By Craddick H.B. No. 2626 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 Relating to the granting of competitive parity for state banks in 1-3 interstate banking and branching; the examination of interstate 1-4 branches; and agency powers of state banks. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Article 342-305 is amended by adding the 1-7 following language: 1-8 Pursuant to Article XVI, Section 16(a), of the Texas 1-9 Constitution and Section 44(a)(2) of the Federal Deposit Insurance 1-10 Act (12 U.S.C. 1811 et seq.), any one or more state banks or 1-11 national banks domiciled in this state may merge or consolidate 1-12 with any other bank organized under the laws of another state and 1-13 domiciled outside of this state, irrespective of which bank will 1-14 result from the merger or consolidation, provided, however, that 1-15 any state bank or national bank domiciled in this state that 1-16 participates in such merger or consolidation shall have been 1-17 established and operated continuously as a bank for at least five 1-18 (5) years prior to the effective date of the merger or 1-19 consolidation. 1-20 The resulting bank of an interstate merger or consolidation 1-21 shall enjoy the same rights and privileges granted to state banks 1-22 and national banks domiciled in this state. The resulting bank 1-23 shall have the authority to establish branch offices in this state 2-1 on the same terms and conditions, and subject to the same 2-2 limitations, as a state bank and a national bank domiciled in this 2-3 state. 2-4 The activities of a resulting bank shall be governed by the 2-5 laws of the state in which the resulting bank is domiciled, except 2-6 that those state laws listed in Section 5155 of the Revised 2-7 Statutes (12 U.S.C. 36(f)(1)(A)) shall apply to a resulting bank 2-8 operating in this state regardless of where the bank is domiciled. 2-9 The resulting bank of an interstate merger or consolidation that is 2-10 domiciled outside of this state shall appoint the Banking 2-11 Commissioner as its agent for service of process within this state. 2-12 The examination of a resulting bank operating in this state 2-13 shall be conducted by the Banking Commissioner in cooperation with 2-14 the primary state banking regulator of the state in which the 2-15 resulting bank is domiciled, if other than this state. The Banking 2-16 Commissioner shall notify the primary state banking regulator of 2-17 the state in which the resulting bank is domiciled in advance of 2-18 all examinations, share information derived from such examinations 2-19 and, upon request, allow joint examinations by the Department of 2-20 Banking and the primary state banking regulator of the state in 2-21 which the resulting bank is domiciled. 2-22 In enforcing state laws against a resulting bank under this 2-23 Section, the Banking Commissioner shall notify the primary state 2-24 banking regulator of the state in which the resulting bank is 2-25 domiciled, if other than this state, of any enforcement action and 3-1 request assistance, if necessary, in the prosecution of the 3-2 enforcement action. 3-3 The Banking Commissioner may enter into cooperative 3-4 agreements with the primary state banking regulator of the state in 3-5 which the resulting bank is domiciled for the purpose of 3-6 establishing uniform examination and supervisory policies and 3-7 procedures, including, but not limited to, the coordination of 3-8 personnel, and the assessment of examination fees and expenses. 3-9 SECTION 2. ARTICLE 342-306 is amended to read as follows: 3-10 Art. 342-306. Reorganization-Incorporation to take over 3-11 business of other banks or state or federal savings banks or 3-12 savings and loan associations-Trust powers. 3-13 A state bank may be incorporated to take over the business of 3-14 any incorporated bank or banks, state or national, or of any state 3-15 or federal savings bank or state or federal savings and loan 3-16 association, organized under the laws of this state or any other 3-17 state, as a step in the reorganization of such institution or 3-18 institutions, (which institution or institutions, whether one or 3-19 more, will be hereafter referred to as the "reorganizing 3-20 institution"), and shall, subject to the provisions of this 3-21 article, be authorized to purchase assets from the reorganizing 3-22 institution and as consideration therefore, assume all liabilities, 3-23 known or unknown, of the reorganizing institution, other than its 3-24 liability to stockholders as such. (the remainder of this Section 3-25 is not amended.) 