1-1 By: Marchant (Senate Sponsor - Montford) H.B. No. 1543
1-2 (In the Senate - Received from the House April 26, 1995;
1-3 April 27, 1995, read first time and referred to Committee on
1-4 Economic Development; May 12, 1995, reported favorably, as amended,
1-5 by the following vote: Yeas 10, Nays 0; May 12, 1995, sent to
1-6 printer.)
1-7 COMMITTEE AMENDMENT NO. 1 By: Sibley
1-8 Amend H.B. 1543 (House Engrossment Printing) as follows:
1-9 (1) On page 257, line 4, through page 261, line 7, strike
1-10 Sections 14-18 of the bill and renumber the subsequent sections
1-11 accordingly.
1-12 (2) On page 272, line 22, between "Section 38 of this Act"
1-13 and "take", insert ", and Chapter 9 of the Texas Banking Act as
1-14 added by this Act".
1-15 A BILL TO BE ENTITLED
1-16 AN ACT
1-17 relating to the regulation of banking and of entities under the
1-18 jurisdiction of state banking regulatory officials; providing
1-19 administrative and criminal penalties.
1-20 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-21 SECTION 1. The Texas Banking Act is enacted to read as
1-22 follows:
1-23 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
1-24 SAVINGS AND LOAN DEPARTMENT
1-25 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
1-26 Sec. 1.001. SHORT TITLE ....................................... 2
1-27 Sec. 1.002. DEFINITIONS ....................................... 2
1-28 Sec. 1.003. FINANCE COMMISSION ................................ 16
1-29 Sec. 1.004. QUALIFICATIONS OF MEMBERS ......................... 17
1-30 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES ..................... 18
1-31 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS .............. 19
1-32 Sec. 1.007. DISQUALIFICATION OF MEMBERS ....................... 20
1-33 Sec. 1.008. MEETINGS .......................................... 20
1-34 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE ........... 21
1-35 Sec. 1.010. PRESIDING OFFICER ................................. 21
1-36 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES ................ 22
1-37 Sec. 1.012. BANKING RULES ..................................... 24
1-38 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
1-39 REGULATIONS ..................................... 25
1-40 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS ............. 26
1-41 Sec. 1.015. SUNSET PROVISION .................................. 26
1-42 (Sections 1.016-1.100 reserved for expansion)
1-43 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
1-44 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER ..................... 26
1-45 Sec. 1.102. DEPUTY COMMISSIONERS .............................. 27
1-46 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT .......... 27
1-47 Sec. 1.104. OATH OF OFFICE .................................... 28
1-48 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER ................. 28
1-49 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT ............... 28
1-50 Sec. 1.107. CONFLICTS OF LAW .................................. 29
1-51 Sec. 1.108. CONFLICTS OF INTEREST ............................. 29
1-52 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS ............... 30
1-53 Sec. 1.110. SUNSET PROVISION .................................. 31
1-54 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
1-55 SAVINGS AND LOAN DEPARTMENT
1-56 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
1-57 Sec. 1.001. SHORT TITLE. This Act may be cited as the Texas
1-58 Banking Act.
1-59 Sec. 1.002. DEFINITIONS. (a) In this Act:
1-60 (1) "Affiliate" means a company that directly or
1-61 indirectly controls, is controlled by, or is under common control
1-62 with a bank or other company.
1-63 (2) "Bank" means a state or national bank.
1-64 (3) "Bank holding company" has the meaning assigned by
1-65 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
1-66 seq.) or a successor to that act.
1-67 (4) "Banking" means the performance of the exclusive
1-68 depository institution functions of accepting deposits and
2-1 discounting loans and the performance of related activities that
2-2 are not exclusive to banks or other depository institutions,
2-3 including paying drafts or checks, lending money, and providing
2-4 related financial services authorized by this Act.
2-5 (5) "Banking association" means a state bank that is
2-6 organized as a banking association, authorized to issue shares of
2-7 stock, and controlled by its shareholders.
2-8 (6) "Banking commissioner" means the banking
2-9 commissioner of Texas or a person designated by the banking
2-10 commissioner and acting under the banking commissioner's direction
2-11 and authority.
2-12 (7) "Board" means the board of directors, managers, or
2-13 managing participants of, or a person or group of persons acting in
2-14 a comparable capacity for, a state bank or other entity.
2-15 (8) "Branch" means a location of a bank, other than
2-16 the bank's home office, at which the bank engages in the business
2-17 of banking. The term does not include:
2-18 (A) a drive-in facility located not more than
2-19 2,000 feet from the nearest wall of the home office or an approved
2-20 branch office of the bank;
2-21 (B) a night depository;
2-22 (C) an electronic terminal subject to Section
2-23 3.204 of this Act;
2-24 (D) a loan production office subject to Section
2-25 3.205 of this Act;
2-26 (E) a state or federally licensed armored car
2-27 service or other courier service transporting items for deposit or
2-28 payment, unless:
2-29 (i) the risk of loss of items in the
2-30 custody of the service is borne by the employing bank; or
2-31 (ii) the items in the custody of the
2-32 service are considered to be in customer accounts at the employing
2-33 bank or federally insured through the employing bank;
2-34 (F) a bank acting as an agent for a depository
2-35 institution affiliate as provided by Section 8.009(a) of this Act;
2-36 or
2-37 (G) other offices as determined by rule.
2-38 (9) "Capital" means:
2-39 (A) the sum of:
2-40 (i) the par value of all shares or
2-41 participation shares of the state bank having a par value that have
2-42 been issued;
2-43 (ii) the consideration fixed by the board
2-44 in the manner provided by the Texas Business Corporation Act for
2-45 all shares or participation shares of the state bank without par
2-46 value that have been issued, except a part of that consideration
2-47 that:
2-48 (a) has been actually received;
2-49 (b) is less than all of that
2-50 consideration; and
2-51 (c) the board, by resolution adopted
2-52 not later than the 60th day after the date of issuance of those
2-53 shares, has allocated to surplus with the prior approval of the
2-54 banking commissioner; and
2-55 (iii) an amount not included in
2-56 Subparagraphs (i) and (ii) that has been transferred to capital of
2-57 the state bank, on the payment of a share dividend or on adoption
2-58 by the board of a resolution directing that all or part of surplus
2-59 be transferred to capital, minus each reduction made as permitted
2-60 by law; less
2-61 (B) all amounts otherwise included in Paragraphs
2-62 (A)(i) and (ii) of this subdivision that are attributable to the
2-63 issuance of securities by the state bank and that the banking
2-64 commissioner determines, after notice and an opportunity for
2-65 hearing, should be classified as debt rather than equity
2-66 securities.
2-67 (10) "Certified surplus" means the part of surplus
2-68 designated by a vote of the board of a state bank under Section
2-69 4.104(b) of this Act and recorded in the board minutes as
2-70 certified.
3-1 (11) "Company" includes a bank, trust company,
3-2 corporation, partnership, association, business trust, or another
3-3 trust.
3-4 (12) "Conservator" means the banking commissioner or
3-5 an agent of the banking commissioner exercising the powers and
3-6 duties provided by Subchapter B, Chapter 6, of this Act.
3-7 (13) "Control" means:
3-8 (A) the ownership of or ability or power to
3-9 vote, directly, acting through one or more other persons, or
3-10 otherwise indirectly, 25 percent or more of the outstanding shares
3-11 of a class of voting securities of a bank or other company;
3-12 (B) the ability to control the election of a
3-13 majority of the board of a bank or other company;
3-14 (C) the power to exercise, directly or
3-15 indirectly, a controlling influence over the management or policies
3-16 of the bank or other company as determined by the banking
3-17 commissioner after notice and an opportunity for hearing; or
3-18 (D) the conditioning of the transfer of 25
3-19 percent or more of the outstanding shares or participation shares
3-20 of a class of voting securities of a bank or other company on the
3-21 transfer of 25 percent or more of the outstanding shares of a class
3-22 of voting securities of another bank or other company.
3-23 (14) "Department" means the Texas Department of
3-24 Banking.
3-25 (15) "Deposit" means the establishment of a
3-26 debtor-creditor relationship represented by the agreement of the
3-27 deposit debtor to act as a holding, paying, or disbursing agent for
3-28 the deposit creditor. The term:
3-29 (A) includes:
3-30 (i) an unpaid balance of money received by
3-31 the deposit debtor in the usual course of business in exchange for
3-32 conditional or unconditional credit to a commercial, checking,
3-33 savings, or time account of the deposit creditor or the creditor's
3-34 designee, or that is evidenced by a certificate of deposit or
3-35 similar instrument, a certified check or draft drawn against a
3-36 deposit account, or a letter of credit or a traveler's check on
3-37 which the deposit debtor is primarily liable, but excluding an
3-38 obligation arising under The Sale of Checks Act (Article 489d,
3-39 Vernon's Texas Civil Statutes);
3-40 (ii) money or credit given for money
3-41 received by the deposit debtor in the usual course of business for
3-42 a special purpose, including money:
3-43 (a) held as escrow funds, as
3-44 security for an obligation due to the deposit debtor or another
3-45 person, or as security for a loan;
3-46 (b) left with a deposit debtor by a
3-47 deposit creditor to meet maturing obligations that are not yet due;
3-48 and
3-49 (c) held by the deposit debtor to
3-50 meet an acceptance or letter of credit;
3-51 (iii) an outstanding draft, cashier's
3-52 check, money order, or other officer's check issued by the deposit
3-53 debtor in the usual course of business for any purpose, including
3-54 payment for services, dividends, or purchases; and
3-55 (iv) an obligation that the finance
3-56 commission by rule defines as a deposit liability, except that the
3-57 term may not include money received for immediate application to
3-58 reduction of an indebtedness; and
3-59 (B) does not include an obligation that this Act
3-60 or finance commission rule determines not to be a deposit
3-61 liability.
3-62 (16) "Depository institution" means an entity with the
3-63 power to accept deposits under applicable law.
3-64 (17) "Discount" means the retention by a lender of
3-65 advance interest from loan proceeds. The term does not include the
3-66 purchase of a promissory note or similar instrument at less than
3-67 its face value unless the party selling the note is liable on the
3-68 note as a maker, endorser, or guarantor.
3-69 (18) "Drive-in facility" means a facility offering one
3-70 or more banking services other than originating or establishing a
4-1 lending or deposit relationship solely to persons who remain
4-2 outside the facility.
4-3 (19) "Electronic terminal" means an electronic device,
4-4 other than a telephone or modem operated by a customer of a
4-5 depository institution, through which a person may initiate an
4-6 electronic fund transfer, as defined in 15 U.S.C. Section 1693a(6).
4-7 The term includes a point-of-sale terminal, automated teller
4-8 machine, or cash dispensing machine.
4-9 (20) "Equity capital" means the amount by which the
4-10 total assets of a state bank exceed the total liabilities of the
4-11 bank.
4-12 (21) "Equity security" means:
4-13 (A) stock, other than adjustable rate preferred
4-14 stock and money market (auction rate) preferred stock;
4-15 (B) a certificate of interest or participation
4-16 in a profit-sharing agreement, collateral-trust certificate,
4-17 preorganization certificate or subscription, transferable share or
4-18 participation share, investment contract, voting-trust certificate,
4-19 or partnership interest;
4-20 (C) a security immediately convertible at the
4-21 option of the holder without payment of substantial additional
4-22 consideration into a security described by this subdivision;
4-23 (D) a security carrying a warrant or right to
4-24 subscribe to or purchase a security described by this subdivision;
4-25 and
4-26 (E) a certificate of interest or participation
4-27 in, temporary or interim certificate for, or receipt for a security
4-28 described by this subdivision that evidences an existing or
4-29 contingent equity ownership interest.
4-30 (22) "Federal savings association" means a savings and
4-31 loan association organized under federal law.
4-32 (23) "Federal savings bank" means a savings bank
4-33 organized under federal law.
4-34 (24) "Finance commission" means the Finance Commission
4-35 of Texas.
4-36 (25) "Financial institution" means a bank, savings
4-37 association, or savings bank maintaining an office, branch, or
4-38 agency office in this state.
4-39 (26) "Foreign bank agency" means an agency established
4-40 and operating under Chapter 9 of this Act by a foreign bank
4-41 corporation.
4-42 (27) "Foreign bank corporation" means a banking
4-43 corporation or association incorporated or organized under the laws
4-44 of a jurisdiction other than the United States or a state,
4-45 territory, commonwealth, or other political subdivision of the
4-46 United States.
4-47 (28) "Full liability participant" means a participant
4-48 that agrees under the terms of a participation agreement to be
4-49 liable under a judgment, decree, or order of court for the entire
4-50 amount of all debts, obligations, or liabilities of a limited
4-51 banking association.
4-52 (29) "Hazardous condition" means:
4-53 (A) a refusal by a state bank to permit
4-54 examination of its books, papers, accounts, records, or affairs by
4-55 the banking commissioner;
4-56 (B) a circumstance or condition in which an
4-57 unreasonable risk of substantial loss is threatened to the
4-58 depositors, creditors, shareholders, or participants of a state
4-59 bank, including a circumstance or condition in which a state bank:
4-60 (i) has inadequate equity capital, or the
4-61 adequacy of its equity capital is threatened;
4-62 (ii) has concentrated an excessive or
4-63 unreasonable portion of its assets in a type or character of loan
4-64 or investment;
4-65 (iii) violates or refuses to comply with
4-66 this Act, another statute or rule applicable to state banks, or a
4-67 final and enforceable order of the banking commissioner;
4-68 (iv) is in a condition that renders the
4-69 continuation of a particular business practice hazardous to the
4-70 public or to its depositors and creditors;
5-1 (v) conducts business in an unsafe and
5-2 unsound manner; or
5-3 (vi) is insolvent; or
5-4 (C) a violation by a state bank of a condition
5-5 of its chartering or an agreement entered into between the bank and
5-6 the banking commissioner or the department.
5-7 (30) "Home office" means a location registered with
5-8 the banking commissioner as the bank's home office at which:
5-9 (A) the bank does business with the public;
5-10 (B) the bank keeps its corporate books and
5-11 records; and
5-12 (C) at least one officer of the bank maintains
5-13 an office.
5-14 (31) "Insolvent" means a circumstance or condition in
5-15 which a state bank:
5-16 (A) is unable or lacks the means to meet its
5-17 current obligations as they come due in the regular and ordinary
5-18 course of business, even if the value of its assets exceeds its
5-19 liabilities;
5-20 (B) has equity capital equal to two percent or
5-21 less of its assets, as determined under regulatory accounting
5-22 principles;
5-23 (C) fails to maintain deposit insurance with the
5-24 Federal Deposit Insurance Corporation or its successor if the
5-25 banking commissioner determines that deposit insurance is necessary
5-26 for the safe and sound operation of the bank;
5-27 (D) sells or attempts to sell substantially all
5-28 of its assets or merges or attempts to merge substantially all of
5-29 its assets or business with another entity other than as provided
5-30 by Chapter 3 of this Act; or
5-31 (E) attempts to dissolve or liquidate other than
5-32 as provided by Chapter 7 of this Act.
5-33 (32) "Investment security" means a marketable
5-34 obligation evidencing indebtedness of a person in the form of a
5-35 bond, note, debenture, or other debt instrument not otherwise
5-36 classified as a loan or extension of credit.
5-37 (33) "Limited banking association" means a state bank
5-38 that is organized as a limited banking association, authorized to
5-39 issue participation shares, and controlled by its participants.
5-40 (34) "Loans and extensions of credit" means direct or
5-41 indirect advances of funds by a state bank to a person that are
5-42 conditioned on the obligation of the person to repay the funds or
5-43 that are repayable from specific property pledged by or on behalf
5-44 of the person. The term includes a contractual liability of a
5-45 state bank to advance funds to or on behalf of a person,
5-46 indebtedness evidenced by a lease financing transaction in which
5-47 the bank is lessor, an overdraft funded by the bank on behalf of a
5-48 person except for an intra-day or daylight overdraft, or another
5-49 indebtedness not otherwise classified as an investment security.
5-50 The term does not include accrued and unpaid interest or discounted
5-51 interest.
5-52 (35) "Manager" means a person elected to the board of
5-53 a limited banking association.
5-54 (36) "Managing participant" means a participant in a
5-55 limited banking association in which management has been retained
5-56 by the participants.
5-57 (37) "National bank" means a banking association
5-58 organized under 12 U.S.C. Section 21.
5-59 (38) "Officer" means the presiding officer of the
5-60 board, the principal executive officer, or another officer
5-61 appointed by the board of a state bank or other company, or a
5-62 person or group of persons acting in a comparable capacity for the
5-63 state bank or other company.
5-64 (39) "Operating subsidiary" means a company for which
5-65 a state bank has the ownership, ability, or power to vote,
5-66 directly, acting through one or more other persons, or otherwise
5-67 indirectly, more than 50 percent of the outstanding shares of each
5-68 class of voting securities or its equivalent of the company.
5-69 (40) "Participant" means an owner of a participation
5-70 share in a limited banking association.
6-1 (41) "Participant-transferee" means a transferee of a
6-2 participation share who has not received the unanimous consent of
6-3 all participants to be a participant, or who becomes a
6-4 participant-transferee under Subchapter C, Chapter 4, of this Act.
6-5 (42) "Participation agreement" means the instrument
6-6 stating the agreement among the participants of a limited banking
6-7 association relating to the rights and duties of the participants
6-8 and participant-transferees, including allocations of income, loss,
6-9 deduction, credit, distributions, liquidation rights, redemption
6-10 rights, liabilities of participants, priority rights of
6-11 participant-transferees to transfer participation shares, rights of
6-12 participants to purchase participation shares of
6-13 participant-transferees, the procedures for elections and voting by
6-14 participants, and any other matter not prohibited by or
6-15 inconsistent with this Act.
6-16 (43) "Participation shares" means the units into which
6-17 the proprietary interests of a limited banking association are
6-18 divided or subdivided by means of classes, series, relative rights,
6-19 or preferences.
6-20 (44) "Person" means an individual or any legal entity.
6-21 (45) "Principal shareholder" means a person who owns
6-22 or has the ability or power to vote, directly, acting through one
6-23 or more other persons, or otherwise indirectly, 10 percent or more
6-24 of the outstanding shares or participation shares of any class of
6-25 voting securities of a bank or other company.
6-26 (46) "Regulatory accounting principles" means
6-27 generally accepted accounting principles as modified by rules
6-28 adopted under this Act or an applicable federal statute or
6-29 regulation.
6-30 (47) "Savings association" means a state or federal
6-31 savings association.
6-32 (48) "Savings bank" means a state or federal savings
6-33 bank.
6-34 (49) "Shareholder" means an owner of a share in a
6-35 banking association.
6-36 (50) "Shares" means the units into which the
6-37 proprietary interests of a banking association are divided or
6-38 subdivided by means of classes, series, relative rights, or
6-39 preferences.
6-40 (51) "State bank" means a banking association or
6-41 limited banking association organized or reorganized under this
6-42 Act, including an association organized under the laws of this
6-43 state before the effective date of this Act, with the express power
6-44 to receive and accept deposits and possessing other rights and
6-45 powers granted by this Act expressly or by implication. The term
6-46 does not include a savings association, savings bank, or credit
6-47 union.
6-48 (52) "State savings association" means a savings and
6-49 loan association organized under the laws of this state.
6-50 (53) "State savings bank" means a savings bank
6-51 organized under or subject to the Texas Savings Bank Act (Article
6-52 489e, Vernon's Texas Civil Statutes).
6-53 (54) "Subsidiary" means a bank or company that is
6-54 controlled by another person. The term includes a subsidiary of a
6-55 subsidiary.
6-56 (55) "Supervisor" means the banking commissioner or an
6-57 agent of the banking commissioner exercising the powers and duties
6-58 specified in Subchapter B, Chapter 6, of this Act.
6-59 (56) "Surplus" means the amount by which the assets of
6-60 a state bank exceed its liabilities, capital, and undivided
6-61 profits.
6-62 (57) "Unauthorized activity" means an act or practice
6-63 within this state by a person without a charter, license, permit,
6-64 registration, or other authority issued or granted by the banking
6-65 commissioner or other appropriate regulatory authority for which
6-66 such a charter, license, permit, registration, or other authority
6-67 is required.
6-68 (58) "Undivided profits" means the part of equity
6-69 capital of a state bank equal to the balance of its net profits,
6-70 income, gains, and losses since the date of its formation, minus
7-1 subsequent distributions to shareholders or participants and
7-2 transfers to surplus or capital under share dividends or
7-3 appropriate board resolutions. The term includes amounts allocated
7-4 to undivided profits as a result of a merger.
7-5 (59) "Voting security" means a share, participation
7-6 share, or other evidence of proprietary interest in a state bank or
7-7 other company that has as an attribute the right to vote or
7-8 participate in the election of the board of the state bank or other
7-9 company, regardless of whether the right is limited to the election
7-10 of fewer than all of the board members. The term includes a
7-11 security that is convertible or exchangeable into a voting security
7-12 and a nonvoting participation share of a managing participant.
7-13 (b) The definitions shall be liberally construed to
7-14 accomplish the purposes of this Act.
7-15 (c) The finance commission by rule may adopt other
7-16 definitions to accomplish the purposes of this Act.
7-17 Sec. 1.003. FINANCE COMMISSION. (a) The Finance Commission
7-18 of Texas is composed of nine members appointed by the governor with
7-19 the advice and consent of the senate.
7-20 (b) Members of the finance commission serve staggered terms
7-21 of six years with the terms of one-third of the members expiring on
7-22 February 1 of each even-numbered year.
7-23 (c) An appointment to the finance commission must be made
7-24 without regard to the race, color, age, sex, religion, disability,
7-25 or national origin of the appointee.
7-26 (d) On taking office a member of the finance commission
7-27 shall take an oath of office to discharge faithfully the duties of
7-28 the finance commission and uphold the constitution and laws of this
7-29 state and the United States.
7-30 Sec. 1.004. QUALIFICATIONS OF MEMBERS. (a) A member of the
7-31 finance commission must be a resident and registered voter of this
7-32 state. Not more than two members may be residents of the same
7-33 state senatorial district.
7-34 (b) Two members of the finance commission must be banking
7-35 executives and two members of the finance commission must be
7-36 savings executives.
7-37 (c) The five members of the finance commission who are not
7-38 banking executives or savings executives must be selected by the
7-39 governor on the basis of recognized business ability. Those
7-40 members may not be banking executives, savings executives, or
7-41 controlling shareholders in a bank, savings association, or savings
7-42 bank. At least one of those members must be a certified public
7-43 accountant.
7-44 (d) A member or employee of the finance commission may not
7-45 be:
7-46 (1) an officer, employee, or paid consultant of a
7-47 trade association representing an industry regulated by the finance
7-48 commission, the banking commissioner, the savings and loan
7-49 commissioner, or the consumer credit commissioner;
7-50 (2) a person required to register as a lobbyist under
7-51 Chapter 305, Government Code, because of activities for a member of
7-52 an industry described by Subdivision (1) of this subsection; or
7-53 (3) related within the second degree by affinity or
7-54 consanguinity, as determined under Chapter 573, Government Code, to
7-55 a person who is an officer, employee, or paid consultant of a trade
7-56 association representing an industry described by Subdivision (1)
7-57 of this subsection.
7-58 (e) For the purposes of this section:
7-59 (1) "Banking executive" means a person who:
7-60 (A) has had five years' or more executive
7-61 experience in a bank during the seven-year period preceding the
7-62 person's appointment; and
7-63 (B) at the time of the person's appointment is
7-64 an officer of a state bank.
7-65 (2) "Savings executive" means a person who:
7-66 (A) has had five years' or more executive
7-67 experience in a savings association or savings bank during the
7-68 seven-year period preceding the person's appointment; and
7-69 (B) at the time of the person's appointment is
7-70 an officer of a state savings association or savings bank.
8-1 (f) Experience as banking commissioner, deputy banking
8-2 commissioner, examiner, or supervisor of examiners for a state or
8-3 federal banking regulatory agency satisfies the executive
8-4 experience requirement of Subsection (e)(1)(A) of this section.
8-5 Experience as savings and loan commissioner, deputy savings and
8-6 loan commissioner, examiner, or supervisor of examiners for a state
8-7 or federal savings and loan regulatory agency satisfies the
8-8 executive experience requirement of Subsection (e)(2)(A) of this
8-9 section.
8-10 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES. (a) A ground
8-11 for removal from the finance commission exists if a member:
8-12 (1) did not have at the time of appointment the
8-13 qualifications required by Section 1.004 of this Act for
8-14 appointment to the finance commission;
8-15 (2) does not maintain the qualifications required by
8-16 Section 1.004 of this Act during service on the finance commission;
8-17 (3) violates a prohibition established by Section
8-18 1.007 of this Act;
8-19 (4) cannot discharge the member's duties for a
8-20 substantial part of the term for which the member is appointed
8-21 because of illness or disability; or
8-22 (5) is absent from more than half of the regularly
8-23 scheduled finance commission meetings that the member is eligible
8-24 to attend during a calendar year unless the absence is excused by
8-25 majority vote of the finance commission.
8-26 (b) If a vacancy occurs on the finance commission for any
8-27 cause, the governor shall appoint a qualified person to fill the
8-28 unexpired term.
8-29 (c) If the executive director of the finance commission has
8-30 knowledge that a potential ground for removal exists, the executive
8-31 director shall notify the presiding officer of the finance
8-32 commission of the ground. The presiding officer shall then notify
8-33 the governor that a potential ground for removal exists.
8-34 (d) The validity of an action of the finance commission is
8-35 not affected by the fact that it was taken when a ground for
8-36 removal of a member of the finance commission existed.
8-37 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS. A member
8-38 of the finance commission is entitled to:
8-39 (1) reimbursement for reasonable and necessary
8-40 expenses incidental to travel incurred in connection with the
8-41 performance of official duties; and
8-42 (2) per diem as set by legislative appropriation for
8-43 each day that the member engages in the business of the finance
8-44 commission.
8-45 Sec. 1.007. DISQUALIFICATION OF MEMBERS. A member of the
8-46 finance commission may not act or participate in the portion of a
8-47 finance commission meeting during which the matter under
8-48 consideration specifically relates to an entity of which the member
8-49 or the member's spouse is an officer, director, stockholder,
8-50 shareholder, manager, participant, participant-transferee, owner,
8-51 or otherwise financially interested.
8-52 Sec. 1.008. MEETINGS. (a) The finance commission shall
8-53 hold at least six regular public meetings during each calendar year
8-54 on dates set by the finance commission. The presiding officer or
8-55 three members of the finance commission may call special public
8-56 meetings of the finance commission. A majority of the members of
8-57 the finance commission constitutes a quorum for the purpose of
8-58 transacting any business coming before the finance commission.
8-59 (b) The finance commission may hold an open or closed
8-60 meeting by telephone conference call if:
8-61 (1) the meeting is a special called meeting and
8-62 immediate action is required;
8-63 (2) the convening at one location of a quorum of the
8-64 finance commission is difficult or impossible;
8-65 (3) notice is given for the telephone conference call
8-66 meeting as for other meetings, specifying a location for the
8-67 meeting at which the public may attend;
8-68 (4) each part of the telephone conference call meeting
8-69 that is required to be open to the public is audible to the public
8-70 at the location specified in the notice of the meeting; and
9-1 (5) the telephone conference call meeting is tape
9-2 recorded and the tape recording of each portion of the meeting that
9-3 is required to be open to the public is made available to the
9-4 public.
9-5 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. (a)
9-6 The finance commission is subject to Chapters 551 and 2001,
9-7 Government Code.
9-8 (b) Notwithstanding Subsection (a) of this section, the
9-9 finance commission is not required to conduct an open meeting to
9-10 deliberate a matter made confidential by law.
9-11 Sec. 1.010. PRESIDING OFFICER. The governor shall appoint a
9-12 member of the finance commission as presiding officer of the
9-13 finance commission. The presiding officer serves at the will of
9-14 the governor. Subject to Section 1.007 of this Act, the presiding
9-15 officer is entitled to vote on all matters. The presiding officer
9-16 shall preside at all public meetings of the finance commission and
9-17 provide for the keeping of minutes of the proceedings of those
9-18 meetings. The presiding officer may:
9-19 (1) adopt rules and procedures of the finance
9-20 commission as the presiding officer considers necessary for the
9-21 orderly operation of the finance commission and for communication
9-22 among the finance commission, the department, the Savings and Loan
9-23 Department, and the Office of Consumer Credit Commissioner;
9-24 (2) adopt internal procedures governing the time and
9-25 place of meetings, the character of notice of special public
9-26 meetings, the manner in which public meetings are to be conducted,
9-27 and other similar matters; and
9-28 (3) appoint committees composed of finance commission
9-29 members as the presiding officer considers necessary to carry out
9-30 the finance commission's business.
