proof of its correctness and without other proof
178-9 except the certificate of the receiver that the book, account,
178-10 record, paper, correspondence, document, or testimony was received
178-11 from the person producing the material or testifying. The
178-12 certified book, account, record, paper, correspondence, or other
178-13 record or document, or a certified copy of such a document, is
178-14 prima facie evidence of the facts it contains. This section does
178-15 not limit another provision of this subchapter, Subchapter D of
178-16 this chapter, or another law that provides for the admission of
178-17 evidence or its evidentiary value.
178-18 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS. (a) Not
178-19 later than six months after the date the receivership proceeding
178-20 begins, the receiver may terminate any executory contract to which
178-21 the bank is a party, or any obligation of the bank as a lessee. A
178-22 lessor who receives notice of the receiver's election to terminate
178-23 the lease before the 60th day preceding the termination date is not
178-24 entitled to rent or damages for termination, other than rent
178-25 accrued to the date of termination.
178-26 (b) An agreement that tends to diminish or defeat the
178-27 interest of the estate in a bank asset is not valid against the
179-1 receiver unless the agreement:
179-2 (1) is in writing;
179-3 (2) was executed by the bank and any person claiming
179-4 an adverse interest under the agreement, including the obligor, at
179-5 the same time as the acquisition of the asset by the bank;
179-6 (3) was approved by the board of the bank or its loan
179-7 committee, and the approval is reflected in the minutes of the
179-8 board or committee; and
179-9 (4) has been continuously since its execution an
179-10 official record of the bank.
179-11 Sec. 7.216. PREFERENCES. (a) Any transfer of or lien on
179-12 the property or assets of a state bank is voidable by the receiver
179-13 if the transfer or lien:
179-14 (1) is made or created before:
179-15 (A) four months before the date the bank is
179-16 closed for liquidation; or
179-17 (B) one year before the date the bank is closed
179-18 for liquidation if the receiving creditor was at the time an
179-19 affiliate, officer, director, manager, managing participant,
179-20 principal shareholder, or participant of the bank or an affiliate
179-21 of the bank;
179-22 (2) was made or created with the intent of giving to a
179-23 creditor or depositor, or enabling a creditor or depositor to
179-24 obtain, a greater percentage of the claimant's debt than is given
179-25 or obtained by another claimant of the same class; and
179-26 (3) is accepted by a creditor or depositor having
179-27 reasonable cause to believe that a preference will occur.
180-1 (b) Each bank officer, director, manager, managing
180-2 participant, employee, shareholder, participant,
180-3 participant-transferee, trustee, agent, servant, employee,
180-4 attorney-in-fact, or correspondent, or other person acting on
180-5 behalf of the bank, who has participated in implementing a voidable
180-6 transfer or lien, and each person receiving property or the benefit
180-7 of property of the bank as a result of the voidable transfer or
180-8 lien, is personally liable for the property or benefit received and
180-9 shall account to the receiver for the benefit of the depositors and
180-10 creditors of the bank.
180-11 (c) The receiver may avoid a transfer of or lien on the
180-12 property or assets of a bank that a depositor, creditor,
180-13 shareholder, participant, or participant-transferee of the bank
180-14 could have avoided and may recover the property transferred or its
180-15 value from the person to whom it was transferred or from a person
180-16 who has received it, unless the transferee or recipient was a bona
180-17 fide holder for value before the date the bank was closed for
180-18 liquidation.
180-19 Sec. 7.217. OTHER POWERS OF THE RECEIVER; ADMINISTRATIVE
180-20 EXPENSES. The receiver may employ agents, legal counsel,
180-21 accountants, appraisers, consultants, and other personnel the
180-22 receiver considers necessary to assist in the performance of the
180-23 receiver's duties. The receiver may use personnel of the
180-24 department if the receiver considers the use to be advantageous or
180-25 desirable. The expense of employing these persons is an
180-26 administrative expense of liquidation.
180-27 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS. (a) In
181-1 the course of liquidating a bank, the receiver on order of the
181-2 court entered with or without hearing may:
181-3 (1) sell all or part of the real and personal property
181-4 of the bank;
181-5 (2) borrow money and pledge all or part of the assets
181-6 of the bank to secure the debt created, except that the receiver
181-7 may not be held personally liable to repay borrowed funds;
181-8 (3) compromise or compound a doubtful or uncollectible
181-9 debt or claim owed by or owing to the bank; and
181-10 (4) enter another agreement on behalf of the bank that
181-11 the receiver considers necessary or proper to the management,
181-12 conservation, or liquidation of its assets.
181-13 (b) If the amount of a debt or claim owed by or owing to the
181-14 bank or the value of an item of property of the bank does not
181-15 exceed $20,000, excluding interest, the receiver may compromise or
181-16 compound the debt or claim or sell the property on terms the
181-17 receiver considers to be in the best interests of the bank estate
181-18 without obtaining the approval of the court.
181-19 (c) The receiver may with the approval of the court sell or
181-20 offer or agree to sell an asset of the bank, other than fiduciary
181-21 assets, to a depositor or creditor of the bank. Payment may be in
181-22 whole or in part out of distributions payable to the purchasing
181-23 creditor or depositor on account of an approved claim against the
181-24 bank's estate. On application by the receiver, the court may
181-25 designate one or more representatives to act for certain depositors
181-26 or creditors as a class in the purchase, holding, and management of
181-27 assets purchased by the class under this section, and the receiver
182-1 may with the approval of the court advance the expenses of the
182-2 appointed representative against the security of the claims of the
182-3 class.
182-4 Sec. 7.219. DISCRETION OF THE COURT. If the court requires
182-5 notice and hearing before entering an order, the court shall fix
182-6 the time and place of the hearing and prescribe whether the notice
182-7 is to be given by service on specific parties, by publication, or
182-8 by a combination of these methods. The court may not enter an
182-9 order requested by a person other than the receiver without notice
182-10 to the receiver and an opportunity for the receiver to be heard.
182-11 Sec. 7.220. FILING REPORTS; EXPENSES. (a) The receiver
182-12 shall file quarterly reports with the court showing the operation,
182-13 receipts, expenditures, and general condition of the bank in
182-14 liquidation. The receiver shall also file a final report regarding
182-15 a liquidated bank showing all receipts and expenditures and giving
182-16 a full explanation and a statement of the disposition of all assets
182-17 of the bank.
182-18 (b) The receiver shall pay all administrative expenses out
182-19 of funds or assets of the bank. Each quarter the receiver shall
182-20 submit an itemized report of those expenses, sworn to by the
182-21 receiver. The court shall approve the report unless an objection
182-22 is filed before the 11th day after the date of submission of the
182-23 account. An objection, if any, may be made only by a party in
182-24 interest and must specify each item objected to and the ground for
182-25 the objection. The court shall set the objection for hearing and
182-26 notify the parties of this action. The objecting party has the
182-27 burden of proof to show that the item objected to is improper,
183-1 unnecessary, or excessive.
183-2 (c) The court may prescribe whether the notice of the
183-3 receiver's report is to be given by service on specific parties, by
183-4 publication, or by a combination of these methods.
183-5 Sec. 7.221. COURT-ORDERED AUDIT. The court in which the
183-6 receivership proceeding is pending may order an audit of the books
183-7 and records of the receiver that relate to the receivership. A
183-8 report of an audit ordered under this section shall be filed with
183-9 the court. The receiver shall make the books and records relating
183-10 to the receivership available to the auditor as required by the
183-11 court order. The receiver shall pay the expenses of an audit
183-12 ordered under this section as an administrative expense.
183-13 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
183-14 contract between the bank and another person for bailment, of
183-15 deposit for hire, or for the lease of a safe, vault, or box ceases
183-16 on the date specified for removal of property in the notices that
183-17 were published and mailed or a later date approved by the receiver
183-18 or the court. A person who has paid rental or storage charges for
183-19 a period extending beyond the date designated as the date for
183-20 removal of property shall have a claim against the bank estate for
183-21 a refund of any unearned amount paid.
183-22 (b) If the property is not removed by the date specified in
183-23 the notices or by the receiver or the court, the receiver shall
183-24 inventory the property and may open a safe, vault, or box, or any
183-25 package, parcel, or receptacle, in the custody or possession of the
183-26 receiver, to make the inventory. The property shall be marked to
183-27 identify, to the extent possible, its owner or the person who left
184-1 it with the bank. After all property belonging to others that is
184-2 in the receiver's custody and control has been inventoried, the
184-3 receiver shall compile a master list that is divided for each
184-4 office of the bank that received property that remains unclaimed.
184-5 The receiver shall publish, in a newspaper of general circulation
184-6 in each community in which the bank had an office that received
184-7 property that remains unclaimed, the list and the names of the
184-8 owners of the property as shown in the bank's records. The
184-9 published notice shall specify a procedure for claiming the
184-10 property, unless the court, on application of the receiver,
184-11 approves an alternate procedure.
184-12 Sec. 7.223. FIDUCIARY ACTIVITIES. (a) As soon after
184-13 beginning the receivership proceeding as is practicable, the
184-14 receiver shall terminate all fiduciary positions it holds,
184-15 surrender all property held by it as a fiduciary, and settle the
184-16 bank's fiduciary accounts. The receiver shall release all
184-17 segregated and identifiable fiduciary property held by the bank to
184-18 successor fiduciaries.
184-19 (b) With the approval of the court, the receiver may sell
184-20 the administration of all or substantially all remaining fiduciary
184-21 accounts to one or more successor fiduciaries on terms that appear
184-22 to be in the best interests of the bank's estate and the persons
184-23 interested in the fiduciary accounts.
184-24 (c) If commingled fiduciary funds held by the bank as
184-25 trustee are insufficient to satisfy all fiduciary claims to the
184-26 commingled funds, the receiver shall distribute commingled funds
184-27 pro rata to all fiduciary claimants of commingled funds based on
185-1 their proportionate interests after payment of administrative
185-2 expenses related solely to the fiduciary claims. The fictional
185-3 tracing rule does not apply. To the extent of any unsatisfied
185-4 fiduciary claim to commingled funds, claimants to commingled trust
185-5 funds are entitled to the same priority as depositors of the bank.
185-6 (d) Subject to Subsection (c) of this section, if the bank
185-7 has lost fiduciary funds or property through misappropriation or
185-8 otherwise, claimants to missing fiduciary funds or property are
185-9 entitled to the same priority as depositors of the bank.
185-10 (e) The receiver may require certain fiduciary claimants to
185-11 file proofs of claim if the records of the bank are insufficient to
185-12 identify their respective interests.
185-13 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a) On
185-14 approval by the court, the receiver may dispose of records of the
185-15 bank in liquidation that are obsolete and unnecessary to the
185-16 continued administration of the receivership proceeding.
185-17 (b) The receiver may devise a method for the effective,
185-18 efficient, and economical maintenance of the records of the bank
185-19 and of the receiver's office, including maintaining those records
185-20 on any medium approved by the records management division of the
185-21 Texas State Library.
185-22 (c) To maintain the records of a liquidated bank after the
185-23 closing of the receivership proceeding, the receiver may reserve
185-24 assets of an estate, deposit them in an account, and use them for
185-25 maintenance, storage, and disposal of records in closed
185-26 receivership estates.
185-27 (d) Records of a liquidated bank are not government records
186-1 for any purpose, including Chapter 552, Government Code, but shall
186-2 be preserved and disposed of as if they were records of the
186-3 department under Chapter 441, Government Code. These records are
186-4 confidential as provided by Subchapter B, Chapter 2, of this Act,
186-5 rules adopted under this Act, and Section 30.007, Civil Practice
186-6 and Remedies Code.
186-7 Sec. 7.225. RECORDS ADMITTED. (a) A book, record,
186-8 document, or paper of a bank in liquidation obtained by the
186-9 receiver and held in the course of the receivership proceeding, or
186-10 a certified copy of such a record under the official seal of the
186-11 receiver shall be received in evidence in all cases without proof
186-12 of correctness or other proof, except the certificate of the
186-13 receiver that the records were received from the custody of the
186-14 bank or found among its effects.
186-15 (b) The receiver may certify the correctness of a paper,
186-16 document, or record of the receiver's office, including those
186-17 described by Subsection (a) of this section, and may certify any
186-18 fact contained in the paper, document, or record. The paper,
186-19 document, or record shall be received in evidence in all cases in
186-20 which the original would be evidence.
186-21 (c) The original book, record, document, or paper, or a
186-22 certified copy of such a record is prima facie evidence of the
186-23 facts it contains.
186-24 (d) A copy of an original record or another record that is
186-25 maintained on a medium approved by the records management division
186-26 of the Texas State Library, within the scope of this section, and
186-27 produced by the receiver or the receiver's authorized
187-1 representative under this section has the same force and effect as
187-2 the original record and may be used the same as the original record
187-3 in a judicial or administrative proceeding in this state.
187-4 Sec. 7.226. RESUMPTION OF BUSINESS. (a) A state bank
187-5 closed under Section 7.201 of this Act may not be reopened without
187-6 the approval of the banking commissioner unless a contest of
187-7 liquidation under Section 7.204 of this Act is finally resolved
187-8 adversely to the banking commissioner and the court authorizes its
187-9 reopening.
187-10 (b) If a bank reopens under this section, the banking
187-11 commissioner may place temporary limits on the right of withdrawals
187-12 by, or payments to, individual depositors and creditors. The
187-13 limits:
187-14 (1) must apply equally to all unsecured depositors and
187-15 creditors;
187-16 (2) may not defer a secured depositor or creditor
187-17 without the person's written consent; and
187-18 (3) may not postpone the right of full withdrawal or
187-19 payment of unsecured depositors or creditors for more than 18
187-20 months after the date that the bank reopens.
187-21 (c) As a depositor or creditor of a reopened bank, this
187-22 state or a political subdivision of this state may agree to
187-23 temporary limits that the banking commissioner places on payments
187-24 or withdrawals.
187-25 Sec. 7.227. AFTER-DISCOVERED ASSETS. (a) If the banking
187-26 commissioner discovers, after the receivership has been closed by
187-27 final order of the court, assets that have value and were abandoned
188-1 as worthless or unknown during receivership, the banking
188-2 commissioner shall report the discovery to the court. The court
188-3 may reopen the receivership proceeding for continued liquidation if
188-4 the value of the after-discovered assets justifies the reopening.
188-5 (b) If the banking commissioner suspects that the
188-6 information may have been intentionally or fraudulently concealed,
188-7 the banking commissioner shall notify appropriate civil and
188-8 criminal authorities to determine what penalties, if any, may be
188-9 available.
188-10 (Sections 7.228-7.300 reserved for expansion)
188-11 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
188-12 Sec. 7.301. FILING CLAIMS. (a) A person other than a
188-13 shareholder, participant, or participant-transferee acting in that
188-14 capacity who has a claim against the bank in liquidation, including
188-15 a claimant with a secured claim and a claimant under a fiduciary
188-16 relationship that has been ordered by the receiver to file a claim
188-17 pursuant to Section 7.223 of this Act, may assert the claim by
188-18 presenting proof of the claim to the receiver at a place specified
188-19 by the receiver within the period specified by the receiver under
188-20 Section 7.205 of this Act. Receipt of the required proof of claim
188-21 by the receiver is a condition precedent to the payment of a claim.
188-22 Except as provided by Subsection (b) of this section, a claim that
188-23 is not filed within the period specified by the court may not
188-24 participate in a distribution of the assets by the receiver.
188-25 Interest does not accrue on a claim after the date the bank is
188-26 closed for liquidation.
188-27 (b) Subject to court approval, the receiver may accept a
189-1 claim filed after the date specified if the claim is filed with the
189-2 receiver not later than the 180th day after the date notice of the
189-3 claimant's right to file a proof of claim is mailed to the
189-4 claimant. If accepted and approved, the claim is subordinate to an
189-5 approved claim of a general creditor.
189-6 Sec. 7.302. PROOF OF CLAIM. (a) A proof of claim must be a
189-7 written statement signed by the claimant that includes:
189-8 (1) the claim;
189-9 (2) the consideration for the claim;
189-10 (3) a statement of whether collateral is held or a
189-11 security interest is asserted against the claim and, if so, a
189-12 description of the collateral held or security interest asserted;
189-13 (4) any right of priority of payment for the claim or
189-14 other specific right asserted by the claimant;
189-15 (5) a statement of whether a payment has been made on
189-16 the claim, and, if so, the amount and source of the payment, to
189-17 the extent known by the claimant;
189-18 (6) a statement that the amount claimed is justly owed
189-19 by the bank in liquidation to the claimant; and
189-20 (7) any other matter that is required by the court in
189-21 which the receivership is pending.
189-22 (b) The receiver may designate the form of the proof of
189-23 claim. A proof of claim shall be filed under oath unless the oath
189-24 is waived by the receiver. A proof of claim filed with the
189-25 receiver is considered filed in an official proceeding for purposes
189-26 of Chapter 37, Penal Code.