4-1 SECTION 3. Article 342-307 is amended to read as follows: 4-2 Article 342-307. Purchase of assets of another bank or state 4-3 or federal savings bank or savings and loans association - 4-4 Disbursing agent. 4-5 Any state bank may, with the consent of the Banking 4-6 Commissioner, purchase the whole or any part of the assets of any 4-7 other state bank or of any national bank domiciled in this state, 4-8 or of a state or federal savings bank or state or federal savings 4-9 and loan association, organized under the laws of this state or any 4-10 other state, and may hold the purchase price and any additional 4-11 funds delivered to it by the selling institution in trust for or as 4-12 a deposit to the credit of the selling institutions. Any 4-13 acquisition of all or substantially all of the assets of a bank 4-14 shall be deemed a merger with such bank and subject to the 4-15 provisions of Section 342-305. (the remainder of this Section is 4-16 not amended.) 4-17 SECTION 4. Article 342-309 is amended by adding the 4-18 following language: 4-19 Pursuant to Article XVI, Section 16(a), of the Texas 4-20 Constitution and Section 44(a)(2) of the Federal Deposit Insurance 4-21 Act (12 U.S.C. 1811 et seq.), a state bank may merge, reorganize or 4-22 consolidate with any other bank organized under the laws of another 4-23 state and domiciled outside of this state irrespective of which 4-24 bank will result from the merger, reorganization or consolidation, 4-25 provided, however, that any state bank that participates in such 5-1 merger, reorganization or consolidation shall have been established 5-2 and operated continuously as a bank for at least five (5) years 5-3 prior to the effective date of the merger, reorganization or 5-4 consolidation. 5-5 The resulting bank of an interstate merger, reorganization or 5-6 consolidation shall enjoy the same rights and privileges granted to 5-7 state banks and national banks domiciled in this state. The 5-8 resulting bank shall have the authority to establish branch offices 5-9 in this state on the same terms and conditions, and subject to the 5-10 same limitations, as a state bank and a national bank domiciled in 5-11 this state. 5-12 The activities of a resulting bank shall be governed by the 5-13 laws of the state in which the resulting bank is domiciled, except 5-14 that those state laws listed in Section 5155 of the Revised 5-15 Statutes (12 U.S.C. 36(f)(1)(A)) shall apply to a resulting bank 5-16 operating in this state regardless of where the bank is domiciled. 5-17 The resulting bank of an interstate merger, reorganization or 5-18 consolidation that is domiciled outside of this state shall appoint 5-19 the Banking Commissioner as its agent for service of process within 5-20 this state. 5-21 The examination of a resulting bank operating as a bank in 5-22 this state shall be conducted by the Banking Commissioner in 5-23 cooperation with the primary state banking regulator of the state 5-24 in which the resulting bank is domiciled, if other than this state. 5-25 The Banking Commissioner shall notify the primary state banking 6-1 regulator of the state in which the resulting bank is domiciled in 6-2 advance of all examinations, share information derived from such 6-3 examinations and, upon request, allow joint examinations by the 6-4 Department of Banking and the primary state banking regulator of 6-5 the state in which the resulting bank is domiciled. 6-6 In enforcing state laws against a resulting bank under this 6-7 Section, the Banking Commissioner shall notify the primary state 6-8 banking regulator of the state in which the resulting bank is 6-9 domiciled, if other than this state, of any enforcement action and 6-10 request assistance, if necessary, in the prosecution of the 6-11 enforcement action. 6-12 The Banking Commissioner may enter into cooperative 6-13 agreements with the primary state banking regulator of the state in 6-14 which the resulting bank is domiciled for the purpose of 6-15 establishing uniform examination and supervisory policies and 6-16 procedures, including, but not limited to, the coordination of 6-17 personnel, and the assessment of examination fees and expenses. 6-18 SECTION 5. Article 342-903 is amended by adding the 6-19 following new language: 6-20 A state bank may establish branch offices in other states 6-21 with the prior written approval of the Banking Commissioner, in 6-22 accordance with regulations promulgated by the Finance Commission, 6-23 and subject to the laws of the state in which the branch is to be 6-24 located. 