9-31 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES. (a) The
9-32 finance commission may designate the banking commissioner, the
9-33 savings and loan commissioner, the consumer credit commissioner, or
9-34 another person to serve full-time or part-time as executive
9-35 director of the finance commission to facilitate its oversight of
9-36 the department, Savings and Loan Department, and Office of Consumer
9-37 Credit Commissioner. The executive director serves as executive
9-38 director at the pleasure of the finance commission, is responsible
9-39 for staff supervision, support, and coordination, and may be
9-40 separately compensated for those duties. The executive director
9-41 shall:
9-42 (1) develop the agenda for finance commission meetings
9-43 and supervise arrangements for the meetings;
9-44 (2) respond or coordinate responses to finance
9-45 commission requests for information and reports;
9-46 (3) coordinate the activities of committees of the
9-47 finance commission;
9-48 (4) supervise and evaluate the performance of staff
9-49 employed under this section; and
9-50 (5) maintain the permanent record of all finance
9-51 commission meetings and actions.
9-52 (b) The finance commission may employ a hearings officer and
9-53 an internal auditor to provide services to and facilitate finance
9-54 commission oversight and control over the department, Savings and
9-55 Loan Department, and Office of Consumer Credit Commissioner. For
9-56 the purposes of Section 2003.021, Government Code, a hearings
9-57 officer employed under this section is considered to be an employee
9-58 of each agency for which hearing services are provided and whose
9-59 only duty is to preside over matters related to contested cases
9-60 before the agency.
9-61 (c) The executive director, the hearings officer, the
9-62 internal auditor, and any other staff employed under this section
9-63 are not subject to direction by the department, Savings and Loan
9-64 Department, or Office of Consumer Credit Commissioner.
9-65 (d) The finance commission shall reduce administrative costs
9-66 through the sharing of support staff, equipment, and facilities
9-67 among the department, Savings and Loan Department, and Office of
9-68 Consumer Credit Commissioner to the extent that the sharing
9-69 contributes to cost efficiency without detracting from the staff
9-70 expertise needed for individual areas of agency responsibility.
10-1 The finance commission may employ staff and purchase equipment and
10-2 facilities to meet these objectives and fund its activities through
10-3 appropriations or as provided by Chapter 771, Government Code.
10-4 (e) An interagency agreement regarding shared staff must
10-5 provide that the fully allocated cost of each member of shared
10-6 staff other than the executive director will be charged to the
10-7 department, Savings and Loan Department, and Office of Consumer
10-8 Credit Commissioner in proportion to the amount of time devoted to
10-9 each agency's business. The cost of the executive director and the
10-10 unallocated cost of operation of the finance commission must be
10-11 shared by the department, Savings and Loan Department, and Office
10-12 of Consumer Credit Commissioner in proportion to the amount of cash
10-13 receipts of each of those agencies.
10-14 Sec. 1.012. BANKING RULES. (a) The finance commission may
10-15 adopt rules to accomplish the purposes of this Act, including rules
10-16 necessary or reasonable to:
10-17 (1) implement and clarify this Act;
10-18 (2) preserve or protect the safety and soundness of
10-19 state banks;
10-20 (3) grant the same rights and privileges to state
10-21 banks that are or may be granted to national banks domiciled in
10-22 this state;
10-23 (4) provide for recovery of the cost of maintenance
10-24 and operation of the department and the cost of enforcing this Act
10-25 through the imposition and collection of ratable and equitable fees
10-26 for notices, applications, and examinations; and
10-27 (5) facilitate the fair hearing and adjudication of
10-28 matters before the banking commissioner and the finance commission.
10-29 (b) In adopting the rules, the finance commission shall
10-30 consider the need to:
10-31 (1) promote a stable banking environment;
10-32 (2) provide the public with convenient, safe, and
10-33 competitive banking services;
10-34 (3) preserve and promote the competitive parity of
10-35 state banks with national banks and other depository institutions
10-36 in this state consistent with the safety and soundness of state
10-37 banks and the state bank system; and
10-38 (4) allow for economic development within this state.
10-39 (c) The presence or absence in this Act of a specific
10-40 reference to rules regarding a particular subject does not enlarge
10-41 or diminish the rulemaking authority conferred by this section.
10-42 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
10-43 REGULATIONS. (a) The finance commission may adopt rules
10-44 applicable to state savings associations or to savings banks and
10-45 may authorize state savings associations and savings banks to
10-46 invest their funds in any manner permitted for a federal savings
10-47 association or federal savings bank domiciled in this state. This
10-48 authority may not be construed to confer authority to abridge,
10-49 diminish, or limit a right or power specifically given to state
10-50 savings associations or savings banks by state law.
10-51 (b) The finance commission may also adopt rules to:
10-52 (1) prevent state savings associations or savings
10-53 banks from concentrating an excessive or unreasonable portion of
10-54 their resources in a type or character of loan or security
10-55 authorized by the Texas Savings and Loan Act (Article 852a,
10-56 Vernon's Texas Civil Statutes) or the Texas Savings Bank Act
10-57 (Article 489e, Vernon's Texas Civil Statutes); and
10-58 (2) establish standards for investments by state
10-59 savings associations or savings banks, including limits on the
10-60 amount that a state savings association or savings bank may invest
10-61 in a type or character of investment to an amount or percentage of
10-62 the savings association's or savings bank's assets or net worth.
10-63 (c) Information regarding the financial condition of a state
10-64 savings association or savings bank obtained through examination or
10-65 otherwise may not be disclosed to a member of the finance
10-66 commission, except that the savings and loan commissioner may
10-67 disclose to the finance commission a file or record pertinent to a
10-68 hearing or matter pending before the finance commission.
10-69 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS. The
10-70 finance commission may adopt rules necessary for supervising the
11-1 consumer credit commissioner and for ensuring compliance with Title
11-2 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
11-3 Civil Statutes).
11-4 Sec. 1.015. SUNSET PROVISION. The finance commission is
11-5 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
11-6 continued in existence as provided by that chapter, the commission
11-7 is abolished September 1, 2001.
11-8 (Sections 1.016-1.100 reserved for expansion)
11-9 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
11-10 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. The finance
11-11 commission, by at least five affirmative votes, shall appoint a
11-12 savings and loan commissioner, who serves at the pleasure of the
11-13 finance commission, as an employee of the commission, and subject
11-14 to its orders and direction. The savings and loan commissioner is
11-15 the chief executive officer of the Savings and Loan Department.
11-16 The savings and loan commissioner must have not less than seven
11-17 years' experience in the executive management of a savings
11-18 association or savings bank or in savings association or savings
11-19 bank supervision. The finance commission shall set the
11-20 compensation of the savings and loan commissioner, which shall be
11-21 paid from funds of the Savings and Loan Department.
11-22 Sec. 1.102. DEPUTY COMMISSIONERS. The savings and loan
11-23 commissioner shall appoint one or more deputy savings and loan
11-24 commissioners. One deputy savings and loan commissioner must have
11-25 the qualifications required of the savings and loan commissioner.
11-26 That deputy savings and loan commissioner has the powers and shall
11-27 perform the duties of the savings and loan commissioner during the
11-28 absence or inability of the savings and loan commissioner. The
11-29 savings and loan commissioner shall also appoint savings
11-30 association and savings bank examiners.
11-31 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
11-32 Subject to Subsection (b) of this section, each officer and
11-33 employee of the Savings and Loan Department is entitled to
11-34 compensation fixed by the finance commission, which shall be paid
11-35 from the funds of the Savings and Loan Department.
11-36 (b) Chapter 654, Government Code, applies to a position of
11-37 the Savings and Loan Department only if it is classified in salary
11-38 groups 1-10 under the General Appropriations Act. The legislature
11-39 in the General Appropriations Act may determine the total amount
11-40 appropriated to the Savings and Loan Department but may not
11-41 determine the number or salaries of employees other than the
11-42 positions specifically subject to Chapter 654, Government Code, as
11-43 provided by this section. The finance commission, subject to the
11-44 limits provided by this section, shall otherwise determine the
11-45 number of employees of the Savings and Loan Department and the
11-46 salaries of those employees. The Savings and Loan Department may
11-47 use funds appropriated to it for any purpose to pay the salaries
11-48 determined by the finance commission.
11-49 Sec. 1.104. OATH OF OFFICE. Before assuming the duties of
11-50 office, the savings and loan commissioner, each deputy savings and
11-51 loan commissioner, examiner, assistant examiner, conservator,
11-52 supervisor, and special agent, and each other officer or employee
11-53 specified by the savings and loan commissioner must take an oath of
11-54 office to discharge faithfully the duties assigned and uphold the
11-55 constitution and laws of this state and the United States.
11-56 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. The savings
11-57 and loan commissioner shall:
11-58 (1) supervise and regulate the organization,
11-59 operation, and liquidation of state savings associations, as
11-60 provided by the Texas Savings and Loan Act (Article 852a, Vernon's
11-61 Texas Civil Statutes), and state savings banks, as provided by the
11-62 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
11-63 Statutes); and
11-64 (2) enforce those acts in person or through a deputy
11-65 savings and loan commissioner, examiner, supervisor, conservator,
11-66 or other agent.
11-67 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a) The
11-68 savings and loan commissioner and the finance commission shall
11-69 establish reasonable and necessary fees for the administration of
11-70 the Texas Savings and Loan Act (Article 852a, Vernon's Texas Civil
12-1 Statutes) and the Texas Savings Bank Act (Article 489e, Vernon's
12-2 Texas Civil Statutes) and for the support of the finance commission
12-3 as provided by Section 1.011 of this Act.
12-4 (b) The savings and loan commissioner shall collect all
12-5 fees, penalties, charges, and revenues required to be paid by state
12-6 savings associations and savings banks and shall from time to time,
12-7 as directed by the finance commission, submit to the commission a
12-8 full and complete report of the receipts and expenditures of the
12-9 Savings and Loan Department.
12-10 (c) The financial transactions of the Savings and Loan
12-11 Department are subject to audit by the state auditor as provided by
12-12 Chapter 321, Government Code, and the actual costs of any audit
12-13 shall be paid to the state auditor from the funds of the Savings
12-14 and Loan Department.
12-15 (d) All money paid to the Savings and Loan Department from
12-16 all sources shall be deposited in the state treasury to the credit
12-17 of the Savings and Loan Department expense fund, which may be used
12-18 only for the expenses incurred by the Savings and Loan Department
12-19 and finance commission. All expenses incurred by the Savings and
12-20 Loan Department shall be paid only from the fund.
12-21 Sec. 1.107. CONFLICTS OF LAW. If this subchapter conflicts
12-22 with the Texas Savings and Loan Act (Article 852a, Vernon's Texas
12-23 Civil Statutes) or the Texas Savings Bank Act (Article 489e,
12-24 Vernon's Texas Civil Statutes), this subchapter controls.
12-25 Sec. 1.108. CONFLICTS OF INTEREST. (a) An officer or
12-26 employee of the Savings and Loan Department may not be an officer,
12-27 employee, or paid consultant of a trade association in the savings
12-28 association industry or the savings bank industry.
12-29 (b) An officer or employee of the Savings and Loan
12-30 Department may not be related within the second degree by affinity
12-31 or consanguinity, as determined under Chapter 573, Government Code,
12-32 to a person who is an officer, employee, or paid consultant of a
12-33 trade association in the savings association industry or the
12-34 savings bank industry.
12-35 (c) Before the 11th day after the date on which an employee
12-36 begins employment with the Savings and Loan Department, the
12-37 employee shall read the conflict-of-interest statutes applicable to
12-38 employees of the Savings and Loan Department and sign a notarized
12-39 affidavit stating that the employee has read those statutes.
12-40 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS. (a) The
12-41 savings and loan commissioner shall prepare information of consumer
12-42 interest describing the regulatory functions of the Savings and
12-43 Loan Department and describing the procedures by which consumer
12-44 complaints are filed with and resolved by the Savings and Loan
12-45 Department. The information must be made available to the general
12-46 public and appropriate state agencies.
12-47 (b) The Savings and Loan Department shall keep an
12-48 information file about each filed complaint relating to a state
12-49 savings association or savings bank.
12-50 (c) If a written complaint is filed with the Savings and
12-51 Loan Department relating to a state savings association or savings
12-52 bank, at least as frequently as quarterly and until final
12-53 disposition of the complaint, the Savings and Loan Department shall
12-54 notify the parties to the complaint of the status of the complaint
12-55 unless the notice would jeopardize an undercover investigation.
12-56 Sec. 1.110. SUNSET PROVISION. The office of savings and
12-57 loan commissioner and the Savings and Loan Department are subject
12-58 to Chapter 325, Government Code (Texas Sunset Act). Unless
12-59 continued in existence as provided by that chapter, the office and
12-60 department are abolished September 1, 2001.
12-61 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
12-62 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
12-63 Sec. 2.001. BANKING COMMISSIONER .............................. 32
12-64 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT ............... 32
12-65 Sec. 2.003. DEPUTY BANKING COMMISSIONER ....................... 33
12-66 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS ........... 33
12-67 Sec. 2.005. DUTIES OF BANKING COMMISSIONER .................... 33
12-68 Sec. 2.006. AUDITS; FEES AND REVENUES ......................... 33
12-69 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS .............. 34
12-70 Sec. 2.008. EXAMINATION ....................................... 35
13-1 Sec. 2.009. CALL REPORTS ...................................... 37
13-2 Sec. 2.010. LIABILITIES ....................................... 37
13-3 Sec. 2.011. OFFENSES .......................................... 38
13-4 Sec. 2.012. CONFLICT OF INTEREST .............................. 39
13-5 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS ............... 39
13-6 Sec. 2.014. SUNSET PROVISION .................................. 40
13-7 (Sections 2.015-2.100 reserved for expansion)
13-8 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
13-9 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED ............... 40
13-10 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION .................. 41
13-11 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES ...................... 41
13-12 Sec. 2.104. OTHER DISCLOSURE PROHIBITED ....................... 42
13-13 Sec. 2.105. CIVIL DISCOVERY ................................... 42
13-14 Sec. 2.106. INVESTIGATIVE INFORMATION ......................... 43
13-15 Sec. 2.107. EMPLOYMENT INFORMATION ............................ 43
13-16 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS ..................... 43
13-17 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
13-18 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
13-19 Sec. 2.001. BANKING COMMISSIONER. The finance commission,
13-20 by at least five affirmative votes, shall appoint a banking
13-21 commissioner who serves at the pleasure of the finance commission,
13-22 as an employee of the finance commission, and subject to the
13-23 finance commission's orders and directions. The banking
13-24 commissioner must have not less than seven years' experience in
13-25 banking or bank supervision and shall serve as the chief executive
13-26 officer of the Texas Department of Banking. The finance commission
13-27 shall set the compensation of the banking commissioner, which shall
13-28 be paid from funds of the department.
13-29 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Chapter
13-30 654, Government Code, applies to a position of the department only
13-31 if it is classified in salary groups 1-10 under the currently
13-32 effective General Appropriations Act. The legislature in the
13-33 General Appropriations Act may determine the total amount
13-34 appropriated to the department but may not determine the number or
13-35 salaries of employees of the department other than positions
13-36 subject to Chapter 654, Government Code. The finance commission,
13-37 subject to the limits provided by this section, shall otherwise
13-38 determine the number of employees of the department and the
13-39 salaries of those employees. The department may use funds
13-40 appropriated to it for any purpose to pay the salaries determined
13-41 by the finance commission.
13-42 Sec. 2.003. DEPUTY BANKING COMMISSIONER. The banking
13-43 commissioner shall appoint a deputy banking commissioner who must
13-44 have the qualifications required of the banking commissioner.
13-45 During the absence or inability of the banking commissioner, the
13-46 deputy banking commissioner has the powers and shall perform the
13-47 duties of the banking commissioner.
13-48 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS. Before
13-49 assuming the duties of office, the banking commissioner, the deputy
13-50 banking commissioner, and each examiner, assistant examiner,
13-51 conservator, supervisor, special agent, and other officer or
13-52 employee specified by the banking commissioner must take an oath of
13-53 office to discharge faithfully the duties assigned and uphold the
13-54 constitution and laws of this state and of the United States.
13-55 Sec. 2.005. DUTIES OF BANKING COMMISSIONER. The banking
13-56 commissioner shall:
13-57 (1) supervise and regulate, as provided by this Act,
13-58 state banks, trust companies, and state-licensed foreign bank
13-59 agencies;
13-60 (2) administer and enforce this Act in person or
13-61 through the deputy banking commissioner or an examiner, supervisor,
13-62 conservator, or other agent; and
13-63 (3) administer and enforce laws other than this Act as
13-64 directed by the legislature.
13-65 Sec. 2.006. AUDITS; FEES AND REVENUES. (a) The department
13-66 is subject to audit by the state auditor as provided by Chapter
13-67 321, Government Code, and the actual costs of an audit shall be
13-68 paid to the state auditor from the funds of the department.
13-69 (b) The finance commission shall establish reasonable and
13-70 necessary fees for the administration of this Act.
14-1 (c) All money paid to the department under this Act shall be
14-2 deposited in the state treasury to the credit of the Department of
14-3 Banking expense fund and may be used only for the administration of
14-4 the statutory duties of the department and finance commission under
14-5 this Act. All expenses incurred by the department in administering
14-6 this Act shall be paid only from the fund.
14-7 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
14-8 banking commissioner may issue interpretive statements containing
14-9 matters of general policy for the guidance of state banks. The
14-10 banking commissioner shall file the statements for publication in
14-11 the Texas Register. The banking commissioner may amend or repeal a
14-12 published interpretive statement by issuing an amended statement or
14-13 notice of repeal of a statement and filing the statement or notice
14-14 for publication in the Texas Register. The secretary of state
14-15 shall publish the filed statements and notices in the Texas
14-16 Register and in a designated chapter of the Texas Administrative
14-17 Code.
14-18 (b) The banking commissioner may issue opinions in response
14-19 to specific requests from members of the public or the banking
14-20 industry directly or through the deputy banking commissioner or the
14-21 department's attorneys. If the banking commissioner determines
14-22 that the opinion is useful for the general guidance of state banks
14-23 or trust companies, the banking commissioner may file the opinion
14-24 for publication in the Texas Register. A published opinion must be
14-25 redacted in a manner that preserves the confidentiality of the
14-26 requesting party, unless the requesting party consents to be
14-27 identified in the published opinion. The banking commissioner may
14-28 amend or repeal a published opinion by issuing an amended opinion
14-29 or notice of repeal of an opinion and filing the opinion or notice
14-30 for publication in the Texas Register, except that the requesting
14-31 party may rely on the original opinion if all material facts were
14-32 originally disclosed to the banking commissioner, considerations of
14-33 safety and soundness of the affected bank are not implicated with
14-34 respect to further and prospective reliance on the original
14-35 opinion, and the text and interpretation of relevant, governing
14-36 provisions of this Act have not been changed by legislative or
14-37 judicial action. The secretary of state shall publish the filed
14-38 opinions and notices in the Texas Register and a designated chapter
14-39 of the Texas Administrative Code.
14-40 (c) An interpretive statement or opinion issued under this
14-41 section does not have the force of law and is not a rule for the
14-42 purposes of Chapter 2001, Government Code, unless adopted by the
14-43 finance commission as provided by Chapter 2001, Government Code.
14-44 An interpretive statement or opinion is an administrative
14-45 construction of this Act entitled to great weight if the
14-46 construction is reasonable and does not conflict with this Act.
14-47 Sec. 2.008. EXAMINATION. (a) The banking commissioner
14-48 shall examine each state bank annually or more often as the banking
14-49 commissioner considers necessary to safeguard the interests of
14-50 depositors, creditors, shareholders, participants, and
14-51 participant-transferees and to enforce this Act. The banking
14-52 commissioner may defer an examination for not more than six months
14-53 if the banking commissioner considers the deferment necessary for
14-54 the efficient enforcement of this Act. The banking commissioner
14-55 may accept examinations of a state bank by a federal or other
14-56 governmental agency in lieu of an examination under this section or
14-57 may conduct examinations of a state bank jointly with a federal or
14-58 other governmental agency.
14-59 (b) Each state bank shall pay the cost of examination, the
14-60 equitable or proportionate cost of maintenance and operation of the
14-61 department, and the cost of enforcement of this Act through the
14-62 imposition and collection of fees established by the finance
14-63 commission under Section 1.012(a)(4) of this Act.
14-64 (c) The performance of data processing, electronic fund
14-65 transfers, or other bank services on behalf of a state bank by a
14-66 third-party contractor, other than a national bank, and the
14-67 activities of a state bank affiliate are subject to regulation and
14-68 examination by the banking commissioner to the same extent as if
14-69 the services or activities were performed by that state bank on its
14-70 own premises. The banking commissioner may collect a fee from an
15-1 examined contractor or affiliate in connection with each
15-2 examination to cover the cost of the examination or may collect
15-3 that fee from the state banks using the third-party contractor.
15-4 For purposes of this subsection, a state bank affiliate does not
15-5 include a company in which ownership or membership is limited to
15-6 individuals and conditioned by law on the existence and maintenance
15-7 of professional licensing.
15-8 (d) The banking commissioner may administer oaths and
15-9 examine persons under oath on any subject that the banking
15-10 commissioner considers pertinent to the financial condition or the
15-11 safety and soundness of the activities of a state bank.
15-12 Sec. 2.009. CALL REPORTS. (a) Except as provided by
15-13 Subsection (b) of this section, each state bank shall periodically
15-14 file with the banking commissioner a copy of its call report
15-15 stating the bank's financial condition and results of operation.
15-16 (b) The finance commission may by rule:
15-17 (1) specify the form of a call report, including
15-18 specified confidential and public information to be in the call
15-19 report;
15-20 (2) require public information in call reports of
15-21 state banks to be published at the times and in the publications
15-22 and locations the finance commission determines; and
15-23 (3) require call reports to be filed with the banking
15-24 commissioner at the intervals the finance commission determines.
15-25 (c) A state bank that fails to timely file its call report
15-26 as required by this section is subject to a penalty not exceeding
15-27 $500 a day to be collected by suit by the attorney general on
15-28 behalf of the banking commissioner.
15-29 Sec. 2.010. LIABILITIES. (a) The banking commissioner,
15-30 each member of the finance commission, the deputy banking
15-31 commissioner, or an examiner, assistant examiner, supervisor,
15-32 conservator, agent, or other officer or employee of the department
15-33 is not personally liable for damages arising from the person's
15-34 official act or omission, unless the act or omission is corrupt or
15-35 malicious.
15-36 (b) The attorney general shall defend an action brought
15-37 against a person because of an official act or omission under
15-38 Subsection (a) of this section, regardless of whether the defendant
15-39 has terminated service with the department before the action
15-40 commences.
15-41 Sec. 2.011. OFFENSES. (a) The banking commissioner or an
15-42 officer or employee of the department commits an offense if the
15-43 person knowingly:
15-44 (1) discloses information or permits access to a file
15-45 or record of the department in violation of Subchapter B of this
15-46 chapter;
15-47 (2) becomes directly or indirectly indebted to, or
15-48 financially interested in, a state bank, foreign bank agency, or
15-49 trust company; or
15-50 (3) purchases an asset owned by a state bank or trust
15-51 company in the possession of the banking commissioner or other
15-52 receiver for purposes of liquidation.
15-53 (b) An offense under this section is a Class A misdemeanor.
15-54 (c) A department employee, other than the banking
15-55 commissioner and deputy banking commissioner, does not commit an
15-56 offense under Subsection (a)(2) solely because the spouse of or
15-57 other person related to the officer or employee is employed by a
15-58 state bank and participates in an employee benefit plan, including
15-59 an employee stock option, bonus, or ownership plan, or other plan
15-60 the sole purpose of which is to compensate employees of the bank
15-61 for services rendered with an ownership interest in the bank.
15-62 (d) The banking commissioner shall adopt a policy requiring
15-63 each employee of the department to notify the banking commissioner
15-64 in writing of an employment relationship described by Subsection
15-65 (c) of this section and to be recused from all matters affecting
15-66 the employing bank until the employment relationship is terminated
15-67 or the spouse or related person no longer owns equity securities
15-68 issued by the bank. Not later than one year after the date the
15-69 employment relationship described by Subsection (c) of this section
15-70 ends, the spouse or related person must divest ownership of equity
16-1 securities issued by the bank.
16-2 Sec. 2.012. CONFLICT OF INTEREST. (a) An officer or
16-3 employee of the department may not be an officer, employee, or paid
16-4 consultant of a trade association in an industry regulated by the
16-5 department.
16-6 (b) An officer or employee of the department may not be
16-7 related within the second degree by affinity or consanguinity, as
16-8 determined under Chapter 573, Government Code, to a person who is
16-9 an officer, employee, or paid consultant of a trade association in
16-10 an industry regulated by the department.
16-11 (c) Before the 11th day after the date on which an employee
16-12 begins employment with the department, the employee shall read the
16-13 conflict of interest statutes applicable to employees of the
16-14 department and sign a notarized affidavit stating that the employee
16-15 has read those statutes.
16-16 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a) The
16-17 banking commissioner shall prepare information of consumer interest
16-18 describing the regulatory functions of the department and
16-19 describing the department's procedures by which consumer complaints
16-20 are filed with and resolved by the department. The banking
16-21 commissioner shall make the information available to the general
16-22 public and appropriate state agencies.
16-23 (b) The banking commissioner shall keep an information file
16-24 about each complaint filed with the banking commissioner relating
16-25 to any entity regulated by the department.
16-26 (c) If a written complaint is filed with the banking
16-27 commissioner relating to any entity regulated by the department,
16-28 the banking commissioner, at least as frequently as quarterly and
16-29 until final disposition of the complaint, shall notify the parties
16-30 to the complaint of the status of the complaint unless the notice
16-31 would jeopardize an undercover investigation.
16-32 Sec. 2.014. SUNSET PROVISION. The office of banking
16-33 commissioner is subject to Chapter 325, Government Code (Texas
16-34 Sunset Act). Unless continued in existence as provided by that
16-35 chapter, the office is abolished September 1, 2001.
16-36 (Sections 2.015-2.100 reserved for expansion)
16-37 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
16-38 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
16-39 (a) Information obtained directly or indirectly by the department
16-40 relative to the financial condition or business affairs of a
16-41 financial institution, or a present, former, or prospective
16-42 shareholder, participant, officer, director, manager, affiliate, or
16-43 service provider of a financial institution, other than the public
16-44 portions of call reports and profit and loss statements, whether
16-45 obtained through application, examination, or otherwise, except
16-46 published statements, and all related files and records of the
16-47 department are confidential and may not be disclosed by the banking
16-48 commissioner or an employee of the department except as expressly
16-49 provided otherwise by this Act or rules adopted under this Act.
16-50 (b) Information obtained by the department from a federal or
16-51 state regulatory agency that is confidential under federal or state
16-52 law may not be disclosed except as provided by federal or state
16-53 law.
16-54 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
16-55 information may not be disclosed to a member of the finance
16-56 commission, and a member of the finance commission may not be given
16-57 access to the files and records of the department except that the
16-58 banking commissioner may disclose to the finance commission
16-59 information, files, and records pertinent to a hearing or matter
16-60 pending before the finance commission.
16-61 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
16-62 and execution of an appropriate confidentiality agreement approved
16-63 by the banking commissioner, the banking commissioner may disclose
16-64 to a federal banking regulatory agency confidential information
16-65 relative to a financial institution within the agency's
16-66 jurisdiction, or an affiliate or service provider of the financial
16-67 institution, and may permit the agency access to files and records
16-68 or reports relating to the financial institution or its affiliate
16-69 or service provider.
16-70 (b) The banking commissioner may, if the banking
17-1 commissioner considers it necessary or proper to the enforcement of
17-2 the laws of this state, another state, the United States, or a
17-3 foreign sovereign state, or to the best interest of the public,
17-4 disclose or authorize release of confidential information to
17-5 another department of this state, another state, the United States,
17-6 a foreign sovereign state, or any related agency or
17-7 instrumentality.
17-8 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
17-9 information that is provided to a financial institution, affiliate,
17-10 or service provider of a financial institution, whether in the form
17-11 of a report of examination or otherwise, is the confidential
17-12 property of the department. The information may not be made public
17-13 or disclosed by the recipient or by its officers, directors,
17-14 managers, employees, or agents to a person not officially connected
17-15 to the recipient as officer, director, employee, attorney, auditor,
17-16 or independent auditor except as authorized by rules adopted under
17-17 this Act. A disclosure or use of the information in violation of
17-18 this section is an offense punishable as provided for an offense
17-19 under Section 37.10, Penal Code.
17-20 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
17-21 information from a person subject to this subchapter pursuant to
17-22 subpoena or other legal process must comply with rules adopted
17-23 under this Act and other applicable law. The rules may restrict
17-24 release of confidential information to solely that portion directly
17-25 relevant to the legal dispute at issue and may require that a
17-26 protective order, in form and under circumstances specified by the
17-27 rules, be issued by a court of competent jurisdiction before
17-28 release of the confidential information.
17-29 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
17-30 other law, the banking commissioner may refuse to release
17-31 information or records in the custody of the department if, in the
17-32 opinion of the banking commissioner, release of the information or
17-33 records might jeopardize an ongoing investigation of potentially
17-34 unlawful activities.