189-27 (c) If a claim is founded on an instrument in writing, the
190-1 original instrument, unless lost or destroyed, shall be filed with
190-2 the proof of claim. After the instrument is filed, the receiver
190-3 may permit the claimant to substitute a copy of the instrument
190-4 until the final disposition of the claim. If the instrument is
190-5 lost or destroyed, a statement of that fact and of the
190-6 circumstances of the loss or destruction shall be filed under oath
190-7 with the claim.
190-8 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM. A judgment entered
190-9 against the bank before the date the bank was closed for
190-10 liquidation may not be given higher priority than an unsecured
190-11 creditor unless the judgment creditor in a proof of claim proves
190-12 the allegations supporting the judgment to the receiver's
190-13 satisfaction. A judgment against the bank entered after the date
190-14 the bank was closed for liquidation may not be considered as
190-15 evidence of liability or of the amount of damages. A judgment
190-16 against the bank taken by default or by collusion before the date
190-17 the bank was closed for liquidation may not be considered as
190-18 conclusive evidence of the liability of the bank to the judgment
190-19 creditor or of the amount of damages to which the judgment creditor
190-20 is entitled.
190-21 Sec. 7.304. SECURED CLAIMS. (a) The owner of a secured
190-22 claim against a bank in liquidation may surrender the security and
190-23 file a claim as a general creditor or apply the security to the
190-24 claim and discharge the claim. If the owner applies the security
190-25 and discharges the claim, any deficiency shall be treated as a
190-26 claim against the general assets of the bank on the same basis as a
190-27 claim of an unsecured creditor. The amount of the deficiency shall
191-1 be determined as provided by Section 7.305 of this Act, except that
191-2 if the amount of the deficiency has been adjudicated by a court of
191-3 competent jurisdiction in a proceeding in which the receiver has
191-4 had notice and an opportunity to be heard, the court's decision is
191-5 conclusive as to the amount.
191-6 (b) The value of security held by a secured creditor shall
191-7 be determined under supervision of the court by:
191-8 (1) converting the security into money according to
191-9 the terms of the agreement under which the security was delivered
191-10 to the creditor; or
191-11 (2) agreement, arbitration, compromise, or litigation
191-12 between the creditor and the receiver.
191-13 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS. (a) A
191-14 claim based on an unliquidated or undetermined demand shall be
191-15 filed within the period provided by Subchapter C of this chapter
191-16 for the filing of a claim. The claim may not share in any
191-17 distribution to claimants until the claim is definitely liquidated,
191-18 determined, and allowed. After the claim is liquidated,
191-19 determined, and allowed, the claim shares ratably with the claims
191-20 of the same class in all subsequent distributions.
191-21 (b) For the purposes of this section, a demand is considered
191-22 unliquidated or undetermined if the right of action on the demand
191-23 accrued while the bank was closed for liquidation and the liability
191-24 on the demand has not been determined or the amount of the demand
191-25 has not been liquidated.
191-26 (c) If the receiver in all other respects is in a position
191-27 to close the receivership proceeding, the proposed closing is
192-1 sufficient grounds for the rejection of any remaining claim based
192-2 on an unliquidated or undetermined demand. The receiver shall
192-3 notify the claimant of the intention to close the proceeding. If
192-4 the demand is not liquidated or determined before the 61st day
192-5 after the date of the notice, the receiver may reject the claim.
192-6 Sec. 7.306. SET-OFF. (a) Mutual credits and mutual debts
192-7 shall be set off and only the balance allowed or paid, except that
192-8 a set-off may not be allowed in favor of a person if:
192-9 (1) the obligation of the bank to the person did not
192-10 on the date the bank was closed for liquidation entitle the person
192-11 to share as a claimant in the assets of the bank;
192-12 (2) the obligation of the bank to the person was
192-13 purchased by or transferred to the person after the date the bank
192-14 was closed for liquidation or for the purpose of increasing set-off
192-15 rights; or
192-16 (3) the obligation of the person or the bank is as a
192-17 trustee or fiduciary.
192-18 (b) On request, the receiver shall provide a person with an
192-19 accounting statement identifying each debt that is due and payable.
192-20 If a person owes the bank an amount that is due and payable against
192-21 which the person asserts set-off of mutual credits that may become
192-22 due and payable from the bank in the future, the person shall
192-23 promptly pay to the receiver the amount due and payable. The
192-24 receiver shall promptly refund, to the extent of the person's prior
192-25 payment, mutual credits that become due and payable to the person
192-26 by the bank in liquidation.
192-27 Sec. 7.307. ACTION ON CLAIMS. (a) Not later than six
193-1 months after the last day permitted for the filing of claims or a
193-2 later date allowed by the court, the receiver shall accept or
193-3 reject each filed claim in whole or in part, except for an
193-4 unliquidated or undetermined claim governed by Section 7.305 of
193-5 this Act. The receiver may approve or reject a claim filed against
193-6 the bank in liquidation, and shall reject a claim if the receiver
193-7 doubts its validity.
193-8 (b) The receiver shall mail written notice to each claimant,
193-9 specifying the disposition of the person's claim. If a claim is
193-10 rejected in whole or in part, the receiver in the notice shall
193-11 specify the basis for rejection and advise the claimant of the
193-12 procedures and deadline for appeal.
193-13 (c) The receiver shall send each claimant a summary schedule
193-14 of approved and rejected claims by priority class and notify the
193-15 claimant:
193-16 (1) that a copy of a schedule of claims disposition
193-17 including only the name of the claimant, the amount of the claim
193-18 allowed, and the amount of the claim rejected is available on
193-19 request; and
193-20 (2) of the procedure and deadline for filing objection
193-21 to an approved claim.
193-22 (d) The receiver and the receiver's agents and employees,
193-23 including employees of the department, are not liable for and a
193-24 cause of action may not be brought against any of them for an
193-25 action taken or not taken by them relating to the adjustment,
193-26 negotiation, or settlement of claims.
193-27 Sec. 7.308. OBJECTION TO APPROVED CLAIM. On or before the
194-1 date specified for objection to an approved claim, which shall be
194-2 set by the receiver with court approval, a depositor, creditor,
194-3 other claimant, shareholder, participant, or participant-transferee
194-4 of the bank may file an objection to an approved claim. The
194-5 objection shall be heard and determined by the court. If the
194-6 objection is sustained, the court shall direct an appropriate
194-7 modification of the schedule.
194-8 Sec. 7.309. APPEAL OF REJECTED CLAIM. If an action on a
194-9 rejected claim is not brought in the court in which the
194-10 receivership proceeding is pending within three months after the
194-11 date of service of notice, the action of the receiver is final and
194-12 not subject to review. If the action is timely brought, review is
194-13 de novo as if originally filed in the court and subject to the
194-14 rules of procedure and appeal applicable to civil cases. This
194-15 action is separate from the receivership proceeding and is not
194-16 initiated by a claimant's attempt to appeal the action of the
194-17 receiver by intervening in the receivership proceeding.
194-18 Sec. 7.310. PAYMENT OF CLAIMS. (a) Except as expressly
194-19 provided otherwise by this subchapter or Subchapter C of this
194-20 chapter, without the approval of the court the receiver may not
194-21 make a payment on a claim, other than a claim for an obligation
194-22 incurred by the receiver for administrative expenses.
194-23 (b) After all objections have been heard and decided as
194-24 provided by Section 7.308 of this Act and the time for filing
194-25 appeals has expired as provided by Section 7.309 of this Act, the
194-26 receiver may periodically make partial distribution to the holders
194-27 of approved claims if a proper reserve is established for the pro
195-1 rata payment of rejected claims that have been appealed and any
195-2 claims based on unliquidated or undetermined demands governed by
195-3 Section 7.305 of this Act.
195-4 (c) As soon as practicable after the determination of all
195-5 objections, appeals, and claims based on previously unliquidated or
195-6 undetermined demands governed by Section 7.305 of this Act, the
195-7 receiver shall distribute the assets of the bank in satisfaction of
195-8 approved claims other than claims asserted in a person's capacity
195-9 as a shareholder, participant, or participant-transferee.
195-10 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED BANK. The
195-11 distribution of assets from the estate of a bank the deposits of
195-12 which are insured by the Federal Deposit Insurance Corporation or
195-13 its successor shall be made in the same order of priority as assets
195-14 would be distributed on liquidation or purchase of assets and
195-15 assumption of liabilities of a national bank under federal law.
195-16 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED BANK.
195-17 (a) The priority of distribution of assets from the estate of a
195-18 bank the deposits of which are not insured by the Federal Deposit
195-19 Insurance Corporation or its successor shall be in accordance with
195-20 the order of each class as provided by this section. Every claim
195-21 in each class shall be paid in full, or adequate funds shall be
195-22 retained for that payment, before the members of the next class
195-23 receive any payment. A subclass may not be established within a
195-24 class, except for a preference or subordination within a class
195-25 expressly created by contract or other instrument or in the
195-26 articles of association.
195-27 (b) Assets shall be distributed in the following order of
196-1 priority:
196-2 (1) administrative expenses;
196-3 (2) approved claims of secured creditors to the extent
196-4 of the value of the security as provided by Section 7.304 of this
196-5 Act;
196-6 (3) approved claims by beneficiaries of insufficient
196-7 commingled fiduciary funds or missing fiduciary property and
196-8 approved claims of depositors of the bank;
196-9 (4) other approved claims of general creditors not
196-10 falling within a higher priority under this section, including
196-11 unsecured claims for taxes and debts due the federal government or
196-12 a state or local government;
196-13 (5) approved claims of a type described by
196-14 Subdivisions (1)-(4) of this subsection that were not filed within
196-15 the period prescribed by this subchapter; and
196-16 (6) claims of capital note or debenture holders or
196-17 holders of similar obligations and proprietary claims of
196-18 shareholders, participants, participant-transferees, or other
196-19 owners according to the terms established by issue, class, or
196-20 series.
196-21 Sec. 7.313. EXCESS ASSETS. (a) If bank assets remain after
196-22 the receiver has provided for unclaimed distributions and all of
196-23 the liabilities of the bank in liquidation, the receiver shall
196-24 distribute the remaining assets to the shareholders or participants
196-25 of the bank. If the remaining assets are not liquid or otherwise
196-26 require continuing administration, the receiver may call a meeting
196-27 of the shareholders or participants and participant-transferees of
197-1 the bank by giving notice in a newspaper of general circulation in
197-2 the county where the home office of the bank was located and by
197-3 written notice to the shareholders or participants and
197-4 participant-transferees of record at their last known addresses.
197-5 (b) At the meeting, the shareholders or participants shall
197-6 appoint one or more agents to take over the affairs to continue the
197-7 liquidation for the benefit of the shareholders or participants and
197-8 participant-transferees. Voting privileges are governed by the
197-9 bank's bylaws and articles of association. If a quorum cannot be
197-10 obtained at the meeting, the banking commissioner shall appoint an
197-11 agent.
197-12 (c) An agent appointed under Subsection (b) of this section
197-13 shall execute and file with the court a bond approved by the court,
197-14 conditioned on the faithful performance of all the duties of the
197-15 trust. Under order of the court the receiver shall transfer and
197-16 deliver to the agent or agents for continued liquidation under the
197-17 court's supervision all assets of the bank remaining in the
197-18 receiver's hands, and the court shall discharge the receiver from
197-19 further liability to the bank and its depositors, creditors,
197-20 shareholders, participants, and participant-transferees. The bank
197-21 may not resume business and the charter of the bank is void on the
197-22 date the court issues the order directing the receiver to transfer
197-23 and deliver the remaining assets of the bank to the agent or
197-24 agents.
197-25 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY. After completion
197-26 of the liquidation, any unclaimed property remaining in the hands
197-27 of the receiver shall be tendered to the state treasurer as
198-1 provided by Chapter 74, Property Code.
198-2 CHAPTER 8. PROVISIONS APPLICABLE TO
198-3 BANKS AND OTHER DEPOSITORY INSTITUTIONS;
198-4 BANK HOLDING COMPANIES
198-5 SUBCHAPTER A. GENERAL PROVISIONS
198-6 Sec. 8.001. LIABILITIES, DEFENSES, AND
198-7 INDEMNIFICATION OF CORPORATE OFFICIALS ......... 200
198-8 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION ............. 202
198-9 Sec. 8.003. OFFICES OF OUT-OF-STATE BANKS .................... 202
198-10 Sec. 8.004. UNAUTHORIZED BANKING ............................. 204
198-11 Sec. 8.005. SLANDER OR LIBEL OF A BANK ....................... 205
198-12 Sec. 8.006. AUTHORITY TO ACT AS NOTARY PUBLIC ................ 205
198-13 Sec. 8.007. EXEMPTION FROM SECURITIES LAW .................... 206
198-14 Sec. 8.008. SUCCESSION OF TRUST POWERS ....................... 206
198-15 Sec. 8.009. AFFILIATES AS AGENTS ............................. 207
198-16 Sec. 8.010. DISCOVERY OF CUSTOMER RECORDS .................... 208
198-17 Sec. 8.011. COMPLIANCE REVIEW COMMITTEE ...................... 208
198-18 (Sections 8.012-8.100 reserved for expansion)
198-19 SUBCHAPTER B. SAFE DEPOSIT BOXES
198-20 Sec. 8.101. DEFINITION ....................................... 210
198-21 Sec. 8.102. AUTHORITY FOR SAFE DEPOSIT BOXES ................. 210
198-22 Sec. 8.103. ACCESS BY MULTIPLE PARTIES ....................... 210
198-23 Sec. 8.104. NONEMERGENCY OPENING AND RELOCATION .............. 211
198-24 Sec. 8.105. EMERGENCY OPENING AND RELOCATION ................. 212
198-25 Sec. 8.106. EXERCISE OF LIEN AND SALE OF CONTENTS ............ 212
198-26 Sec. 8.107. IDENTIFICATION NUMBER FOR KEYS ................... 213
198-27 (Sections 8.108-8.200 reserved for expansion)
199-1 SUBCHAPTER C. EMERGENCIES
199-2 Sec. 8.201. DEFINITION ....................................... 214
199-3 Sec. 8.202. EFFECT OF CLOSING ................................ 215
199-4 Sec. 8.203. EFFECT OF OTHER PROVISIONS ....................... 215
199-5 Sec. 8.204. LIMITATIONS ON WITHDRAWALS FROM A STATE
199-6 BANK ........................................... 215
199-7 Sec. 8.205. FINANCIAL MORATORIUM ............................. 216
199-8 Sec. 8.206. EMERGENCY SUSPENSION OF OPERATIONS BY
199-9 BANK ........................................... 216
199-10 Sec. 8.207. EMERGENCY SUSPENSION OF OPERATIONS BY
199-11 BANKING COMMISSIONER ........................... 217
199-12 (Sections 8.208-8.300 reserved for expansion)
199-13 SUBCHAPTER D. BANK HOLDING COMPANIES
199-14 Sec. 8.301. ACQUISITION OF BANK OR BANK HOLDING
199-15 COMPANY ........................................ 218
199-16 Sec. 8.302. OTHER APPLICABLE REQUIREMENTS .................... 219
199-17 Sec. 8.303. ADDITIONAL REQUIREMENTS APPLICABLE TO
199-18 OUT-OF-STATE BANK HOLDING COMPANIES ............ 220
199-19 Sec. 8.304. ACQUISITION OF NONBANKING INSTITUTION BY
199-20 A BANK HOLDING COMPANY ......................... 221
199-21 Sec. 8.305. ENFORCEMENT ...................................... 222
199-22 CHAPTER 8. PROVISIONS APPLICABLE TO
199-23 BANKS AND OTHER DEPOSITORY INSTITUTIONS;
199-24 BANK HOLDING COMPANIES
199-25 SUBCHAPTER A. GENERAL PROVISIONS
199-26 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION OF
199-27 CORPORATE OFFICIALS. (a) The provisions of the Texas Business
200-1 Corporation Act regarding liability, defenses, and indemnification
200-2 of a director, officer, agent, or employee apply to a director,
200-3 officer, agent, or employee of a depository institution in this
200-4 state. Except as limited by those provisions, a disinterested
200-5 director, manager, managing participant, officer, or employee of a
200-6 depository institution may not be held personally liable in an
200-7 action seeking monetary damages arising from the conduct of the
200-8 depository institution's affairs unless the damages resulted from
200-9 the gross negligence or wilful or intentional misconduct of the
200-10 person during the person's term of office with the depository
200-11 institution.