6-25 Any bank organized under the laws of another state or a 7-1 national bank domiciled in another state may establish branch 7-2 offices in this state with the prior written approval of the 7-3 Banking Commissioner; provided, however, that the Banking 7-4 Commissioner may approve an application to establish a branch 7-5 office by a bank organized under the laws of another state or of a 7-6 national bank domiciled in another state only if the establishment 7-7 of the branch results solely from a conversion to, or merger or 7-8 consolidation with, either a state bank or a national bank 7-9 domiciled in this state that has been established and operated 7-10 continuously as a bank for at least five (5) years prior to the 7-11 application for establishment of the branch office. 7-12 Branch offices established by banks organized under the laws 7-13 of other states and national banks domiciled in other states shall 7-14 enjoy the same rights and privileges granted to branch offices of 7-15 state banks and national banks domiciled in this state. 7-16 The examination of a branch office established by a bank 7-17 organized under the laws of another state shall be conducted by the 7-18 Banking Commissioner in cooperation with the primary state banking 7-19 regulator of the state in which the bank is domiciled, if other 7-20 than this state. The Banking Commissioner shall notify the primary 7-21 state banking regulator of the state in which the bank is domiciled 7-22 in advance of all examinations, share information derived from such 7-23 examinations and, upon request, allow joint examinations by the 7-24 Department of Banking and the primary state banking regulator of 7-25 the state in which the bank is domiciled. 8-1 The Banking Commissioner may enter into cooperative 8-2 agreements with the primary state banking regulator of the state in 8-3 which the bank is domiciled for the purpose of establishing uniform 8-4 examination and supervisory policies and procedures for the 8-5 examination of branch offices, including, but not limited to, the 8-6 coordination of personnel, and the assessment of examination fees 8-7 and charges. 8-8 SECTION 6. The Texas Banking Code is amended by adding the 8-9 following new article: 8-10 Article 342-917. Affiliated Bank Agency Powers. 8-11 (a) AUTHORITY TO ACT AS AGENT. - A state bank may act as an 8-12 agent of another bank, whether such bank is organized under the 8-13 laws of another state or is a national bank domiciled in another 8-14 state, provided that, all of the outstanding voting shares of the 8-15 state bank are owned by the same bank holding company that owns all 8-16 of the outstanding voting shares of such bank organized under the 8-17 laws of another state or the national bank domiciled in another 8-18 state. The agency described herein is limited to the following 8-19 activities: 8-20 (i) the receipt of deposits, 8-21 (ii) the renewal of time deposits, 8-22 (iii) the closing of loans, 8-23 (iv) the servicing of loans, and 8-24 (v) the receipt of payments of loans and other 8-25 extensions of credit. 9-1 The conduct of any activity authorized by this section shall not be 9-2 deemed to constitute the establishment of a branch office. 9-3 (b) AUTHORITY TO OPERATE THROUGH AFFILIATE AGENTS. - Any 9-4 state bank may appoint as its agent a bank organized under the laws 9-5 of another state or a national bank domiciled in another state, 9-6 provided that, all of the outstanding voting shares of the state 9-7 bank are owned by the same bank holding company that owns all of 9-8 the outstanding voting shares of such bank organized under the laws 9-9 of another state or the national bank domiciled in another state. 9-10 The agency described herein is limited to the following activities: 9-11 (i) the receipt of deposits, 9-12 (ii) the renewal of time deposits, 9-13 (iii) the closing of loans, 9-14 (iv) the servicing of loans, and 9-15 (v) the receipt of payments of loans and other 9-16 extensions of credit. 9-17 The conduct of any activity authorized by this section shall not be 9-18 deemed to constitute the establishment of a branch office. 9-19 SECTION 7. This Act takes effect on June 1, 1997, provided 9-20 that no legislation prohibiting the activities contained herein is 9-21 enacted by the Texas Legislature and becomes effective prior to 9-22 that date. If such legislation is enacted and becomes effective 9-23 prior to June 1, 1997, this Act shall have no effect. 9-24 SECTION 8. The importance of this legislation and the 9-25 crowded condition of the calendar in both houses creates an 10-1 emergency and an imperative public necessity that the 10-2 constitutional rule requiring bills to be read on three separate 10-3 days in each house be suspended, and this rule is hereby suspended, 10-4 and that this Act take effect and be in force from and after its 10-5 passage, and it is so enacted.