17-35 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
17-36 employment information to a financial institution or to a person
17-37 providing employment information to a financial institution
17-38 concerning the known or suspected involvement of a present or
17-39 former employee, officer, or director in a violation of any state
17-40 or federal law, rule, or regulation that has been reported to
17-41 appropriate state or federal authorities. The person may not be
17-42 held liable for providing that information unless the information
17-43 provided is false and the person provided the information with
17-44 disregard for the truth.
17-45 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
17-46 Notwithstanding Article 2.44, Texas Business Corporation Act, a
17-47 shareholder or participant of a state bank may not examine:
17-48 (1) a report of examination or other confidential
17-49 property of the department that is in the possession of the state
17-50 bank; or
17-51 (2) a book or record of the state bank that directly
17-52 or indirectly pertains to financial or other information maintained
17-53 by the bank on behalf of its customers, including a specific item
17-54 in the minutes of the board or a committee of the board regarding
17-55 loan review and approval or a loan delinquency report that would
17-56 tend to identify the bank's customer.
17-57 (b) This section does not affect the rights of a shareholder
17-58 or participant of a state bank when acting in another capacity.
17-59 CHAPTER 3. POWERS; ORGANIZATION AND
17-60 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
17-61 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
17-62 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS ............ 46
17-63 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK ............. 47
17-64 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER ................ 49
17-65 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER
17-66 APPLICATION ..................................... 50
17-67 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION ....... 51
17-68 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY .............. 52
17-69 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL
17-70 BUSINESS CORPORATIONS ........................... 53
18-1 Sec. 3.008. BANKING COMMISSIONER HEARINGS ..................... 54
18-2 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS .............. 54
18-3 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS ........... 56
18-4 (Sections 3.011-3.100 reserved for expansion)
18-5 SUBCHAPTER B. AMENDMENT OF ARTICLES;
18-6 CHANGES IN CAPITAL AND SURPLUS
18-7 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
18-8 OF ASSOCIATION .................................. 59
18-9 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR
18-10 PARTICIPATION SHARES ............................ 61
18-11 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS ......... 62
18-12 Sec. 3.104. CAPITAL NOTES OR DEBENTURES ....................... 62
18-13 (Sections 3.105-3.200 reserved for expansion)
18-14 SUBCHAPTER C. BANK OFFICES
18-15 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING ............... 63
18-16 Sec. 3.202. HOME OFFICE ....................................... 64
18-17 Sec. 3.203. BRANCH OFFICES .................................... 65
18-18 Sec. 3.204. ELECTRONIC TERMINALS .............................. 66
18-19 Sec. 3.205. LOAN PRODUCTION OFFICES ........................... 67
18-20 (Sections 3.206-3.300 reserved for expansion)
18-21 SUBCHAPTER D. MERGER
18-22 Sec. 3.301. MERGER AUTHORITY .................................. 67
18-23 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER .................. 68
18-24 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER .................... 70
18-25 (Sections 3.304-3.400 reserved for expansion)
18-26 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
18-27 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
18-28 FINANCIAL INSTITUTION ........................... 70
18-29 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT .............. 70
18-30 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION ................ 71
18-31 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS ............... 72
18-32 Sec. 3.405. SALE OF ASSETS .................................... 72
18-33 (Sections 3.406-3.500 reserved for expansion)
18-34 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
18-35 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
18-36 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
18-37 BANK INTO NATIONAL BANK OR SAVINGS BANK OR
18-38 SAVINGS ASSOCIATION ............................. 73
18-39 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
18-40 BANK ............................................ 75
18-41 CHAPTER 3. POWERS; ORGANIZATION AND
18-42 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
18-43 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
18-44 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
18-45 One or more persons, a majority of whom are residents of this
18-46 state, may organize a state bank as a banking association or a
18-47 limited banking association. A state bank may:
18-48 (1) receive and pay deposits with or without interest,
18-49 discount and negotiate promissory notes, borrow or lend money with
18-50 or without security or interest, invest and deal in securities, buy
18-51 and sell exchange, coin, and bullion and exercise incidental powers
18-52 as necessary to carry on the business of banking as provided by
18-53 this Act;
18-54 (2) act as agent, including a fiscal agent, registrar,
18-55 or transfer agent and, in that capacity, receive and disburse money
18-56 and transfer securities;
18-57 (3) act in a fiduciary capacity, without giving bond,
18-58 as guardian, receiver, executor, administrator, or trustee,
18-59 including a mortgage or indenture trustee; and
18-60 (4) engage in any other activity, directly or through
18-61 a subsidiary, authorized by this Act or rules adopted under this
18-62 Act or determined by the banking commissioner to be closely related
18-63 to banking.
18-64 (b) Subject to Section 3.007 of this Act, a state bank may
18-65 exercise the powers of a Texas business corporation reasonably
18-66 necessary to enable exercise of its specific powers under this Act.
18-67 (c) A state bank may contribute to community funds, or to
18-68 charitable, philanthropic, or benevolent instrumentalities
18-69 conducive to public welfare, amounts that its board considers
18-70 expedient and in the interests of the bank.
19-1 (d) A state bank may be organized or reorganized as a
19-2 community development financial institution, as defined by the
19-3 Riegle Community Development and Regulatory Improvement Act of
19-4 1994.
19-5 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. The
19-6 articles of association of a state bank must be signed and
19-7 acknowledged by each organizer and must contain:
19-8 (1) the name of the state bank, except that the
19-9 banking commissioner may determine that a proposed bank name is
19-10 potentially misleading to the public and require the organizers to
19-11 select a different name;
19-12 (2) the period of its duration, which may be
19-13 perpetual, except that a state bank, other than a private bank,
19-14 organized before August 31, 1993, is considered to have perpetual
19-15 existence, notwithstanding a contrary statement in its articles of
19-16 association, unless after the effective date of this Act the bank
19-17 amends its articles of association to reaffirm its limited
19-18 duration;
19-19 (3) the powers of the state bank, which may be stated
19-20 as:
19-21 (A) all powers granted by law to a state bank;
19-22 or
19-23 (B) a list of the specific powers under Section
19-24 3.001 of this Act that the state bank chooses to exercise;
19-25 (4) the aggregate number of shares or participation
19-26 shares that the bank will be authorized to issue, the number of
19-27 classes of shares or participation shares, which may be one or
19-28 more, the number of shares or participation shares of each class if
19-29 more than one class, and a statement of the par value of the shares
19-30 or participation shares of each class or that the shares or
19-31 participation shares are to be without par value;
19-32 (5) if the shares or participation shares are to be
19-33 divided into classes, the designation of each class and statement
19-34 of the preferences, limitations, and relative rights of the shares
19-35 or participation shares of each class, which in the case of a
19-36 limited banking association may be more fully set forth in the
19-37 participation agreement;
19-38 (6) any provision limiting or denying to shareholders
19-39 or participants the preemptive right to acquire additional or
19-40 treasury shares or participation shares of the bank;
19-41 (7) any provision granting the right of shareholders
19-42 or participants to cumulative voting in the election of directors
19-43 or managers;
19-44 (8) the aggregate amount of consideration to be
19-45 received for all shares or participation shares initially issued by
19-46 the bank, and a statement that all authorized shares or
19-47 participation shares have been subscribed and that all
19-48 subscriptions received provide for the consideration to be fully
19-49 paid in cash before issuance of the charter;
19-50 (9) any provision consistent with law that the
19-51 organizers elect to set forth in the articles of association for
19-52 the regulation of the internal affairs of the bank or that is
19-53 otherwise required by this Act to be set forth in the articles of
19-54 association;
19-55 (10) the street address of the bank's initial home
19-56 office required to be maintained under Section 3.202 of this Act;
19-57 and
19-58 (11) the number of directors or managers constituting
19-59 the initial board, which may be no fewer than five or more than 25,
19-60 and the names and street addresses of the persons who are to serve
19-61 as directors or managers until the first annual meeting of
19-62 shareholders or participants or until successor directors or
19-63 managers have been elected and qualified; or, at the option of the
19-64 organizers of a limited banking association that will have no fewer
19-65 than five or more than 25 participants, a statement that management
19-66 is vested in a board composed of all participants, with management
19-67 authority vested in each participant in proportion to the
19-68 participant's contribution to capital as adjusted from time to time
19-69 to properly reflect any additional contribution, and the names and
19-70 street addresses of the persons who are to be managing
20-1 participants.
20-2 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a) An
20-3 application for a state bank charter must be made under oath and in
20-4 the form required by the banking commissioner, who shall inquire
20-5 fully into the identity and character of each proposed director,
20-6 manager, officer, managing participant, and principal shareholder
20-7 or participant. The application must be accompanied by all charter
20-8 fees and deposits required by law or regulation.
20-9 (b) The banking commissioner shall grant a state bank
20-10 charter only if the commissioner determines that the organizers
20-11 have established that:
20-12 (1) a public necessity exists for the proposed state
20-13 bank;
20-14 (2) the proposed organizational and capital structure
20-15 and amount of initial capitalization is adequate for the proposed
20-16 business and location;
20-17 (3) the anticipated volume of business indicates
20-18 profitable operation;
20-19 (4) the proposed officers, directors, and managers, or
20-20 managing participants, as a group have sufficient banking
20-21 experience, ability, standing, competence, trustworthiness, and
20-22 integrity to justify a belief that the proposed state bank will
20-23 operate in compliance with law and that success of the proposed
20-24 state bank is probable;
20-25 (5) each principal shareholder or participant has
20-26 sufficient experience, ability, standing, competence,
20-27 trustworthiness, and integrity to justify a belief that the
20-28 proposed state bank will be free from improper or unlawful
20-29 influence or interference with respect to the bank's operation in
20-30 compliance with law; and
20-31 (6) the organizers are acting in good faith.
20-32 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
20-33 (a) The banking commissioner shall notify the organizers when the
20-34 application is complete and accepted for filing and all required
20-35 fees and deposits have been paid. Promptly after this notification
20-36 the organizers shall publish notice of the application and solicit
20-37 comments and protests, in the form specified by the banking
20-38 commissioner, in a newspaper of general circulation in the county
20-39 where the proposed state bank is to be located.
20-40 (b) At the expense of the organizers, the banking
20-41 commissioner shall thoroughly investigate the application. The
20-42 banking commissioner shall prepare a written report of the
20-43 investigation, and any person, other than a person protesting under
20-44 Section 3.005 of this Act, may request a copy of the
20-45 nonconfidential portions of the application and written report as
20-46 provided by Chapter 552, Government Code. Rules adopted under
20-47 this Act may specify the confidential or nonconfidential character
20-48 of information obtained by the department under this chapter.
20-49 Except as provided by Subchapter B, Chapter 2, of this Act or in
20-50 rules regarding confidential information, the financial statement
20-51 of a proposed officer, director, manager, or managing participant
20-52 is confidential and not subject to public disclosure.
20-53 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
20-54 (a) Any person may file a protest to an application.
20-55 (b) If a protest of the application is not filed before the
20-56 15th day after the date the organizers publish notice under Section
20-57 3.004(a) of this Act, the banking commissioner may immediately
20-58 determine whether the necessary conditions set forth in Section
20-59 3.003(b) of this Act have been established, based on the
20-60 application and investigation. The banking commissioner shall
20-61 approve the application for charter or set the charter application
20-62 for hearing.
20-63 (c) If a protest of the application is timely filed,
20-64 accompanied by the fees and deposits required by statute or rules,
20-65 or if the banking commissioner sets a hearing, the banking
20-66 commissioner shall conduct a public hearing and one or more
20-67 prehearing conferences and opportunities for discovery as the
20-68 banking commissioner considers advisable and consistent with the
20-69 applicable statutes and rules. A person protesting the application
20-70 is entitled to the confidential portion of the application, subject
21-1 to a protective order that restricts the use of confidential
21-2 information to the charter proceedings.
21-3 (d) Based on the record of the hearing, the banking
21-4 commissioner shall determine whether the application meets the
21-5 requirements of Section 3.003(b) of this Act and shall enter an
21-6 order granting or denying the charter.
21-7 (e) The banking commissioner may make approval of an
21-8 application conditional. The banking commissioner shall include
21-9 any conditions in the order approving the application.
21-10 (f) Chapter 2001, Government Code, does not apply to a
21-11 charter application filed for the purpose of assuming the assets
21-12 and liabilities of a financial institution considered by the
21-13 banking commissioner to be in hazardous condition.
21-14 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) A
21-15 state bank may not engage in the business of banking until it
21-16 receives a certificate of authority from the banking commissioner.
21-17 The banking commissioner may not deliver the certificate of
21-18 authority until the bank has:
21-19 (1) received cash for the issuance of all authorized
21-20 shares or participation shares in the full amount subscribed;
21-21 (2) elected or qualified the initial officers and
21-22 directors or managers, as appropriate, named in the application for
21-23 charter or other officers and directors or managers approved by the
21-24 banking commissioner; and
21-25 (3) complied with all the other requirements of this
21-26 Act relating to the organization of state banks.
21-27 (b) If the state bank does not open and engage in the
21-28 business of banking within six months after the date of the
21-29 granting of its charter, the banking commissioner may forfeit the
21-30 charter or cancel the conditional approval of application for
21-31 charter without judicial action.
21-32 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
21-33 CORPORATIONS. (a) The Texas Business Corporation Act and the
21-34 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
21-35 seq., Vernon's Texas Civil Statutes) apply to a state bank to the
21-36 extent not inconsistent with this Act or the proper business of a
21-37 state bank, except that:
21-38 (1) a reference in those Acts to the secretary of
21-39 state means the banking commissioner unless the context requires
21-40 otherwise; and
21-41 (2) the right of shareholders or participants to
21-42 cumulative voting in the election of directors or managers exists
21-43 only if granted by the state bank's articles of association.
21-44 (b) The finance commission may adopt rules to limit or
21-45 refine the applicability of Subsection (a) of this section to a
21-46 state bank or to alter or supplement the procedures and
21-47 requirements of the Texas Business Corporation Act applicable to an
21-48 action taken under this chapter.
21-49 (c) Unless expressly authorized by this Act or a rule
21-50 adopted under this Act, a state bank may not take an action
21-51 authorized by the Texas Business Corporation Act regarding its
21-52 corporate status, capital structure, or a matter of corporate
21-53 governance, of the type for which the Texas Business Corporation
21-54 Act would require a filing with the secretary of state if the bank
21-55 were a business corporation, without submitting the filing to the
21-56 banking commissioner and obtaining the banking commissioner's prior
21-57 written approval of the action.
21-58 Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) This
21-59 section does not grant a right to hearing to a person that is not
21-60 otherwise granted by governing law.
21-61 (b) The banking commissioner may convene a hearing to
21-62 receive evidence and argument regarding any matter before the
21-63 banking commissioner for decision or review under this Act. The
21-64 hearing must be conducted under Chapter 2001, Government Code.
21-65 (c) A hearing before the banking commissioner that is
21-66 required or authorized by law may be conducted by a hearing officer
21-67 on behalf of the banking commissioner. A matter made confidential
21-68 by law must be considered by the banking commissioner in a closed
21-69 hearing.
21-70 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
22-1 Except as expressly provided otherwise by this Act, a decision or
22-2 order of the banking commissioner made under this Act after hearing
22-3 may be appealed directly to the District Court of Travis County as
22-4 provided by Subsection (c) of this section or, at the option of the
22-5 appellant, to the finance commission for review.
22-6 (b) The finance commission shall consider the questions
22-7 raised by the application for review and may also consider
22-8 additional matters pertinent to the appeal. An order of the
22-9 banking commissioner continues in effect pending review unless the
22-10 order is stayed by the finance commission. The finance commission
22-11 may impose any condition before granting a stay of the appealed
22-12 order. The finance commission may not be required to accept
22-13 additional evidence or hold an evidentiary hearing if a hearing was
22-14 held and a record made before the banking commissioner. The
22-15 finance commission shall remand the proceeding to the banking
22-16 commissioner for the purpose of receiving any additional evidence
22-17 the finance commission chooses to consider. A hearing before the
22-18 finance commission that is required or authorized by law may be
22-19 conducted by a hearing officer on behalf of the finance commission.
22-20 A matter made confidential by law must be considered by the finance
22-21 commission in a closed hearing.
22-22 (c) A person affected by a final order of the banking
22-23 commissioner that elects to appeal directly to district court, or a
22-24 person affected by a final order of the finance commission under
22-25 this section, may appeal the final order by filing a petition for
22-26 judicial review under the substantial evidence rule in the District
22-27 Court of Travis County as provided by Chapter 2001, Government
22-28 Code. A petition for appeal filed in the district court does not
22-29 stay or vacate the appealed order unless the court, after notice
22-30 and hearing, expressly stays or vacates the order.
22-31 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS.
22-32 (a) Section 16(a), Article XVI, Texas Constitution, empowers the
22-33 legislature to authorize the incorporation of state banks and
22-34 provide for a system of state regulation and control of state banks
22-35 that will adequately protect and secure depositors and creditors.
22-36 Section 16(c), Article XVI, Texas Constitution, grants to state
22-37 banks, created by virtue of the power vested in the legislature by
22-38 Section 16(a) of that article, the same rights and privileges that
22-39 are or may be granted to national banks domiciled in this state.
22-40 The legislature finds that Section 16(c) of that article does not
22-41 restrict the legislature's power to provide a system of state
22-42 regulation pursuant to Section 16(a) of that article that differs
22-43 from the regulatory scheme imposed on national banks under federal
22-44 law or prevent the finance commission, acting under authority
22-45 granted by the legislature for the purpose of implementing this
22-46 Act, from adopting rules that differ from federal statutes and
22-47 regulations or that reasonably regulate the method or manner by
22-48 which a state bank exercises its rights and privileges, if the
22-49 rules are adopted after due consideration of the factors listed in
22-50 Section 1.012(b) of this Act. The legislature further finds that
22-51 Section 16(c) does not diminish or limit any rights or powers
22-52 specifically given to state banks by the laws of this state.
22-53 (b) A state bank that intends to exercise a right or
22-54 privilege granted to national banks that is not authorized for
22-55 state banks under the statutes and rules of this state shall submit
22-56 a letter to the banking commissioner, describing in detail the
22-57 activity in which the state bank intends to engage and the specific
22-58 authority of a national bank that authorizes the activity for a
22-59 national bank and shall attach copies, if available, of relevant
22-60 federal law, regulations, and interpretive letters. The bank may
22-61 begin to perform the proposed activity after the 30th day after the
22-62 date the banking commissioner receives the bank's letter unless the
22-63 banking commissioner specifies an earlier or later date or
22-64 prohibits the activity. The banking commissioner may prohibit the
22-65 state bank from performing the activity only if the banking
22-66 commissioner finds that:
22-67 (1) a national bank domiciled in this state does not
22-68 possess the specific right or privilege to perform the activity the
22-69 state bank seeks to perform; or
22-70 (2) the performance of the activity by the state bank
23-1 would adversely affect the safety and soundness of the requesting
23-2 state bank.
23-3 (c) The banking commissioner may extend the 30-day period
23-4 under Subsection (b) of this section if the banking commissioner
23-5 determines that the bank's letter raises issues requiring
23-6 additional information or additional time for analysis. If the
23-7 30-day period is extended, the bank may perform the proposed
23-8 activity only on prior written approval by the banking
23-9 commissioner, except that the banking commissioner must approve or
23-10 prohibit the proposed activity or convene a hearing under Section
23-11 3.008 of this Act not later than the 60th day after the date the
23-12 commissioner receives the bank's letter. If a hearing is convened
23-13 under Section 3.008 of this Act, the banking commissioner must
23-14 approve or prohibit the proposed activity not later than the 30th
23-15 day after the date the hearing is completed.
23-16 (d) A state bank that is denied the requested right or
23-17 privilege to engage in an activity by the banking commissioner
23-18 under this section may appeal as provided by Section 3.009 of this
23-19 Act or may resubmit a letter under this subsection with additional
23-20 information or authority relevant to the banking commissioner's
23-21 determination. A denial is immediately final for purposes of
23-22 appeal.
23-23 (e) To effectuate the Texas Constitution, the finance
23-24 commission may adopt rules implementing the method or manner in
23-25 which a state bank exercises specific rights and privileges granted
23-26 pursuant to Section 16(c), Article XVI, Texas Constitution,
23-27 including rules regarding the exercise of rights and privileges
23-28 that would be prohibited to state banks but for Section 16(c). The
23-29 finance commission may not adopt rules under this subsection unless
23-30 it considers the factors listed in Section 1.012(b) of this Act and
23-31 finds that:
23-32 (1) national banks domiciled in this state possess the
23-33 rights or privileges to perform activities the rule would permit
23-34 state banks to perform; and
23-35 (2) the rules contain adequate safeguards and
23-36 controls, consistent with safety and soundness, to address the
23-37 concern of the legislature evidenced by the state law the rules
23-38 would impact.
23-39 (f) The exercise of rights and privileges by a state bank in
23-40 compliance with and in the manner authorized by this section is not
23-41 a violation of any statute of this state.
23-42 (Sections 3.011-3.100 reserved for expansion)
23-43 SUBCHAPTER B. AMENDMENT OF ARTICLES;
23-44 CHANGES IN CAPITAL AND SURPLUS
23-45 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
23-46 OF ASSOCIATION. (a) A state bank that has been granted a
23-47 certificate of authority under Section 3.006 of this Act may amend
23-48 or restate its articles of association for any lawful purpose,
23-49 including the creation of authorized but unissued shares or
23-50 participation shares in one or more classes or series.
23-51 (b) An amendment authorizing the issuance of shares or
23-52 participation shares in series must contain:
23-53 (1) the designation of each series and a statement of
23-54 any variations in the preferences, limitations, and relative rights
23-55 among series to the extent that the preferences, limitations, and
23-56 relative rights are to be established in the articles of
23-57 association; and
23-58 (2) a statement of any authority to be vested in the
23-59 board to establish series and determine the preferences,
23-60 limitations, and relative rights of each series.
23-61 (c) A limited banking association may not amend its articles
23-62 of association to extend its period of existence for a perpetual
23-63 period or for any period of years, unless the period of existence
23-64 is expressly contingent on those events resulting in dissolution of
23-65 the limited banking association under Section 4.207 of this Act.
23-66 (d) Amendment or restatement of the articles of association
23-67 of a state bank and approval of the board and shareholders or
23-68 participants must be made or obtained in accordance with provisions
23-69 of the Texas Business Corporation Act for the amendment or
23-70 restatement of articles of incorporation except as otherwise
24-1 provided by this Act or rules adopted under this Act. The original
24-2 and one copy of the articles of amendment or restated articles of
24-3 association must be filed with the banking commissioner for
24-4 approval. Unless the submission presents novel or unusual
24-5 questions, the banking commissioner shall approve or reject the
24-6 amendment or restatement not later than the 31st day after the date
24-7 the banking commissioner considers the submission informationally
24-8 complete and accepted for filing. The banking commissioner may
24-9 require the submission of additional information as considered
24-10 necessary to an informed decision to approve or reject any
24-11 amendment or restatement of articles of association under this
24-12 section. If the banking commissioner finds that the amendment or
24-13 restatement conforms to law and any conditions imposed by the
24-14 banking commissioner, and any required filing fee has been paid,
24-15 the banking commissioner shall:
24-16 (1) endorse the face of the original and copy of the
24-17 amendment or restatement with the date of approval and the word
24-18 "Approved";
24-19 (2) file the original of the amendment or restatement
24-20 in the department's records; and
24-21 (3) deliver a certified copy of the amendment or
24-22 restatement to the state bank.
24-23 (e) An amendment or restatement, if approved, takes effect
24-24 on the date of approval, unless the amendment or restatement
24-25 provides for a different effective date.
24-26 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
24-27 SHARES. (a) If the articles of association expressly give the
24-28 board authority to establish series and determine the preferences,
24-29 limitations, and relative rights of each series, the board may do
24-30 so only on compliance with this section and any rules adopted under
24-31 this Act.
24-32 (b) A series of shares or participation shares may be
24-33 established in the manner provided by the Texas Business
24-34 Corporation Act as if the state bank were a domestic corporation,
24-35 but the shares or participation shares of the series may not be
24-36 issued and sold without the prior written approval of the banking
24-37 commissioner under Section 3.103 of this Act. The state bank shall
24-38 file the original and one copy of the statement of action required
24-39 by the Texas Business Corporation Act with the banking
24-40 commissioner. Unless the submission presents novel or unusual
24-41 questions, the banking commissioner shall approve or reject the
24-42 series not later than the 31st day after the date the banking
24-43 commissioner considers the submission informationally complete and
24-44 accepted for filing. The banking commissioner may require the
24-45 submission of additional information as considered necessary to an
24-46 informed decision to approve or reject a proposed series under this
24-47 section. If the banking commissioner finds that the interests of
24-48 depositors and creditors will not be adversely affected by the
24-49 series, that the series conforms to law and any conditions imposed
24-50 by the banking commissioner, and that any required filing fee has
24-51 been paid, the banking commissioner shall:
24-52 (1) endorse the face of the original and copy of the
24-53 statement with the date of approval and the word "Approved";
24-54 (2) file the original of the statement in the
24-55 department's records; and
24-56 (3) deliver a certified copy of the statement to the
24-57 state bank.
24-58 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
24-59 A state bank may not reduce or increase its outstanding capital and
24-60 surplus through dividend, redemption, issuance of shares or
24-61 participation shares, or otherwise, without the prior written
24-62 approval of the banking commissioner, except as permitted by this
24-63 section or rules adopted under this Act.
24-64 (b) Unless otherwise restricted by rules, prior written
24-65 approval is not required for an increase in capital and surplus
24-66 accomplished through:
24-67 (1) issuance of shares of common stock or their
24-68 equivalent in participation shares for cash;
24-69 (2) declaration and payment of pro rata share
24-70 dividends as defined in the Texas Business Corporation Act; or
25-1 (3) adoption by the board of a resolution directing
25-2 that all or part of undivided profits be transferred to capital or
25-3 surplus.
25-4 (c) Prior approval is not required for a decrease in capital
25-5 or surplus caused by losses in excess of undivided profits.
25-6 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
25-7 prior written approval of the banking commissioner a state bank
25-8 may, at any time, through action of its board, and without
25-9 requiring action of its shareholders or participants, issue and
25-10 sell its capital notes or debentures, which must be subordinate to
25-11 the claims of depositors and may be subordinate to other claims,
25-12 including the claims of other creditors or the shareholders or
25-13 participants.
25-14 (b) Capital notes or debentures may be convertible into
25-15 shares or participation shares of any class or series. The
25-16 issuance and sale of convertible capital notes or debentures are
25-17 subject to satisfaction of preemptive rights, if any, to the extent
25-18 provided by law.
25-19 (c) Without the prior written approval of the banking
25-20 commissioner, interest due or principal repayable on outstanding
25-21 capital notes or debentures may not be paid by a state bank at a
25-22 time when the bank is in hazardous condition or is insolvent, or to
25-23 the extent that payment will cause the bank to be in hazardous
25-24 condition or insolvent, as determined by the banking commissioner.
25-25 (d) The amount of any outstanding capital notes or
25-26 debentures that meet the requirements of this section and that are
25-27 subordinated to unsecured creditors of the bank may be included in
25-28 equity capital of the bank for purposes of determining hazardous
25-29 condition or insolvency and for other purposes provided by rules
25-30 adopted under this Act.
25-31 (Sections 3.105-3.200 reserved for expansion)
25-32 SUBCHAPTER C. BANK OFFICES
25-33 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
25-34 state bank may engage in the banking business at its home office,
25-35 at an approved branch office location, and through electronic
25-36 terminals. A drive-in facility must be approved as a branch if it
25-37 is more than 2,000 feet from the nearest wall of the bank's home
25-38 office or another approved branch office.
25-39 (b) A function of a state bank that does not involve banking
25-40 contact with the public may be conducted at any location without
25-41 prior written approval of the banking commissioner. The finance
25-42 commission may adopt rules further defining functions of a state
25-43 bank that are not required to be conducted at an approved location.
25-44 (c) Under Section 3.010 of this Act the finance commission
25-45 may by rule authorize a new form of banking facility. The banking
25-46 commissioner may approve a new form of banking facility other than
25-47 as provided in this subchapter if the banking commissioner does not
25-48 have a significant supervisory or regulatory concern regarding the
25-49 proposed facility.
25-50 Sec. 3.202. HOME OFFICE. (a) Each state bank must have and
25-51 continuously maintain in this state a home office, which must be a
25-52 location at which the bank does business with the public and keeps
25-53 its corporate books and records. At least one officer of the bank
25-54 must maintain an office at the home office and each officer at the
25-55 home office is an agent for service of process for the bank.
25-56 (b) A state bank may change its home office to one of its
25-57 previously established branch locations within this state, if the
25-58 location that is the home office before the change is to remain as
25-59 a branch of the bank, by filing a written notice with the banking
25-60 commissioner setting forth the name of the state bank, the street
25-61 address of its home office before the change, the street address of
25-62 the location to which the home office is to be changed, and a copy
25-63 of the resolution adopted by the board authorizing the change. The
25-64 change of home office takes effect on the 31st day after the date
25-65 the banking commissioner receives the notice unless the banking
25-66 commissioner consents to a different effective date.