200-12 (b) A director, manager, managing participant, officer, or
200-13 employee of a depository institution is disinterested with respect
200-14 to a decision or transaction if the director, manager, managing
200-15 participant, officer, or employee fully discloses any interest in
200-16 the decision or transaction and does not participate in the
200-17 decision or transaction, or if the decision or transaction does not
200-18 involve:
200-19 (1) personal profit for the director, manager,
200-20 managing participant, officer, or employee through dealing with the
200-21 depository institution or usurping an opportunity of the depository
200-22 institution;
200-23 (2) buying or selling assets of the depository
200-24 institution in a transaction in which the director, manager,
200-25 managing participant, officer, or employee has a direct or indirect
200-26 pecuniary interest;
200-27 (3) dealing with another depository institution or
201-1 other person in which the director, manager, managing participant,
201-2 officer, or employee is also a director, manager, managing
201-3 participant, officer, or employee or otherwise has a significant
201-4 direct or indirect financial interest; or
201-5 (4) dealing with a family member of the director,
201-6 manager, managing participant, officer, or employee.
201-7 (c) A director, manager, managing participant, or officer
201-8 who, in performing the person's duties and functions, acts in good
201-9 faith and reasonably believes that reliance is warranted is
201-10 entitled to rely on information or an opinion, report, statement,
201-11 including a financial statement or other financial data, decision,
201-12 judgment, or performance, including a decision, judgment, or
201-13 performance by a committee, prepared, presented, made, or rendered
201-14 by:
201-15 (1) one or more directors, managers, managing
201-16 participants, officers, or employees of the depository institution,
201-17 or of an entity under joint or common control with the depository
201-18 institution, who the director, manager, managing participant, or
201-19 officer reasonably believes merits confidence;
201-20 (2) legal counsel, a public accountant, or another
201-21 person who the director, manager, managing participant, or officer
201-22 reasonably believes merits confidence; or
201-23 (3) a committee of the board of which the director,
201-24 manager, or managing participant is not a member.
201-25 (d) In this section, "family member" means a person's:
201-26 (1) spouse;
201-27 (2) minor child; or
202-1 (3) adult child who resides in the person's home.
202-2 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. (a) An
202-3 attachment, injunction, or execution for the purpose of collecting
202-4 a money judgment or securing a prospective money judgment against a
202-5 financial institution may not be issued against a financial
202-6 institution located in this state before the judgment is final and
202-7 all appeals have been exhausted or foreclosed by law.
202-8 (b) This section affects an attachment, injunction,
202-9 execution, or writ of garnishment issued to or served on a
202-10 financial institution for the purpose of collecting a money
202-11 judgment or securing a prospective money judgment against a
202-12 depositor of or deposit account in the financial institution.
202-13 Sec. 8.003. OFFICES OF OUT-OF-STATE BANKS. (a) A bank that
202-14 is not domiciled or primarily located in this state may establish
202-15 one or more offices in this state for any lawful purpose. Before
202-16 transacting business in this state, the bank shall file with the
202-17 secretary of state:
202-18 (1) a duly executed instrument, by its terms of
202-19 indefinite duration and irrevocable, appointing the secretary of
202-20 state as its agent for service of process on whom a notice or
202-21 process issued by a court in this state may be served in an action
202-22 or proceeding relating to the business of the bank in this state;
202-23 and
202-24 (2) a written certificate of designation, which may be
202-25 changed from time to time by the filing of a new certificate of
202-26 designation, specifying the name and address of the officer, agent,
202-27 or other person to whom the notice or process should be forwarded
203-1 by the secretary of state.
203-2 (b) The secretary of state shall collect for the use of the
203-3 state:
203-4 (1) a fee of $100 for indexing and filing the initial
203-5 certificate of designation and accompanying instruments required to
203-6 be filed by Subsection (a) of this section; and
203-7 (2) a fee of $15 for the filing of an amended
203-8 certificate of designation.
203-9 (c) On receipt of a notice or process, the secretary of
203-10 state shall promptly forward it by registered or certified mail,
203-11 return receipt requested, to the officer, agent, or other person
203-12 designated. Failure of the bank to maintain a designated person
203-13 does not affect the validity of service mailed to the last
203-14 designated person at the last designated address. Service of
203-15 notice or process on the secretary of state as agent for a bank
203-16 described in this section has the same effect as personal service
203-17 would have if made in this state on the depository institution.
203-18 (d) A bank transacting business in this state in compliance
203-19 with this section is not doing business in this state for the
203-20 purposes of Part Eight, Texas Business Corporation Act.
203-21 (e) A bank described by Subsection (a) of this section may
203-22 not use any form of advertising, including a sign or printed or
203-23 broadcast material, that implies or tends to imply that the bank is
203-24 engaged in banking business that the bank is not legally authorized
203-25 to transact.
203-26 Sec. 8.004. UNAUTHORIZED BANKING. (a) Except as otherwise
203-27 provided by law, a person other than a depository institution
204-1 authorized to conduct business in this state may not conduct the
204-2 business of banking or represent to the public that it is
204-3 conducting the business of banking in this state.
204-4 (b) A person may not use the term "bank" or "bank and
204-5 trust," or a similar term, or a character, ideogram, phonogram,
204-6 phrase, or foreign language word in its name, stationery, or
204-7 advertising in a manner that would imply to the public that the
204-8 person is engaged in the business of banking in this state.
204-9 (c) Subsection (b) of this section does not apply to:
204-10 (1) a depository institution authorized to conduct
204-11 business in this state;
204-12 (2) a foreign bank agency;
204-13 (3) a loan production office or representative office
204-14 of a foreign bank corporation or an out-of-state bank established
204-15 in compliance with this Act; or
204-16 (4) another entity organized under the laws of this
204-17 state, another state, the United States, or a foreign sovereign
204-18 state to the extent that:
204-19 (A) the entity is authorized under its charter
204-20 or the laws of this state or the United States to use a term, word,
204-21 character, ideogram, phonogram, or phrase prohibited by Subsection
204-22 (b) of this section; and
204-23 (B) the entity is authorized by the laws of this
204-24 state or the United States to conduct the activities in which the
204-25 entity is engaged in this state.
204-26 (d) A person violating this section is subject to an
204-27 enforcement action initiated by the banking commissioner under
205-1 Subchapter C, Chapter 6, of this Act, except that the maximum
205-2 administrative penalty under Section 6.210 of this Act for
205-3 violation involving only Subsection (b) of this section is $500 for
205-4 each day the violation continues.
205-5 Sec. 8.005. SLANDER OR LIBEL OF A BANK. (a) A person
205-6 commits an offense if the person:
205-7 (1) knowingly makes, circulates, or transmits to
205-8 another person an untrue statement that is derogatory to the
205-9 financial condition of a bank located in this state; or
205-10 (2) with intent to injure the bank, counsels, aids,
205-11 procures, or induces another person to knowingly make, circulate,
205-12 or transmit to another person an untrue statement that is
205-13 derogatory to the financial condition of any bank located in this
205-14 state.
205-15 (b) An offense under this section is a state jail felony.
205-16 Sec. 8.006. AUTHORITY TO ACT AS NOTARY PUBLIC. A notary
205-17 public is not disqualified from taking an acknowledgement or proof
205-18 of a written instrument as provided by Section 406.016, Government
205-19 Code, solely because of the person's ownership of stock or
205-20 participation interest in or employment by a bank that is an
205-21 interested party in the underlying transaction.
205-22 Sec. 8.007. EXEMPTION FROM SECURITIES LAW. (a) An officer,
205-23 director, manager, managing participant, or employee of a bank
205-24 located in this state with fewer than 500 shareholders or
205-25 participants or a bank holding company with fewer than 500
205-26 shareholders or participants that controls a bank located in this
205-27 state is exempt from the registration and licensing provisions of
206-1 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
206-2 Statutes) with respect to that person's participation in a sale or
206-3 other transaction involving securities issued by:
206-4 (1) the bank or bank holding company of which that
206-5 person is an officer, director, manager, managing participant, or
206-6 employee;
206-7 (2) a bank holding company that controls the bank of
206-8 which that person is an officer, director, manager, managing
206-9 participant, or employee; or
206-10 (3) a bank controlled by the bank holding company of
206-11 which that person is an officer, director, manager, managing
206-12 participant, or employee.
206-13 (b) A person may not be compensated for services performed
206-14 under the exemption provided by this section.
206-15 Sec. 8.008. SUCCESSION OF TRUST POWERS. If a reorganizing
206-16 or selling financial institution at the time of a merger,
206-17 reorganization, conversion, or sale of substantially all of its
206-18 assets under Chapter 3 of this Act or other applicable law is
206-19 acting as trustee, guardian, executor, or administrator, or in
206-20 another fiduciary capacity, the successor entity with fiduciary
206-21 powers may, without the necessity of judicial action or action by
206-22 the creator of the trust, continue the office, trust, or fiduciary
206-23 relationship. The financial institution may perform all the duties
206-24 and exercise all the powers connected with or incidental to the
206-25 fiduciary relationship in the same manner as if the successor
206-26 entity had been originally designated as the fiduciary.
206-27 Sec. 8.009. AFFILIATES AS AGENTS. (a) A bank subsidiary of
207-1 a bank holding company may receive deposits, renew time deposits,
207-2 close loans, service loans, and receive payments on loans and other
207-3 obligations as an agent for a depository institution affiliate.
207-4 Notwithstanding any other provision of law, a bank acting as an
207-5 agent for a depository institution affiliate as provided by this
207-6 section is not considered to be a branch of the affiliate.
207-7 (b) A depository institution may not:
207-8 (1) conduct an activity as an agent under Subsection
207-9 (a) that the institution is prohibited from conducting as a
207-10 principal under federal or state law; or
207-11 (2) as a principal, have an agent conduct an activity
207-12 under Subsection (a) that the institution is prohibited from
207-13 conducting under federal or state law.
207-14 (c) This section does not affect:
207-15 (1) the authority of a depository institution to act
207-16 as an agent on behalf of another depository institution under
207-17 another law; or
207-18 (2) whether a depository institution that conducts
207-19 activity as an agent on behalf of another depository institution
207-20 under another law is considered to be a branch of the other
207-21 institution.
207-22 (d) An agency relationship between depository institutions
207-23 under Subsection (a) of this section must be on terms that are
207-24 consistent with safe and sound banking practices and all applicable
207-25 rules.
207-26 Sec. 8.010. DISCOVERY OF CUSTOMER RECORDS. Civil discovery
207-27 of a customer record maintained by a financial institution is
208-1 governed by Section 30.007, Civil Practice and Remedies Code.
208-2 Sec. 8.011. COMPLIANCE REVIEW COMMITTEE. (a) In this
208-3 section:
208-4 (1) "Civil action" means a civil proceeding pending in
208-5 a court or other adjudicatory tribunal with jurisdiction to issue a
208-6 request or subpoena for records, including an alternative dispute
208-7 resolution mechanism, voluntary or required, under which a party
208-8 may compel the production of records. The term does not include an
208-9 examination or enforcement proceeding initiated by:
208-10 (A) a governmental agency with primary
208-11 regulatory jurisdiction over a financial institution in possession
208-12 of a compliance review document;
208-13 (B) the Federal Deposit Insurance Corporation or
208-14 its successor; or
208-15 (C) the board of governors of the Federal
208-16 Reserve System or its successor.
208-17 (2) "Compliance review document" means a document
208-18 prepared for or created by a compliance review committee.
208-19 (b) A financial institution or an affiliate of a financial
208-20 institution, including its holding company, may establish a
208-21 compliance review committee to test, review, or evaluate the
208-22 institution's conduct, transactions, or potential transactions for
208-23 the purpose of monitoring and improving or enforcing compliance
208-24 with:
208-25 (1) a statutory or regulatory requirement;
208-26 (2) financial reporting to a governmental agency;
208-27 (3) the policies and procedures of the financial
209-1 institution or its affiliates; or
209-2 (4) safe, sound, and fair lending practices.
209-3 (c) Except as provided by Subsection (d) of this section:
209-4 (1) a compliance review document is confidential and
209-5 is not discoverable or admissible in evidence in a civil action;
209-6 (2) an individual serving on a compliance review
209-7 committee or acting under the direction of a compliance review
209-8 committee may not be required to testify in a civil action as to
209-9 the contents or conclusions of a compliance review document or as
209-10 to an action taken or discussions conducted by or for a compliance
209-11 review committee; and
209-12 (3) a compliance review document or an action taken or
209-13 discussion conducted by or for a compliance review committee that
209-14 is disclosed to a governmental agency remains confidential and is
209-15 not discoverable or admissible in a civil action.
209-16 (d) Subsection (c)(2) of this section does not apply to an
209-17 individual that has management responsibility for the operations,
209-18 records, employees, or activities being examined or evaluated by
209-19 the compliance review committee.
209-20 (e) This section does not limit the discovery or
209-21 admissibility in a civil action of a document that is not a
209-22 compliance review document.
209-23 (Sections 8.012-8.100 reserved for expansion)
209-24 SUBCHAPTER B. SAFE DEPOSIT BOXES
209-25 Sec. 8.101. DEFINITION. In this subchapter "safe deposit
209-26 company" means a person, including a depository institution, trust
209-27 company, hotel, or other entity, that maintains and rents safe
210-1 deposit boxes.
210-2 Sec. 8.102. AUTHORITY FOR SAFE DEPOSIT BOXES. (a) Any
210-3 person may be a safe deposit company. In safe deposit transactions
210-4 the relationship of the safe deposit company and the renter is that
210-5 of lessor and lessee and landlord and tenant, and the rights and
210-6 liabilities of the safe deposit company are governed accordingly in
210-7 the absence of a contract or statute to the contrary. The lessee
210-8 is considered for all purposes to be in possession of the box and
210-9 its contents.
210-10 (b) A notice required by this subchapter must be in writing
210-11 and personally delivered or sent by registered or certified mail,
210-12 return receipt requested, to each lessee at the last known address
210-13 of the person according to the records of the safe deposit company.
210-14 (c) This subchapter does not affect Sections 36B through
210-15 36F, Texas Probate Code, or another statute of this state governing
210-16 safe deposit boxes.
210-17 Sec. 8.103. ACCESS BY MULTIPLE PARTIES. If a safe deposit
210-18 box is leased in the name of two or more persons jointly or if a
210-19 person other than the lessee is designated in the lease agreement
210-20 as having a right of access to the box, each of those persons is
210-21 entitled to access to the box and to remove its contents in the
210-22 absence of a contract to the contrary. This right of access and
210-23 removal is not affected by the death or incapacity of another
210-24 person that is a lessee or otherwise entitled to access to the box.
210-25 The safe deposit company is not responsible for damage arising from
210-26 access to the safe deposit box or removal of any of its contents by
210-27 a person with a right of access to the box.
211-1 Sec. 8.104. NONEMERGENCY OPENING AND RELOCATION. (a) A
211-2 safe deposit company may not relocate a safe deposit box rented for
211-3 a term of six months or longer if the box rental is not delinquent
211-4 or open the box to relocate its contents to another box or location
211-5 except in the presence of the lessee or with the lessee's written
211-6 authorization or as provided by this section or Section 8.105 of
211-7 this Act. A safe deposit box may not be relocated under this
211-8 section unless the storage conditions at the new location are at
211-9 least as secure as the conditions at the original box location.
211-10 This section and Section 8.105 of this Act do not apply to a
211-11 relocation of a safe deposit box within the same building.
211-12 (b) Not later than the 30th day before the scheduled date of
211-13 a nonemergency relocation, the safe deposit company shall give
211-14 notice of the relocation and its scheduled date and time to the
211-15 lessee or to each joint lessee. The notice must state whether the
211-16 box will be opened during the relocation. A lessee may personally
211-17 supervise the relocation or authorize the relocation in writing if
211-18 notice is given to all joint lessees.
211-19 (c) If during the relocation the box is opened and a lessee
211-20 does not personally supervise or authorize the relocation in
211-21 writing, two employees, at least one of whom is an officer or
211-22 manager of the safe deposit company and at least one of whom is a
211-23 notary public, shall inventory the contents of the box in detail.
211-24 The safe deposit company shall notify each lessee of the new box
211-25 number or location not later than the 30th day after the date of
211-26 the relocation and shall include a signed and notarized copy of the
211-27 inventory report. The cost of a certified mailing other than the
212-1 first notice sent in connection with each relocation may be treated
212-2 as box rental due and payable at the expiration of the rental term.
212-3 Sec. 8.105. EMERGENCY OPENING AND RELOCATION. A safe
212-4 deposit company may relocate a safe deposit box or open the box to
212-5 relocate its contents to another box or location without complying
212-6 with Sections 8.104(a) and (b) of this Act if the security of the
212-7 original box is threatened or destroyed by natural disaster,
212-8 including tornado, flood, fire, or other unforeseeable
212-9 circumstances beyond the control of the safe deposit company. The
212-10 safe deposit company shall follow the procedure of Section 8.104(c)
212-11 of this Act, except that the notice of the new box number or
212-12 location must be given not later than the 90th day after the date
212-13 of a relocation under this section.