25-67 (c) A state bank may change its home office to any location
25-68 within this state, other than as permitted by Subsection (b) of
25-69 this section, on prior written approval of the banking
25-70 commissioner. The banking commissioner shall grant an application
26-1 under this subsection if the banking commissioner does not have a
26-2 significant supervisory or regulatory concern regarding the
26-3 proposed banking facility, the applicant, or an affiliate of the
26-4 applicant. Any standard established by the banking commissioner or
26-5 the finance commission regarding the establishment of a branch
26-6 under Section 3.203 of this Act applies to an application for a
26-7 change of home office that is subject to this subsection, except as
26-8 otherwise provided by rules adopted under this Act.
26-9 (d) If the proposed relocation of the bank's home office
26-10 would effect an abandonment of all or part of the community served
26-11 by the bank, the bank must also establish to the satisfaction of
26-12 the banking commissioner that the abandonment is consistent with
26-13 the original determination of public necessity for the
26-14 establishment of a bank at that location.
26-15 Sec. 3.203. BRANCH OFFICES. A state bank may establish and
26-16 maintain branch offices at any location on prior written approval
26-17 of the banking commissioner. If the banking commissioner does not
26-18 have a significant supervisory or regulatory concern regarding the
26-19 proposed branch, the applicant, or an affiliate, the banking
26-20 commissioner shall approve the application. The finance commission
26-21 may adopt rules establishing additional standards for the approval
26-22 of branch offices.
26-23 Sec. 3.204. ELECTRONIC TERMINALS. (a) A person or group of
26-24 persons, for the convenience of customers of depository
26-25 institutions, may install, maintain, and operate one or more
26-26 electronic terminals at any location within this state.
26-27 (b) Depository institutions may agree in writing to share in
26-28 the use of an electronic terminal on a reasonable,
26-29 nondiscriminatory basis and on the condition that a depository
26-30 institution using one or more electronic terminals may be required
26-31 to meet necessary and reasonable technical standards and to pay
26-32 charges for the use of the electronic terminal. The standards or
26-33 charges imposed must be reasonable, fair, equitable, and
26-34 nondiscriminatory among the depository institutions. Any charges
26-35 imposed must:
26-36 (1) not exceed an equitable proportion of the cost of
26-37 establishing the electronic terminal, including provisions for
26-38 amortization of development costs and capital expenditures over a
26-39 reasonable period, and the cost of operation and maintenance of the
26-40 electronic terminal, plus a reasonable return on those costs; and
26-41 (2) be related to the services provided to the
26-42 depository institution or its customers.
26-43 (c) This section does not apply to:
26-44 (1) an electronic terminal located at the domicile or
26-45 home office or a branch of a depository institution; or
26-46 (2) the use by a person of an electronic terminal,
26-47 regardless of location, solely to withdraw cash, make account
26-48 balance inquiries, or make transfers among the person's accounts
26-49 within the same depository institution.
26-50 Sec. 3.205. LOAN PRODUCTION OFFICES. (a) A state bank may
26-51 establish one or more loan production offices solely for the
26-52 purpose of soliciting loans, accepting loan applications, and
26-53 performing ministerial duties related to consummating a granted
26-54 loan such as execution of loan documents and dispensing of loan
26-55 proceeds by draft or check, including a certified or cashier's
26-56 check, but not by cash. A credit decision, commitment to make a
26-57 loan, and preparation of a check or draft to dispense loan proceeds
26-58 must occur at the bank's home office or a branch office and may not
26-59 occur at a loan production office.
26-60 (b) The bank shall notify the banking commissioner in
26-61 writing before the 31st day preceding the date of establishment of
26-62 a loan production office, except that the banking commissioner may
26-63 waive or shorten the period if the banking commissioner does not
26-64 have a significant supervisory or regulatory concern regarding the
26-65 bank or its planned loan production office.
26-66 (Sections 3.206-3.300 reserved for expansion)
26-67 SUBCHAPTER D. MERGER
26-68 Sec. 3.301. MERGER AUTHORITY. (a) Two or more financial
26-69 institutions, corporations, or other entities with all requisite
26-70 legal authority to participate in a merger, at least one of which
27-1 is a state bank, may adopt and implement a plan of merger in
27-2 accordance with this section. The merger may not be made without
27-3 the prior written approval of the banking commissioner if any
27-4 surviving, new, or acquiring entity that is a party to the merger
27-5 or created by the terms of the merger is a state bank or is not a
27-6 financial institution.
27-7 (b) Implementation of the merger by the parties and approval
27-8 of the board, shareholders, participants, or owners of the parties
27-9 must be made or obtained in accordance with the Texas Business
27-10 Corporation Act as if the state bank were a domestic corporation
27-11 and all other parties to the merger were foreign corporations and
27-12 other entities, except as may be otherwise provided by applicable
27-13 rules.
27-14 (c) A consummated merger has the effect provided by the
27-15 Texas Business Corporation Act. A separate application is not
27-16 required to relocate the home office of a surviving state bank or
27-17 to grant authority to a surviving bank to operate new branch
27-18 offices that previously existed as part of a merging financial
27-19 institution if the intent of the surviving bank is clearly stated
27-20 as part of the plan of merger.
27-21 (d) A merger under this subchapter does not confer
27-22 additional powers on a state bank beyond the powers conferred by
27-23 other provisions of this Act.
27-24 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) If the
27-25 transaction is subject to the prior written approval of the banking
27-26 commissioner, the original articles of merger and a number of
27-27 copies of the articles equal to the number of surviving, new, and
27-28 acquiring entities must be filed with the banking commissioner. On
27-29 this filing, the banking commissioner shall investigate the
27-30 condition of the merging parties. The banking commissioner may
27-31 require the submission of additional information the banking
27-32 commissioner determines necessary to an informed decision to
27-33 approve or reject a merger under this subchapter.
27-34 (b) The banking commissioner shall approve the merger only
27-35 if:
27-36 (1) each resulting state bank will be solvent and have
27-37 adequate capitalization for its business and location;
27-38 (2) each resulting state bank has in all respects
27-39 complied with the laws of this state relative to the organization
27-40 and operation of state banks;
27-41 (3) all deposit and other liabilities of every state
27-42 bank that is a party to the merger have been properly discharged or
27-43 otherwise assumed or retained by a financial institution;
27-44 (4) each surviving, new, or acquiring entity that is
27-45 not a depository institution will not be engaged in the
27-46 unauthorized business of banking, and each state bank will not be
27-47 engaged in a business other than banking or a business incidental
27-48 to banking;
27-49 (5) the parties have in all respects complied with the
27-50 laws of this state; and
27-51 (6) all conditions imposed by the banking commissioner
27-52 have been satisfied or otherwise resolved.
27-53 (c) If the banking commissioner approves the merger and
27-54 finds that all required filing fees and investigative costs have
27-55 been paid, the banking commissioner shall:
27-56 (1) endorse the face of the original and each copy
27-57 with the date of approval and the word "Approved";
27-58 (2) file the original of the articles of merger in the
27-59 department's records; and
27-60 (3) deliver a certified copy of the articles of merger
27-61 to each surviving, new, or acquiring entity.
27-62 (d) An approved merger takes effect on the date of approval,
27-63 unless the merger agreement provides for a different effective
27-64 date.
27-65 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
27-66 participant, or participant-transferee may dissent from the merger
27-67 to the extent and by following the procedure provided by the Texas
27-68 Business Corporation Act or any rules adopted under this Act.
27-69 (Sections 3.304-3.400 reserved for expansion)
27-70 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
28-1 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
28-2 FINANCIAL INSTITUTION. A state bank with the prior written
28-3 approval of the banking commissioner may purchase all or
28-4 substantially all of the assets of another financial institution.
28-5 Except as otherwise expressly provided by another statute, the
28-6 purchase of all or part of the assets of the selling institution
28-7 does not make the purchasing bank responsible for any liability or
28-8 obligation of the selling institution that the purchasing bank does
28-9 not expressly assume. Except as otherwise provided by this Act,
28-10 this subchapter does not govern or prohibit the purchase by a state
28-11 bank of all or part of the assets of a corporation or other entity
28-12 that is not a financial institution.
28-13 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
28-14 purchasing bank may hold the purchase price and any additional
28-15 funds delivered to it by the selling institution in trust for, or
28-16 as a deposit to the credit of, the selling institution and may act
28-17 as agent of the selling institution in disbursing those funds in
28-18 trust or on deposit by paying the depositors and creditors of the
28-19 selling institution. If the purchasing bank acts under written
28-20 contract of agency approved by the banking commissioner that
28-21 specifically names each depositor and creditor and the amount to be
28-22 paid each, and if the agency is limited to the purely ministerial
28-23 act of paying those depositors and creditors the amounts due them
28-24 as determined by the selling institution and reflected in the
28-25 contract of agency and does not involve discretionary duties or
28-26 authority other than the identification of the depositors and
28-27 creditors named, the purchasing bank:
28-28 (1) may rely on the contract of agency and the
28-29 instructions included in it; and
28-30 (2) is not responsible for:
28-31 (A) any error made by the selling institution in
28-32 determining its liabilities, the depositors and creditors to whom
28-33 the liabilities are due, or the amounts due the depositors and
28-34 creditors; or
28-35 (B) any preference that results from the
28-36 payments made under the contract of agency and the instructions
28-37 included in it.
28-38 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
28-39 selling financial institution is at any time after the sale of
28-40 assets voluntarily or involuntarily closed for liquidation by a
28-41 state or federal regulatory agency, the purchasing bank shall pay
28-42 to the receiver of the selling institution the balance of the funds
28-43 held by it in trust or on deposit for the selling institution and
28-44 not yet paid to the depositors and creditors of the selling
28-45 institution. Without further action the purchasing bank is
28-46 discharged of all responsibilities to the selling institution, its
28-47 receiver, or its depositors, creditors, shareholders, participants,
28-48 or participant-transferees.
28-49 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Payment to
28-50 a depositor or creditor of the selling institution of the amount to
28-51 be paid the person under the terms of the contract of agency may be
28-52 made by the purchasing bank by opening an account in the name of
28-53 the depositor or creditor, crediting the account with the amount to
28-54 be paid the depositor or creditor under the terms of the agency
28-55 contract, and mailing or personally delivering a duplicate deposit
28-56 ticket evidencing the credit to the depositor or creditor at the
28-57 person's address shown in the records of the selling institution.
28-58 The relationship between the purchasing bank and the depositor or
28-59 creditor is that of debtor to creditor only to the extent of the
28-60 credit reflected by the deposit ticket.
28-61 Sec. 3.405. SALE OF ASSETS. (a) The board of a state bank,
28-62 with the prior written approval of the banking commissioner, may
28-63 cause a bank to sell all or substantially all of its assets without
28-64 shareholder or participant approval if:
28-65 (1) the banking commissioner finds the interests of
28-66 depositors and creditors are jeopardized because of insolvency or
28-67 imminent insolvency and that the sale is in their best interest;
28-68 and
28-69 (2) the Federal Deposit Insurance Corporation or its
28-70 successor approves the transaction and agrees to provide assistance
29-1 to the prospective buyer under 12 U.S.C. Section 1823(c) or a
29-2 comparable law unless the deposits of the bank are not insured.
29-3 (b) A sale under this section must include an assumption and
29-4 promise by the buyer to pay or otherwise discharge:
29-5 (1) all of the bank's liabilities to depositors;
29-6 (2) all of the bank's liabilities for salaries of the
29-7 bank's employees incurred before the date of the sale;
29-8 (3) obligations incurred by the banking commissioner
29-9 arising out of the supervision or sale of the bank; and
29-10 (4) fees and assessments due the department.
29-11 (c) This section does not affect the banking commissioner's
29-12 right to take action under another law. The sale by a state bank
29-13 of all or substantially all of its assets with shareholder or
29-14 participant approval is considered a voluntary dissolution and
29-15 liquidation and is governed by Subchapter B, Chapter 7, of this
29-16 Act.
29-17 (Sections 3.406-3.500 reserved for expansion)
29-18 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
29-19 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
29-20 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
29-21 BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS ASSOCIATION.
29-22 (a) A state bank may act as necessary under the laws of the United
29-23 States or this state to merge, reorganize, or convert into a
29-24 national bank, state or federal savings bank, or state or federal
29-25 savings association.
29-26 (b) The merger, reorganization, or conversion by the state
29-27 bank must be made and approval of its board, shareholders, or
29-28 participants must be obtained in accordance with the Texas Business
29-29 Corporation Act as if the state bank were a domestic corporation
29-30 and all other parties to the transaction, if any, were foreign
29-31 corporations and other entities, except as may be otherwise
29-32 provided by rules. For purposes of this subsection, a conversion
29-33 is considered a merger into the successor form of financial
29-34 institution.
29-35 (c) The state bank does not cease to be a state bank subject
29-36 to the supervision of the banking commissioner unless:
29-37 (1) the banking commissioner has been given written
29-38 notice of the intention to merge, reorganize, or convert before the
29-39 31st day preceding the date of the proposed transaction;
29-40 (2) the bank has published notice of the transaction,
29-41 in the form and frequency specified by the banking commissioner, in
29-42 a newspaper of general circulation published in the county of its
29-43 home office or, if such a newspaper is not published in the county,
29-44 in an adjacent county and in other locations that the banking
29-45 commissioner considers appropriate;
29-46 (3) the bank has filed with the banking commissioner:
29-47 (A) a copy of the application filed with the
29-48 successor regulatory authority, including a copy of each contract
29-49 evidencing or implementing the merger, reorganization, or
29-50 conversion, or other documents sufficient to show compliance with
29-51 applicable law;
29-52 (B) a certified copy of all minutes of board
29-53 meetings and shareholder or participant meetings at which action
29-54 was taken regarding the merger, reorganization, or conversion; and
29-55 (C) a publisher's certificate showing
29-56 publication of the required notice;
29-57 (4) the banking commissioner determines that:
29-58 (A) all deposit and other liabilities of the
29-59 state bank are fully discharged, assumed, or otherwise retained by
29-60 the successor form of financial institution;
29-61 (B) any conditions imposed by the banking
29-62 commissioner for the protection of depositors and creditors have
29-63 been met or otherwise resolved; and
29-64 (C) any required filing fees have been paid; and
29-65 (5) the bank has received a certificate of authority
29-66 to do business as a national bank, state or federal savings bank,
29-67 or state or federal savings association.
29-68 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
29-69 BANK. (a) A financial institution may apply to the banking
29-70 commissioner for conversion into a state bank on a form prescribed
30-1 by the banking commissioner accompanied by any required fee, if the
30-2 institution follows the procedures prescribed by the laws of the
30-3 United States or this state governing the exit of the institution
30-4 for the purpose of conversion into a state bank from the regulatory
30-5 system applicable before the conversion. A banking association or
30-6 limited banking association may convert its organizational form
30-7 under this section.
30-8 (b) An institution applying to convert into a state bank may
30-9 receive a certificate of authority to do business as a state bank
30-10 if the banking commissioner finds that:
30-11 (1) the institution is not engaging in a pattern or
30-12 practice of unsafe and unsound banking practices;
30-13 (2) the institution has adequate capitalization for a
30-14 state bank to engage in business at the same locations as the
30-15 institution is engaged in business before the conversion;
30-16 (3) the institution can be expected to operate
30-17 profitably after the conversion;
30-18 (4) the officers, directors, managers, and managing
30-19 participants of the institution as a group have sufficient banking
30-20 experience, ability, standing, competence, trustworthiness, and
30-21 integrity to justify a belief that the institution will operate in
30-22 compliance with law; and
30-23 (5) each principal shareholder or participant has
30-24 sufficient experience, ability, standing, competence,
30-25 trustworthiness, and integrity to justify a belief that the
30-26 institution will be free from improper or unlawful influence or
30-27 interference with respect to the institution's operation in
30-28 compliance with law.
30-29 (c) The banking commissioner may:
30-30 (1) request additional or supplemental information
30-31 considered necessary to an informed decision under this section;
30-32 (2) perform an examination of the converting
30-33 institution at the expense of the converting institution; and
30-34 (3) require that examination fees be paid before a
30-35 certificate of authority is issued.
30-36 (d) In connection with the application, the converting
30-37 institution must submit a statement of the law governing the exit
30-38 of the institution from the regulatory system applicable before the
30-39 conversion and the terms of the transition into a state bank. The
30-40 financial institution must also demonstrate that all applicable law
30-41 has been fully satisfied.
30-42 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
30-43 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
30-44 SUBCHAPTER A. TRANSFER OF OWNERSHIP
30-45 INTERESTS IN STATE BANK
30-46 Sec. 4.001. ACQUISITION OF CONTROL ............................ 78
30-47 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL ...... 79
30-48 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL .... 80
30-49 Sec. 4.004. APPEAL FROM ADVERSE DECISION ...................... 82
30-50 Sec. 4.005. EXEMPTIONS ........................................ 83
30-51 Sec. 4.006. OBJECTION TO OTHER TRANSFER ....................... 84
30-52 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES ............. 84
30-53 (Sections 4.008-4.100 reserved for expansion)
30-54 SUBCHAPTER B. BOARD AND OFFICERS
30-55 Sec. 4.101. VOTING SECURITIES HELD BY BANK .................... 84
30-56 Sec. 4.102. BYLAWS ............................................ 85
30-57 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
30-58 PARTICIPANTS .................................... 85
30-59 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS ................... 88
30-60 Sec. 4.105. OFFICERS .......................................... 88
30-61 Sec. 4.106. CERTAIN CRIMINAL OFFENSES ......................... 89
30-62 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES ....... 90
30-63 (Sections 4.108-4.200 reserved for expansion)
30-64 SUBCHAPTER C. SPECIAL PROVISIONS
30-65 FOR LIMITED BANKING ASSOCIATIONS
30-66 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY ................ 90
30-67 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS ............ 91
30-68 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS ................. 92
30-69 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION ......... 92
30-70 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
31-1 CONTRIBUTION TO CAPITAL ......................... 93
31-2 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
31-3 TRANSFERABILITY OF INTEREST ..................... 94
31-4 Sec. 4.207. DISSOLUTION ....................................... 94
31-5 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES .................. 96
31-6 Sec. 4.209. DISTRIBUTIONS ..................................... 96
31-7 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
31-8 ASSOCIATIONS .................................... 96
31-9 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
31-10 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
31-11 SUBCHAPTER A. TRANSFER OF OWNERSHIP
31-12 INTERESTS IN STATE BANK
31-13 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
31-14 expressly otherwise permitted by this Act, a person may not without
31-15 the prior written approval of the banking commissioner directly or
31-16 indirectly acquire a legal or beneficial interest in voting
31-17 securities of a state bank or a corporation or other entity owning
31-18 voting securities of a state bank if, after the acquisition, the
31-19 person would control the state bank. For purposes of this
31-20 subchapter and except as otherwise provided by rules adopted under
31-21 this Act, the principal shareholder or principal participant of a
31-22 state bank that directly or indirectly owns or has the power to
31-23 vote a greater percentage of voting securities of the bank than any
31-24 other shareholder or participant is considered to control the state
31-25 bank.
31-26 (b) This subchapter does not prohibit a person from
31-27 negotiating to acquire, but not acquiring, control of a state bank
31-28 or a person that controls a state bank.
31-29 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
31-30 (a) An application for approval to acquire control of a state bank
31-31 or a person that controls a state bank must be filed under oath by
31-32 the proposed transferee on a form prescribed by the banking
31-33 commissioner and accompanied by any filing fee required by statute
31-34 or rule. The application must contain all information required by
31-35 rules adopted under this Act or that the banking commissioner
31-36 requires in a particular application as necessary to an informed
31-37 decision to approve or reject the proposed acquisition.
31-38 (b) If a person or proposed transferee proposing to acquire
31-39 voting securities subject to this section includes any group of
31-40 individuals or entities acting in concert, the information required
31-41 by the banking commissioner may be required of each member of the
31-42 group.
31-43 (c) Information obtained by the banking commissioner under
31-44 this section is confidential and may not be disclosed by the
31-45 banking commissioner or any employee of the department except as
31-46 provided by Subchapter B, Chapter 2, of this Act.
31-47 (d) The applicants shall publish notice of the application,
31-48 its date of filing, and the identity of each applicant, in the form
31-49 specified by the banking commissioner, in a newspaper of general
31-50 circulation in the county where the bank's home office is located,
31-51 promptly after the applicants are notified by the banking
31-52 commissioner that the application is complete and accepted for
31-53 filing. Publication of notice of an application filed in
31-54 contemplation of a public tender offer subject to the requirements
31-55 of 15 U.S.C. Section 78n(d)(1) may be deferred for not more than 34
31-56 days after the date the application is filed if:
31-57 (1) the applicant requests confidential treatment and
31-58 represents that a public announcement of the tender offer and the
31-59 filing of appropriate forms with the Securities and Exchange
31-60 Commission or the appropriate federal banking agency, as
31-61 applicable, will occur within the period of deferral; and
31-62 (2) the banking commissioner determines that the
31-63 public interest will not be harmed by the requested confidential
31-64 treatment.
31-65 (e) The banking commissioner may waive the requirement that
31-66 a notice be published or permit delayed publication on a
31-67 determination that waiver or delay is in the public interest. If
31-68 publication of notice is waived under this subsection, the
31-69 information that would be contained in a published notice becomes
31-70 public information under Chapter 552, Government Code, on the 35th
32-1 day after the date the application is filed.
32-2 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
32-3 (a) Not later than the 60th day after the date the notice is
32-4 published, the banking commissioner shall approve the application
32-5 or set the application for hearing. If the banking commissioner
32-6 sets a hearing, the department shall participate as the opposing
32-7 party and the banking commissioner shall conduct a hearing and one
32-8 or more prehearing conferences and opportunities for discovery as
32-9 the banking commissioner considers advisable and consistent with
32-10 governing statutes and rules. A hearing held under this section is
32-11 confidential and closed to the public.
32-12 (b) Based on the record, the banking commissioner may issue
32-13 an order denying an application if:
32-14 (1) the acquisition would substantially lessen
32-15 competition, be in restraint of trade, result in a monopoly, or be
32-16 in furtherance of a combination or conspiracy to monopolize or
32-17 attempt to monopolize the banking industry in any part of this
32-18 state, unless:
32-19 (A) the anticompetitive effects of the proposed
32-20 acquisition are clearly outweighed in the public interest by the
32-21 probable effect of acquisition in meeting the convenience and needs
32-22 of the community to be served; and
32-23 (B) the proposed acquisition is not in violation
32-24 of law of this state or the United States;
32-25 (2) the financial condition of the proposed
32-26 transferee, or any member of a group comprising the proposed
32-27 transferee, might jeopardize the financial stability of the bank
32-28 being acquired;
32-29 (3) plans or proposals to operate, liquidate, or sell
32-30 the bank or its assets are not in the best interests of the bank;
32-31 (4) the experience, ability, standing, competence,
32-32 trustworthiness, and integrity of the proposed transferee, or any
32-33 member of a group comprising the proposed transferee, are
32-34 insufficient to justify a belief that the bank will be free from
32-35 improper or unlawful influence or interference with respect to the
32-36 bank's operation in compliance with law;
32-37 (5) the bank will not be solvent, have adequate
32-38 capitalization, or be in compliance with the laws of this state
32-39 after the acquisition;
32-40 (6) the proposed transferee has failed to furnish all
32-41 information pertinent to the application reasonably required by the
32-42 banking commissioner; or
32-43 (7) the proposed transferee is not acting in good
32-44 faith.
32-45 (c) If an application filed under this section is approved
32-46 by the banking commissioner, the transaction may be consummated.
32-47 Any written commitment from the proposed transferee offered to and
32-48 accepted by the banking commissioner as a condition that the
32-49 application will be approved is enforceable against the bank and
32-50 the transferee and is considered for all purposes an agreement
32-51 under this Act.
32-52 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
32-53 has been held, the banking commissioner has entered an order
32-54 denying the application, and the order has become final, the
32-55 proposed transferee may appeal the final order by filing a petition
32-56 for judicial review under the substantial evidence rule in the
32-57 District Court of Travis County as provided by Chapter 2001,
32-58 Government Code.
32-59 (b) The filing of an appeal under this section does not stay
32-60 the order of the banking commissioner.
32-61 Sec. 4.005. EXEMPTIONS. The following acquisitions are
32-62 exempt from Section 4.001 of this Act:
32-63 (1) the acquisition of securities in connection with
32-64 the exercise of a security interest or otherwise in full or partial
32-65 satisfaction of a debt previously contracted for in good faith if
32-66 the acquiring person files written notice of acquisition with the
32-67 banking commissioner before the person votes the securities
32-68 acquired;
32-69 (2) the acquisition of voting securities in any class
32-70 or series by a controlling person who has previously complied with
33-1 and received approval under this subchapter or who was identified
33-2 as a controlling person in a prior application filed with and
33-3 approved by the banking commissioner;
33-4 (3) an acquisition or transfer by operation of law,
33-5 will, or intestate succession if the acquiring person files written
33-6 notice of acquisition with the banking commissioner before the
33-7 person votes the securities acquired;
33-8 (4) a transaction subject to Subchapter D, Chapter 8,
33-9 of this Act; or
33-10 (5) a transaction exempted by the banking commissioner
33-11 or by rules adopted under this Act because the transaction is not
33-12 within the purposes of this subchapter or the regulation of which
33-13 is not necessary or appropriate to achieve the objectives of this
33-14 subchapter.
33-15 Sec. 4.006. OBJECTION TO OTHER TRANSFER. This subchapter
33-16 may not be construed to prevent the banking commissioner from
33-17 investigating, commenting on, or seeking to enjoin or set aside a
33-18 transfer of voting securities that evidence a direct or indirect
33-19 interest in a state bank, regardless of whether the transfer is
33-20 included within this subchapter, if the banking commissioner
33-21 considers the transfer to be against the public interest.
33-22 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
33-23 the banking commissioner believes that a person has committed or is
33-24 about to commit a violation of this subchapter or a rule or order
33-25 of the banking commissioner pertaining to this subchapter, the
33-26 attorney general on behalf of the banking commissioner may apply to
33-27 the District Court of Travis County for an order enjoining the
33-28 violation and for other equitable relief the nature of the case
33-29 requires.
33-30 (b) A person who knowingly fails or refuses to file the
33-31 application required by Section 4.002 of this Act commits an
33-32 offense. An offense under this subsection is a Class A
33-33 misdemeanor.
33-34 (Sections 4.008-4.100 reserved for expansion)
33-35 SUBCHAPTER B. BOARD AND OFFICERS
33-36 Sec. 4.101. VOTING SECURITIES HELD BY BANK. (a) Voting
33-37 securities of a state bank held by the state bank in a fiduciary
33-38 capacity under a will or trust, whether registered in its own name
33-39 or in the name of its nominee, may not be voted in the election of
33-40 directors or managers or on a matter affecting the compensation of
33-41 directors, managers, officers, or employees of the bank in that
33-42 capacity, unless:
33-43 (1) under the terms of the will or trust, the manner
33-44 in which the voting securities are to be voted may be determined by
33-45 a donor or beneficiary of the will or trust and the donor or
33-46 beneficiary actually makes the determination in the matter at
33-47 issue;
33-48 (2) the terms of the will or trust expressly direct
33-49 the manner in which the securities must be voted to the extent that
33-50 no discretion is vested in the bank as fiduciary; or
33-51 (3) the securities are voted solely by a cofiduciary
33-52 that is not an affiliate of the bank, as if the cofiduciary were
33-53 the sole fiduciary.
33-54 (b) Voting securities of a state bank that cannot be voted
33-55 under this section are considered to be authorized but unissued for
33-56 purposes of determining the procedures for and results of the
33-57 affected vote.
33-58 Sec. 4.102. BYLAWS. (a) Each state bank shall adopt bylaws
33-59 and may amend its bylaws from time to time for the purposes and in
33-60 accordance with the procedures set forth in the Texas Business
33-61 Corporation Act.
33-62 (b) A limited banking association in which management is
33-63 retained by the participants is not required to adopt bylaws if
33-64 provisions required by law to be contained in the bylaws are
33-65 contained in the articles of association or the participation
33-66 agreement.
33-67 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
33-68 PARTICIPANTS. (a) The board of a state bank must consist of not
33-69 fewer than five or more than 25 directors, managers, or managing
33-70 participants, the majority of whom must be residents of this state.
34-1 Except for a limited banking association in which management has
34-2 been retained by its participants, the principal executive officer
34-3 of the bank is a member of the board. The principal executive
34-4 officer acting in the capacity of board member is the board's
34-5 presiding officer unless the board elects a different presiding
34-6 officer to perform the duties as designated by the board.
34-7 (b) Unless the banking commissioner consents otherwise in
34-8 writing, a person may not serve as director, manager, or managing
34-9 participant of a state bank if:
34-10 (1) the bank incurs an unreimbursed loss attributable
34-11 to a charged-off obligation of or holds a judgment against the
34-12 person or an entity that was controlled by the person at the time
34-13 of funding and at the time of default on the loan that gave rise to
34-14 the judgment or charged-off obligation; or
34-15 (2) the person has been convicted of a felony.