212-14 Sec. 8.106. EXERCISE OF LIEN AND SALE OF CONTENTS. (a) If
212-15 the rental for a safe deposit box is delinquent for six months, the
212-16 safe deposit company may send notice to each lessee that the
212-17 company will remove the contents of the box if the rent is not paid
212-18 before the date specified in the notice, which may not be before
212-19 the 60th day after the date the notice is delivered or sent. If
212-20 the rent is not paid before this time, the safe deposit company may
212-21 open the box in the presence of two employees, at least one of whom
212-22 is an officer or manager of the safe deposit company and at least
212-23 one of whom is a notary public. The safe deposit company shall
212-24 inventory the contents of the box in detail as provided by state
212-25 treasury reporting instructions and place the contents of the box
212-26 in a sealed envelope or container bearing the name of the lessee.
212-27 (b) The safe deposit company has a lien on the contents of
213-1 the box for an amount equal to the rental of the box and the cost
213-2 of opening the box and may retain possession of the contents. If
213-3 the rental and the cost of opening the box are not paid before the
213-4 second anniversary of the date the box was opened, the safe deposit
213-5 company may sell all or part of the contents at public auction in
213-6 the manner and with the notice prescribed for the sale of real
213-7 property under deed of trust under Section 51.002, Property Code.
213-8 Any unsold contents of the box and any excess proceeds from a sale
213-9 of contents shall be remitted to the state treasury as provided by
213-10 Chapters 72 through 75, Property Code.
213-11 Sec. 8.107. IDENTIFICATION NUMBER FOR KEYS. (a) A
213-12 depository institution that rents or permits access to a safe
213-13 deposit box shall imprint each key to the box with its routing
213-14 number. The requirement of this subsection begins to apply to a
213-15 key issued under a lease in effect on September 1, 1992, on the
213-16 date the term of that lease expires, without regard to any
213-17 extension of the lease term.
213-18 (b) If a depository institution believes that the routing
213-19 number imprinted on a key, or tag attached to a key, used to open a
213-20 safe deposit box has been altered or defaced so that the correct
213-21 routing number is illegible, the depository institution shall
213-22 notify the Department of Public Safety of the State of Texas, on a
213-23 form designed by the banking commissioner, not later than the 10th
213-24 day after the date the altered or defaced key is used to open the
213-25 box.
213-26 (c) This section does not require a depository institution
213-27 to inspect the routing number imprinted on a key or an attached tag
214-1 to determine if the number has been altered or defaced. A
214-2 depository institution that has imprinted a key to a safe deposit
214-3 box as provided by this section and that follows applicable law and
214-4 the depository institution's established security procedures in
214-5 permitting access to the box is not liable for any damage arising
214-6 because of access to or removal of the contents of the box.
214-7 (Sections 8.108-8.200 reserved for expansion)
214-8 SUBCHAPTER C. EMERGENCIES
214-9 Sec. 8.201. DEFINITION. In this subchapter "emergency"
214-10 means a condition or occurrence that may interfere physically with
214-11 the conduct of normal business at the offices of a bank or of
214-12 particular bank operations or that poses an imminent or existing
214-13 threat to the safety or security of persons or property, including:
214-14 (1) fire, flood, earthquake, hurricane, tornado, or
214-15 wind, rain, or snow storm;
214-16 (2) labor dispute or strike;
214-17 (3) power failure, transportation failure, or
214-18 interruption of communication facilities;
214-19 (4) shortage of fuel, housing, food, transportation,
214-20 or labor;
214-21 (5) robbery, burglary, or attempted robbery or
214-22 burglary;
214-23 (6) epidemic or other catastrophe; or
214-24 (7) riot, civil commotion, enemy attack, or other acts
214-25 of lawlessness or violence, or a threat of such an act.
214-26 Sec. 8.202. EFFECT OF CLOSING. A day on which a bank, or
214-27 any one or more of its operations, is closed during all or part of
215-1 its normal banking hours as provided by this subchapter is a legal
215-2 holiday for all purposes with respect to any banking business
215-3 affected by the closed bank or bank operations. No liability or
215-4 loss of rights of any kind on the part of any bank or a director,
215-5 manager, managing participant, officer, or employee of a bank
215-6 arises because of a closing authorized by this subchapter.
215-7 Sec. 8.203. EFFECT OF OTHER PROVISIONS. This subchapter is
215-8 in addition to any other provision of law of this state, including
215-9 another provision of this Act, or the United States that
215-10 authorizes the closing of a bank or that excuses a delay by a bank
215-11 in the performance of its duties and obligations.
215-12 Sec. 8.204. LIMITATIONS ON WITHDRAWALS FROM A STATE BANK.
215-13 (a) On the request of a state bank that is experiencing or
215-14 threatened with unusual and excessive withdrawals because of
215-15 financial conditions, panic, or crisis, the banking commissioner,
215-16 to prevent unnecessary loss to or preference among the depositors
215-17 and creditors of the bank and to preserve the financial structure
215-18 of the bank and its usefulness to the community, may issue an order
215-19 limiting the right of withdrawal by or payment to depositors,
215-20 creditors, and other persons to whom the bank is liable.
215-21 (b) An order issued under this section:
215-22 (1) must expire not later than the 10th day after the
215-23 date it is issued;
215-24 (2) must be uniform in application to each class of
215-25 liability; and
215-26 (3) is not subject to judicial review.
215-27 Sec. 8.205. FINANCIAL MORATORIUM. (a) The banking
216-1 commissioner, with the approval of a majority of the finance
216-2 commission and the governor, may proclaim a financial moratorium
216-3 for, and invoke a uniform limitation on, withdrawal of deposits of
216-4 every character from all banks within this state. A bank refusing
216-5 to comply with a written proclamation of the banking commissioner
216-6 under this section, signed by a majority of the members of the
216-7 finance commission and the governor:
216-8 (1) forfeits its charter, if it is a state bank; or
216-9 (2) may not act as reserve agent for a state bank or
216-10 act as depository of state, county, municipal, or other public
216-11 funds, if it is a national bank.
216-12 (b) On refusal of a national bank to comply with the
216-13 proclamation, all public funds shall be immediately withdrawn by
216-14 the depositor from the national bank on order of the banking
216-15 commissioner and may not be redeposited in the national bank
216-16 without the prior written approval of the banking commissioner.
216-17 Sec. 8.206. EMERGENCY SUSPENSION OF OPERATIONS BY BANK. (a)
216-18 If the officers of a bank located in this state believe that an
216-19 emergency exists or is impending that affects or may affect the
216-20 bank's offices or particular bank operations, the officers of the
216-21 bank may choose not to open the bank's offices or conduct the
216-22 particular bank operations. During a business or banking day on
216-23 which the bank offices have opened or bank operations begun, the
216-24 officers may close bank offices or suspend and close the particular
216-25 bank operations during the emergency, even if the banking
216-26 commissioner has not issued a proclamation of emergency.
216-27 (b) The office or operations closed or suspended may remain
217-1 closed until the officers determine that the emergency has ended,
217-2 and for additional time reasonably required to reopen, except that
217-3 the offices or operations may not remain closed or suspended for
217-4 more than three consecutive days, excluding days on which the bank
217-5 is customarily closed, without the approval of the banking
217-6 commissioner. A bank closing an office or operations under this
217-7 section shall give notice of its action to the banking commissioner
217-8 as promptly as possible and by any means available.
217-9 Sec. 8.207. EMERGENCY SUSPENSION OF OPERATIONS BY BANKING
217-10 COMMISSIONER. (a) If the banking commissioner believes that an
217-11 emergency exists or is impending in all or part of this state, the
217-12 banking commissioner may by proclamation authorize banks located in
217-13 the affected area to close or suspend all or part of their offices
217-14 or operations.
217-15 (b) If the banking commissioner believes that an emergency
217-16 exists or is impending that affects or may affect a particular bank
217-17 or banks or a particular bank operation, but not banks located in
217-18 the area generally, the banking commissioner may authorize the
217-19 particular bank or banks affected to close or to suspend and close
217-20 a particular bank operation.
217-21 (c) A bank office or bank operation closed or suspended
217-22 under this section may remain closed until the banking commissioner
217-23 proclaims that the emergency has ended, or until an earlier time
217-24 that the officers of the bank determine that the closed bank
217-25 offices or bank operations should reopen, except that the affected
217-26 bank offices and operations may remain closed for additional time
217-27 reasonably required to reopen.
218-1 (Sections 8.208-8.300 reserved for expansion)
218-2 SUBCHAPTER D. BANK HOLDING COMPANIES
218-3 Sec. 8.301. ACQUISITION OF BANK OR BANK HOLDING COMPANY.
218-4 (a) A bank or bank holding company that seeks to directly or
218-5 indirectly acquire or acquire control of a bank located in this
218-6 state, or of a bank holding company that controls a bank in this
218-7 state, and that submits an application for approval to the Board of
218-8 Governors of the Federal Reserve System as provided by Section 3,
218-9 Bank Holding Company Act of 1956 (12 U.S.C. Section 1842), shall
218-10 submit a copy of the application and any additional information
218-11 required under Section 8.303 of this Act to the banking
218-12 commissioner when the application is submitted to the board of
218-13 governors.
218-14 (b) The banking commissioner, on receipt of the notice
218-15 prescribed by Section 3(b), Bank Holding Company Act of 1956 (12
218-16 U.S.C. Section 1842(b)), shall state in writing within the period
218-17 prescribed by that subsection:
218-18 (1) the views and recommendations of the banking
218-19 commissioner concerning the application; and
218-20 (2) the opinion of the banking commissioner regarding
218-21 whether the application evidences compliance with the Community
218-22 Reinvestment Act of 1977, as amended (12 U.S.C. Section 2901 et
218-23 seq.), except that the banking commissioner is not required to
218-24 disapprove the application solely because of that opinion.
218-25 (c) If the proposed acquisition is of a state bank or a bank
218-26 holding company controlling a state bank and the banking
218-27 commissioner disapproves the application in the response, the
219-1 banking commissioner shall appear at the hearing held as provided
219-2 by Section 3(b), Bank Holding Company Act of 1956 (12 U.S.C.
219-3 Section 1842(b)), and present evidence at the hearing regarding the
219-4 reasons the application should be denied.
219-5 (d) If the proposed acquisition is of a national bank or a
219-6 bank holding company controlling a national bank and the banking
219-7 commissioner opposes the application in the response, the banking
219-8 commissioner shall request that a hearing be held as provided by
219-9 Section 3(b), Bank Holding Company Act of 1956 (12 U.S.C. Section
219-10 1842(b)). If the board of governors grants the request, the
219-11 banking commissioner shall appear and present evidence at the
219-12 hearing regarding the reasons the application should be denied.
219-13 (e) If the board of governors approves an application that
219-14 the banking commissioner opposed, the banking commissioner may
219-15 accept the decision or seek to overturn the decision on appeal,
219-16 with the assistance of the attorney general, as provided by Section
219-17 9, Bank Holding Company Act of 1956 (12 U.S.C. Section 1848).
219-18 Sec. 8.302. OTHER APPLICABLE REQUIREMENTS. Notwithstanding
219-19 any other law, a bank or bank holding company may not acquire
219-20 control of or acquire all or substantially all of the assets of a
219-21 bank located in this state or of a bank holding company that
219-22 controls a bank in this state if the acquiring bank or bank holding
219-23 company and all its insured depository institution affiliates
219-24 controls, or after consummation of the acquisition would control,
219-25 more than 20 percent of the total amount of deposits of insured
219-26 depository institutions located in this state, as reported in the
219-27 most recently available reports of condition or similar reports
220-1 filed with state or federal authorities. For purposes of this
220-2 section, "deposit" and "insured depository institution" have the
220-3 same meanings assigned by Section 3, Federal Deposit Insurance Act
220-4 (12 U.S.C. Section 1813).
220-5 Sec. 8.303. ADDITIONAL REQUIREMENTS APPLICABLE TO
220-6 OUT-OF-STATE BANK HOLDING COMPANIES. (a) An out-of-state bank
220-7 holding company may not make an acquisition specified by Section
220-8 8.301(a) of this Act unless each bank in this state that would on
220-9 consummation of the acquisition be directly or indirectly
220-10 controlled by the out-of-state bank holding company has existed and
220-11 continuously operated as a bank at least five years.
220-12 (b) For the purposes of this section:
220-13 (1) a bank that is the successor as a result of merger
220-14 or acquisition of all or substantially all of the assets of a prior
220-15 bank is considered to have been in existence and continuously
220-16 operated during the period of its existence and continuous
220-17 operation as a bank and during the period of existence and
220-18 continuous operation of the prior bank;
220-19 (2) a bank effecting a purchase and assumption,
220-20 merger, or similar transaction with or supervised by the Federal
220-21 Deposit Insurance Corporation or its successor is considered to
220-22 have been in existence and continuously operated during the
220-23 existence and continuous operation of the bank with respect to
220-24 which the transaction was consummated; and
220-25 (3) a bank holding company is considered an
220-26 out-of-state bank holding company after it becomes an out-of-state
220-27 bank holding company until the banking commissioner determines
221-1 otherwise.
221-2 (c) In this section, "out-of-state bank holding company" has
221-3 the meaning assigned by Section 2(o)(7), Bank Holding Company Act
221-4 of 1956 (12 U.S.C. Section 1841(o)(7)), and includes a bank
221-5 holding company domiciled outside the United States.
221-6 Sec. 8.304. ACQUISITION OF NONBANKING INSTITUTION BY A BANK
221-7 HOLDING COMPANY. (a) A bank holding company doing business in
221-8 this state that submits an application or notice to the Board of
221-9 Governors of the Federal Reserve System regarding an acquisition or
221-10 activity regulated by Section 4, Bank Holding Company Act of 1956
221-11 (12 U.S.C. Section 1843), that will directly or indirectly affect
221-12 residents of this state, including any remote or contingent effect,
221-13 shall submit a copy of the application or notice to the banking
221-14 commissioner when the application or notice is submitted to the
221-15 board of governors. The bank holding company shall submit other
221-16 information reasonably requested by the banking commissioner to
221-17 determine the manner in which the acquisition or activity will
221-18 directly or indirectly affect residents of this state.
221-19 (b) The banking commissioner may hold a public hearing
221-20 regarding the application and its effect on this state, regardless
221-21 of whether requested to do so by a person, as provided by Section
221-22 3.008 of this Act, to assist in determining whether to oppose the
221-23 application. The banking commissioner shall convene a hearing if
221-24 the bank holding company requests a hearing in writing when it
221-25 submits the application or notice to the banking commissioner. The
221-26 banking commissioner shall oppose the application if the banking
221-27 commissioner determines that the acquisition or activity would be
222-1 detrimental to the public interest as a result of probable adverse
222-2 effects, including undue concentration of resources, decreased or
222-3 unfair competition, conflicts of interest, or unsound banking
222-4 practices.
222-5 (c) If the banking commissioner determines to oppose the
222-6 application, the banking commissioner may prepare and file a
222-7 response to the application with the board of governors and request
222-8 that a hearing be held. If the board of governors grants the
222-9 request, the banking commissioner shall appear and present evidence
222-10 at the hearing regarding the reasons the application should be
222-11 denied.
222-12 (d) If the board of governors approves an application that
222-13 the banking commissioner opposed, the banking commissioner may
222-14 accept the decision or seek to overturn the decision on appeal,
222-15 with the assistance of the attorney general, as provided by Section
222-16 9, Bank Holding Company Act of 1956 (12 U.S.C. Section 1848).
222-17 Sec. 8.305. ENFORCEMENT. The banking commissioner may bring
222-18 an enforcement proceeding under Chapter 6 of this Act against a
222-19 bank holding company that violates or participates in the violation
222-20 of this Act, an agreement filed with the banking commissioner under
222-21 this subchapter, or a rule or order issued by the banking
222-22 commissioner or the finance commission under this Act, as if the
222-23 bank holding company were a state bank.
222-24 CHAPTER 9. FOREIGN BANK CORPORATIONS
222-25 AND REPRESENTATIVE OFFICES
222-26 Sec. 9.001. PURPOSES ......................................... 223
222-27 Sec. 9.002. APPLICABILITY OF ACT ............................. 224
223-1 Sec. 9.003. REQUIREMENTS FOR MAINTAINING A FOREIGN
223-2 BANK AGENCY .................................... 224
223-3 Sec. 9.004. APPLICATION FOR LICENSE .......................... 224
223-4 Sec. 9.005. HEARING AND DECISION ON APPLICATION .............. 226
223-5 Sec. 9.006. REPRESENTATIVE OFFICES OF FOREIGN BANK
223-6 CORPORATIONS ................................... 228
223-7 Sec. 9.007. DESIGNATED AGENT FOR SERVICE OF PROCESS .......... 230
223-8 Sec. 9.008. LOCATION OF PLACE OF BUSINESS .................... 232
223-9 Sec. 9.009. REVOCATION OF LICENSE OR REGISTRATION ............ 233
223-10 Sec. 9.010. EFFECT OF REVOKED REGISTRATION ................... 235
223-11 Sec. 9.011. STATUS OF REVOKED LICENSEE ....................... 235
223-12 Sec. 9.012. POWERS AND PERMITTED ACTIVITIES .................. 235
223-13 Sec. 9.013. REPORTS .......................................... 237
223-14 Sec. 9.014. TAXATION ......................................... 238
223-15 Sec. 9.015. DISSOLUTION ...................................... 238
223-16 CHAPTER 9. FOREIGN BANK CORPORATIONS
223-17 AND REPRESENTATIVE OFFICES
223-18 Sec. 9.001. PURPOSES. A foreign bank corporation with
223-19 equity capital equivalent to at least $100 million in United States
223-20 currency may establish a foreign bank agency as provided by this
223-21 chapter in a standard metropolitan statistical area in this state
223-22 having a population in excess of 500,000. A foreign bank agency in
223-23 this state may perform only the functions permitted by this
223-24 chapter. A license issued under this chapter is not transferable
223-25 or assignable.
223-26 Sec. 9.002. APPLICABILITY OF ACT. (a) A foreign bank
223-27 agency is subject to this Act and other laws of this state
224-1 applicable to banks as if the foreign bank agency were a state
224-2 bank, except as otherwise provided by rules adopted under this Act
224-3 or unless the context of a provision or other information indicates
224-4 that a provision applies only to a bank organized under the laws of
224-5 this state or the United States.
224-6 (b) The finance commission may adopt rules specifically
224-7 applicable to foreign bank corporations, including rules that
224-8 provide for proportionate recovery of the cost of maintenance and
224-9 operation of the department and of enforcement of this chapter
224-10 through ratable and equitable fees established for notices,
224-11 applications, and examinations.
224-12 Sec. 9.003. REQUIREMENTS FOR MAINTAINING A FOREIGN BANK
224-13 AGENCY. A foreign bank corporation may not maintain a foreign bank
224-14 agency in this state or an office in this state for carrying on
224-15 functions permitted for a foreign bank agency unless the
224-16 corporation has complied with Section 9.007 of this Act and holds a
224-17 license for a foreign bank agency issued by the banking
224-18 commissioner.
224-19 Sec. 9.004. APPLICATION FOR LICENSE. (a) To obtain a
224-20 license for a foreign bank agency, a foreign bank corporation must
224-21 submit an application to the banking commissioner, accompanied by
224-22 all application fees and deposits required by applicable rules.
224-23 The application, in the form specified by the banking commissioner,
224-24 must be subscribed and acknowledged by an officer of the foreign
224-25 bank corporation and must have attached a complete copy of the
224-26 foreign bank corporation's application to the board of governors of
224-27 the Federal Reserve System under 12 U.S.C. Section 3105(d). The
225-1 application is due when the federal application is submitted to the
225-2 board of governors and must include on its face or in accompanying
225-3 documents:
225-4 (1) the name of the foreign bank corporation;
225-5 (2) an authenticated copy of the foreign bank
225-6 corporation's articles of incorporation and bylaws or other
225-7 constitutive documents and, if a copy is in a language other than
225-8 English, an English translation of the document, under the oath of
225-9 the translator;
225-10 (3) the street address where the foreign bank agency's
225-11 principal office is to be located and, if different, the foreign
225-12 bank agency's mailing address;
225-13 (4) the name and qualifications of each officer and
225-14 director of the foreign bank corporation who will have control of
225-15 all or part of the business and affairs of the foreign bank agency;
225-16 (5) a detailed statement of the foreign bank
225-17 corporation's financial condition as of a date not more than 360
225-18 days before the date of the application; and
225-19 (6) other information that:
225-20 (A) is necessary to enable the banking
225-21 commissioner to make the findings listed in Subsection (b) of this
225-22 section;
225-23 (B) is required by rules adopted under this Act;
225-24 or
225-25 (C) the banking commissioner reasonably
225-26 requests.
225-27 (b) The banking commissioner shall approve an application if
226-1 the banking commissioner finds after reasonable inquiry that:
226-2 (1) the foreign bank corporation has equity capital
226-3 under regulatory accounting principles equivalent to at least $100
226-4 million in United States currency;
226-5 (2) the standard metropolitan statistical area in
226-6 which the principal office of the foreign bank agency is proposed
226-7 to be located has a population in excess of 500,000;
226-8 (3) all members of the proposed management of the
226-9 agency have sufficient banking experience, ability, standing,
226-10 competence, trustworthiness, and integrity to justify a belief that
226-11 the proposed foreign bank agency will operate in compliance with
226-12 state law;
226-13 (4) the foreign bank corporation has sufficient
226-14 standing to justify a belief that the proposed foreign bank agency
226-15 will be free from improper or unlawful influence or interference
226-16 with respect to the bank's operation in compliance with state law;
226-17 and
226-18 (5) the applicant is acting in good faith and the
226-19 application does not contain a material misrepresentation.
226-20 Sec. 9.005. HEARING AND DECISION ON APPLICATION. (a) After
226-21 the application is complete and accepted for filing and all
226-22 required fees and deposits have been paid, the banking commissioner
226-23 shall determine whether the conditions set forth by Section
226-24 9.004(b) of this Act have been established, based on the
226-25 application and the initial investigation. The banking
226-26 commissioner shall approve the application or set the application
226-27 for hearing. As provided by 12 C.F.R. Section 211.25(b)(5), the
227-1 banking commissioner shall notify the board of governors of the
227-2 Federal Reserve System that the application has been set for
227-3 hearing.
227-4 (b) If the banking commissioner sets the application for
227-5 hearing, the department shall participate as the opposing party,
227-6 and the banking commissioner shall conduct a hearing and one or
227-7 more prehearing conferences and opportunities for discovery as the
227-8 banking commissioner considers advisable and consistent with
227-9 applicable statutes and rules. Information relating to the
227-10 financial condition and business affairs of the foreign bank
227-11 corporation and financial information of its management and
227-12 shareholders, except for previously published statements and
227-13 information, is confidential and may not be released to the public
227-14 or considered in the public portion of the hearing. Based on the
227-15 record, the banking commissioner shall make a finding on each
227-16 condition listed in Section 9.004(b) of this Act and enter an order
227-17 granting or denying the license. The banking commissioner shall
227-18 inform the board of governors of the Federal Reserve System of the
227-19 order and the reasons the federal application should be denied if
227-20 the banking commissioner denied the application under this section.
227-21 (c) The banking commissioner may make approval of any
227-22 application conditional. The banking commissioner shall include
227-23 any conditions in the order granting the license, but may not issue
227-24 the license until the agency has received the approval of the board
227-25 of governors of the Federal Reserve System as provided by 12 U.S.C.
227-26 Section 3105(d). A written commitment from the applicant offered
227-27 to and accepted by the banking commissioner as a condition on the
228-1 approval of the application is enforceable against the applicant
228-2 and is considered for all purposes an agreement under this Act.
228-3 (d) If a hearing has been held, the banking commissioner has
228-4 entered an order denying the application, and the order has become
228-5 final, the applicant may appeal as provided by Section 3.009 of
228-6 this Act.
228-7 Sec. 9.006. REPRESENTATIVE OFFICES OF FOREIGN BANK
228-8 CORPORATIONS. (a) A foreign bank corporation that does not
228-9 possess a license to operate a foreign bank agency in this state
228-10 may establish one or more representative offices in this state for
228-11 any lawful purpose by filing with the banking commissioner a
228-12 verified statement of registration accompanied by all registration
228-13 fees and deposits required by rule. The statement of registration,
228-14 in a form specified by the banking commissioner, must be subscribed
228-15 and acknowledged by an officer of the foreign bank corporation and
228-16 must contain as an exhibit or attachment a complete copy of the
228-17 foreign bank corporation's registration form submitted to the Board
228-18 of Governors of the Federal Reserve System under 12 U.S.C. Section
228-19 3107. The statement of registration is due at the same time the
228-20 federal application is submitted to the Board of Governors and must
228-21 set forth, directly or in exhibits or attachments:
228-22 (1) the name of the foreign bank corporation;
228-23 (2) a duly authenticated copy of its articles of
228-24 incorporation and bylaws or other constitutive documents, and if
228-25 the copy is in a language other than English, an attached English
228-26 translation of the document, under the oath of the translator;
228-27 (3) the street and post office address and county
229-1 where each representative office is to be located in this state;
229-2 (4) the name and qualifications of each officer and
229-3 director of the foreign bank corporation who will have charge of
229-4 any aspect of the business and affairs of the representative
229-5 office;
229-6 (5) a complete and detailed statement of the financial
229-7 condition of the foreign bank corporation as of a date not more
229-8 than 360 days before the date of the filing; and
229-9 (6) other information the banking commissioner
229-10 requires.
229-11 (b) Before transacting business in this state through a
229-12 representative office, a foreign bank corporation described by this
229-13 section must comply with Section 9.007 of this Act.
229-14 (c) A representative office of a foreign bank corporation
229-15 established or maintained in this state may:
229-16 (1) solicit loans in principal amount of $250,000 or
229-17 more and in connection with the loans may:
229-18 (A) assemble credit information about the
229-19 borrower;
229-20 (B) make inspections and appraisals of property;
229-21 (C) obtain property title information; and
229-22 (D) prepare applications for loans;
229-23 (2) solicit purchasers for loans from the foreign
229-24 banking corporation;
229-25 (3) solicit persons to contract for loan servicing of
229-26 the foreign bank corporation loans;
229-27 (4) conduct research;
230-1 (5) perform services as liaison for customers and
230-2 correspondents of the foreign banking corporation;
230-3 (6) provide for execution of loan documents for
230-4 permitted loans as provided by written approval from the foreign
230-5 bank corporation; and
230-6 (7) engage in other activities approved by the banking
230-7 commissioner or permitted by rule.
230-8 (d) A representative office may not solicit or accept credit
230-9 balances or deposits or make final credit decisions.
230-10 (e) A representative office may engage in the business
230-11 authorized by this section at the places of business registered
230-12 with the banking commissioner. A representative office may change
230-13 its location in this state by filing a notice with the banking
230-14 commissioner containing the street and post office mailing address
230-15 and county of the new location.
230-16 (f) The banking commissioner may examine a representative
230-17 office of a foreign bank corporation to determine compliance with
230-18 this section.
230-19 Sec. 9.007. DESIGNATED AGENT FOR SERVICE OF PROCESS. (a)
230-20 Before transacting business in this state through a foreign bank
230-21 agency or a representative office, a foreign bank corporation shall
230-22 file with the secretary of state:
230-23 (1) a duly executed instrument, by its terms of
230-24 indefinite duration and irrevocable, appointing the secretary of
230-25 state as its agent for service of process on whom a notice or
230-26 process issued by a court in this state may be served in an action
230-27 or proceeding relating to the business of the foreign bank
231-1 corporation in this state; and
231-2 (2) a written certificate of designation, which may be
231-3 amended periodically by the filing of a new certificate of
231-4 designation, specifying the name and address of the officer, agent,
231-5 or other person to whom the notice or process shall be forwarded by
231-6 the secretary of state.
231-7 (b) The secretary of state shall collect for the use of the
231-8 state:
231-9 (1) a fee of $100 for indexing and filing the initial
231-10 certificate of designation and accompanying instruments required to
231-11 be filed by Subsection (a) of this section; and
231-12 (2) a fee of $15 for the filing of an amended
231-13 certificate of designation.
231-14 (c) On receipt of a notice or process, the secretary of
231-15 state shall promptly forward it by registered or certified mail to
231-16 the officer, agent, or other person designated. Failure of the
231-17 foreign bank corporation to maintain a designated person does not
231-18 affect the validity of service mailed to the last designated person
231-19 at the last designated address. Service of notice or process on
231-20 the secretary of state as agent for a foreign bank corporation has
231-21 the same effect as personal service made in this state on the
231-22 foreign bank corporation.
231-23 (d) A foreign bank corporation is not considered to be doing
231-24 business in this state for the purposes of Part Eight, Texas
231-25 Business Corporation Act, solely because it transacts business in
231-26 this state through a foreign bank agency or representative office
231-27 as provided by this Act.
232-1 Sec. 9.008. LOCATION OF PLACE OF BUSINESS. (a) Except as
232-2 otherwise provided by this Act, a foreign bank corporation may
232-3 engage in business through a foreign bank agency as authorized by
232-4 this Act only at the place of business specified in its license or
232-5 another location permitted by rule or approval of the banking
232-6 commissioner under Subsection (b) of this section. The license
232-7 must at all times be conspicuously displayed in the authorized
232-8 place of business.
232-9 (b) With the prior written approval of the banking
232-10 commissioner, the foreign bank agency may change the location of
232-11 its place of business to another location in an area where a
232-12 foreign bank agency is authorized to be established under Section
232-13 9.001 of this Act. A foreign bank agency may not maintain more
232-14 than one place of business in this state.
232-15 (c) For the purposes of this section, a place where loans or
232-16 extensions of credit or other permissible services are solicited is
232-17 not an impermissible place of business of the foreign bank agency
232-18 if the loans or extensions of credit are approved and made or other
232-19 permissible services are conducted at the authorized place of
232-20 business of the foreign bank agency. This section does not apply
232-21 to a representative office of the foreign bank corporation
232-22 registered with the banking commissioner under Section 9.006 of
232-23 this Act.
232-24 Sec. 9.009. REVOCATION OF LICENSE OR REGISTRATION. (a) The
232-25 banking commissioner may initiate a proceeding to revoke a license
232-26 or cancel a registration if the banking commissioner finds, by
232-27 examination or other credible evidence, that the foreign bank
233-1 corporation:
233-2 (1) with respect to its foreign bank agency, does not
233-3 currently meet the criteria established by this chapter for the
233-4 original issuance of a license;
233-5 (2) has refused to permit the banking commissioner to
233-6 examine a foreign bank agency's or representative office's books,
233-7 papers, accounts, records, or affairs;
233-8 (3) has violated this Act, another law or rule
233-9 applicable to a foreign bank corporation or foreign bank agency, or
233-10 a final and enforceable order of the banking commissioner or the
233-11 finance commission;
233-12 (4) has misrepresented or concealed a material fact in
233-13 the original registration or application for license;
233-14 (5) has violated a condition of its license or an
233-15 agreement between the foreign bank corporation and the banking
233-16 commissioner or the department; or
233-17 (6) conducts business in an unsafe and unsound manner.
233-18 (b) Notice of a proceeding under Subsection (a) of this
233-19 section must be served on the foreign bank corporation by personal
233-20 delivery or registered or certified mail, return receipt requested,
233-21 to a director, officer, or employee of the foreign bank corporation
233-22 at its foreign bank agency or representative office location. The
233-23 notice must be in the form of a proposed order and must state the
233-24 grounds for the proposed revocation with reasonable certainty. The
233-25 effective date of the proposed order must be stated in the proposed
233-26 order and may not be before the 21st day after the date the
233-27 proposed order is mailed or delivered. Unless the foreign bank
234-1 corporation requests a hearing in writing on or before the
234-2 effective date of the proposed order, the order takes effect as
234-3 proposed and is final and nonappealable.
234-4 (c) A hearing requested on a proposed order shall be held
234-5 not later than the 30th day after the date written request for
234-6 hearing is received by the department unless the parties agree to a
234-7 later hearing date. The department shall participate as the
234-8 opposing party, and the banking commissioner shall conduct the
234-9 hearing and one or more prehearing conferences and opportunities
234-10 for discovery as the banking commissioner considers advisable and
234-11 consistent with applicable statutes and rules. During the pendency
234-12 of the hearing and unless the banking commissioner gives prior
234-13 written approval, the foreign bank corporation may not accept new
234-14 business, except that it shall comply with any stricter
234-15 requirements imposed by 12 U.S.C. Section 3105(e). Information
234-16 relating to the financial condition and business affairs of the
234-17 foreign bank corporation, except for previously published
234-18 statements and information, is confidential and may not be released
234-19 to the public or considered in the public portion of the hearing.
234-20 Based on the record, the banking commissioner shall issue or refuse
234-21 to issue the proposed order. An issued order may contain any
234-22 modifications indicated by the record to be necessary or desirable.
234-23 (d) If a hearing has been held, the banking commissioner has
234-24 entered an order adverse to the foreign bank corporation, and the
234-25 order has become final, the foreign bank corporation may appeal as
234-26 provided by Section 3.009 of this Act.
234-27 Sec. 9.010. EFFECT OF REVOKED REGISTRATION. A foreign bank
235-1 corporation that has had its registration under Section 9.006 of
235-2 this Act revoked shall cease all activities in this state.
235-3 Continued activity of an unregistered foreign bank corporation is
235-4 subject to Subchapter C, Chapter 6, of this Act.
235-5 Sec. 9.011. STATUS OF REVOKED LICENSEE. Unless stayed by
235-6 the finance commission or district court that has jurisdiction over
235-7 an appeal, a final revocation order of the banking commissioner is
235-8 effective and the foreign bank corporation must immediately cease
235-9 all licensed activity in this state. The foreign bank agency
235-10 reverts to the status of a representative office and all licensed
235-11 functions must be immediately transferred to a branch, affiliate,
235-12 or agency of the foreign bank corporation that is located outside
235-13 of this state and that has the power to perform these functions
235-14 under governing law.