34-16 (c) If a state bank other than a limited banking association
34-17 operated by managing participants does not elect directors or
34-18 managers before the 61st day after the date of its regular annual
34-19 meeting, the banking commissioner may appoint a conservator under
34-20 Chapter 6 of this Act to operate the bank and elect directors or
34-21 managers, as appropriate. If the conservator is unable to locate
34-22 or elect persons willing and able to serve as directors or
34-23 managers, the banking commissioner may close the bank for
34-24 liquidation.
34-25 (d) A vacancy on the board that reduces the number of
34-26 directors, managers, or managing participants to fewer than five
34-27 must be filled not later than the 30th day after the date the
34-28 vacancy occurs. A limited banking association with fewer than five
34-29 managing participants must add one or more new participants or
34-30 elect a board of managers of not fewer than five persons to resolve
34-31 the vacancy. After 30 days after the date the vacancy occurs, the
34-32 banking commissioner may appoint a conservator under Chapter 6 of
34-33 this Act to operate the bank and elect a board of not fewer than
34-34 five persons to resolve the vacancy. If the conservator is unable
34-35 to locate or elect five persons willing and able to serve as
34-36 directors or managers, the banking commissioner may close the bank
34-37 for liquidation.
34-38 (e) Before each term to which a person is elected to serve
34-39 as a director or manager of a state bank, or annually for a person
34-40 who is a managing participant, the person shall submit an affidavit
34-41 for filing in the minutes of the bank stating that the person, to
34-42 the extent applicable:
34-43 (1) accepts the position and is not disqualified from
34-44 serving in the position;
34-45 (2) will not violate or knowingly permit an officer,
34-46 director, manager, managing participant, or employee of the bank to
34-47 violate any law applicable to the conduct of business of the bank;
34-48 and
34-49 (3) will diligently perform the duties of the
34-50 position.
34-51 (f) An advisory director or manager is not considered a
34-52 director if the advisory director or manager:
34-53 (1) is not elected by the shareholders or participants
34-54 of the bank;
34-55 (2) does not vote on matters before the board or a
34-56 committee of the board and is not counted for purposes of
34-57 determining a quorum of the board or committee; and
34-58 (3) provides solely general policy advice to the
34-59 board.
34-60 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) The board
34-61 of a state bank shall hold at least one regular meeting each month.
34-62 At each regular meeting the board shall review and approve the
34-63 minutes of the prior meeting and review the operations, activities,
34-64 and financial condition of the bank. The board may designate
34-65 committees from among its members to perform these duties and
34-66 approve or disapprove the committees' reports at each regular
34-67 meeting. All actions of the board must be recorded in its minutes.
34-68 (b) Periodically the board may vote to designate and record
34-69 the amount of certified surplus in its minutes. Except to absorb
34-70 losses in excess of undivided profits and uncertified surplus,
35-1 certified surplus may not be reduced without the prior written
35-2 approval of the banking commissioner.
35-3 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
35-4 the officers of the bank, who serve at the pleasure of the board.
35-5 The bank must have a principal executive officer primarily
35-6 responsible for the execution of board policies and operation of
35-7 the bank and an officer responsible for the maintenance and storage
35-8 of all corporate books and records of the bank and for required
35-9 attestation of signatures. These positions may not be held by the
35-10 same person. The board may appoint other officers of the bank as
35-11 the board considers necessary.
35-12 (b) Unless expressly authorized by a resolution of the board
35-13 recorded in its minutes, an officer or employee may not create or
35-14 dispose of a bank asset or create or incur a liability on behalf of
35-15 the bank.
35-16 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
35-17 director, manager, managing participant, employee, shareholder, or
35-18 participant of a state bank commits an offense if the person
35-19 knowingly:
35-20 (1) conceals information or a fact or removes,
35-21 destroys, or conceals a book or record of the bank for the purpose
35-22 of concealing information or a fact from the banking commissioner
35-23 or an agent of the banking commissioner; or
35-24 (2) removes, destroys, or conceals any book or record
35-25 of the bank that is material to a pending or anticipated legal or
35-26 administrative proceeding.
35-27 (b) An officer, director, manager, managing participant, or
35-28 employee of a state bank commits an offense if the person:
35-29 (1) knowingly makes a false entry in the books or
35-30 records or in any report or statement of the bank; or
35-31 (2) violates or knowingly participates in or permits
35-32 another of the bank's officers, directors, managers, managing
35-33 participants, or employees to violate the prohibition on lending
35-34 trust funds under Section 113.052, Property Code.
35-35 (c) An offense under this section is a felony of the third
35-36 degree.
35-37 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
35-38 (a) Without the prior approval of a disinterested majority of the
35-39 board recorded in the minutes, or if a disinterested majority
35-40 cannot be obtained the prior written approval of the banking
35-41 commissioner, a state bank may not directly or indirectly:
35-42 (1) sell or lease an asset of the bank to an officer,
35-43 director, manager, managing participant, or principal shareholder
35-44 or participant of the bank or an affiliate of the bank; or
35-45 (2) purchase or lease an asset in which an officer,
35-46 director, manager, managing participant, or principal shareholder
35-47 or participant of the bank or an affiliate of the bank has an
35-48 interest.
35-49 (b) Notwithstanding Subsection (a) of this section, a lease
35-50 transaction described in Subsection (a)(2) of this section
35-51 involving real property may not be consummated, renewed, or
35-52 extended without the prior written approval of the banking
35-53 commissioner. For purposes of this subsection only, an affiliate
35-54 of the bank does not include a subsidiary of the bank.
35-55 (c) An officer, director, manager, or managing participant
35-56 of the bank who knowingly participates in or permits a violation of
35-57 this section commits an offense. An offense under this subsection
35-58 is a felony of the third degree.
35-59 (Sections 4.108-4.200 reserved for expansion)
35-60 SUBCHAPTER C. SPECIAL PROVISIONS
35-61 FOR LIMITED BANKING ASSOCIATIONS
35-62 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
35-63 limited banking association shall file with the banking
35-64 commissioner a copy of any participation agreement by which a
35-65 participant of the limited banking association agrees to become a
35-66 full liability participant and the name and address of each full
35-67 liability participant. The filed copy is a public record.
35-68 (b) The banking commissioner may require a complete copy of
35-69 the participation agreement to be filed with the department,
35-70 regardless of whether the state bank has a full liability
36-1 participant, except that the provisions of the participation
36-2 agreement other than those by which a participant of the limited
36-3 banking association agrees to become a full liability participant
36-4 are confidential and subject to release only as provided by
36-5 Subchapter B, Chapter 2, of this Act.
36-6 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
36-7 (a) Except as provided by Subsection (b), the participants,
36-8 participant-transferees, and managers of a limited banking
36-9 association may not be held liable for a debt, obligation, or
36-10 liability of the limited banking association, including a debt,
36-11 obligation, or liability under a judgment, decree, or order of
36-12 court. A participant, other than a full liability participant, or
36-13 a manager of a limited banking association is not a proper party to
36-14 proceedings by or against a limited banking association, unless the
36-15 object of the proceeding is to enforce a participant's or manager's
36-16 right against or liability to a limited banking association.
36-17 (b) A full liability participant of a limited banking
36-18 association is liable under a judgment, decree, or order of court
36-19 for a debt, obligation, or liability of the limited banking
36-20 association that accrued during the participation of the full
36-21 liability participant in the limited banking association and before
36-22 the full liability participant or a successor in interest files a
36-23 notice of withdrawal as a full liability participant from the
36-24 limited banking association with the banking commissioner. The
36-25 filed notice of withdrawal is a public record.
36-26 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
36-27 provided by this section or the articles of association of the
36-28 limited banking association, debts, liabilities, and other
36-29 obligations may be contracted for or incurred on behalf of a
36-30 limited banking association by:
36-31 (1) a majority of the managers, if management of the
36-32 limited banking association has been vested in a board of managers;
36-33 (2) a majority of the managing participants; or
36-34 (3) an officer or other agent vested with actual or
36-35 apparent authority to contract for or incur the debt, liability, or
36-36 other obligation.
36-37 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
36-38 Management of a limited banking association is vested in the
36-39 participants in proportion to each participant's contribution to
36-40 capital, as adjusted periodically to properly reflect any
36-41 additional contribution. The articles of association may provide
36-42 that management of a limited banking association is vested in a
36-43 board of managers to be elected annually by the participants as
36-44 prescribed by the bylaws.
36-45 (b) Participants of a limited banking association may not
36-46 retain management and must elect a board of managers if:
36-47 (1) any participant is disqualified from serving as a
36-48 managing participant under Section 4.103 of this Act;
36-49 (2) the limited banking association has fewer than
36-50 five or more than 25 participants; or
36-51 (3) any participant has been removed by the banking
36-52 commissioner under Subchapter A, Chapter 6, of this Act.
36-53 (c) The articles of association, bylaws, and participation
36-54 agreement of a limited banking association may use the terms
36-55 "director" and "board" instead of "manager" and "board of
36-56 managers," respectively.
36-57 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
36-58 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
36-59 limited banking association any part of the participant's
36-60 contribution to capital until:
36-61 (1) all liabilities of the bank, except liabilities to
36-62 participants on account of contribution to capital, have been paid
36-63 or, if after the withdrawal or reduction, sufficient property of
36-64 the bank will remain to pay all liabilities of the bank, except
36-65 liabilities to participants on account of contribution to capital;
36-66 (2) all participants consent, unless the return of the
36-67 contribution to capital may be demanded as provided by this
36-68 chapter; or
36-69 (3) the articles of association are canceled or
36-70 amended to set out the withdrawal or reduction.
37-1 (b) A participant may demand the return of the participant's
37-2 contribution to capital on the dissolution of the association and
37-3 the failure by the full liability participants to exercise the
37-4 right for the business of the limited banking association to be
37-5 carried on by the remaining participants as provided by Section
37-6 4.207 of this Act.
37-7 (c) Unless allowed by the articles of association or by the
37-8 unanimous consent of all participants of the limited banking
37-9 association, a participant may demand the return of the
37-10 participant's contribution to capital only in cash.
37-11 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
37-12 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
37-13 participant-transferee in a limited banking association is the
37-14 personal estate of the participant or the participant-transferee
37-15 and may be transferred as provided by the bylaws or the
37-16 participation agreement. A transferee of a participant's interest
37-17 has the status of a participant-transferee and does not by the
37-18 transfer become a participant or obtain a right to participate in
37-19 the management of the limited banking association. A
37-20 participant-transferee is entitled to receive only a share of
37-21 profits, return of contribution, or other distributive benefit in
37-22 respect to the interest transferred to which the participant who
37-23 transferred the interest would have been entitled. A
37-24 participant-transferee may become a participant only as provided by
37-25 the bylaws or the participation agreement.
37-26 (b) A limited banking association may add additional
37-27 participants in the same manner as participant-transferees after
37-28 payment in full of the capital contribution to the limited banking
37-29 association payable for the issuance of additional participation
37-30 interests.
37-31 Sec. 4.207. DISSOLUTION. (a) A limited banking association
37-32 organized under this chapter is dissolved on:
37-33 (1) the expiration of the period fixed for the
37-34 duration of the limited banking association;
37-35 (2) a vote to dissolve or the execution of a written
37-36 consent to dissolve by all full liability participants, if any, and
37-37 a sufficient number of other participants that combined with all
37-38 full liability participants hold at least two-thirds of the
37-39 participation shares in each class in the association, or a greater
37-40 fraction as provided by the articles of association;
37-41 (3) except as provided by the articles of association,
37-42 the death, insanity, expulsion, bankruptcy, retirement, or
37-43 resignation of a participant unless a majority in interest of all
37-44 remaining participants elect in writing not later than the 90th day
37-45 after the date of the event to continue the business of the
37-46 association; or
37-47 (4) the occurrence of an event of dissolution
37-48 specified in the articles of association.
37-49 (b) A dissolution under this section is considered to be the
37-50 initiation of a voluntary liquidation under Subchapter B, Chapter
37-51 7, of this Act.
37-52 (c) An event of dissolution described by Subsection (a)(3)
37-53 of this section does not cancel or revoke a contract to which the
37-54 bank is a party, including a trust indenture or agreement or
37-55 voluntary dissolution under Subchapter B, Chapter 7, of this Act,
37-56 until the period for the remaining participants to continue the
37-57 business of the bank has expired without the remaining participants
37-58 having completed the necessary action to continue the business of
37-59 the bank.
37-60 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
37-61 and losses of a limited banking association may be allocated among
37-62 the participants and among classes of participants as provided by
37-63 the participation agreement. Without the prior written approval of
37-64 the banking commissioner, the profits and losses must be allocated
37-65 based on the relative interests of the participants as reflected in
37-66 the articles of association and related documents filed with and
37-67 approved by the banking commissioner.
37-68 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
37-69 Act, distributions of cash or other assets of a limited banking
37-70 association may be made to the participants as provided by the
38-1 participation agreement. Without the prior written approval of the
38-2 banking commissioner, distributions must be made to the
38-3 participants based on the relative interests of the participants as
38-4 reflected in the articles of association and related documents
38-5 filed with and approved by the banking commissioner.
38-6 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
38-7 ASSOCIATIONS. For purposes of the provisions of this Act other
38-8 than this subchapter, as the context requires:
38-9 (1) a manager and the board of managers are considered
38-10 to be a director and the board of directors, respectively;
38-11 (2) if there is not a board of managers, a participant
38-12 is considered to be a director and all of the participants are
38-13 considered to be the board of directors;
38-14 (3) a participant or participant-transferee is
38-15 considered to be a shareholder;
38-16 (4) a participation share is considered to be a share
38-17 of stock; and
38-18 (5) a distribution is considered to be a dividend.
38-19 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
38-20 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
38-21 OF BANK FACILITIES AND OTHER REAL ESTATE
38-22 Sec. 5.001. INVESTMENT IN BANK FACILITIES .................... 98
38-23 Sec. 5.002. OTHER REAL ESTATE ................................ 100
38-24 (Sections 5.003-5.100 reserved for expansion)
38-25 SUBCHAPTER B. INVESTMENTS
38-26 Sec. 5.101. SECURITIES ....................................... 101
38-27 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
38-28 SHARES ......................................... 104
38-29 Sec. 5.103. BANK SUBSIDIARIES ................................ 104
38-30 Sec. 5.104. MUTUAL FUNDS ..................................... 106
38-31 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS .................. 107
38-32 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE ................... 110
38-33 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED .................. 111
38-34 (Sections 5.108-5.200 reserved for expansion)
38-35 SUBCHAPTER C. LOANS
38-36 Sec. 5.201. LENDING LIMITS ................................... 111
38-37 Sec. 5.202. LOAN EXPENSES AND FEES ........................... 115
38-38 Sec. 5.203. LEASE FINANCING TRANSACTIONS ..................... 116
38-39 (Sections 5.204-5.300 reserved for expansion)
38-40 SUBCHAPTER D. DEPOSITS
38-41 Sec. 5.301. NATURE OF DEPOSIT CONTRACT ....................... 117
38-42 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT ................... 117
38-43 Sec. 5.303. FEES; DISCLOSURES ................................ 119
38-44 Sec. 5.304. SECURING DEPOSITS ................................ 120
38-45 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS ....................... 120
38-46 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION ........ 121
38-47 Sec. 5.307. RIGHT OF SET-OFF ................................. 123
38-48 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
38-49 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
38-50 OF BANK FACILITIES AND OTHER REAL ESTATE
38-51 Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) In this
38-52 subchapter, "bank facility" means real estate, including an
38-53 improvement, owned, or leased to the extent the lease or the
38-54 leasehold improvements are capitalized, by a state bank for the
38-55 purpose of:
38-56 (1) providing space for bank employees to perform
38-57 their duties and space for parking by bank employees and customers;
38-58 (2) conducting bank business, including meeting the
38-59 reasonable needs and convenience of the public and the bank's
38-60 customers, computer operations, document and other item processing,
38-61 maintenance and storage of foreclosed collateral pending disposal,
38-62 and record retention and storage;
38-63 (3) holding, improving, and occupying as an incident
38-64 to future expansion of the bank's facilities; or
38-65 (4) conducting another activity authorized by rules
38-66 adopted under this Act.
38-67 (b) Without the prior written approval of the banking
38-68 commissioner, a state bank may not directly or indirectly invest an
38-69 amount in excess of its capital and certified surplus in bank
38-70 facilities, furniture, fixtures, and equipment. Except as
39-1 otherwise provided by rules adopted under this Act, in computing
39-2 this limitation a state bank:
39-3 (1) shall include:
39-4 (A) its direct investment in bank facilities;
39-5 (B) any investment in equity or investment
39-6 securities of a company holding title to a facility used by the
39-7 bank for the purposes specified by Subsection (a) of this section;
39-8 (C) any loan made by the bank to or on the
39-9 security of equity or investment securities issued by a company
39-10 holding title to a facility used by the bank; and
39-11 (D) any indebtedness incurred on bank facilities
39-12 by a company:
39-13 (i) that holds title to the facility;
39-14 (ii) that is an affiliate of the bank; and
39-15 (iii) in which the bank is invested in the
39-16 manner described by Paragraph (B) or (C) of this subdivision; and
39-17 (2) may exclude an amount included under Subdivisions
39-18 (1)(B)-(D) of this subsection to the extent any lease of a facility
39-19 from the company holding title to the facility is capitalized on
39-20 the books of the bank.
39-21 (c) Real estate acquired under Subsection (a)(3) of this
39-22 section and not improved and occupied by the bank ceases to be a
39-23 bank facility on the third anniversary of the date of its
39-24 acquisition, unless the banking commissioner on application grants
39-25 written approval to further delay in the improvement and occupation
39-26 of the property by the bank.
39-27 (d) A bank shall comply with regulatory accounting
39-28 principles in accounting for its investment in and depreciation of
39-29 bank facilities, furniture, fixtures, and equipment.
39-30 Sec. 5.002. OTHER REAL ESTATE. (a) A state bank may not
39-31 acquire real estate except:
39-32 (1) as permitted by Section 5.001 of this Act or as
39-33 otherwise provided by this Act, including rules adopted under this
39-34 Act;
39-35 (2) with the prior written approval of the banking
39-36 commissioner; or
39-37 (3) if necessary to avoid or minimize a loss on a loan
39-38 or investment previously made in good faith.
39-39 (b) With the prior written approval of the banking
39-40 commissioner, a state bank may exchange real estate for other real
39-41 estate or personal property, invest additional funds in or improve
39-42 real estate acquired under this subsection or Subsection (a) of
39-43 this section, or acquire additional real estate to avoid or
39-44 minimize loss on real estate acquired as permitted by Subsection
39-45 (a) of this section.
39-46 (c) A state bank shall dispose of any real estate subject to
39-47 this section not later than:
39-48 (1) the fifth anniversary of the date:
39-49 (A) it was acquired, except as otherwise
39-50 provided by rules adopted under this Act; or
39-51 (B) it ceases to be used as a bank facility; or
39-52 (2) the second anniversary of the date it ceases to be
39-53 a bank facility as provided by Section 5.001(c) of this Act.
39-54 (d) The banking commissioner on application may grant one or
39-55 more extensions of time for disposing of real estate if the banking
39-56 commissioner determines that:
39-57 (1) the bank has made a good faith effort to dispose
39-58 of the real estate; or
39-59 (2) disposal of the real estate would be detrimental
39-60 to the bank.
39-61 (Sections 5.003-5.100 reserved for expansion)
39-62 SUBCHAPTER B. INVESTMENTS
39-63 Sec. 5.101. SECURITIES. (a) A state bank may purchase and
39-64 sell equity and investment securities without recourse, solely on
39-65 the order and for the account of a customer, and may not underwrite
39-66 an issue of securities except as otherwise provided by this Act or
39-67 rules adopted under this Act.
39-68 (b) Except as otherwise provided by this Act or rules
39-69 adopted under this Act, a state bank may not invest its funds in
39-70 equity securities except as necessary to avoid or minimize a loss
40-1 on a loan or investment previously made in good faith.
40-2 (c) A state bank may purchase investment securities for its
40-3 own account under limitations and restrictions prescribed by rules
40-4 adopted under this Act. Except as otherwise provided by this
40-5 section, the total amount of the investment securities of any one
40-6 obligor or maker, held by the bank for its own account, may not
40-7 exceed an amount equal to 15 percent of the bank's capital and
40-8 certified surplus.
40-9 (d) Notwithstanding Subsections (a)-(c) of this section, a
40-10 state bank may, with prudent banking judgment, deal in, underwrite,
40-11 or purchase for its own account:
40-12 (1) bonds and other legally created general
40-13 obligations of a state, an agency or political subdivision of a
40-14 state, the United States, or an agency or instrumentality of the
40-15 United States;
40-16 (2) an investment security that this state, an agency
40-17 or political subdivision of this state, the United States, or an
40-18 agency or instrumentality of the United States has unconditionally
40-19 agreed to purchase, insure, or guarantee;
40-20 (3) securities that are offered and sold under 15
40-21 U.S.C. Section 77d(5);
40-22 (4) mortgage related securities, as defined by 15
40-23 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
40-24 the Riegle Community Development and Regulatory Improvement Act of
40-25 1994, a note or obligation that is secured by a first lien on one
40-26 or more parcels of real estate on which is located one or more
40-27 commercial structures is subject to the limitations of Subsection
40-28 (c) of this section;
40-29 (5) investment securities issued or guaranteed by the
40-30 Federal Home Loan Mortgage Corporation, the Federal National
40-31 Mortgage Association, the Government National Mortgage Association,
40-32 the Federal Agriculture Mortgage Association, or the Federal Farm
40-33 Credit Banks Funding Corporation;
40-34 (6) investment securities issued or guaranteed by the
40-35 North American Development Bank; or
40-36 (7) securities issued by a Federal Home Loan Bank.
40-37 (e) Subsection (a) of this section does not apply to an
40-38 obligation issued by a state or an agency or political subdivision
40-39 of a state for housing, higher education, health care, or public
40-40 welfare purposes if the state bank evaluates the obligation, before
40-41 dealing in, underwriting, or purchasing the obligation, to
40-42 determine whether the obligation is of sufficient investment
40-43 quality and marketability for investment by the bank and whether
40-44 the obligation has been issued for the appropriate purpose by a
40-45 qualifying issuer. If the bank has made a firm commitment to
40-46 underwrite the obligation, the bank is considered to hold the
40-47 obligation for purposes of the limitations of Subsection (c) of
40-48 this section.
40-49 (f) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
40-50 (c) of this section applies to investments in small business
40-51 related securities as defined by 15 U.S.C. Section 78c(a).
40-52 (g) A state bank may not invest more than an amount equal to
40-53 25 percent of its capital and certified surplus in investment grade
40-54 adjustable rate preferred stock and money market (auction rate)
40-55 preferred stock.
40-56 (h) A state bank may deposit funds in a federally insured
40-57 financial institution, a Federal Reserve Bank, or a Federal Home
40-58 Loan Bank without limitation.
40-59 (i) The finance commission may adopt rules to administer and
40-60 carry out this section, including rules to define or further define
40-61 terms used by this section, establish limits, requirements, or
40-62 exemptions other than those specified by this section for
40-63 particular classes or categories of investment securities, or limit
40-64 or expand investment authority for state banks for particular
40-65 classes or categories of investment securities.
40-66 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
40-67 SHARES. (a) Except as otherwise provided by this section, a state
40-68 bank may not acquire a lien by pledge or otherwise on its own
40-69 shares or participation shares or otherwise purchase or acquire
40-70 title to its own shares or participation shares, except as
41-1 necessary to avoid or minimize a loss on a loan or investment
41-2 previously made in good faith.
41-3 (b) With the prior written approval of the banking
41-4 commissioner or as permitted by rules adopted under this Act, a
41-5 state bank may acquire title to its own shares or participation
41-6 shares and hold those shares or participation shares as treasury
41-7 stock. Treasury stock acquired under this subsection is not
41-8 considered an equity investment.
41-9 (c) If a state bank acquires a lien on or title to its own
41-10 shares or participation shares under this section, the lien may not
41-11 by its original terms extend for more than two years. Except with
41-12 the prior written approval of the banking commissioner, the bank
41-13 may not hold title to its own shares or participation shares for
41-14 more than one year.
41-15 (d) For purposes of this section and except as otherwise
41-16 provided by rules adopted under this Act, equity securities in a
41-17 bank holding company that are not publicly held and traded on a
41-18 national securities exchange or automated quotation system are
41-19 considered to be shares or participation shares of each of the bank
41-20 holding company's subsidiary state banks.
41-21 Sec. 5.103. BANK SUBSIDIARIES. (a) Except as otherwise
41-22 provided by this Act or rules adopted under this Act, a state bank
41-23 may conduct any activity or investment through an operating
41-24 subsidiary that a state bank or a bank holding company is
41-25 authorized to conduct under the laws of this state, if the
41-26 operating subsidiary is adequately empowered and appropriately
41-27 licensed to conduct its business.
41-28 (b) Except for investment in a subsidiary engaging solely in
41-29 activities that may be engaged in directly by the bank, a state
41-30 bank without the prior written approval of the banking commissioner
41-31 may not invest more than an amount equal to 10 percent of its
41-32 capital and certified surplus in a single subsidiary and may not
41-33 invest more than the amount of its equity capital in all
41-34 subsidiaries. The amount of a state bank's investment in a
41-35 subsidiary is the total amount of the bank's investment in equity
41-36 or investment securities issued by its subsidiary and any loans and
41-37 extensions of credit from the bank to its subsidiary.
41-38 (c) A state bank may establish or acquire a subsidiary as
41-39 provided by 12 CFR Section 337.4 to conduct securities activities
41-40 that the bank is prohibited from conducting directly.
41-41 (d) Except as otherwise provided by a rule adopted under
41-42 this Act, a state bank may make a minority investment indirectly
41-43 through an operating subsidiary in equity securities of:
41-44 (1) another bank;
41-45 (2) a company that engages solely in an activity that
41-46 is permissible for a bank service corporation or a bank holding
41-47 company subsidiary; or
41-48 (3) a company that engages solely in activities as
41-49 agent or trustee or in a brokerage, custodial, advisory, or
41-50 administrative capacity.
41-51 (e) A state bank that intends to acquire, establish, or
41-52 perform new activities through a subsidiary shall submit a letter
41-53 to the banking commissioner describing in detail the proposed
41-54 activities of the subsidiary.
41-55 (f) The bank may acquire or establish a subsidiary or
41-56 perform new activities in an existing subsidiary beginning on the
41-57 31st day after the date the banking commissioner receives the
41-58 bank's letter, unless the banking commissioner specifies an earlier
41-59 or later date. The banking commissioner may extend the 30-day
41-60 period on a determination that the bank's letter raises issues that
41-61 require additional information or additional time for analysis. If
41-62 the period is extended, the bank may acquire or establish a
41-63 subsidiary, or may perform new activities in an existing
41-64 subsidiary, only on prior written approval of the banking
41-65 commissioner.
41-66 (g) A subsidiary of a state bank is subject to regulation by
41-67 the banking commissioner to the extent provided by this Act or
41-68 rules adopted under this Act. In the absence of limiting rules,
41-69 the banking commissioner may regulate a subsidiary as if it were a
41-70 state bank.
42-1 Sec. 5.104. MUTUAL FUNDS. (a) A state bank may invest for
42-2 its own account in equity securities of an investment company
42-3 registered under the Investment Company Act of 1940 (15 U.S.C.
42-4 Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C.
42-5 Section 77a et seq.) if the portfolio of the investment company
42-6 consists wholly of investments in which the bank could invest
42-7 directly for its own account.
42-8 (b) If the portfolio of an investment company described by
42-9 Subsection (a) of this section consists wholly of investments in
42-10 which the bank could invest directly without limitation under
42-11 Section 5.101(d) of this Act, the bank may invest in the investment
42-12 company without limitation.
42-13 (c) If the portfolio of an investment company described by
42-14 Subsection (a) of this section contains an investment or obligation
42-15 that is subject to the limits of Section 5.101(c) or 5.201(a) of
42-16 this Act, the bank may invest in the investment company not more
42-17 than an amount equal to 15 percent of the bank's capital and
42-18 certified surplus.
42-19 (d) A state bank that invests in an investment company as
42-20 provided by Subsection (c) of this section shall periodically
42-21 determine that its pro rata share of any security in the portfolio
42-22 of the investment company is not in excess of applicable investment
42-23 and lending limits by reason of being combined with the bank's pro
42-24 rata share of that security held by all other investment companies
42-25 in which the bank has invested and with the bank's own direct
42-26 investment and loan holdings.
42-27 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) A state
42-28 bank may purchase for its own account equity securities of any
42-29 class issued by:
42-30 (1) a bank service corporation, except that not more
42-31 than an amount equal to 15 percent of the bank's capital and
42-32 certified surplus may be invested in a single bank service
42-33 corporation and not more than an amount equal to five percent of
42-34 its assets may be invested in all bank service corporations;
42-35 (2) an agricultural credit corporation, but the bank
42-36 may not invest more than an amount equal to 30 percent of the
42-37 bank's capital and certified surplus in the agricultural credit
42-38 corporation unless the bank owns at least 80 percent of the equity
42-39 securities of the agricultural credit corporation;
42-40 (3) a small business investment company if the
42-41 aggregate investment does not exceed an amount equal to 10 percent
42-42 of the bank's capital and certified surplus;
42-43 (4) a banker's bank if the aggregate investment does
42-44 not exceed an amount equal to 15 percent of the bank's capital and
42-45 certified surplus or result in the bank acquiring or retaining
42-46 ownership, control, or power to vote more than five percent of any
42-47 class of voting securities of the banker's bank; and
42-48 (5) a housing corporation if the sum of the amount of
42-49 investment and the amount of loans and commitments for loans to the
42-50 housing corporation does not exceed an amount equal to 10 percent
42-51 of the bank's capital and certified surplus.
42-52 (b) The banking commissioner may authorize investments in
42-53 excess of the limitations of Subsection (a) of this section in
42-54 response to a written application if the banking commissioner
42-55 concludes that:
42-56 (1) the excess investment is not precluded by other
42-57 applicable law; and
42-58 (2) the safety and soundness of the requesting bank
42-59 would not be adversely affected.
42-60 (c) For the purposes of this section:
42-61 (1) "Agricultural credit corporation" means a company
42-62 organized solely for the purpose of making loans to farmers and
42-63 ranchers for agriculture purposes, including the breeding, raising,
42-64 fattening, or marketing of livestock.
42-65 (2) "Banker's bank" means a bank insured by the
42-66 Federal Deposit Insurance Corporation or a bank holding company
42-67 that owns or controls such an insured bank, if:
42-68 (A) all equity securities of the bank or bank
42-69 holding company, other than director's qualifying shares or shares
42-70 issued under an employee compensation plan, are owned by depository
43-1 institutions or depository institution holding companies; and
43-2 (B) the bank or bank holding company and all its
43-3 subsidiaries are engaged exclusively in providing:
43-4 (i) services to or for other depository
43-5 institutions, depository institution holding companies, and the
43-6 directors, managers, managing participants, officers, and employees
43-7 of other depository institutions and depository institution holding
43-8 companies; and
43-9 (ii) correspondent banking services at the
43-10 request of other depository institutions, depository institution
43-11 holding companies, or their subsidiaries.
43-12 (3) "Bank service corporation" has the meaning
43-13 assigned by the Bank Service Corporation Act (12 U.S.C. Section
43-14 1861 et seq.) or a successor to that Act.
43-15 (4) "Housing corporation" means a corporation
43-16 organized under Title IX of the Housing and Urban Development Act
43-17 of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited
43-18 partnership, or joint venture organized under Section 907(a) or (c)
43-19 of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing
43-20 corporation organized pursuant to the laws of this state for the
43-21 purpose of engaging in or financing low- and moderate-income
43-22 housing developments or projects.
43-23 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) A state
43-24 bank may make investments of a predominantly civic, community, or
43-25 public nature designed primarily to promote the public welfare,
43-26 including the welfare of low and moderate income communities or
43-27 families, including investments providing housing, services, or
43-28 jobs. The state bank may make the investments directly or by
43-29 purchasing equity securities in an entity primarily engaged in
43-30 making those investments. The state bank may not make the
43-31 investment if it would expose the bank to unlimited liability. In
43-32 addition, a bank may serve as a community partner and make
43-33 investments in a community partnership, as those terms are defined
43-34 by the Riegle Community Development and Regulatory Improvement Act
43-35 of 1994.
43-36 (b) A bank's aggregate investments under this section,
43-37 including loans and commitments for loans, may not exceed an amount
43-38 equal to 10 percent of the bank's capital and certified surplus.
43-39 The banking commissioner may authorize investments in excess of
43-40 this limitation in response to a written application if the banking
43-41 commissioner concludes that:
43-42 (1) the excess investment is not precluded by other
43-43 applicable law; and
43-44 (2) the safety and soundness of the requesting bank
43-45 would not be adversely affected.
43-46 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Except as
43-47 otherwise provided by this Act or rules adopted under this Act, a
43-48 state bank may not invest its funds in trade or commerce by buying,
43-49 selling, or otherwise dealing in goods or by owning or operating a
43-50 business not part of the business of banking, except as necessary
43-51 to avoid or minimize a loss on a loan or investment previously made
43-52 in good faith.
43-53 (Sections 5.108-5.200 reserved for expansion)
43-54 SUBCHAPTER C. LOANS
43-55 Sec. 5.201. LENDING LIMITS. (a) Without the prior written
43-56 approval of the banking commissioner, the total loans and
43-57 extensions of credit by a state bank to a person outstanding at one
43-58 time may not exceed an amount equal to 25 percent of the bank's
43-59 capital and certified surplus. This limitation does not apply to:
43-60 (1) liability as endorser or guarantor of commercial
43-61 or business paper discounted by or assigned to the bank by its
43-62 owner who has acquired it in the ordinary course of business;
43-63 (2) indebtedness evidenced by bankers' acceptances as
43-64 described by 12 U.S.C. Section 372 and issued by other banks;
43-65 (3) indebtedness secured by a bill of lading,
43-66 warehouse receipt, or similar document transferring or securing
43-67 title to readily marketable goods, except that:
43-68 (A) the goods shall be insured if it is
43-69 customary to insure those goods; and
43-70 (B) the aggregate indebtedness of a person under
44-1 this subdivision may not exceed an amount equal to 50 percent of
44-2 the bank's capital and certified surplus;
44-3 (4) indebtedness evidenced by notes or other paper
44-4 secured by liens on agricultural products in secure and properly
44-5 documented storage in bonded warehouses or elevators if the value
44-6 of the collateral is not less than 125 percent of the amount of the
44-7 indebtedness and the bank's interest in the collateral is
44-8 adequately insured against loss, except that the aggregate
44-9 indebtedness of a person under this subdivision may not exceed an
44-10 amount equal to 50 percent of the bank's capital and certified
44-11 surplus;
44-12 (5) indebtedness of another depository institution
44-13 arising out of loans with settlement periods of less than one week;
44-14 (6) indebtedness arising out of the daily transaction
44-15 of the business of a clearinghouse association in this state;
44-16 (7) liability under an agreement by a third party to
44-17 repurchase from the bank an investment security listed in
44-18 Subsection 5.101(d) of this Act to the extent that the agreed
44-19 repurchase price does not exceed the original purchase price to the
44-20 bank or the market value of the investment security;
44-21 (8) that portion of an indebtedness that this state,
44-22 an agency or political subdivision of this state, the United
44-23 States, or an agency or instrumentality of the United States has
44-24 unconditionally agreed to purchase, insure, or guarantee;
44-25 (9) indebtedness secured by investment securities
44-26 listed in Subsection 5.101(d) of this Act to the extent that the
44-27 market value of the investment securities equals or exceeds the
44-28 indebtedness;
44-29 (10) that portion of an indebtedness that is fully
44-30 secured by a segregated deposit account in the lending bank;
44-31 (11) loans and extensions of credit arising from the
44-32 purchase of negotiable or nonnegotiable installment consumer paper
44-33 that carries a full recourse endorsement or unconditional guarantee
44-34 by the person transferring the paper if the bank's files or the
44-35 knowledge of its officers of the financial condition of each maker
44-36 of the consumer paper is reasonably adequate and if an officer of
44-37 the bank designated for that purpose by the board certifies in
44-38 writing that the bank is relying primarily on the responsibility of
44-39 each maker for payment of the loans or extensions of credit and not
44-40 on a full or partial recourse endorsement or guarantee by the
44-41 transferor;
44-42 (12) that portion of an indebtedness in excess of the
44-43 limitation of Subsection (a) of this section that is fully secured
44-44 by marketable securities or bullion with a market value at least
44-45 equal to the amount of the overage, as determined by reliable and
44-46 continuously available price quotations, except that the exempted
44-47 indebtedness or overage of a person under this subdivision may not
44-48 exceed an amount equal to 15 percent of the bank's capital and
44-49 certified surplus;
44-50 (13) indebtedness of an affiliate of the bank if the
44-51 transaction with the affiliate is subject to the restrictions and
44-52 limitations of 12 U.S.C. Section 371c;
44-53 (14) indebtedness of an operating subsidiary of the
44-54 bank; and
44-55 (15) that portion of the indebtedness of a person
44-56 secured in good faith by a purchase money lien taken by the bank in
44-57 exchange for the sale of real or personal property owned by the
44-58 bank if the sale is in the best interest of the bank.
44-59 (b) The finance commission may adopt rules to administer and
44-60 carry out this section, including rules to:
44-61 (1) define or further define terms used by this
44-62 section;
44-63 (2) establish limits, requirements, or exemptions
44-64 other than those specified by this section for particular classes
44-65 or categories of loans or extensions of credit; and
44-66 (3) establish collective lending and investment
44-67 limits.
44-68 (c) The banking commissioner may determine whether a loan or
44-69 extension of credit putatively made to a person will be attributed
44-70 to another person for purposes of this section.
45-1 (d) An officer, director, manager, managing participant, or
45-2 employee of a state bank who approves or participates in the
45-3 approval of a loan with actual knowledge that the loan violates
45-4 this section is jointly and severally liable to the bank for the
45-5 lesser of the amount by which the loan exceeded applicable lending
45-6 limits or the bank's actual loss, and remains liable for that
45-7 amount until the loan and all prior indebtedness of the borrower to
45-8 the bank have been fully repaid. The bank may initiate a
45-9 proceeding to collect an amount due under this subsection at any
45-10 time before four years after the date the borrower defaults on the
45-11 subject loan or any prior indebtedness. A person that is liable
45-12 for and pays amounts to the bank under this subsection is entitled
45-13 to an assignment of the bank's claim against the borrower to the
45-14 extent of the payments. For purposes of this subsection, an
45-15 officer, director, manager, managing participant, or employee of a
45-16 state bank is presumed to know the amount of the bank's lending
45-17 limit under Subsection (a) of this section and the amount of the
45-18 borrower's aggregate outstanding indebtedness to the bank
45-19 immediately before a new loan or extension of credit to that
45-20 borrower.
45-21 Sec. 5.202. LOAN EXPENSES AND FEES. (a) A bank may require
45-22 a borrower to pay all reasonable expenses and fees incurred in
45-23 connection with the making, closing, disbursing, extending,
45-24 readjusting, or renewing of a loan, regardless of whether those
45-25 expenses or fees are paid to third parties. A fee charged by the
45-26 bank under this section may not exceed the cost the bank reasonably
45-27 expects to incur in connection with the transaction to which the
45-28 fee relates. Payment for these expenses may be collected by the
45-29 bank from the borrower and retained by the bank or paid to a person
45-30 rendering services for which a charge has been made, or the
45-31 payments may be paid directly by the borrower to a third party to
45-32 whom they are payable. This section does not authorize the bank to
45-33 charge its borrower for payment of fees and expenses to an officer,
45-34 director, manager, or managing participant of the bank for services
45-35 rendered in the person's capacity as an officer, director, manager,
45-36 or managing participant.
45-37 (b) A bank may charge a penalty for prepayment or late
45-38 payment. Only one penalty may be charged by the bank on each past
45-39 due payment. Unless otherwise agreed in writing, prepayment of
45-40 principal must be applied on the final installment of the note or
45-41 other obligation until that installment is fully paid, and further
45-42 prepayments must be applied on installments in the inverse order of
45-43 their maturity.
45-44 (c) Fees and expenses charged and collected as provided by
45-45 this section are not considered a part of the interest or
45-46 compensation charged by the bank for the use, forbearance, or
45-47 detention of money.
45-48 (d) To the extent of any conflict between this section and a
45-49 provision of Subtitle 2, Title 79, Revised Statutes (Article
45-50 5069-2.01 et seq., Vernon's Texas Civil Statutes), or Chapter 15,
45-51 Title 79, Revised Statutes (Article 5069-15.01 et seq., Vernon's
45-52 Texas Civil Statutes), the provision of Title 79, Revised Statutes,
45-53 prevails.
45-54 Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) A state bank
45-55 may purchase or construct a public facility and, as holder of legal
45-56 title, lease the facility to a public authority having sufficient
45-57 resources to pay all rentals as they become due. A lease under
45-58 this subsection must provide that legal title to the property
45-59 transfers to the lessee on consummation and expiration of the
45-60 lease.
45-61 (b) Subject to rules adopted under this Act, a state bank
45-62 may become the owner and lessor of tangible personal property for
45-63 lease financing transactions on a net lease basis on the specific
45-64 request and for the use of a customer. Without the written
45-65 approval of the banking commissioner to continue holding property
45-66 acquired for leasing purposes under this subsection, the bank may
45-67 not hold the property more than six months after the date of
45-68 expiration of the original or any extended or renewed lease period
45-69 agreed to by the customer for whom the property was acquired or by
45-70 a subsequent lessee.
46-1 (c) Rental payments received by the bank in a lease
46-2 financing transaction under this section are considered to be rent
46-3 and not interest or compensation for the use, forbearance, or
46-4 detention of money. However, a lease financing transaction is
46-5 considered to be a loan or extension of credit for purposes of
46-6 Section 5.201 of this Act.
46-7 (Sections 5.204-5.300 reserved for expansion)
46-8 SUBCHAPTER D. DEPOSITS
46-9 Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) A deposit
46-10 contract between a bank and an account holder is considered a
46-11 contract in writing for all purposes and may be evidenced by one or
46-12 more agreements, deposit tickets, signature cards, or notices as
46-13 provided by Section 5.302 of this Act, or by other documentation as
46-14 provided by law.
46-15 (b) A cause of action for denial of deposit liability on a
46-16 deposit contract without a maturity date does not accrue until the
46-17 bank has denied liability and given notice of the denial to the
46-18 account holder. A bank that provides an account statement or
46-19 passbook to the account holder is considered to have denied
46-20 liability and given the notice as to any amount not shown on the
46-21 statement or passbook.
46-22 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) A bank and
46-23 its account holder may amend the deposit contract as permitted by
46-24 Subsection (b) of this section, by agreement, or as otherwise
46-25 permitted by law.
46-26 (b) A bank may amend a deposit contract by mailing a written
46-27 notice of the amendment to the account holder, separately or as an
46-28 enclosure with or part of the account holder's statement of account
46-29 or passbook. The notice must include the text and effective date
46-30 of the amendment. The bank is required to deliver the notice to
46-31 only one of the account holders of a deposit account that has more
46-32 than one account holder. The effective date may not be earlier
46-33 than the 30th day after the date of mailing the notice, unless the
46-34 amendment:
46-35 (1) is made to comply with a statute or rule that
46-36 authorizes an earlier effective date;
46-37 (2) does not reduce the interest rate on the account
46-38 or otherwise adversely affect the account holder; or
46-39 (3) is made for reasons relating to security of
46-40 accounts.
46-41 (c) Except for a disclosure required to be made under
46-42 Section 5.303 of this Act or the Truth in Savings Act (12 U.S.C.
46-43 Section 4301 et seq.) or other federal law, before renewal of an
46-44 account, a notice of amendment is not required under Subsection
46-45 (b) of this section for:
46-46 (1) a change in the interest rate on a variable-rate
46-47 account, including a money market or negotiable order of withdrawal
46-48 account;
46-49 (2) a change in a term for a time account with a
46-50 maturity of one month or less, if the deposit contract authorizes
46-51 the change in the term; or
46-52 (3) a change contemplated and permitted by the
46-53 original contract.
46-54 (d) An amendment under Subsection (b) of this section may
46-55 reduce the rate of interest or eliminate interest on an account
46-56 without a maturity date.
46-57 (e) Amendment of a deposit contract made in compliance with
46-58 this section is not a violation of the Deceptive Trade
46-59 Practices-Consumer Protection Act (Section 17.41 et seq., Business
46-60 & Commerce Code).
46-61 Sec. 5.303. FEES; DISCLOSURES. (a) Except as otherwise
46-62 provided by law, a bank may charge an account holder a fee, service
46-63 charge, or penalty relating to service or activity of a deposit
46-64 account, including a fee for an overdraft, insufficient fund check,
46-65 or stop payment order.
46-66 (b) Except as otherwise provided by the Truth in Savings Act
46-67 (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall
46-68 disclose the amount of each fee, charge, or penalty related to an
46-69 account, or if the amount of a fee, charge, or penalty cannot be
46-70 stated, the method of computing the fee, charge, or penalty, by
47-1 written notice delivered or mailed to each customer opening an
47-2 account not later than the 10th business day after the date the
47-3 account is opened. A bank that increases or adds a new fee,
47-4 charge, or penalty shall give notice of the change to each affected
47-5 account holder in the manner provided by Section 5.302(b) of this
47-6 Act for notice of an amendment of a deposit contract.
47-7 Sec. 5.304. SECURING DEPOSITS. (a) A state bank may not
47-8 pledge or create a lien on its assets or secure the repayment of a
47-9 deposit except as authorized or required by this section, rules
47-10 adopted under this Act, or other law.
47-11 (b) A state bank may pledge its assets to secure a deposit
47-12 of this state, an agency or political subdivision of this state,
47-13 the United States, or an instrumentality of the United States.
47-14 (c) This section does not prohibit the pledge of assets to
47-15 secure the repayment of money borrowed or the purchase of excess
47-16 deposit insurance from a private insurance company. An act, deed,
47-17 conveyance, pledge, or contract in violation of this section is
47-18 void.
47-19 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Except as
47-20 otherwise provided by this section, a bank lawfully doing business
47-21 in this state may enter a deposit account with a minor as the sole
47-22 and absolute owner of the account and may pay checks and
47-23 withdrawals and otherwise act with respect to the account on the
47-24 order of the minor. A payment or delivery of rights to a minor who
47-25 holds a deposit account evidenced by a receipt or acquittance
47-26 signed by the minor discharges the bank to the extent of the
47-27 payment made or rights delivered.
47-28 (b) If the minor is the sole and absolute owner of the
47-29 deposit account, the disabilities of minority are removed for the
47-30 limited purpose of enabling:
47-31 (1) the minor to enter into a depository contract with
47-32 the bank; and
47-33 (2) the bank to enforce the contract against the
47-34 minor, including collection of overdrafts and account fees and
47-35 submission of account history to account reporting agencies and
47-36 credit reporting bureaus.
47-37 (c) A parent or legal guardian of a minor may deny the
47-38 minor's authority to control, transfer, draft on, or make
47-39 withdrawals from the minor's deposit account by notifying the bank
47-40 in writing. On receipt of the notice by the bank, the minor may
47-41 not control, transfer, draft on, or make withdrawals from the
47-42 account during minority except with the joinder of a parent or
47-43 legal guardian of the minor.
47-44 (d) If a minor with a deposit account dies, the receipt or
47-45 acquittance of the minor's parent or legal guardian discharges the
47-46 liability of the bank to the extent of the receipt or acquittance,
47-47 except that the aggregate discharges under this subsection may not
47-48 exceed $3,000.
47-49 (e) Subsection (a) of this section does not authorize a loan
47-50 to the minor by the bank, whether on pledge of the minor's savings
47-51 account or otherwise, or bind the minor to repay a loan made except
47-52 as provided by Subsection (b) of this section or other law or
47-53 unless the depository institution has obtained the express consent
47-54 and joinder of a parent or legal guardian of the minor. This
47-55 subsection does not apply to an inadvertent extension of credit
47-56 because of an overdraft from insufficient funds, returned checks or
47-57 deposits, or other shortages in a depository account resulting from
47-58 normal banking operations.
47-59 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION.
47-60 (a) If a deposit account is opened with a bank by one or more
47-61 persons expressly as a trustee for one or more other named persons
47-62 and further notice of the existence and terms of a legal and valid
47-63 trust is not given in writing to the bank, the bank may accept and
47-64 administer the account, subject to Chapter XI, Probate Code.
47-65 (b) If a deposit account is opened with a bank by one or
47-66 more persons expressly as a trustee for one or more other named
47-67 persons pursuant to or purporting to be pursuant to a written trust
47-68 agreement, the trustee may provide the bank with a certificate of
47-69 trust to evidence the trust relationship. The certificate must be
47-70 an affidavit of the trustee and must include the effective date of
48-1 the trust, the name of the trustee, the name or method for choosing
48-2 successor trustees, the name and address of each beneficiary, the
48-3 authority granted to the trustee, the disposition of the account on
48-4 the death of the trustee or the survivor of two or more trustees,
48-5 other information required by the bank, and an indemnification of
48-6 the bank. The bank may accept and administer the account, subject
48-7 to Chapter XI, Probate Code, in accordance with the certificate of
48-8 trust without requiring a copy of the trust agreement. The bank is
48-9 not liable for administering the account as provided by the
48-10 certificate of trust, even if the certificate of trust is contrary
48-11 to the terms of the trust agreement, unless the bank has actual
48-12 knowledge of the terms of the trust agreement.
48-13 (c) On the death of the trustee or the survivor of two or
48-14 more trustees, the bank may pay all or part of the withdrawal value
48-15 of the account with interest as provided by the certificate of
48-16 trust. If the trustee did not deliver a certificate of trust, the
48-17 bank's right to treat the account as owned by a trustee ceases on
48-18 the death of the trustee. On the death of the trustee or the
48-19 survivor of two or more trustees, the bank shall, unless the
48-20 certificate of trust provides otherwise, pay the withdrawal value
48-21 of the account with interest in equal shares to the persons who
48-22 survived the trustee, are named as beneficiaries in the certificate
48-23 of trust, and can be located by the bank from its own records. If
48-24 there is not a certificate of trust, payment of the withdrawal
48-25 value and interest shall be made as provided by Chapter XI, Probate
48-26 Code. Any payment made under this section for all or part of the
48-27 withdrawal value and interest discharges any liability of the bank
48-28 to the extent of the payment. The bank may pay all or part of the
48-29 withdrawal value and interest in the manner provided by this
48-30 section, regardless of whether it has knowledge of a competing
48-31 claim, unless the bank receives actual knowledge that payment has
48-32 been restrained by order of a court of competent jurisdiction.
48-33 (d) This section does not obligate a bank to accept a
48-34 deposit account from a trustee who does not furnish a copy of the
48-35 trust agreement or to search beyond its own records for the
48-36 location of a named beneficiary.
48-37 (e) This section does not affect a contractual provision to
48-38 the contrary that otherwise complies with the laws of this state.
48-39 Sec. 5.307. RIGHT OF SET-OFF. (a) Except as otherwise
48-40 provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
48-41 seq.) or other federal law, a bank has a right of set-off, without
48-42 further agreement or action, against all accounts owned by a
48-43 depositor to whom or on whose behalf the bank has made an advance
48-44 of money by loan, overdraft, or otherwise, if the bank has
48-45 previously disclosed this right to the depositor. If the depositor
48-46 defaults in the repayment or satisfaction of the obligation, the
48-47 bank may, without notice to or consent of the depositor, set off or
48-48 cancel on its books all or part of the accounts owned by the
48-49 depositor and apply the value of the accounts in payment of and to
48-50 the extent of the obligation.
48-51 (b) For purposes of this section, a default occurs when an
48-52 obligor has failed to make a payment as provided by the terms of
48-53 the loan or other credit obligation and a grace period provided for
48-54 by the agreement or law has expired. An obligation is not required
48-55 to be accelerated or matured for a default to authorize set-off of
48-56 the depositor's obligation against the defaulted payment.
48-57 (c) A bank may not exercise its right of set-off under this
48-58 section against an account unless the account is due and owing to
48-59 the depositor in the same capacity as the defaulted credit
48-60 obligation. A trust account for which a depositor is trustee,
48-61 including a trustee under a certificate of trust delivered under
48-62 Section 5.306(b) of this Act, is not subject to the right of
48-63 set-off under this section unless the trust relationship is solely
48-64 evidenced by the account card as provided by Chapter XI, Probate
48-65 Code.
48-66 (d) This section does not limit or prohibit the exercise of
48-67 another right of set-off, including a right under contract or
48-68 common law.
48-69 CHAPTER 6. ENFORCEMENT ACTIONS
48-70 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
49-1 Sec. 6.001. DETERMINATION LETTER ............................. 126
49-2 Sec. 6.002. CEASE AND DESIST ORDER ........................... 127
49-3 Sec. 6.003. REMOVAL OR PROHIBITION ORDER ..................... 128
49-4 Sec. 6.004. HEARING ON PROPOSED ORDER ........................ 130
49-5 Sec. 6.005. EMERGENCY ORDERS ................................. 131
49-6 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS .......... 132
49-7 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION
49-8 ORDER .......................................... 132
49-9 Sec. 6.008. LIMITATION ON ACTION ............................. 134
49-10 Sec. 6.009. ENFORCEMENT OF FINAL ORDER ....................... 134
49-11 Sec. 6.010. ADMINISTRATIVE PENALTIES ......................... 134
49-12 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE
49-13 PENALTIES ...................................... 135
49-14 Sec. 6.012. CONFIDENTIALITY OF RECORDS ....................... 136
49-15 Sec. 6.013. COLLECTION OF FEES ............................... 136
49-16 (Sections 6.014-6.100 reserved for expansion)
49-17 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
49-18 Sec. 6.101. ORDER OF SUPERVISION ............................. 137
49-19 Sec. 6.102. ORDER OF CONSERVATORSHIP ......................... 137
49-20 Sec. 6.103. HEARING .......................................... 137
49-21 Sec. 6.104. POST-HEARING ORDER ............................... 138
49-22 Sec. 6.105. CONFIDENTIALITY OF RECORDS ....................... 139
49-23 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION ................. 140
49-24 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR ................. 140
49-25 Sec. 6.108. QUALIFICATIONS OF APPOINTEE ...................... 141
49-26 Sec. 6.109. EXPENSES ......................................... 141
49-27 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR
49-28 DECISIONS ...................................... 142
49-29 Sec. 6.111. VENUE ............................................ 143
49-30 Sec. 6.112. DURATION ......................................... 144
49-31 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES .............. 144
49-32 (Sections 6.114-6.200 reserved for expansion)
49-33 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
49-34 INVESTIGATION AND ENFORCEMENT
49-35 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY ........... 144
49-36 Sec. 6.202. SUBPOENA AUTHORITY ............................... 146
49-37 Sec. 6.203. ENFORCEMENT OF SUBPOENA .......................... 147
49-38 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS ............ 148
49-39 Sec. 6.205. EVIDENCE ......................................... 149
49-40 Sec. 6.206. CEASE AND DESIST ORDER REGARDING
49-41 UNAUTHORIZED ACTIVITY .......................... 149
49-42 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER
49-43 REGARDING UNAUTHORIZED ACTIVITY ................ 150
49-44 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER
49-45 REGARDING UNAUTHORIZED ACTIVITY ................ 152
49-46 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
49-47 REGARDING UNAUTHORIZED ACTIVITY ................ 152
49-48 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY .......... 153
49-49 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER .............. 154
49-50 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER ................. 156
49-51 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND .................. 157
49-52 CHAPTER 6. ENFORCEMENT ACTIONS
49-53 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
49-54 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
49-55 commissioner determines from examination or other credible evidence
49-56 that a state bank is in a condition that may warrant the issuance
49-57 of an enforcement order under this chapter, the banking
49-58 commissioner may, by personal delivery or by registered or
49-59 certified mail, return receipt requested, notify the bank in
49-60 writing of the determination, the requirements the bank must
49-61 satisfy to abate the determination, and the time in which the
49-62 requirements must be satisfied to avert further administrative
49-63 action.
49-64 (b) The determination letter may be issued in connection
49-65 with the issuance of a cease and desist, removal, or prohibition
49-66 order under this subchapter or an order of supervision or
49-67 conservatorship under Subchapter B of this chapter.
49-68 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
49-69 commissioner has grounds to issue a cease and desist order to an
49-70 officer, employee, director, manager, or managing participant of a
50-1 state bank, or the bank itself acting through an authorized person,
50-2 if the banking commissioner determines from examination or other
50-3 credible evidence that the bank or person, directly or indirectly:
50-4 (1) has violated this Act or another applicable law or
50-5 rule;
50-6 (2) has engaged in a breach of trust or other
50-7 fiduciary duty;
50-8 (3) has refused to submit to examination or
50-9 examination under oath;
50-10 (4) has conducted business in an unsafe or unsound
50-11 manner; or
50-12 (5) has violated a condition of the bank's charter or
50-13 an agreement between the bank or the person and the banking
50-14 commissioner or the department.
50-15 (b) If the banking commissioner has grounds for action under
50-16 Subsection (a) of this section and further finds that an order to
50-17 cease and desist from a violation appears to be necessary and in
50-18 the best interest of the bank involved and its depositors,
50-19 creditors, and shareholders or participants, the banking
50-20 commissioner, by personal delivery or by registered or certified
50-21 mail, return receipt requested, may serve a proposed cease and
50-22 desist order on the bank and each person who committed or
50-23 participated in the violation. The proposed order must state the
50-24 grounds for the proposed order with reasonable certainty. The
50-25 proposed order must state its effective date, which may not be
50-26 before the 21st day after the date the proposed order is mailed or
50-27 delivered. The order takes effect for the bank if the bank does
50-28 not request a hearing in writing before the effective date and
50-29 takes effect for each other person against whom the proposed order
50-30 is directed if that person does not request a hearing in writing
50-31 before the effective date. After taking effect the order is final
50-32 and nonappealable as to that bank or other person.