235-15 Sec. 9.012. POWERS AND PERMITTED ACTIVITIES. (a) A foreign
235-16 bank corporation licensed to transact business in this state
235-17 through a foreign bank agency may exercise the powers of a state
235-18 bank except as limited by this chapter, including the power to:
235-19 (1) borrow and lend money with or without real or
235-20 personal property as security;
235-21 (2) purchase, sell, and make loans regardless of
235-22 whether the loans are secured by bonds or mortgages on real
235-23 property;
235-24 (3) engage in a foreign exchange transaction;
235-25 (4) issue, advise, confirm, and otherwise deal with a
235-26 letter of credit and pay, accept, or negotiate a draft drawn under
235-27 a letter of credit;
236-1 (5) accept a bill of exchange or draft;
236-2 (6) buy or acquire and sell or dispose of a bill of
236-3 exchange, draft, note, acceptance, or other obligation for the
236-4 payment of money;
236-5 (7) maintain a credit balance of funds received at the
236-6 foreign bank agency incidental to or arising out of the exercise of
236-7 its authorized activities in this state, if the funds are not
236-8 intended to be deposits and do not remain in the foreign bank
236-9 agency after the completion of all transactions to which they
236-10 relate;
236-11 (8) receive money for transmission and transmit the
236-12 money from its authorized place of business in this state to any
236-13 other place; and
236-14 (9) perform other activities that are authorized by
236-15 rules adopted under this Act or that the banking commissioner
236-16 determines are analogous or incidental to specific activities
236-17 authorized by this section for a foreign bank agency.
236-18 (b) A foreign bank corporation may not receive deposits or
236-19 exercise fiduciary powers in this state, other than through the
236-20 performance of duties as an indenture trustee or as a registrar,
236-21 paying agent, or transfer agent, on behalf of the issuer, for
236-22 equity or investment securities. The exercise of the powers and
236-23 activities permitted by this subsection or Subsection (a) of this
236-24 section by a foreign bank agency is not considered the exercise of
236-25 banking or discounting privileges in this state by the foreign bank
236-26 corporation.
236-27 (c) A foreign bank corporation licensed to transact business
237-1 in this state through a foreign bank agency may share the premises
237-2 of the foreign bank agency with another authorized office of the
237-3 foreign bank corporation or a direct or indirect subsidiary of the
237-4 foreign bank corporation if the books and records of the foreign
237-5 bank agency are kept separately from the books and records of the
237-6 other office.
237-7 Sec. 9.013. REPORTS. (a) Before opening a foreign bank
237-8 agency in this state and annually while the foreign bank agency is
237-9 maintained in this state at the time specified by the banking
237-10 commissioner, the foreign bank corporation shall furnish the
237-11 banking commissioner with a copy of its annual financial statement,
237-12 expressed in the currency of the country of its incorporation or
237-13 organization.
237-14 (b) A foreign bank corporation doing business in this state
237-15 shall, at the times and in the form specified by the banking
237-16 commissioner, make written reports in English to the banking
237-17 commissioner under oath of one of its officers, managers, or agents
237-18 transacting business in this state. The report must show the
237-19 amount of the foreign bank corporation's assets and liabilities and
237-20 contain other information that the banking commissioner requires.
237-21 Failing to make the report or knowingly making a false statement in
237-22 the report is grounds for revocation of the license or registration
237-23 of the foreign bank corporation.
237-24 Sec. 9.014. TAXATION. A foreign bank corporation is subject
237-25 to the franchise tax to the extent provided by Chapter 171, Tax
237-26 Code.
237-27 Sec. 9.015. DISSOLUTION. (a) If a foreign bank corporation
238-1 licensed to maintain a foreign bank agency in this state is
238-2 dissolved, has its authority or existence terminated or canceled in
238-3 the jurisdiction of its incorporation, or has its authority to
238-4 maintain an agency in this state terminated by the board of
238-5 governors of the Federal Reserve System under 12 U.S.C. Section
238-6 3105(e), an officer, manager, or agent of the foreign bank
238-7 corporation shall deliver to the banking commissioner:
238-8 (1) a certificate of the official responsible for
238-9 records of banking corporations of the foreign bank corporation's
238-10 jurisdiction of incorporation attesting to the occurrence of
238-11 dissolution or cancellation or termination of existence or
238-12 authority;
238-13 (2) a certified copy of an order or decree of a court
238-14 of competent jurisdiction directing the dissolution of the foreign
238-15 bank corporation or cancellation or termination of its existence or
238-16 authority; or
238-17 (3) a certified copy of the order of the board of
238-18 governors of the Federal Reserve System terminating its authority
238-19 under 12 U.S.C. Section 3105(e).
238-20 (b) The filing of the certificate, order, or decree has the
238-21 same effect provided by Section 9.012 of this Act as if the license
238-22 issued under this chapter were revoked by the banking commissioner.
238-23 SECTION 2. (a) Sections 1 and 2, Article 1, Chapter XI, The
238-24 Texas Banking Code (Article 342-1101, Vernon's Texas Civil
238-25 Statutes), are amended to read as follows:
238-26 Sec. 1. (a) Prior to exercising trust powers, a trust
238-27 company shall incorporate in accordance with this chapter and the
239-1 Texas Banking Act <code>. A trust company may incorporate for the
239-2 following purpose: to act as a trustee, executor, administrator,
239-3 or guardian when designated by any person, corporation, or court to
239-4 do so and as agent for the performance of any lawful act, including
239-5 the right to receive deposits made by agencies of the United States
239-6 of America for the authorized account of any individual, and to
239-7 lend and accumulate money without banking privileges, when licensed
239-8 under provisions of Subtitle 2, Title 79, Revised Statutes.
239-9 (b) The Banking Commissioner <State Banking Board> shall
239-10 hear and determine applications for state trust company charters.
239-11 A final order of the Banking Commissioner on a charter application
239-12 may be appealed as provided by Section 3.009, Texas Banking Act.
239-13 Sec. 2. (a) Subject to Subsection (b), every trust company
239-14 with a capital of not less than $1 million <$500,000> shall, in
239-15 addition to all other powers conferred by law, have the power: to
239-16 purchase, sell, discount, and negotiate, with or without its
239-17 endorsement or guaranty, notes, drafts, checks, bills of exchange,
239-18 acceptances, including bankers' acceptances, cable transfers, and
239-19 other evidences of indebtedness; to purchase and sell, with or
239-20 without its endorsement or guaranty, stocks, bonds, securities,
239-21 including the obligations of the United States or of any states
239-22 thereof; to issue debentures, bonds, and promissory notes, to
239-23 accept bills or drafts drawn upon it, but in no event having
239-24 liabilities outstanding thereon at any one time exceeding five
239-25 times its capital stock and surplus; provided, however, that with
239-26 the consent in writing of the Banking Commissioner it may have
239-27 outstanding at any one time 10 times the capital stock and surplus;
240-1 and generally, to exercise such powers as are incidental to the
240-2 powers conferred by this article.
240-3 (b) The <Banking Section of The> Finance Commission of Texas
240-4 shall prescribe regulations pursuant to which the Banking
240-5 Commissioner may require such additional capital over and above the
240-6 minimum amount of $1 million <$500,000> prescribed in Subsection
240-7 (a) as may be necessary to assure the safety and soundness of trust
240-8 companies engaging in activities under Subsection (a). The
240-9 proposed effective date of an order requiring a trust company to
240-10 increase its capital must be stated in the order as on or after the
240-11 21st day after the date the proposed order is mailed or delivered.
240-12 Unless the trust company requests a hearing before the Banking
240-13 Commissioner in writing before the effective date of the proposed
240-14 order, the order becomes effective and is final and nonappealable.
240-15 (b) Article 2, Chapter XI, The Texas Banking Code (Article
240-16 342-1102, Vernon's Texas Civil Statutes), is amended to read as
240-17 follows:
240-18 Art. 2. Applicability of State Banking Code; Venue.
240-19 Sec. 1. Unless otherwise provided in this chapter, a trust company
240-20 is subject to the provisions of Chapters 1-4, 6-8, and Subchapters
240-21 A and B, Chapter 5, Texas Banking Act, <I, II, III, IV, V, VIII,
240-22 and IX of this code> as if the trust company were a state bank;
240-23 provided, however, that Section 3.001 of that Act <Article 1,
240-24 Chapter III>, relating to banking powers, and Section 8.008 of that
240-25 Act <Article 11a, Chapter IV>, relating to securities law
240-26 exemption, <Article 4a, Chapter VIII, relating to priority of
240-27 distribution in liquidation, and Article 3, Chapter IX, relating to
241-1 limited branch banking> shall not apply.
241-2 Sec. 2. Venue for an action instituted to effect, contest,
241-3 or otherwise intervene in the liquidation of a trust company as
241-4 provided in this chapter and Chapter 7, Texas Banking Act, <VIII of
241-5 this code (Article 342-801 et seq., Vernon's Texas Civil Statutes)>
241-6 is in Travis County, except that on motion filed and served
241-7 concurrently with or before the filing of the answer, the court
241-8 may, upon a finding of good cause, transfer the action to the
241-9 county of the trust company's principal place of business.
241-10 (c) Sections 1 and 5, Article 3, Chapter XI, The Texas
241-11 Banking Code (Article 342-1103, Vernon's Texas Civil Statutes), are
241-12 amended to read as follows:
241-13 Sec. 1. Annual Statement. (a) Every trust company shall be
241-14 subject to regulation by the Banking Commissioner of Texas and
241-15 shall file with the banking commissioner on or before March 1 of
241-16 each year a statement of its condition on the previous December 31,
241-17 in such form as may be required by the banking commissioner,
241-18 showing under oath its assets and liabilities, together with a fee
241-19 of $50 for filing; and such statement shall be published in a
241-20 newspaper of general circulation published in the county in which
241-21 the trust company is located. The banking commissioner may, for
241-22 good cause shown, extend the time for filing such statement for not
241-23 more than 60 days. In addition, each trust company shall make and
241-24 publish statements of its financial condition as provided by
241-25 Section 2.009, Texas Banking Act <Article 9 of Chapter II of this
241-26 code>.
241-27 (b) Each trust company annually may be required by the
242-1 commissioner to obtain an external audit of its books and records
242-2 by a certified public accountant and provide the commissioner a
242-3 copy of the audit report.
242-4 Sec. 5. Confidentiality. The confidentiality provisions of
242-5 Subchapter B, Chapter 2, Texas Banking Act, <Article 10, Chapter
242-6 II, of this code> apply to all information obtained by the
242-7 Department relative to the financial condition of trust companies
242-8 other than the annual statements required under Section 1 of this
242-9 article.
242-10 (d) Article 4, Chapter XI, The Texas Banking Code (Article
242-11 342-1104, Vernon's Texas Civil Statutes), is amended to read as
242-12 follows:
242-13 Art. 4. Action by Banking Commissioner; Officers and
242-14 Directors; Cease and Desist Orders; Removal; Review. (a) With
242-15 regard to a trust company, the Banking Commissioner of Texas may
242-16 take action in accordance with Subchapter A, Chapter 6, Texas
242-17 Banking Act <Article 12, Chapter IV, of this code>, as if the trust
242-18 company were a state bank if the banking commissioner finds that an
242-19 officer, director, or employee of the trust company, or the trust
242-20 company itself acting through any authorized person:
242-21 (1) violates any law or rule applicable to the trust
242-22 company;
242-23 (2) refuses to comply with any law or rule applicable
242-24 to the trust company;
242-25 (3) wilfully neglects to perform his or its duties or
242-26 commits a breach of trust or of fiduciary duty;
242-27 (4) commits any fraudulent or questionable practice in
243-1 the conduct of the trust company's business that threatens the
243-2 trust company's solvency;
243-3 (5) refuses to submit to examination under oath;
243-4 (6) conducts business in an unsafe or unauthorized
243-5 manner; or
243-6 (7) violates any conditions of the trust company's
243-7 charter or of any agreement entered with the Banking Commissioner
243-8 of the Banking Department.
243-9 (b) An individual or trust company against which action is
243-10 taken under this section may request review of that action in
243-11 accordance with Subchapter A, Chapter 6, Texas Banking Act <Article
243-12 12, Chapter IV, of this code>, as if the trust company were a state
243-13 bank.
243-14 (e) Sections (a) and (b), Article 5, Chapter XI, The Texas
243-15 Banking Code (Article 342-1105, Vernon's Texas Civil Statutes), are
243-16 amended to read as follows:
243-17 (a) With regard to a trust company, the Banking Commissioner
243-18 of Texas may take action in accordance with Subchapter B, Chapter
243-19 6, Texas Banking Act <Article 1a, Chapter VIII, of this code>, as
243-20 if the trust company were a state bank if:
243-21 (1) it appears to the banking commissioner that the
243-22 trust company is in a condition that would be a hazardous <an
243-23 unsafe> condition for a state bank <under Article 1a> and the trust
243-24 company's condition renders the continuance of its business
243-25 hazardous to the public or to the shareholders or creditors of the
243-26 trust company;
243-27 (2) it appears to the banking commissioner
244-1 <considering Article 1a> that the trust company has exceeded its
244-2 powers;
244-3 (3) the trust company had failed to comply with the
244-4 law; or
244-5 (4) the trust company gives written consent to
244-6 supervision or conservatorship under this section.
244-7 (b) A trust company against which action is taken under this
244-8 section may request review of that action in accordance with
244-9 Subchapter B, Chapter 6, Texas Banking Act <Article 1a, Chapter
244-10 VIII, of this code>, as if it were a state bank.
244-11 (f) Section (a), Article 6, Chapter XI, The Texas Banking
244-12 Code (Article 342-1106, Vernon's Texas Civil Statutes), is amended
244-13 to read as follows:
244-14 (a) The Finance Commission <State Banking Board> shall
244-15 promulgate and adopt such rules and procedural regulations as may
244-16 be necessary to facilitate the fair hearing and adjudication of
244-17 charter applications.
244-18 (g) Article 8, Chapter XI, The Texas Banking Code (Article
244-19 342-1108, Vernon's Texas Civil Statutes), is amended to read as
244-20 follows:
244-21 Art. 8. PAID-IN CAPITAL. (a) A trust company shall have
244-22 and maintain a fully paid-in capital of not less than $1 million
244-23 <$500,000>.
244-24 (b) The banking commissioner may require additional capital
244-25 of a trust company if the banking commissioner <he> determines it
244-26 necessary to protect the safety and soundness of the trust company.
244-27 The proposed effective date of an order requiring a trust company
245-1 to increase its capital must be stated in the order as on or after
245-2 the 21st day after the date the proposed order is mailed or
245-3 delivered. Unless the trust company requests a hearing before the
245-4 banking commissioner in writing before the effective date of the
245-5 proposed order, the order becomes effective and is final and
245-6 nonappealable.
245-7 (c) The banking commissioner on application may authorize a
245-8 trust company to have and maintain capital of less than the amount
245-9 required by Subsection (a) of this section if the banking
245-10 commissioner finds that the safety and soundness of the trust
245-11 company will be adequately protected by the lower capital
245-12 requirement.
245-13 (h) Article 13, Chapter XI, The Texas Banking Code (Article
245-14 342-1113, Vernon's Texas Civil Statutes), is amended to read as
245-15 follows:
245-16 Art. 13. Exemptions. The provisions of this chapter shall
245-17 not affect or apply to:
245-18 (1) any state or federal credit union doing business
245-19 in this state provided that such credit union is otherwise
245-20 authorized to exercise trust powers;
245-21 (2) a public, private, or independent institution of
245-22 higher education or a university system, as those terms are defined
245-23 by Section 61.003, Education Code, including its affiliated
245-24 foundations or corporations, acting as trustee as provided by the
245-25 Education Code; or
245-26 (3) a corporation serving as trustee of a charitable
245-27 trust as provided by Article 2.31, Texas Non-Profit Corporation Act
246-1 (Article 1396-2.31, Vernon's Texas Civil Statutes).
246-2 (i) Section 2, Article 14, Chapter XI, The Texas Banking
246-3 Code (Article 342-1114, Vernon's Texas Civil Statutes), is amended
246-4 to read as follows:
246-5 Sec. 2. Subject to the provisions of Sections 7.310 and
246-6 7.313, Texas Banking Act <Articles 14 and 15 of Chapter VIII of
246-7 this Act>, after fully satisfying all timely filed and approved
246-8 claims of a higher priority, the commissioner may make a ratable
246-9 distribution to approved claimants within a particular class or
246-10 priority if there are insufficient funds to fully satisfy all of
246-11 those claims, after reserving funds for administrative expenses, if
246-12 necessary.