50-33 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
50-34 commissioner has grounds to remove a present or former officer,
50-35 director, manager, managing participant, or employee of a state
50-36 bank from office or employment in, or prohibit a controlling
50-37 shareholder or participant or other person participating in the
50-38 affairs of a state bank from further participation in the affairs
50-39 of, a state bank, trust company, or other entity chartered or
50-40 licensed by the banking commissioner under the laws of this state,
50-41 if the banking commissioner determines from examination or other
50-42 credible evidence that:
50-43 (1) the person committed, participated, or acted, in
50-44 other than an inadvertent or unintentional manner, as described by
50-45 Section 6.002(a) of this Act with regard to the affairs of the
50-46 bank, or violated a final cease and desist order issued in response
50-47 to the same or a similar act; and
50-48 (2) because of this action by the person:
50-49 (A) the bank has suffered or will probably
50-50 suffer financial loss or other damage;
50-51 (B) the interests of the bank's depositors have
50-52 been or could be prejudiced; or
50-53 (C) the person has received financial gain or
50-54 other benefit by reason of the violation; and
50-55 (3) this action by the person:
50-56 (A) involves personal dishonesty on the part of
50-57 the person; or
50-58 (B) demonstrates wilful or continuing disregard
50-59 for the safety or soundness of the bank.
50-60 (b) If the banking commissioner finds grounds for action
50-61 under Subsection (a) of this section and further finds that a
50-62 removal or prohibition order appears to be necessary and in the
50-63 best interest of the bank involved and its depositors, creditors,
50-64 and shareholders or participants, the banking commissioner, by
50-65 personal delivery or by registered or certified mail, return
50-66 receipt requested, may serve a proposed removal or prohibition
50-67 order, as appropriate, on an officer, employee, director, manager
50-68 or managing participant, controlling shareholder or participant, or
50-69 other person alleged to have committed or participated in the
50-70 violation. The proposed order must state the grounds for removal
51-1 or prohibition with reasonable certainty. The proposed order must
51-2 state its effective date, which may not be before the 21st day
51-3 after the date the proposed order is mailed or delivered. The
51-4 order takes effect for a person against whom the proposed order is
51-5 directed if the person does not request a hearing in writing before
51-6 the effective date. After taking effect the order is final and
51-7 nonappealable as to that person.
51-8 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
51-9 hearing on a proposed order shall be held not later than the 30th
51-10 day after the date the first request for a hearing on the order was
51-11 received by the department unless the parties agree to a later
51-12 hearing date. Each party shall be given written notice by personal
51-13 delivery or by registered or certified mail, return receipt
51-14 requested, of the date set by the banking commissioner for the
51-15 hearing not later than the 11th day before that date. The hearing
51-16 shall be conducted as provided by Chapter 2001, Government Code.
51-17 At the hearing, the department has the burden of proof and each
51-18 person against whom the proposed order is directed may
51-19 cross-examine and present evidence to show why the proposed order
51-20 should not be issued.
51-21 (b) After the hearing, the banking commissioner shall issue
51-22 or decline to issue the proposed order. The proposed order may be
51-23 modified as necessary to conform to the findings at the hearing and
51-24 to require the board to take necessary affirmative action to
51-25 correct the conditions cited in the order.
51-26 (c) An order issued under this section is immediately final
51-27 for purposes of enforcement and appeal. The order may be appealed
51-28 as provided by Section 3.009 of this Act.
51-29 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
51-30 commissioner believes that immediate action is needed to prevent
51-31 immediate and irreparable harm to the bank and its depositors,
51-32 creditors, and shareholders or participants, the banking
51-33 commissioner may issue one or more cease and desist, removal, or
51-34 prohibition orders as emergency orders to become effective
51-35 immediately on service without prior notice or hearing. Service
51-36 must be by personal delivery or by registered or certified mail,
51-37 return receipt requested.
51-38 (b) In each emergency order the banking commissioner shall
51-39 notify the bank and any person against whom the emergency order is
51-40 directed of the specific conduct, activity, or omission requiring
51-41 the order, the citation of each statute or rule alleged to have
51-42 been violated, the immediate and irreparable harm alleged to be
51-43 threatened, and the right to a hearing. A hearing on the order may
51-44 be requested in writing not later than the 10th day after the date
51-45 that the order is served. Unless a person against whom the
51-46 emergency order is directed requests a hearing in writing before
51-47 the 11th day after the date it is served on the person, the
51-48 emergency order is final and nonappealable as to that person.
51-49 (c) A hearing on an emergency order, if requested, must be
51-50 given priority over all other matters pending before the banking
51-51 commissioner and must be held not later than the 20th day after the
51-52 date that it is requested unless the parties agree to a later
51-53 hearing date.
51-54 (d) Until the hearing, an emergency order continues in
51-55 effect unless the order is stayed by the banking commissioner. The
51-56 banking commissioner may impose any condition before granting a
51-57 stay of the emergency order.
51-58 (e) After the hearing, the banking commissioner may affirm,
51-59 modify, or set aside in whole or part the emergency order. An
51-60 order affirming or modifying the emergency order is immediately
51-61 final for purposes of enforcement and appeal. The order may be
51-62 appealed as provided by Section 3.009 of this Act.
51-63 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS. A copy
51-64 of any determination letter, proposed order, emergency order, or
51-65 final order issued by the banking commissioner under this
51-66 subchapter shall be immediately brought to the attention of the
51-67 board of the affected bank, regardless of whether the bank is a
51-68 party, and filed in the minutes of the board. Each director,
51-69 manager, or managing participant shall immediately certify to the
51-70 banking commissioner in writing that the certifying person has read
52-1 and understood the determination letter, proposed order, emergency
52-2 order, or final order. The required certification may not be
52-3 considered an admission of a person in a subsequent legal or
52-4 administrative proceeding.
52-5 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
52-6 (a) Without the prior written approval of the banking
52-7 commissioner, a person subject to a final and enforceable removal
52-8 or prohibition order issued by the banking commissioner:
52-9 (1) may not serve as a director, officer, or employee
52-10 of any state bank, trust company, or other entity chartered or
52-11 licensed by the banking commissioner under the laws of this state
52-12 while the order is in effect;
52-13 (2) may not directly or indirectly participate in any
52-14 manner in the management of such an entity;
52-15 (3) may not directly or indirectly vote for a director
52-16 of such an entity;
52-17 (4) may not solicit, procure, transfer, attempt to
52-18 transfer, vote, or attempt to vote a proxy, consent, or
52-19 authorization with respect to voting rights in such an entity; and
52-20 (5) remains entitled to receive dividends or a share
52-21 of profits, return of contribution, or other distributive benefit
52-22 from such an entity with respect to voting securities in the entity
52-23 owned by the person.
52-24 (b) If voting securities of an entity identified in
52-25 Subsection (a)(1) of this section cannot be voted under this
52-26 section, the voting securities are considered to be authorized but
52-27 unissued for purposes of determining the procedures for and results
52-28 of the affected vote<code>. A trust company may incorporate for the
93-3 following purpose: to act as a trustee, executor, administrator,
93-4 or guardian when designated by any person, corporation, or court to
93-5 do so and as agent for the performance of any lawful act, including
93-6 the right to receive deposits made by agencies of the United States
93-7 of America for the authorized account of any individual, and to
93-8 lend and accumulate money without banking privileges, when licensed
93-9 under provisions of Subtitle 2, Title 79, Revised Statutes.
93-10 (b) The Banking Commissioner <State Banking Board> shall
93-11 hear and determine applications for state trust company charters.
93-12 A final order of the Banking Commissioner on a charter application
93-13 may be appealed as provided by Section 3.009, Texas Banking Act.
93-14 Sec. 2. (a) Subject to Subsection (b), every trust company
93-15 with a capital of not less than $1 million <$500,000> shall, in
93-16 addition to all other powers conferred by law, have the power: to
93-17 purchase, sell, discount, and negotiate, with or without its
93-18 endorsement or guaranty, notes, drafts, checks, bills of exchange,
93-19 acceptances, including bankers' acceptances, cable transfers, and
93-20 other evidences of indebtedness; to purchase and sell, with or
93-21 without its endorsement or guaranty, stocks, bonds, securities,
93-22 including the obligations of the United States or of any states
93-23 thereof; to issue debentures, bonds, and promissory notes, to
93-24 accept bills or drafts drawn upon it, but in no event having
93-25 liabilities outstanding thereon at any one time exceeding five
93-26 times its capital stock and surplus; provided, however, that with
93-27 the consent in writing of the Banking Commissioner it may have
93-28 outstanding at any one time 10 times the capital stock and surplus;
93-29 and generally, to exercise such powers as are incidental to the
93-30 powers conferred by this article.
93-31 (b) The <Banking Section of The> Finance Commission of Texas
93-32 shall prescribe regulations pursuant to which the Banking
93-33 Commissioner may require such additional capital over and above the
93-34 minimum amount of $1 million <$500,000> prescribed in Subsection
93-35 (a) as may be necessary to assure the safety and soundness of trust
93-36 companies engaging in activities under Subsection (a). The
93-37 proposed effective date of an order requiring a trust company to
93-38 increase its capital must be stated in the order as on or after the
93-39 21st day after the date the proposed order is mailed or delivered.
93-40 Unless the trust company requests a hearing before the Banking
93-41 Commissioner in writing before the effective date of the proposed
93-42 order, the order becomes effective and is final and nonappealable.
93-43 (b) Article 2, Chapter XI, The Texas Banking Code (Article
93-44 342-1102, Vernon's Texas Civil Statutes), is amended to read as
93-45 follows:
93-46 Art. 2. Applicability of State Banking Code; Venue
93-47 Sec. 1. Unless otherwise provided in this chapter, a trust
93-48 company is subject to the provisions of Chapters 1-4, 6-8, and
93-49 Subchapters A and B, Chapter 5, Texas Banking Act, <I, II, III, IV,
93-50 V, VIII, and IX of this code> as if the trust company were a state
93-51 bank; provided, however, that Section 3.001 of that Act <Article 1,
93-52 Chapter III>, relating to banking powers, and Section 8.008 of that
93-53 Act <Article 11a, Chapter IV>, relating to securities law
93-54 exemption, <Article 4a, Chapter VIII, relating to priority of
93-55 distribution in liquidation, and Article 3, Chapter IX, relating to
93-56 limited branch banking> shall not apply.
93-57 Sec. 2. Venue for an action instituted to effect, contest,
93-58 or otherwise intervene in the liquidation of a trust company as
93-59 provided in this chapter and Chapter 7, Texas Banking Act, <VIII of
93-60 this code (Article 342-801 et seq., Vernon's Texas Civil Statutes)>
93-61 is in Travis County, except that on motion filed and served
93-62 concurrently with or before the filing of the answer, the court
93-63 may, upon a finding of good cause, transfer the action to the
93-64 county of the trust company's principal place of business.
93-65 (c) Sections 1 and 5, Article 3, Chapter XI, The Texas
93-66 Banking Code (Article 342-1103, Vernon's Texas Civil Statutes), are
93-67 amended to read as follows:
93-68 Sec. 1. Annual Statement. (a) Every trust company shall be
93-69 subject to regulation by the Banking Commissioner of Texas and
93-70 shall file with the banking commissioner on or before March 1 of
94-1 each year a statement of its condition on the previous December 31,
94-2 in such form as may be required by the banking commissioner,
94-3 showing under oath its assets and liabilities, together with a fee
94-4 of $50 for filing; and such statement shall be published in a
94-5 newspaper of general circulation published in the county in which
94-6 the trust company is located. The banking commissioner may, for
94-7 good cause shown, extend the time for filing such statement for not
94-8 more than 60 days. In addition, each trust company shall make and
94-9 publish statements of its financial condition as provided by
94-10 Section 2.009, Texas Banking Act <Article 9 of Chapter II of this
94-11 code>.
94-12 (b) Each trust company annually may be required by the
94-13 commissioner to obtain an external audit of its books and records
94-14 by a certified public accountant and provide the commissioner a
94-15 copy of the audit report.
94-16 Sec. 5. Confidentiality. The confidentiality provisions of
94-17 Subchapter B, Chapter 2, Texas Banking Act, <Article 10, Chapter
94-18 II, of this code> apply to all information obtained by the
94-19 Department relative to the financial condition of trust companies
94-20 other than the annual statements required under Section 1 of this
94-21 article.
94-22 (d) Article 4, Chapter XI, The Texas Banking Code (Article
94-23 342-1104, Vernon's Texas Civil Statutes), is amended to read as
94-24 follows:
94-25 Art. 4. Action by Banking Commissioner; Officers and
94-26 Directors; Cease and Desist Orders; Removal; Review. (a) With
94-27 regard to a trust company, the Banking Commissioner of Texas may
94-28 take action in accordance with Subchapter A, Chapter 6, Texas
94-29 Banking Act <Article 12, Chapter IV, of this code>, as if the trust
94-30 company were a state bank if the banking commissioner finds that an
94-31 officer, director, or employee of the trust company, or the trust
94-32 company itself acting through any authorized person:
94-33 (1) violates any law or rule applicable to the trust
94-34 company;
94-35 (2) refuses to comply with any law or rule applicable
94-36 to the trust company;
94-37 (3) wilfully neglects to perform his or its duties or
94-38 commits a breach of trust or of fiduciary duty;
94-39 (4) commits any fraudulent or questionable practice in
94-40 the conduct of the trust company's business that threatens the
94-41 trust company's solvency;
94-42 (5) refuses to submit to examination under oath;
94-43 (6) conducts business in an unsafe or unauthorized
94-44 manner; or
94-45 (7) violates any conditions of the trust company's
94-46 charter or of any agreement entered with the Banking Commissioner
94-47 of the Banking Department.
94-48 (b) An individual or trust company against which action is
94-49 taken under this section may request review of that action in
94-50 accordance with Subchapter A, Chapter 6, Texas Banking Act <Article
94-51 12, Chapter IV, of this code>, as if the trust company were a state
94-52 bank.
94-53 (e) Sections (a) and (b), Article 5, Chapter XI, The Texas
94-54 Banking Code (Article 342-1105, Vernon's Texas Civil Statutes), are
94-55 amended to read as follows:
94-56 (a) With regard to a trust company, the Banking Commissioner
94-57 of Texas may take action in accordance with Subchapter B, Chapter
94-58 6, Texas Banking Act <Article 1a, Chapter VIII, of this code>, as
94-59 if the trust company were a state bank if:
94-60 (1) it appears to the banking commissioner that the
94-61 trust company is in a condition that would be a hazardous <an
94-62 unsafe> condition for a state bank <under Article 1a> and the trust
94-63 company's condition renders the continuance of its business
94-64 hazardous to the public or to the shareholders or creditors of the
94-65 trust company;
94-66 (2) it appears to the banking commissioner
94-67 <considering Article 1a> that the trust company has exceeded its
94-68 powers;
94-69 (3) the trust company had failed to comply with the
94-70 law; or
95-1 (4) the trust company gives written consent to
95-2 supervision or conservatorship under this section.
95-3 (b) A trust company against which action is taken under this
95-4 section may request review of that action in accordance with
95-5 Subchapter B, Chapter 6, Texas Banking Act <Article 1a, Chapter
95-6 VIII, of this code>, as if it were a state bank.
95-7 (f) Section (a), Article 6, Chapter XI, The Texas Banking
95-8 Code (Article 342-1106, Vernon's Texas Civil Statutes), is amended
95-9 to read as follows:
95-10 (a) The Finance Commission <State Banking Board> shall
95-11 promulgate and adopt such rules and procedural regulations as may
95-12 be necessary to facilitate the fair hearing and adjudication of
95-13 charter applications.
95-14 (g) Article 8, Chapter XI, The Texas Banking Code (Article
95-15 342-1108, Vernon's Texas Civil Statutes), is amended to read as
95-16 follows:
95-17 Art. 8. PAID-IN CAPITAL. (a) A trust company shall have
95-18 and maintain a fully paid-in capital of not less than $1 million
95-19 <$500,000>.
95-20 (b) The banking commissioner may require additional capital
95-21 of a trust company if the banking commissioner <he> determines it
95-22 necessary to protect the safety and soundness of the trust company.
95-23 The proposed effective date of an order requiring a trust company
95-24 to increase its capital must be stated in the order as on or after
95-25 the 21st day after the date the proposed order is mailed or
95-26 delivered. Unless the trust company requests a hearing before the
95-27 banking commissioner in writing before the effective date of the
95-28 proposed order, the order becomes effective and is final and
95-29 nonappealable.
95-30 (c) The banking commissioner on application may authorize a
95-31 trust company to have and maintain capital of less than the amount
95-32 required by Subsection (a) of this section if the banking
95-33 commissioner finds that the safety and soundness of the trust
95-34 company will be adequately protected by the lower capital
95-35 requirement.
95-36 (h) Article 13, Chapter XI, The Texas Banking Code (Article
95-37 342-1113, Vernon's Texas Civil Statutes), is amended to read as
95-38 follows:
95-39 Art. 13. Exemptions. The provisions of this chapter shall
95-40 not affect or apply to:
95-41 (1) any state or federal credit union doing business
95-42 in this state provided that such credit union is otherwise
95-43 authorized to exercise trust powers;
95-44 (2) a public, private, or independent institution of
95-45 higher education or a university system, as those terms are defined
95-46 by Section 61.003, Education Code, including its affiliated
95-47 foundations or corporations, acting as trustee as provided by the
95-48 Education Code; or
95-49 (3) a corporation serving as trustee of a charitable
95-50 trust as provided by Article 2.31, Texas Non-Profit Corporation Act
95-51 (Article 1396-2.31, Vernon's Texas Civil Statutes).
95-52 (i) Section 2, Article 14, Chapter XI, The Texas Banking
95-53 Code (Article 342-1114, Vernon's Texas Civil Statutes), is amended
95-54 to read as follows:
95-55 Sec. 2. Subject to the provisions of Sections 7.310 and
95-56 7.313, Texas Banking Act <Articles 14 and 15 of Chapter VIII of
95-57 this Act>, after fully satisfying all timely filed and approved
95-58 claims of a higher priority, the commissioner may make a ratable
95-59 distribution to approved claimants within a particular class or
95-60 priority if there are insufficient funds to fully satisfy all of
95-61 those claims, after reserving funds for administrative expenses, if
95-62 necessary.
95-63 (j) A trust company that possesses a charter on September 1,
95-64 1995, and that has capital and surplus of less than the amount
95-65 required by Article 8, Chapter XI, The Texas Banking Code, as
95-66 amended by this section, shall increase its capital and surplus to
95-67 the amount required by that article before September 1, 2000. The
95-68 Finance Commission of Texas may adopt rules specifying procedures
95-69 for ratable increases in capital and surplus under this section and
95-70 for deferrals and extensions of time for a trust company acting in
96-1 good faith to achieve minimum required capital and surplus.
96-2 SECTION 3. Chapter 30, Civil Practice and Remedies Code, is
96-3 amended by adding Section 30.007 to read as follows:
96-4 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
96-5 (a) In this section:
96-6 (1) "Customer" means a person who uses, purchases, or
96-7 obtains an account, extension of credit, or product of a financial
96-8 institution or for whom a financial institution acts as a
96-9 fiduciary, agent, or custodian or in another representative
96-10 capacity.
96-11 (2) "Financial institution" means a state or national
96-12 bank, state or federal savings and loan association, state or
96-13 federal savings bank, state or federal credit union, foreign bank,
96-14 foreign bank agency, or trust company.
96-15 (3) "Record" means financial or other information of a
96-16 customer maintained by a financial institution.
96-17 (4) "Record request" means a valid and enforceable
96-18 subpoena, request for production, or other instrument issued under
96-19 authority of a tribunal that compels production of a customer
96-20 record.
96-21 (5) "Tribunal" means a court or other adjudicatory
96-22 tribunal with jurisdiction to issue a request for records,
96-23 including a government agency exercising adjudicatory functions and
96-24 an alternative dispute resolution mechanism, voluntary or required,
96-25 under which a party may compel the production of records.
96-26 (b) This section provides the exclusive method for compelled
96-27 discovery of a record of a financial institution relating to one or
96-28 more customers, does not create a right of privacy in a record, and
96-29 does not apply to:
96-30 (1) a demand or inquiry from a state or federal
96-31 government agency authorized by law to conduct an examination of
96-32 the financial institution;
96-33 (2) a record request from a state or federal
96-34 government agency or instrumentality under statutory or
96-35 administrative authority that provides for, or is accompanied by, a
96-36 specific mechanism for discovery and protection of a customer
96-37 record of a financial institution, including a record request from
96-38 a federal agency subject to the Right to Financial Privacy Act of
96-39 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
96-40 Service under 26 U.S.C. Section 7609;
96-41 (3) a record request from or report to a government
96-42 agency arising out of the investigation or prosecution of a
96-43 criminal offense;
96-44 (4) a record request in connection with a garnishment
96-45 proceeding in which the financial institution is garnishee and the
96-46 customer is debtor;
96-47 (5) an investigative demand or inquiry from a state
96-48 legislative investigating committee;
96-49 (6) an investigative demand or inquiry from the
96-50 attorney general of this state as authorized by law other than the
96-51 procedural law governing discovery in civil cases; or
96-52 (7) the voluntary use or disclosure of a record by a
96-53 financial institution subject to other applicable state or federal
96-54 law.
96-55 (c) A financial institution shall produce a record in
96-56 response to a record request only if:
96-57 (1) it is served with the record request not later
96-58 than the 24th day before the date that compliance with the record
96-59 request is required;
96-60 (2) before the financial institution complies with the
96-61 record request the requesting party pays the financial
96-62 institution's reasonable costs of complying with the record
96-63 request, including costs of reproduction, postage, research,
96-64 delivery, and attorney's fees, or posts a cost bond in an amount
96-65 estimated by the financial institution to cover those costs; and
96-66 (3) when the customer is not a party to the proceeding
96-67 in which the request was issued, the requesting party complies with
96-68 Subsections (d) and (e) and:
96-69 (A) the financial institution receives the
96-70 customer's written consent to release the record after a request
97-1 under Subsection (d)(3); or
97-2 (B) the tribunal takes further action based on
97-3 action initiated by the requesting party under Subsection (e).
97-4 (d) If the affected customer is not a party to the
97-5 proceeding in which the record request was issued, in addition to
97-6 serving the financial institution with a record request, the
97-7 requesting party shall:
97-8 (1) give notice stating the rights of the customer
97-9 under Subsection (f) and a copy of the request to each affected
97-10 customer in the manner and within the time provided by Rule 21a,
97-11 Texas Rules of Civil Procedure;
97-12 (2) file a certificate of service indicating that the
97-13 customer has been mailed or served with the notice and a copy of
97-14 the record request as required by this subsection with the tribunal
97-15 and the financial institution; and
97-16 (3) request the customer's written consent authorizing
97-17 the financial institution to comply with the request.
97-18 (e) If the customer refuses to execute the written consent
97-19 or fails to respond to the requesting party's request under
97-20 Subsection (d)(3) on or before the date that compliance with the
97-21 request is required, the requesting party may by written motion
97-22 seek an in camera inspection of the requested record as its sole
97-23 means of obtaining access to the requested record. In response to
97-24 a motion for in camera inspection, the tribunal may inspect the
97-25 requested record to determine its relevance to the matter before
97-26 the tribunal. The tribunal may order redaction of portions of the
97-27 records that the tribunal determines should not be produced and
97-28 shall enter a protective order preventing the record that it orders
97-29 produced from being:
97-30 (1) disclosed to a person who is not a party to the
97-31 proceeding before the tribunal; and
97-32 (2) used by a person for any purpose other than
97-33 resolving the dispute before the tribunal.
97-34 (f) The customer bears the burden of preventing or limiting
97-35 the financial institution's compliance with a record request
97-36 subject to this section by seeking an appropriate remedy, including
97-37 filing a motion to quash the record request or a motion for a
97-38 protective order. The customer has standing to appear before the
97-39 tribunal for that purpose if the customer is not otherwise a party.
97-40 Any motion filed shall be served on the financial institution and
97-41 the requesting party before the date that compliance with the
97-42 request is required. A financial institution is not liable to its
97-43 customer or another person for disclosure of a record in compliance
97-44 with this section.
97-45 (g) A financial institution may not be required to produce a
97-46 record under this section before the later of:
97-47 (1) the 24th day after the date of receipt of the
97-48 record request as provided by Subsection (c)(1);
97-49 (2) the 15th day after the date of receipt of a
97-50 customer consent to disclose a record as provided by Subsection
97-51 (c)(3); or
97-52 (3) the 15th day after the date a court orders
97-53 production of a record after an in camera inspection of a requested
97-54 record as provided by Subsection (e).
97-55 (h) An order to quash or for protection or other remedy
97-56 entered or denied by the tribunal under Subsection (e) or (f) is
97-57 not a final order and an interlocutory appeal may not be taken.
97-58 SECTION 4. Section 2001.223, Government Code, is amended to
97-59 read as follows:
97-60 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
97-61 Enforcement, and Contested Case Provisions. Section 2001.038 and
97-62 Subchapters C through H do not apply to:
97-63 (1) the granting, payment, denial, or withdrawal of
97-64 financial or medical assistance or benefits under service programs
97-65 of the Texas Department of Human Services;
97-66 (2) action by the Banking Commissioner or the Finance
97-67 Commission of Texas <State Banking Board> regarding the issuance of
97-68 a state bank charter for a bank to assume the assets and
97-69 liabilities of a financial institution <state bank> that the
97-70 commissioner considers <determines> to be in hazardous <an unsafe>
98-1 condition as defined by Section 1.002(a), <Section 1, Article 1a,
98-2 Chapter VIII, The> Texas Banking Act <Code (Article 342-801a,
98-3 Vernon's Texas Civil Statutes)>;
98-4 (3) a hearing or interview conducted by the Board of
98-5 Pardons and Paroles or the pardons and paroles division of the
98-6 Texas Department of Criminal Justice relating to the grant,
98-7 rescission, or revocation of parole or other form of administrative
98-8 release; or
98-9 (4) the suspension, revocation, or termination of the
98-10 certification of a breath analysis operator or technical supervisor
98-11 under the rules of the Department of Public Safety.
98-12 SECTION 5. Sections 2257.002(1) and (3), Government Code,
98-13 are amended to read as follows:
98-14 (1) "Bank holding company" has the meaning assigned by
98-15 Section 1.002(a), Texas Banking Act <Article 2, Chapter I, The
98-16 Texas Banking Code (Article 342-102, Vernon's Texas Civil
98-17 Statutes)>.
98-18 (3) "Control" has the meaning assigned by Section
98-19 1.002(a), Texas Banking Act <Article 2, Chapter I, The Texas
98-20 Banking Code (Article 342-102, Vernon's Texas Civil Statutes)>.
98-21 SECTION 6. Section 712.042(b), Health and Safety Code, is
98-22 amended to read as follows:
98-23 (b) The banking department shall receive and disburse
98-24 revenues collected under this chapter in accordance with Section
98-25 2.006, Texas Banking Act <Article 12, Chapter I, The Texas Banking
98-26 Code of 1943 (Article 342-112, Vernon's Texas Civil Statutes)>.
98-27 SECTION 7. Section 1(c), Article 1.19-1, Insurance Code, is
98-28 amended to read as follows:
98-29 (c) A subpoena issued to a bank or other financial
98-30 institution as part of a criminal investigation is not subject to
98-31 Section 30.007, Civil Practice and Remedies Code <Article 5,
98-32 Chapter VII, The Texas Banking Code (Article 342-705, Vernon's
98-33 Texas Civil Statutes)>.
98-34 SECTION 8. Section 1, Article 9.05, Insurance Code, is
98-35 amended to read as follows:
98-36 Sec. 1. Any corporation heretofore chartered under the
98-37 provisions of Article 9.03 of this Act, or its antecedents, Article
98-38 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
98-39 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
98-40 having as one of its powers "to act as trustee under any lawful
98-41 trust committed to it by contract or will, appointment by any court
98-42 having jurisdiction of the subject matter, as trustee, receiver or
98-43 guardian and as executor or guardian under the terms of any will
98-44 and as any administrator of the estates of decedents under the
98-45 appointment of the court" may transfer and assign to a state bank
98-46 or trust company created under the provisions of the Texas Banking
98-47 Act or a predecessor of that Act <Code of 1943>, as amended, all of
98-48 its fiduciary business in which such corporation is named or acting
98-49 as guardian, trustee, executor, administrator or in any other
98-50 fiduciary capacity, whereupon said state bank or trust company
98-51 shall, without the necessity of any judicial action in the courts
98-52 of the State of Texas or any action by the creator or beneficiary
98-53 of such trust or estate, continue the guardianship, trusteeship,
98-54 executorship, administration or other fiduciary relationship, and
98-55 perform all of the duties and obligations of such corporation, and
98-56 exercise all of the powers and authority relative thereto now being
98-57 exercised by such corporation, and provided further that the
98-58 transfer or assignment by such corporation of such fiduciary
98-59 business being conducted by it under the powers granted in its
98-60 original charter, as amended, shall not constitute or be deemed a
98-61 resignation or refusal to act upon the part of such corporation as
98-62 to any such guardianship, trust, executorship, administration, or
98-63 any other fiduciary capacity; and provided further that the naming
98-64 or designation by a testator or the creator of a living trust of
98-65 such corporation to act as trustee, guardian, executor, or in any
98-66 other fiduciary capacity, shall be considered the naming or
98-67 designation of the state bank or trust company and authorizing such
98-68 state bank or trust company to act in said fiduciary capacity. All
98-69 transfers and assignments of fiduciary business by such
98-70 corporations to a state bank or trust company consistent with the
99-1 provisions of this Act are hereby validated.
99-2 SECTION 9. Section 105.001(13), Local Government Code, is
99-3 amended to read as follows:
99-4 (13) "State bank" has the meaning assigned by Section
99-5 1.002(a), Texas Banking Act <The Texas Banking Code (Article
99-6 342-101 et seq., Vernon's Texas Civil Statutes)>.
99-7 SECTION 10. Sections 105A(c) and (d), Texas Probate Code,
99-8 are amended to read as follows:
99-9 (c) No foreign bank or trust company shall establish or
99-10 maintain any branch office, agency or other place of business
99-11 within this state, or shall in any way solicit, directly or
99-12 indirectly, any fiduciary business in this state of the types
99-13 embraced by subdivision (a) hereof. Except as authorized herein or
99-14 as may otherwise be authorized by the laws of this state, no
99-15 foreign bank or trust company shall act in a fiduciary capacity in
99-16 this state. Nothing in this Section shall be construed to
99-17 authorize foreign banks and trust companies to issue or to sell or
99-18 otherwise market or distribute in this state any investment
99-19 certificates, trust certificates, or other types of securities
99-20 (including without limiting the generality of the foregoing any
99-21 securities of the types authorized by Chapter 7 of the Insurance
99-22 Code of 1951 prior to the repeal thereof), or to conduct any
99-23 activities or exercise any powers of the type embraced and
99-24 regulated by the Texas Banking Act <Code of 1943> other than those
99-25 conducted and exercised in a fiduciary capacity under the terms and
99-26 conditions hereof.
99-27 (d) Any foreign bank or trust company acting in a fiduciary
99-28 capacity in this state in strict accordance with the provisions of
99-29 this Section shall not be deemed to be doing business in the State
99-30 of Texas within the meaning of Article 8.01 of the Texas Business
99-31 Corporation Act; shall be deemed qualified to serve in such
99-32 capacity under the provisions of Section 105 of this Code; and
99-33 notwithstanding other law shall not be prohibited <by the
99-34 provisions of Chapter 137, Acts of the 55th Legislature, Regular
99-35 Session, 1957, amending Article 342-902 of the Texas Banking Code
99-36 of 1943,> from using in its name and stationery the terms "bank,"
99-37 "trust," or "bank and trust."
99-38 SECTION 11. Section 73.003(c), Property Code, is amended to
99-39 read as follows:
99-40 (c) This section does not affect the provisions of
99-41 Subchapter B, Chapter 8, Texas Banking Act <Article 6, Chapter IX,
99-42 The Texas Banking Code of 1943 (Article 342-906, Vernon's Texas
99-43 Civil Statutes)>.
99-44 SECTION 12. Section 171.001(b)(1), Tax Code, is amended to
99-45 read as follows:
99-46 (1) "Banking corporation" means each state, national,
99-47 domestic, or foreign bank, including a limited banking association,
99-48 as defined by Section 1.002(a), Texas Banking Act <organized under
99-49 Subchapter C, Chapter III, The Texas Banking Code (Article 342-360
99-50 et seq., Vernon's Texas Civil Statutes)>, and each bank organized
99-51 under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
99-52 (edge corporations), but does not include a bank holding company as
99-53 that term is defined by Section 2, Bank Holding Company Act of 1956
99-54 (12 U.S.C. Sec. 1841).
99-55 SECTION 13. Section 171.1031(c), Tax Code, is amended to
99-56 read as follows:
99-57 (c) To the extent that this subsection is not preempted by
99-58 federal law, the Texas Department of Banking <does not conflict
99-59 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
99-60 342-908, Vernon's Texas Civil Statutes), the Banking Department of
99-61 Texas> is required to appoint a conservator under Subchapter B,
99-62 Chapter 6, Texas Banking Act, to pay the franchise tax <revoke the
99-63 chapter> of any banking corporation certified by the Comptroller as
99-64 being delinquent in the payment of its franchise tax.
99-65 SECTION 14. Section 5, Article 350, Revised Statutes, is
99-66 amended to read as follows:
99-67 Sec. 5. Fees. The commissioner by rule shall set the
99-68 license application fees, license fees, license renewal fees, <and>
99-69 examination fees, and investigation fees in amounts reasonable and
99-70 necessary to defray the cost of administering this article.
100-1 SECTION 15. Section 8, Article 350, Revised Statutes, is
100-2 amended by amending Subsections (c) and (d) and adding Subsections
100-3 (e), (f), and (g) to read as follows:
100-4 (c) A person is not eligible for a license or must surrender
100-5 an existing license if<, during the previous 10 years,> the person,
100-6 an agent of the person for purposes of the currency exchange or
100-7 transmission business, or a principal of the person, if a business:
100-8 (1) has been convicted within 10 years preceding the
100-9 date of the application of a felony or a crime involving moral
100-10 turpitude under the laws of this state, any other state, or the
100-11 United States;
100-12 (2) has been convicted within 10 years of the date of
100-13 the application of a crime under the laws of another country that
100-14 involves moral turpitude or would be a felony if committed in the
100-15 United States; or
100-16 (3) owes delinquent taxes, fines, or fees to any
100-17 local, state, or federal taxing or governmental entity.
100-18 (d) An applicant for a license or renewal of a license must
100-19 demonstrate that the applicant:
100-20 (1) has not recklessly failed to file or evaded the
100-21 obligation to file a currency transaction report as required by 31
100-22 U.S.C. Section 5313 during the previous three years;
100-23 (2) has not recklessly accepted currency for exchange
100-24 or transmission during the previous three years in which a portion
100-25 of the currency was derived from an illegal transaction or
100-26 activity;
100-27 (3) will conduct its currency exchange or transmission
100-28 business within the bounds of state and federal law; <and>
100-29 (4) warrants the trust of the community; and
100-30 (5) has a minimum net worth of $25,000, computed
100-31 according to generally accepted accounting principles, for each
100-32 location at which business is conducted, including any location or
100-33 agency that receives or holds any funds intended to be transmitted
100-34 by another location, except that an applicant may not be required
100-35 to maintain a net worth of more than $1 million.
100-36 (e) If the applicant is an individual who is a foreign
100-37 citizen, the applicant must be a resident of the state. If the
100-38 applicant is a person other than an individual, a majority of the
100-39 principals of the applicant who the commissioner determines are
100-40 actively involved in the currency exchange or transmission business
100-41 in the state must be residents of the state.
100-42 (f) Before approving an application for a license under this
100-43 article, the commissioner may investigate an applicant or a
100-44 principal of the applicant. The commissioner shall charge and
100-45 collect from the applicant a nonrefundable fee to cover the expense
100-46 of an investigation under this subsection. If the applicant fails
100-47 to pay a fee required by this subsection or the applicant or
100-48 principal of the applicant fails to cooperate with an investigation
100-49 conducted under this subsection, the commissioner may deny the
100-50 application.
100-51 (g) A licensee shall maintain a minimum net worth for each
100-52 license in the amount required under Subsection (d)(5).
100-53 SECTION 16. Section 10(a), Article 350, Revised Statutes, is
100-54 amended to read as follows:
100-55 (a) A person who is licensed under this article shall post a
100-56 bond with a qualified surety company doing business in this state
100-57 that is acceptable to the commissioner or an irrevocable letter of
100-58 credit issued by a qualified financial institution that is
100-59 acceptable to the commissioner. The bond or letter of credit shall
100-60 be in an amount determined by the commissioner. The commissioner
100-61 shall determine the amount of the bond or letter of credit based on
100-62 the dollar volume of the licensee's currency exchange or
100-63 transmission business and the number of locations from which the
100-64 person operates, but the bond or letter of credit must be at least
100-65 $25,000 for a person conducting a currency exchange business and at
100-66 least $300,000 for a person conducting a currency transmission or
100-67 currency transportation business.
100-68 SECTION 17. Section 11, Article 350, Revised Statutes, is
100-69 amended to read as follows:
100-70 Sec. 11. Examination. (a) Each licensee is subject to a
101-1 periodic examination of the licensee's business records by the
101-2 commissioner at the expense of the licensee. For the purpose of
101-3 carrying out this article, the commissioner may examine all books,
101-4 records, papers, or other objects that the commissioner determines
101-5 are necessary for conducting a complete examination and may also
101-6 examine under oath any principal associated with the license
101-7 holder, including an officer, director, or employee of the
101-8 licensee. If a person required by the commissioner to submit to an
101-9 examination refuses to permit the examination or to answer any
101-10 question authorized by this article, the commissioner may suspend
101-11 the person's license until the examination is completed.
101-12 (b) The Banking Department may, at its sole discretion,
101-13 periodically conduct an unannounced examination to determine a
101-14 licensee's compliance with this article.
101-15 (c) As part of every examination, the Banking Department
101-16 shall determine whether the licensee is complying with all state
101-17 and federal laws relating to the currency exchange, transportation,
101-18 or transmission business.
101-19 SECTION 18. Article 350, Revised Statutes, is amended by
101-20 adding Sections 22 and 23 to read as follows:
101-21 Sec. 22. DECEPTIVE ADVERTISING. (a) A licensee who
101-22 advertises the prices to be charged by the currency exchange,
101-23 transportation, or currency transmission business for services
101-24 provided must specifically state in the advertisement any fee or
101-25 commission that is included as part of the price to the consumer.
101-26 (b) The commissioner by rule shall establish requirements
101-27 for the size and type of lettering a licensee must use in placing
101-28 an advertisement for prices or rates to be charged by the business.
101-29 (c) A person who violates this section or a rule adopted
101-30 under this section commits a false, misleading, or deceptive act or
101-31 practice within the meaning of Subsections (a) and (b) of Section
101-32 17.46, Business & Commerce Code.
101-33 Sec. 23. NAME. The commissioner may not issue a license to
101-34 an applicant if the commissioner determines the applicant's name is
101-35 misleading or deceptive to consumers.
101-36 SECTION 19. Section 2.13, Texas Savings Bank Act (Article
101-37 489e, Vernon's Texas Civil Statutes), is amended to read as
101-38 follows:
101-39 Sec. 2.13. Corporate Name. The name of a savings bank must
101-40 include the words "State Savings Bank" or the abbreviation "SSB."
101-41 These words or the abbreviation must be preceded by an appropriate
101-42 descriptive word or words approved by the commissioner. The
101-43 commissioner may not approve the incorporation of a savings bank
101-44 having the same name as another financial institution authorized to
101-45 do business in this state under this Act, the Texas Savings and
101-46 Loan Act (Article 852a, Vernon's Texas Civil Statutes), or the
101-47 Texas Banking Act <The Texas Banking Code (Article 342-101 et seq.,
101-48 Vernon's Texas Civil Statutes)> or a name so nearly resembling the
101-49 name of another financial institution as to be calculated to
101-50 deceive unless the savings bank is formed by the reincorporation,
101-51 reorganization, or consolidation of the other financial institution
101-52 or on the sale of the property or franchise of the other savings
101-53 bank. A person or company, either domestic or foreign, other than
101-54 a state or federal savings bank, may not do business under a name
101-55 or title that contains the words "savings bank," that indicates or
101-56 reasonably implies that the business is the character or kind of
101-57 business carried on or transacted by a savings bank, or that is
101-58 calculated to lead any person to believe that its business is that
101-59 of a savings bank. On application by the commissioner or any
101-60 savings bank, a court of competent jurisdiction may issue an
101-61 injunction to restrain a person or company from violating this
101-62 section.
101-63 SECTION 20. Section 4.07, Texas Savings Bank Act (Article
101-64 489e, Vernon's Texas Civil Statutes), is amended to read as
101-65 follows:
101-66 Sec. 4.07. Fees. The commissioner and the finance
101-67 commission, acting under the rulemaking power delegated by Section
101-68 1.106, Texas Banking Act <Article 5, Chapter II, The Texas Banking
101-69 Code (Article 342-205, Vernon's Texas Civil Statutes)>, and Section
101-70 4.04 of this Act, shall establish the amount of the fees to be
102-1 charged by the commissioner for supervision and examination of
102-2 savings banks, for filing an application or other documents, for
102-3 conducting a hearing, and for other services performed by the
102-4 commissioner and the commission's office and the time and manner of
102-5 payment of the fees. Fees collected by the commissioner shall be
102-6 deposited and used in accordance with Section 1.106, Texas Banking
102-7 Act <(h), Article 5, Chapter II, The Texas Banking Code (Article
102-8 342-205, Vernon's Texas Civil Statutes)>.
102-9 SECTION 21. Section 12.07, Texas Savings Bank Act (Article
102-10 489e, Vernon's Texas Civil Statutes), is amended to read as
102-11 follows:
102-12 Sec. 12.07. Initiation of Rulemaking by Savings Banks. If
102-13 20 percent or more of the savings banks subject to this Act
102-14 petition the commissioner in writing requesting the adoption,
102-15 amendment, or repeal of a rule, the commissioner shall initiate
102-16 rulemaking proceedings under Chapter 2001, Government Code
102-17 <Subsection (e), Article 5, Chapter II, The Texas Banking Code
102-18 (Article 342-205, Vernon's Texas Civil Statutes)>.
102-19 SECTION 22. Section 12.12(b), Texas Savings Bank Act
102-20 (Article 489e, Vernon's Texas Civil Statutes), is amended to read
102-21 as follows:
102-22 (b) Subsection (a) of this section does not apply to this
102-23 Act, the Texas Savings and Loan Act (Article 852a, Vernon's Texas
102-24 Civil Statutes), the Texas Banking Act <The Texas Banking Code
102-25 (Article 342-101 et seq., Vernon's Texas Civil Statutes)>, or the
102-26 Penal Code.
102-27 SECTION 23. Section 11.05, Texas Savings and Loan Act
102-28 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
102-29 as follows:
102-30 Sec. 11.05. Fees. The amount of the fees to be charged by
102-31 the Commissioner for supervision and examination of associations,
102-32 filing of applications and other documents and for other services
102-33 performed by the Commissioner and his office and the time and
102-34 manner of payment thereof shall be fixed by rule and regulation
102-35 adopted by the Commissioner and the Finance Commission, acting
102-36 pursuant to the rule-making power delegated by Section 1.106, Texas
102-37 Banking Act <Article 5, Chapter II, the Texas Banking Code of 1943
102-38 (Article 342-205, Vernon's Texas Civil Statutes)>. All fees
102-39 collected by the Commissioner shall be deposited and used in
102-40 accordance with Section 1.106, Texas Banking Act <(h), Article 5,
102-41 Chapter II, The Texas Banking Code of 1943 (Article 342-205,
102-42 Vernon's Texas Civil Statutes)>.
102-43 SECTION 24. Section 11.20(l), Texas Savings and Loan Act
102-44 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
102-45 as follows:
102-46 (l) The Finance Commission of Texas by rule shall adopt a
102-47 schedule of fees for the filing of applications and the holding of
102-48 hearings. The schedule may be graduated so that those applications
102-49 and hearings that are more difficult to review or administer will
102-50 require a larger fee. An application fee is not refundable on
102-51 denial of the application, but the commissioner may refund a
102-52 portion of the fee if the application is withdrawn before he
102-53 completes review of it. Fees collected under this section shall be
102-54 deposited and used in accordance with Section 1.106, Texas Banking
102-55 Act <(h), Article 5, Chapter II, The Texas Banking Code of 1943
102-56 (Article 342-205, Vernon's Texas Civil Statutes)>.
102-57 SECTION 25. Section A(2), Article 7.06, Texas Miscellaneous
102-58 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
102-59 Statutes), is amended to read as follows:
102-60 (2) "Corporation" means:
102-61 (a) Any corporation, association, or other
102-62 organization incorporated or organized under the Texas Business
102-63 Corporation Act, the Texas Non-Profit Corporation Act (Article
102-64 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
102-65 Banking Act or a predecessor of that Act <The Texas Banking Code of
102-66 1943 (Article 342-1.01 et seq., Vernon's Texas Civil Statutes)>,
102-67 the Insurance Code, the Texas Savings and Loan Act (Article 852a,
102-68 Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
102-69 Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
102-70 Texas Civil Statutes), the Texas Credit Union Act (Article
103-1 2461-1.01 et seq., Vernon's Texas Civil Statutes), the Cooperative
103-2 Association Act (Article 1396-50.01, Vernon's Texas Civil
103-3 Statutes), Articles 1399 through 1407, Revised Statutes, Article
103-4 1448, Revised Statutes, Section 2, Chapter 42, Acts of the 42nd
103-5 Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
103-6 Texas Civil Statutes), the State Housing Law (Article 1528a,
103-7 Vernon's Texas Civil Statutes), the Electric Cooperative
103-8 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
103-9 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
103-10 Statutes), the Automobile Club Services Act (Article 1528d,
103-11 Vernon's Texas Civil Statutes), The Texas Professional Corporation
103-12 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
103-13 Professional Association Act (Article 1528f, Vernon's Texas Civil
103-14 Statutes), the Texas Mutual Trust Investment Company Act (Article
103-15 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
103-16 Safety Code, the Texas Transportation Corporation Act (Article
103-17 1528l, Vernon's Texas Civil Statutes), the Cultural Education
103-18 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
103-19 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
103-20 and Safety Code, Title 4, Agricultural Code, Subchapter A, Chapter
103-21 301, Health and Safety Code, Subchapter B, Chapter 301, Health and
103-22 Safety Code, or the Higher Education Authority Act, Chapter 53,
103-23 Education Code;
103-24 (b) Any corporation, association, or other
103-25 organization incorporated or organized under the laws of this state
103-26 that is governed in whole or in part by the Texas Business
103-27 Corporation Act, the Texas Non-Profit Corporation Act (Article
103-28 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
103-29 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
103-30 Vernon's Texas Civil Statutes); or
103-31 (c) To the extent permitted by federal law, any
103-32 federally chartered bank, savings and loan association, or credit
103-33 union.
103-34 SECTION 26. The Texas Non-Profit Corporation Act (Article
103-35 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
103-36 adding Article 2.31 to read as follows:
103-37 Art. 2.31. POWER TO SERVE AS TRUSTEE. A corporation that is
103-38 described by Section 501(c)(3) or 170(c), Internal Revenue Code of
103-39 1986, or a corresponding provision of a subsequent federal tax law,
103-40 may serve as the trustee of a trust:
103-41 (1) of which the corporation is a beneficiary; or
103-42 (2) benefiting another organization described by one
103-43 of those sections of the Internal Revenue Code of 1986, if the
103-44 service as trustee is in furtherance of the purposes for which the
103-45 corporation was formed.
103-46 SECTION 27. Subsections (d) and (k), Article 2.01, Title 79,
103-47 Revised Statutes (Article 5069-2.01, Vernon's Texas Civil
103-48 Statutes), are amended to read as follows:
103-49 (d) "Bank" shall mean any person doing business under the
103-50 authority of and as permitted by the Texas Banking Act <Code of
103-51 1943, as amended,> or any person organized under the provisions of
103-52 Title 12, United States Code, Section 21 (U.S.Rev.Statutes 5133)
103-53 and the amendments thereto.
103-54 (k) "Finance Commission" means the Finance Commission of
103-55 Texas <created by the Texas Banking Code of 1943>, or any
103-56 subcommittee created by any rule or regulation of the Finance
103-57 Commission of Texas.
103-58 SECTION 28. Section (1), Article 2.02B, Title 79, Revised
103-59 Statutes (Article 5069-2.02B, Vernon's Texas Civil Statutes), is
103-60 amended to read as follows:
103-61 (1) All money collected under this Act shall be deposited in
103-62 the Office of the Consumer Credit Commissioner expense fund, which
103-63 is created as a special fund in the State Treasury. Money in the
103-64 fund may be used only for the administration of this Act and
103-65 support of The Finance Commission of Texas as provided by Section
103-66 1.011, Texas Banking Act <Article 11C, Chapter I, The Texas Banking
103-67 Code (Article 342-111C, Vernon's Texas Civil Statutes)>. Income
103-68 earned on money deposited in the expense fund shall be credited to
103-69 that fund.
103-70 SECTION 29. Subsection (d), Article 15.01, Title 79, Revised
104-1 Statutes (Article 5069-15.01, Vernon's Texas Civil Statutes), is
104-2 amended to read as follows:
104-3 (d) "Bank" means a person doing business under the
104-4 authority of and as permitted by the Texas Banking Act <The Texas
104-5 Banking Code of 1943, as amended (Article 342-101 et seq., Vernon's
104-6 Texas Civil Statutes)>, and any person organized under Title 12,
104-7 United States Code, as amended.
104-8 SECTION 30. Section 6, Acts of the 60th Legislature, Regular
104-9 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
104-10 is amended to read as follows:
104-11 Sec. 6. ACT CUMULATIVE. The provisions of this Act are
104-12 cumulative of the Texas Banking Act <Code of 1943, as amended>; the
104-13 "Texas Savings and Loan Act," as amended; and Articles 2461 through
104-14 2484, Revised Civil Statutes of Texas, 1925, as amended and the
104-15 amendments thereto, and Section 5 of House Bill No. 47, Acts of the
104-16 46th Legislature, Regular Session, 1939, and Chapter 173, Acts of
104-17 the 51st Legislature, Regular Session, 1949, relating to Credit
104-18 Unions and the amendments thereto.
104-19 SECTION 31. The following laws are repealed:
104-20 (1) Chapters I-X, The Texas Banking Code (Article
104-21 342-101 et seq., Vernon's Texas Civil Statutes);
104-22 (2) Chapter 183, General Laws, Acts of the 44th
104-23 Legislature, Regular Session, 1935 (Article 489b, Vernon's Texas
104-24 Civil Statutes); and
104-25 (3) Article 3921, Revised Statutes.
104-26 SECTION 32. A change in law made by this Act does not
104-27 affect:
104-28 (1) the validity of any action taken by the Finance
104-29 Commission of Texas, banking commissioner of Texas, savings and
104-30 loan commissioner, or State Banking Board before the effective date
104-31 of this Act; or
104-32 (2) a civil, criminal, or administrative proceeding
104-33 completed before the effective date of this Act.
104-34 SECTION 33. A state bank or private bank that exists on the
104-35 effective date of this Act retains the powers provided by its
104-36 charter and is subject to the jurisdiction and control of the
104-37 Banking Commissioner of Texas as if it were a state bank chartered
104-38 under the Texas Banking Act, as added by this Act.
104-39 SECTION 34. (a) The changes in criminal law made by this
104-40 Act apply only to an offense committed on or after the effective
104-41 date of this Act. For purposes of this section, an offense is
104-42 committed before the effective date of this Act if any element of
104-43 the offense occurs before that date.
104-44 (b) The repeal of a criminal law made by this Act does not
104-45 apply to an offense committed under the repealed law before the
104-46 effective date of this Act.
104-47 (c) An offense committed before the effective date of this
104-48 Act is covered by the law in effect when the offense was committed,
104-49 and the former law is continued in effect for that purpose.
104-50 SECTION 35. (a) The change in law made by this Act does not
104-51 affect the standards for approval to be applied to an application
104-52 accepted for filing by the Texas Department of Banking before the
104-53 effective date of this Act under:
104-54 (1) Article 6, Chapter III, The Texas Banking Code
104-55 (Article 342-306, Vernon's Texas Civil Statutes);
104-56 (2) Article 7, Chapter III, The Texas Banking Code
104-57 (Article 342-307, Vernon's Texas Civil Statutes);
104-58 (3) Article 9, Chapter III, The Texas Banking Code
104-59 (Article 342-309, Vernon's Texas Civil Statutes);
104-60 (4) Article 10, Chapter III, The Texas Banking Code
104-61 (Article 342-310, Vernon's Texas Civil Statutes);
104-62 (5) Article 11, Chapter III, The Texas Banking Code
104-63 (Article 342-311, Vernon's Texas Civil Statutes);
104-64 (6) Article 31, Chapter III, The Texas Banking Code
104-65 (Article 342-331, Vernon's Texas Civil Statutes);
104-66 (7) Article 32, Chapter III, The Texas Banking Code
104-67 (Article 342-332, Vernon's Texas Civil Statutes);
104-68 (8) Article 63, Chapter III, The Texas Banking Code
104-69 (Article 342-363, Vernon's Texas Civil Statutes);
104-70 (9) Article 68, Chapter III, The Texas Banking Code
105-1 (Article 342-368, Vernon's Texas Civil Statutes);
105-2 (10) Article 1a, Chapter IV, The Texas Banking Code
105-3 (Article 342-401a, Vernon's Texas Civil Statutes);
105-4 (11) Article 12, Chapter IX, The Texas Banking Code
105-5 (Article 342-912, Vernon's Texas Civil Statutes);
105-6 (12) Article 6, Chapter X, The Texas Banking Code
105-7 (Article 342-1006, Vernon's Texas Civil Statutes).
105-8 (b) The standards for approval under former law applicable
105-9 to the applications listed in Subsection (a) of this section
105-10 continue in effect as if this Act had not been enacted.
105-11 SECTION 36. (a) A principal shareholder or participant that
105-12 is considered to control a state bank under Section 4.001(a), Texas
105-13 Banking Act, as added by this Act, is not required to file a change
105-14 of control application under Section 4.002, Texas Banking Act, as
105-15 added by this Act, until the person acquires one or more additional
105-16 shares or participation shares of the state bank on or after the
105-17 effective date of this Act.
105-18 (b) With respect to an office of an out-of-state bank that
105-19 exists on the effective date of this Act, the out-of-state bank
105-20 must file the documentation and information required by Section
105-21 8.003, Texas Banking Act, as added by this Act, before September 1,
105-22 1996.
105-23 (c) With respect to a representative office of a foreign
105-24 bank corporation in this state that exists as of the effective date
105-25 of this Act, the foreign bank corporation must file before
105-26 September 1, 1996:
105-27 (1) a registration of the representative office with
105-28 the banking commissioner containing the information required by
105-29 Section 9.006(a), Texas Banking Act, as added by this Act; and
105-30 (2) with the secretary of state the fees,
105-31 documentation, and information required by Section 9.007, Texas
105-32 Banking Act, as added by this Act.
105-33 SECTION 37. The changes in civil enforcement provisions,
105-34 penalties, and procedures made by Chapter 6, Texas Banking Act, as
105-35 added by this Act, do not apply to a civil enforcement proceeding
105-36 begun by the service of a notice for hearing or proposed civil
105-37 enforcement order by the banking commissioner before the effective
105-38 date of this Act. That proceeding is governed by the law in effect
105-39 when the proceeding was begun, and that law is continued in effect
105-40 for that purpose.
105-41 SECTION 38. Subdivision (3), Article 13, Chapter XI, The
105-42 Texas Banking Code (Article 342-1113, Vernon's Texas Civil
105-43 Statutes), as added by Section 2(h) of this Act, and Article 2.31,
105-44 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
105-45 Vernon's Texas Civil Statutes), as added by Section 26 of this Act,
105-46 are clarification of the law existing before the effective date of
105-47 this Act. An act of a nonprofit corporation serving as trustee
105-48 before the effective date of this Act is valid if consistent with
105-49 law as amended by this Act.
105-50 SECTION 39. (a) If this Act conflicts with another Act of
105-51 the 74th Legislature, Regular Session, 1995:
105-52 (1) the change in law made in the other Act prevails
105-53 and the substance of the change is given effect as part of the
105-54 Texas Banking Act adopted by this Act unless:
105-55 (A) this Act or the conflicting Act expressly
105-56 provides otherwise; or
105-57 (B) it is not possible to give the conflicting
105-58 law effect within the context of the Texas Banking Act, in which
105-59 event the Texas Banking Act prevails; and
105-60 (2) the text of a law that is reenacted in the other
105-61 Act only because of the constitutional requirement that the amended
105-62 law be reenacted at length is superseded by this Act.
105-63 (b) If this Act and another Act of the 74th Legislature,
105-64 Regular Session, 1995, make the same substantive change from the
105-65 current law but differ in text, this Act prevails regardless of the
105-66 relative dates of enactment.
105-67 SECTION 40. This Act takes effect September 1, 1995, except
105-68 that Section 2(h), Section 26, and Section 38 of this Act take
105-69 effect immediately.
105-70 SECTION 41. The importance of this legislation and the
106-1 crowded condition of the calendars in both houses create an
106-2 emergency and an imperative public necessity that the
106-3 constitutional rule requiring bills to be read on three several
106-4 days in each house be suspended, and this rule is hereby suspended,
106-5 and that this Act take effect and be in force from and after its
106-6 passage, and it is so enacted.
106-7 * * * * *