246-13 (j) A trust company that possesses a charter on September 1,
246-14 1995, and that has capital and surplus of less than the amount
246-15 required by Article 8, Chapter XI, The Texas Banking Code, as
246-16 amended by this section, shall increase its capital and surplus to
246-17 the amount required by that article before September 1, 2000. The
246-18 finance commission may adopt rules specifying procedures for
246-19 ratable increases in capital and surplus under this section and for
246-20 deferrals and extensions of time for a trust company acting in good
246-21 faith to achieve minimum required capital and surplus.
246-22 SECTION 3. Chapter 30, Civil Practice and Remedies Code, is
246-23 amended by adding Section 30.007 to read as follows:
246-24 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
246-25 (a) In this section:
246-26 (1) "Customer" means a person who uses, purchases, or
246-27 obtains an account, extension of credit, or product of a financial
247-1 institution or for whom a financial institution acts as a
247-2 fiduciary, agent, or custodian or in another representative
247-3 capacity.
247-4 (2) "Financial institution" means a state or national
247-5 bank, state or federal savings and loan association, state or
247-6 federal savings bank, state or federal credit union, foreign bank,
247-7 foreign bank agency, or trust company.
247-8 (3) "Record" means financial or other information of a
247-9 customer maintained by a financial institution.
247-10 (4) "Record request" means a valid and enforceable
247-11 subpoena, request for production, or other instrument issued under
247-12 authority of a tribunal that compels production of a customer
247-13 record.
247-14 (5) "Tribunal" means a court or other adjudicatory
247-15 tribunal with jurisdiction to issue a request for records,
247-16 including a government agency exercising adjudicatory functions and
247-17 an alternative dispute resolution mechanism, voluntary or required,
247-18 under which a party may compel the production of records.
247-19 (b) This section provides the exclusive method for compelled
247-20 discovery of a record of a financial institution relating to one or
247-21 more customers, does not create a right of privacy in a record, and
247-22 does not apply to:
247-23 (1) a demand or inquiry from a state or federal
247-24 government agency authorized by law to conduct an examination of
247-25 the financial institution;
247-26 (2) a record request from a state or federal
247-27 government agency or instrumentality under statutory or
248-1 administrative authority that provides for, or is accompanied by, a
248-2 specific mechanism for discovery and protection of a customer
248-3 record of a financial institution, including a record request from
248-4 a federal agency subject to the Right to Financial Privacy Act of
248-5 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
248-6 Service under 26 U.S.C. Section 7609;
248-7 (3) a record request from or report to a government
248-8 agency arising out of the investigation or prosecution of a
248-9 criminal offense;
248-10 (4) a record request in connection with a garnishment
248-11 proceeding in which the financial institution is garnishee and the
248-12 customer is debtor;
248-13 (5) an investigative demand or inquiry from a state
248-14 legislative investigating committee;
248-15 (6) an investigative demand or inquiry from the
248-16 attorney general of this state as authorized by law other than the
248-17 procedural law governing discovery in civil cases; or
248-18 (7) the voluntary use or disclosure of a record by a
248-19 financial institution subject to other applicable state or federal
248-20 law.
248-21 (c) A financial institution shall produce a record in
248-22 response to a record request only if:
248-23 (1) it is served with the record request not later
248-24 than the 24th day before the date that compliance with the record
248-25 request is required;
248-26 (2) before the financial institution complies with the
248-27 record request the requesting party pays the financial
249-1 institution's reasonable costs of complying with the record
249-2 request, including costs of reproduction, postage, research,
249-3 delivery, and attorney's fees, or posts a cost bond in an amount
249-4 estimated by the financial institution to cover those costs; and
249-5 (3) when the customer is not a party to the proceeding
249-6 in which the request was issued, the requesting party complies with
249-7 Subsections (d) and (e) and:
249-8 (A) the financial institution receives the
249-9 customer's written consent to release the record after a request
249-10 under Subsection (d)(3); or
249-11 (B) the tribunal takes further action based on
249-12 action initiated by the requesting party under Subsection (e).
249-13 (d) If the affected customer is not a party to the
249-14 proceeding in which the record request was issued, in addition to
249-15 serving the financial institution with a record request, the
249-16 requesting party shall:
249-17 (1) give notice stating the rights of the customer
249-18 under Subsection (f) and a copy of the request to each affected
249-19 customer in the manner and within the time provided by Rule 21a,
249-20 Texas Rules of Civil Procedure;
249-21 (2) file a certificate of service indicating that the
249-22 customer has been mailed or served with the notice and a copy of
249-23 the record request as required by this subsection with the tribunal
249-24 and the financial institution; and
249-25 (3) request the customer's written consent authorizing
249-26 the financial institution to comply with the request.
249-27 (e) If the customer refuses to execute the written consent
250-1 or fails to respond to the requesting party's request under
250-2 Subsection (d)(3) on or before the date that compliance with the
250-3 request is required, the requesting party may by written motion
250-4 seek an in camera inspection of the requested record as its sole
250-5 means of obtaining access to the requested record. In response to
250-6 a motion for in camera inspection, the tribunal may inspect the
250-7 requested record to determine its relevance to the matter before
250-8 the tribunal. The tribunal may order redaction of portions of the
250-9 records that the tribunal determines should not be produced and
250-10 shall enter a protective order preventing the record that it orders
250-11 produced from being:
250-12 (1) disclosed to a person who is not a party to the
250-13 proceeding before the tribunal; and
250-14 (2) used by a person for any purpose other than
250-15 resolving the dispute before the tribunal.
250-16 (f) The customer bears the burden of preventing or limiting
250-17 the financial institution's compliance with a record request
250-18 subject to this section by seeking an appropriate remedy, including
250-19 filing a motion to quash the record request or a motion for a
250-20 protective order. The customer has standing to appear before the
250-21 tribunal for that purpose if the customer is not otherwise a party.
250-22 Any motion filed shall be served on the financial institution and
250-23 the requesting party before the date that compliance with the
250-24 request is required. A financial institution is not liable to its
250-25 customer or another person for disclosure of a record in compliance
250-26 with this section.
250-27 (g) A financial institution may not be required to produce a
251-1 record under this section before the later of:
251-2 (1) the 24th day after the date of receipt of the
251-3 record request as provided by Subsection (c)(1);
251-4 (2) the 15th day after the date of receipt of a
251-5 customer consent to disclose a record as provided by Subsection
251-6 (c)(3); or
251-7 (3) the 15th day after the date a court orders
251-8 production of a record after an in camera inspection of a requested
251-9 record as provided by Subsection (e).
251-10 (h) An order to quash or for protection or other remedy
251-11 entered or denied by the tribunal under Subsection (e) or (f) is
251-12 not a final order and an interlocutory appeal may not be taken.
251-13 SECTION 4. Section 2001.223, Government Code, is amended to
251-14 read as follows:
251-15 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
251-16 Enforcement, and Contested Case Provisions. Section 2001.038 and
251-17 Subchapters C through H do not apply to:
251-18 (1) the granting, payment, denial, or withdrawal of
251-19 financial or medical assistance or benefits under service programs
251-20 of the Texas Department of Human Services;
251-21 (2) action by the Banking Commissioner or the Finance
251-22 Commission of Texas <State Banking Board> regarding the issuance of
251-23 a state bank charter for a bank to assume the assets and
251-24 liabilities of a financial institution <state bank> that the
251-25 commissioner considers <determines> to be in hazardous <an unsafe>
251-26 condition as defined by Section 1.002(a) <Section 1, Article 1a,
251-27 Chapter VIII>, The Texas Banking Act <Code (Article 342-801a,
252-1 Vernon's Texas Civil Statutes)>;
252-2 (3) a hearing or interview conducted by the Board of
252-3 Pardons and Paroles or the pardons and paroles division of the
252-4 Texas Department of Criminal Justice relating to the grant,
252-5 rescission, or revocation of parole or other form of administrative
252-6 release; or
252-7 (4) the suspension, revocation, or termination of the
252-8 certification of a breath analysis operator or technical supervisor
252-9 under the rules of the Department of Public Safety.
252-10 SECTION 5. Sections 2257.002(1) and (3), Government Code,
252-11 are amended to read as follows:
252-12 (1) "Bank holding company" has the meaning assigned by
252-13 Section 1.002(a), Texas Banking Act <Article 2, Chapter I, The
252-14 Texas Banking Code (Article 342-102, Vernon's Texas Civil
252-15 Statutes)>.
252-16 (3) "Control" has the meaning assigned by Section
252-17 1.002(a), Texas Banking Act <Article 2, Chapter I, The Texas
252-18 Banking Code (Article 342-102, Vernon's Texas Civil Statutes)>.
252-19 SECTION 6. Section 712.042(b), Health and Safety Code, is
252-20 amended to read as follows:
252-21 (b) The banking department shall receive and disburse
252-22 revenues collected under this chapter in accordance with Section
252-23 2.006, Texas Banking Act <Article 12, Chapter I, The Texas Banking
252-24 Code of 1943 (Article 342-112, Vernon's Texas Civil Statutes)>.
252-25 SECTION 7. Section 1(c), Article 1.19-1, Insurance Code, is
252-26 amended to read as follows:
252-27 (c) A subpoena issued to a bank or other financial
253-1 institution as part of a criminal investigation is not subject to
253-2 Section 30.007, Civil Practice and Remedies Code <Article 5,
253-3 Chapter VII, The Texas Banking Code (Article 342-705, Vernon's
253-4 Texas Civil Statutes)>.
253-5 SECTION 8. Section 1, Article 9.05, Insurance Code, is
253-6 amended to read as follows:
253-7 Sec. 1. Any corporation heretofore chartered under the
253-8 provisions of Article 9.03 of this Act, or its antecedents, Article
253-9 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
253-10 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
253-11 having as one of its powers "to act as trustee under any lawful
253-12 trust committed to it by contract or will, appointment by any court
253-13 having jurisdiction of the subject matter, as trustee, receiver or
253-14 guardian and as executor or guardian under the terms of any will
253-15 and as any administrator of the estates of decedents under the
253-16 appointment of the court" may transfer and assign to a state bank
253-17 or trust company created under the provisions of the Texas Banking
253-18 Act or a predecessor of that Act <Code of 1943>, as amended, all of
253-19 its fiduciary business in which such corporation is named or acting
253-20 as guardian, trustee, executor, administrator or in any other
253-21 fiduciary capacity, whereupon said state bank or trust company
253-22 shall, without the necessity of any judicial action in the courts
253-23 of the State of Texas or any action by the creator or beneficiary
253-24 of such trust or estate, continue the guardianship, trusteeship,
253-25 executorship, administration or other fiduciary relationship, and
253-26 perform all of the duties and obligations of such corporation, and
253-27 exercise all of the powers and authority relative thereto now being
254-1 exercised by such corporation, and provided further that the
254-2 transfer or assignment by such corporation of such fiduciary
254-3 business being conducted by it under the powers granted in its
254-4 original charter, as amended, shall not constitute or be deemed a
254-5 resignation or refusal to act upon the part of such corporation as
254-6 to any such guardianship, trust, executorship, administration, or
254-7 any other fiduciary capacity; and provided further that the naming
254-8 or designation by a testator or the creator of a living trust of
254-9 such corporation to act as trustee, guardian, executor, or in any
254-10 other fiduciary capacity, shall be considered the naming or
254-11 designation of the state bank or trust company and authorizing such
254-12 state bank or trust company to act in said fiduciary capacity. All
254-13 transfers and assignments of fiduciary business by such
254-14 corporations to a state bank or trust company consistent with the
254-15 provisions of this Act are hereby validated.
254-16 SECTION 9. Section 105.001(13), Local Government Code, is
254-17 amended to read as follows:
254-18 (13) "State bank" has the meaning assigned by Section
254-19 1.002(a), Texas Banking Act <The Texas Banking Code (Article
254-20 342-101 et seq., Vernon's Texas Civil Statutes)>.
254-21 SECTION 10. Sections 105A(c) and (d), Texas Probate Code,
254-22 are amended to read as follows:
254-23 (c) No foreign bank or trust company shall establish or
254-24 maintain any branch office, agency or other place of business
254-25 within this state, or shall in any way solicit, directly or
254-26 indirectly, any fiduciary business in this state of the types
254-27 embraced by subdivision (a) hereof. Except as authorized herein or
255-1 as may otherwise be authorized by the laws of this state, no
255-2 foreign bank or trust company shall act in a fiduciary capacity in
255-3 this state. Nothing in this Section shall be construed to
255-4 authorize foreign banks and trust companies to issue or to sell or
255-5 otherwise market or distribute in this state any investment
255-6 certificates, trust certificates, or other types of securities
255-7 (including without limiting the generality of the foregoing any
255-8 securities of the types authorized by Chapter 7 of the Insurance
255-9 Code of 1951 prior to the repeal thereof), or to conduct any
255-10 activities or exercise any powers of the type embraced and
255-11 regulated by the Texas Banking Act <Code of 1943> other than those
255-12 conducted and exercised in a fiduciary capacity under the terms and
255-13 conditions hereof.
255-14 (d) Any foreign bank or trust company acting in a fiduciary
255-15 capacity in this state in strict accordance with the provisions of
255-16 this Section shall not be deemed to be doing business in the State
255-17 of Texas within the meaning of Article 8.01 of the Texas Business
255-18 Corporation Act; shall be deemed qualified to serve in such
255-19 capacity under the provisions of Section 105 of this Code; and
255-20 notwithstanding other law shall not be prohibited <by the
255-21 provisions of Chapter 137, Acts of the 55th Legislature, Regular
255-22 Session, 1957, amending Article 342-902 of the Texas Banking Code
255-23 of 1943,> from using in its name and stationery the terms "bank,"
255-24 "trust," or "bank and trust."
255-25 SECTION 11. Section 73.003(c), Property Code, is amended to
255-26 read as follows:
255-27 (c) This section does not affect the provisions of
256-1 Subchapter B, Chapter 8, Texas Banking Act <Article 6, Chapter IX,
256-2 The Texas Banking Code of 1943 (Article 342-906, Vernon's Texas
256-3 Civil Statutes)>.
256-4 SECTION 12. Section 171.001(b)(1), Tax Code, is amended to
256-5 read as follows:
256-6 (1) "Banking corporation" means each state, national,
256-7 domestic, or foreign bank, including a limited banking association,
256-8 as defined by Section 1.002(a), Texas Banking Act <organized under
256-9 Subchapter C, Chapter III, The Texas Banking Code (Article 342-360
256-10 et seq., Vernon's Texas Civil Statutes)>, and each bank organized
256-11 under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
256-12 (edge corporations), but does not include a bank holding company as
256-13 that term is defined by Section 2, Bank Holding Company Act of 1956
256-14 (12 U.S.C. Sec. 1841).
256-15 SECTION 13. Section 171.1031(c), Tax Code, is amended to
256-16 read as follows:
256-17 (c) To the extent that this subsection is not preempted by
256-18 federal law, the Texas Department of Banking <does not conflict
256-19 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
256-20 342-908, Vernon's Texas Civil Statutes), the Banking Department of
256-21 Texas> is required to appoint a conservator under Subchapter B,
256-22 Chapter 6, Texas Banking Act, to pay the franchise tax <revoke the
256-23 chapter> of any banking corporation certified by the Comptroller as
256-24 being delinquent in the payment of its franchise tax.
256-25 SECTION 14. Section 2.13, Texas Savings Bank Act (Article
256-26 489e, Vernon's Texas Civil Statutes), is amended to read as
256-27 follows:
257-1 Sec. 2.13. Corporate Name. The name of a savings bank must
257-2 include the words "State Savings Bank" or the abbreviation "SSB."
257-3 These words or the abbreviation must be preceded by an appropriate
257-4 descriptive word or words approved by the commissioner. The
257-5 commissioner may not approve the incorporation of a savings bank
257-6 having the same name as another financial institution authorized to
257-7 do business in this state under this Act, the Texas Savings and
257-8 Loan Act (Article 852a, Vernon's Texas Civil Statutes), or the
257-9 Texas Banking Act <The Texas Banking Code (Article 342-101 et seq.,
257-10 Vernon's Texas Civil Statutes)> or a name so nearly resembling the
257-11 name of another financial institution as to be calculated to
257-12 deceive unless the savings bank is formed by the reincorporation,
257-13 reorganization, or consolidation of the other financial institution
257-14 or on the sale of the property or franchise of the other savings
257-15 bank. A person or company, either domestic or foreign, other than
257-16 a state or federal savings bank, may not do business under a name
257-17 or title that contains the words "savings bank," that indicates or
257-18 reasonably implies that the business is the character or kind of
257-19 business carried on or transacted by a savings bank, or that is
257-20 calculated to lead any person to believe that its business is that
257-21 of a savings bank. On application by the commissioner or any
257-22 savings bank, a court of competent jurisdiction may issue an
257-23 injunction to restrain a person or company from violating this
257-24 section.
257-25 SECTION 15. Section 4.07, Texas Savings Bank Act (Article
257-26 489e, Vernon's Texas Civil Statutes), is amended to read as
257-27 follows:
258-1 Sec. 4.07. Fees. The commissioner and the finance
258-2 commission, acting under the rulemaking power delegated by Section
258-3 1.106, Texas Banking Act <Article 5, Chapter II, The Texas Banking
258-4 Code (Article 342-205, Vernon's Texas Civil Statutes)>, and Section
258-5 4.04 of this Act, shall establish the amount of the fees to be
258-6 charged by the commissioner for supervision and examination of
258-7 savings banks, for filing an application or other documents, for
258-8 conducting a hearing, and for other services performed by the
258-9 commissioner and the commission's office and the time and manner of
258-10 payment of the fees. Fees collected by the commissioner shall be
258-11 deposited and used in accordance with Section 1.106, Texas Banking
258-12 Act <(h), Article 5, Chapter II, The Texas Banking Code (Article
258-13 342-205, Vernon's Texas Civil Statutes)>.
258-14 SECTION 16. Section 12.07, Texas Savings Bank Act (Article
258-15 489e, Vernon's Texas Civil Statutes), is amended to read as
258-16 follows:
258-17 Sec. 12.07. Initiation of Rulemaking by Savings Banks. If
258-18 20 percent or more of the savings banks subject to this Act
258-19 petition the commissioner in writing requesting the adoption,
258-20 amendment, or repeal of a rule, the commissioner shall initiate
258-21 rulemaking proceedings under Chapter 2001, Government Code
258-22 <Subsection (e), Article 5, Chapter II, The Texas Banking Code
258-23 (Article 342-205, Vernon's Texas Civil Statutes)>.
258-24 SECTION 17. Section 12.12(b), Texas Savings Bank Act
258-25 (Article 489e, Vernon's Texas Civil Statutes), is amended to read
258-26 as follows:
258-27 (b) Subsection (a) of this section does not apply to this
259-1 Act, the Texas Savings and Loan Act (Article 852a, Vernon's Texas
259-2 Civil Statutes), the Texas Banking Act <The Texas Banking Code
259-3 (Article 342-101 et seq., Vernon's Texas Civil Statutes)>, or the
259-4 Penal Code.
259-5 SECTION 18. Section 11.05, Texas Savings and Loan Act
259-6 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
259-7 as follows:
259-8 Sec. 11.05. Fees. The amount of the fees to be charged by
259-9 the Commissioner for supervision and examination of associations,
259-10 filing of applications and other documents and for other services
259-11 performed by the Commissioner and his office and the time and
259-12 manner of payment thereof shall be fixed by rule and regulation
259-13 adopted by the Commissioner and the Finance Commission, acting
259-14 pursuant to the rule-making power delegated by Section 1.106, Texas
259-15 Banking Act <Article 5, Chapter II, the Texas Banking Code of 1943
259-16 (Article 342-205, Vernon's Texas Civil Statutes)>. All fees
259-17 collected by the Commissioner shall be deposited and used in
259-18 accordance with Section 1.106, Texas Banking Act <(h), Article 5,
259-19 Chapter II, The Texas Banking Code of 1943 (Article 342-205,
259-20 Vernon's Texas Civil Statutes)>.
259-21 SECTION 19. Section 11.20(l), Texas Savings and Loan Act
259-22 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
259-23 as follows:
259-24 (l) The Finance Commission of Texas by rule shall adopt a
259-25 schedule of fees for the filing of applications and the holding of
259-26 hearings. The schedule may be graduated so that those applications
259-27 and hearings that are more difficult to review or administer will
260-1 require a larger fee. An application fee is not refundable on
260-2 denial of the application, but the commissioner may refund a
260-3 portion of the fee if the application is withdrawn before he
260-4 completes review of it. Fees collected under this section shall be
260-5 deposited and used in accordance with Section 1.106, Texas Banking
260-6 Act <(h), Article 5, Chapter II, The Texas Banking Code of 1943
260-7 (Article 342-205, Vernon's Texas Civil Statutes)>.
260-8 SECTION 20. Section A(2), Article 7.06, Texas Miscellaneous
260-9 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
260-10 Statutes), is amended to read as follows:
260-11 (2) "Corporation" means:
260-12 (a) Any corporation, association, or other
260-13 organization incorporated or organized under the Texas Business
260-14 Corporation Act, the Texas Non-Profit Corporation Act (Article
260-15 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
260-16 Banking Act or a predecessor of that Act <The Texas Banking Code of
260-17 1943 (Article 342-1.01 et seq., Vernon's Texas Civil Statutes)>,
260-18 the Insurance Code, the Texas Savings and Loan Act (Article 852a,
260-19 Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
260-20 Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
260-21 Texas Civil Statutes), the Texas Credit Union Act (Article
260-22 2461-1.01 et seq., Vernon's Texas Civil Statutes), the Cooperative
260-23 Association Act (Article 1396-50.01, Vernon's Texas Civil
260-24 Statutes), Articles 1399 through 1407, Revised Statutes, Article
260-25 1448, Revised Statutes, Section 2, Chapter 42, Acts of the 42nd
260-26 Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
260-27 Texas Civil Statutes), the State Housing Law (Article 1528a,
261-1 Vernon's Texas Civil Statutes), the Electric Cooperative
261-2 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
261-3 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
261-4 Statutes), the Automobile Club Services Act (Article 1528d,
261-5 Vernon's Texas Civil Statutes), The Texas Professional Corporation
261-6 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
261-7 Professional Association Act (Article 1528f, Vernon's Texas Civil
261-8 Statutes), the Texas Mutual Trust Investment Company Act (Article
261-9 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
261-10 Safety Code, the Texas Transportation Corporation Act (Article
261-11 1528l, Vernon's Texas Civil Statutes), the Cultural Education
261-12 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
261-13 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
261-14 and Safety Code, Title 4, Agricultural Code, Subchapter A, Chapter
261-15 301, Health and Safety Code, Subchapter B, Chapter 301, Health and
261-16 Safety Code, or the Higher Education Authority Act, Chapter 53,
261-17 Education Code;
261-18 (b) Any corporation, association, or other
261-19 organization incorporated or organized under the laws of this state
261-20 that is governed in whole or in part by the Texas Business
261-21 Corporation Act, the Texas Non-Profit Corporation Act (Article
261-22 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
261-23 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
261-24 Vernon's Texas Civil Statutes); or
261-25 (c) To the extent permitted by federal law, any
261-26 federally chartered bank, savings and loan association, or credit
261-27 union.
262-1 SECTION 21. The Texas Non-Profit Corporation Act (Article
262-2 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
262-3 adding Article 2.31 to read as follows:
262-4 Art. 2.31. POWER TO SERVE AS TRUSTEE. A corporation that is
262-5 described by Section 501(c)(3) or 170(c), Internal Revenue Code of
262-6 1986, or a corresponding provision of a subsequent federal tax law,
262-7 may serve as the trustee of a trust:
262-8 (1) of which the corporation is a beneficiary; or
262-9 (2) benefiting another organization described by one
262-10 of those sections of the Internal Revenue Code of 1986, if the
262-11 service as trustee is in furtherance of the purposes for which the
262-12 corporation was formed.
262-13 SECTION 22. Subsections (d) and (k), Article 2.01, Title 79,
262-14 Revised Statutes (Article 5069-2.01, Vernon's Texas Civil
262-15 Statutes), are amended to read as follows:
262-16 (d) "Bank" shall mean any person doing business under the
262-17 authority of and as permitted by the Texas Banking Act <Code of
262-18 1943, as amended,> or any person organized under the provisions of
262-19 Title 12, United States Code, Section 21 (U.S.Rev.Statutes 5133)
262-20 and the amendments thereto.
262-21 (k) "Finance Commission" means the Finance Commission of
262-22 Texas <created by the Texas Banking Code of 1943>, or any
262-23 subcommittee created by any rule or regulation of the Finance
262-24 Commission of Texas.
262-25 SECTION 23. Section (1), Article 2.02B, Title 79, Revised
262-26 Statutes (Article 5069-2.02B, Vernon's Texas Civil Statutes), is
262-27 amended to read as follows:
263-1 (1) All money collected under this Act shall be deposited in
263-2 the Office of the Consumer Credit Commissioner expense fund, which
263-3 is created as a special fund in the State Treasury. Money in the
263-4 fund may be used only for the administration of this Act and
263-5 support of The Finance Commission of Texas as provided by Section
263-6 1.011, Texas Banking Act <Article 11C, Chapter I, The Texas Banking
263-7 Code (Article 342-111C, Vernon's Texas Civil Statutes)>. Income
263-8 earned on money deposited in the expense fund shall be credited to
263-9 that fund.
263-10 SECTION 24. Subsection (d), Article 15.01, Title 79, Revised
263-11 Statutes (Article 5069-15.01, Vernon's Texas Civil Statutes), is
263-12 amended to read as follows:
263-13 (d) "Bank" means a person doing business under the
263-14 authority of and as permitted by the Texas Banking Act <The Texas
263-15 Banking Code of 1943, as amended (Article 342-101 et seq., Vernon's
263-16 Texas Civil Statutes)>, and any person organized under Title 12,
263-17 United States Code, as amended.
263-18 SECTION 25. Section 6, Acts of the 60th Legislature, Regular
263-19 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
263-20 is amended to read as follows:
263-21 Sec. 6. ACT CUMULATIVE. The provisions of this Act are
263-22 cumulative of the Texas Banking Act <Code of 1943, as amended>; the
263-23 "Texas Savings and Loan Act," as amended; and Articles 2461 through
263-24 2484, Revised Civil Statutes of Texas, 1925, as amended and the
263-25 amendments thereto, and Section 5 of House Bill No. 47, Acts of the
263-26 46th Legislature, Regular Session, 1939, and Chapter 173, Acts of
263-27 the 51st Legislature, Regular Session, 1949, relating to Credit
264-1 Unions and the amendments thereto.
264-2 SECTION 26. The following laws are repealed:
264-3 (1) Chapters I-X, The Texas Banking Code (Article
264-4 342-101 et seq., Vernon's Texas Civil Statutes);
264-5 (2) Chapter 183, General Laws, Acts of the 44th
264-6 Legislature, Regular Session, 1935 (Article 489b, Vernon's Texas
264-7 Civil Statutes); and
264-8 (3) Article 3921, Revised Statutes.
264-9 SECTION 27. A change in law made by this Act does not
264-10 affect:
264-11 (1) the validity of any action taken by the Finance
264-12 Commission of Texas, banking commissioner of Texas, savings and
264-13 loan commissioner, or State Banking Board before the effective date
264-14 of this Act; or
264-15 (2) a civil, criminal, or administrative proceeding
264-16 completed before the effective date of this Act.
264-17 SECTION 28. A state bank or private bank that exists on the
264-18 effective date of this Act retains the powers provided by its
264-19 charter and is subject to the jurisdiction and control of the
264-20 Banking Commissioner of Texas as if it were a state bank chartered
264-21 under the Texas Banking Act, as added by this Act.
264-22 SECTION 29. (a) The changes in criminal law made by this
264-23 Act apply only to an offense committed on or after the effective
264-24 date of this Act. For purposes of this section, an offense is
264-25 committed before the effective date of this Act if any element of
264-26 the offense occurs before that date.
264-27 (b) The repeal of a criminal law made by this Act does not
265-1 apply to an offense committed under the repealed law before the
265-2 effective date of this Act.
265-3 (c) An offense committed before the effective date of this
265-4 Act is covered by the law in effect when the offense was committed,
265-5 and the former law is continued in effect for that purpose.
265-6 SECTION 30. (a) The change in law made by this Act does not
265-7 affect the standards for approval to be applied to an application
265-8 accepted for filing by the Texas Department of Banking before the
265-9 effective date of this Act under:
265-10 (1) Article 6, Chapter III, The Texas Banking Code
265-11 (Article 342-306, Vernon's Texas Civil Statutes);
265-12 (2) Article 7, Chapter III, The Texas Banking Code
265-13 (Article 342-307, Vernon's Texas Civil Statutes);
265-14 (3) Article 9, Chapter III, The Texas Banking Code
265-15 (Article 342-309, Vernon's Texas Civil Statutes);
265-16 (4) Article 10, Chapter III, The Texas Banking Code
265-17 (Article 342-310, Vernon's Texas Civil Statutes);
265-18 (5) Article 11, Chapter III, The Texas Banking Code
265-19 (Article 342-311, Vernon's Texas Civil Statutes);
265-20 (6) Article 31, Chapter III, The Texas Banking Code
265-21 (Article 342-331, Vernon's Texas Civil Statutes);
265-22 (7) Article 32, Chapter III, The Texas Banking Code
265-23 (Article 342-332, Vernon's Texas Civil Statutes);
265-24 (8) Article 63, Chapter III, The Texas Banking Code
265-25 (Article 342-363, Vernon's Texas Civil Statutes);
265-26 (9) Article 68, Chapter III, The Texas Banking Code
265-27 (Article 342-368, Vernon's Texas Civil Statutes);
266-1 (10) Article 1a, Chapter IV, The Texas Banking Code
266-2 (Article 342-401a, Vernon's Texas Civil Statutes);
266-3 (11) Article 12, Chapter IX, The Texas Banking Code
266-4 (Article 342-912, Vernon's Texas Civil Statutes);
266-5 (12) Article 6, Chapter X, The Texas Banking Code
266-6 (Article 342-1006, Vernon's Texas Civil Statutes).
266-7 (b) The standards for approval under former law applicable
266-8 to the applications listed in Subsection (a) of this section
266-9 continue in effect as if this Act had not been enacted.
266-10 SECTION 31. (a) A principal shareholder or participant that
266-11 is considered to control a state bank under Section 4.001(a), Texas
266-12 Banking Act, as added by this Act, is not required to file a change
266-13 of control application under Section 4.002, Texas Banking Act, as
266-14 added by this Act until the person acquires one or more additional
266-15 shares or participation shares of the state bank on or after the
266-16 effective date of this Act.
266-17 (b) With respect to an office of an out-of-state bank that
266-18 exists on the effective date of this Act, the out-of-state bank
266-19 must file the documentation and information required by Section
266-20 8.003, Texas Banking Act, as added by this Act, before September 1,
266-21 1996.
266-22 (c) With respect to a representative office of a foreign
266-23 bank corporation in this state that exists as of the effective date
266-24 of this Act, the foreign bank corporation must file before
266-25 September 1, 1996:
266-26 (1) a registration of the representative office with
266-27 the banking commissioner containing the information required by
267-1 Section 9.006(a), Texas Banking Act, as added by this Act; and
267-2 (2) with the secretary of state the fees,
267-3 documentation, and information required by Section 9.007, Texas
267-4 Banking Act, as added by this Act.
267-5 SECTION 32. The changes in civil enforcement provisions,
267-6 penalties, and procedures made by Chapter 6, Texas Banking Act, as
267-7 added by this Act, do not apply to a civil enforcement proceeding
267-8 begun by the service of a notice for hearing or proposed civil
267-9 enforcement order by the banking commissioner before the effective
267-10 date of this Act. That proceeding is governed by the law in effect
267-11 when the proceeding was begun, and that law is continued in effect
267-12 for that purpose.
267-13 SECTION 33. Subdivision (3), Article 13, Chapter XI, The
267-14 Texas Banking Code (Article 342-1113, Vernon's Texas Civil
267-15 Statutes), as added by Section 2(h) of this Act, and Article 2.31,
267-16 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
267-17 Vernon's Texas Civil Statutes), as added by Section 21 of this Act,
267-18 are clarification of the law existing before the effective date of
267-19 this Act. An act of a nonprofit corporation serving as trustee
267-20 before the effective date of this Act is valid if consistent with
267-21 law as amended by this Act.
267-22 SECTION 34. (a) If this Act conflicts with another Act of
267-23 the 74th Legislature, Regular Session, 1995:
267-24 (1) the change in law made in the other Act prevails
267-25 and the substance of the change is given effect as part of the
267-26 Texas Banking Act adopted by this Act unless:
267-27 (A) this Act or the conflicting Act expressly
268-1 provides otherwise; or
268-2 (B) it is not possible to give the conflicting
268-3 law effect within the context of the Texas Banking Act, in which
268-4 event the Texas Banking Act prevails; and
268-5 (2) the text of a law that is reenacted in the other
268-6 Act only because of the constitutional requirement that the amended
268-7 law be reenacted at length is superseded by this Act.
268-8 (b) If this Act and another Act of the 74th Legislature,
268-9 Regular Session, 1995, make the same substantive change from the
268-10 current law but differ in text, this Act prevails regardless of the
268-11 relative dates of enactment.
268-12 SECTION 35. This Act takes effect September 1, 1995.
268-13 SECTION 36. The importance of this legislation and the
268-14 crowded condition of the calendars in both houses create an
268-15 emergency and an imperative public necessity that the
268-16 constitutional rule requiring bills to be read on three several
268-17 days in each house be suspended, and this rule is hereby suspended.