By Montford S.B. No. 765
74R5759 DWS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of banking and of entities under the
1-3 jurisdiction of state banking regulatory officials; providing
1-4 administrative and criminal penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Banking Act is enacted to read as
1-7 follows:
1-8 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
1-9 SAVINGS AND LOAN DEPARTMENT
1-10 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
1-11 Sec. 1.001. SHORT TITLE ....................................... 2
1-12 Sec. 1.002. DEFINITIONS ....................................... 2
1-13 Sec. 1.003. FINANCE COMMISSION ................................ 16
1-14 Sec. 1.004. QUALIFICATIONS OF MEMBERS ......................... 17
1-15 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES ..................... 18
1-16 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS .............. 19
1-17 Sec. 1.007. DISQUALIFICATION OF MEMBERS ....................... 20
1-18 Sec. 1.008. MEETINGS .......................................... 20
1-19 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE ........... 21
1-20 Sec. 1.010. PRESIDING OFFICER ................................. 21
1-21 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES ................ 22
1-22 Sec. 1.012. BANKING RULES ..................................... 24
1-23 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
1-24 REGULATIONS ..................................... 25
2-1 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS ............. 26
2-2 Sec. 1.015. SUNSET PROVISION .................................. 26
2-3 (Sections 1.016-1.100 reserved for expansion)
2-4 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
2-5 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER ..................... 26
2-6 Sec. 1.102. DEPUTY COMMISSIONERS .............................. 27
2-7 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT .......... 27
2-8 Sec. 1.104. OATH OF OFFICE .................................... 28
2-9 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER ................. 28
2-10 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT ............... 28
2-11 Sec. 1.107. CONFLICTS OF LAW .................................. 29
2-12 Sec. 1.108. CONFLICTS OF INTEREST ............................. 29
2-13 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS ............... 30
2-14 Sec. 1.110. SUNSET PROVISION .................................. 31
2-15 CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
2-16 SAVINGS AND LOAN DEPARTMENT
2-17 SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION
2-18 Sec. 1.001. SHORT TITLE. This Act may be cited as the Texas
2-19 Banking Act.
2-20 Sec. 1.002. DEFINITIONS. (a) In this Act:
2-21 (1) "Affiliate" means a company that directly or
2-22 indirectly controls, is controlled by, or is under common control
2-23 with a bank or other company.
2-24 (2) "Bank" means a state or national bank.
2-25 (3) "Bank holding company" has the meaning assigned by
2-26 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
2-27 seq.) or a successor to that act.
3-1 (4) "Banking" means the performance of the exclusive
3-2 depository institution functions of accepting deposits and
3-3 discounting loans and the performance of related activities that
3-4 are not exclusive to banks or other depository institutions,
3-5 including paying drafts or checks, lending money, and providing
3-6 related financial services authorized by this Act.
3-7 (5) "Banking association" means a state bank that is
3-8 organized as a banking association, authorized to issue shares of
3-9 stock, and controlled by its shareholders.
3-10 (6) "Banking commissioner" means the banking
3-11 commissioner of Texas or a person designated by the banking
3-12 commissioner and acting under the banking commissioner's direction
3-13 and authority.
3-14 (7) "Board" means the board of directors, managers, or
3-15 managing participants of, or a person or group of persons acting in
3-16 a comparable capacity for, a state bank or other entity.
3-17 (8) "Branch" means a location of a bank, other than
3-18 the bank's home office, at which the bank engages in the business
3-19 of banking. The term does not include:
3-20 (A) a drive-in facility located not more than
3-21 2,000 feet from the nearest wall of the home office or an approved
3-22 branch office of the bank;
3-23 (B) a night depository;
3-24 (C) an electronic terminal subject to Section
3-25 3.204 of this Act;
3-26 (D) a loan production office subject to Section
3-27 3.205 of this Act;
4-1 (E) a state or federally licensed armored car
4-2 service or other courier service transporting items for deposit or
4-3 payment, unless:
4-4 (i) the risk of loss of items in the
4-5 custody of the service is borne by the employing bank; or
4-6 (ii) the items in the custody of the
4-7 service are considered to be in customer accounts at the employing
4-8 bank or federally insured through the employing bank;
4-9 (F) a bank acting as an agent for a depository
4-10 institution affiliate as provided by Section 8.010(a) of this Act;
4-11 or
4-12 (G) other offices as determined by rule.
4-13 (9) "Capital" means:
4-14 (A) the sum of:
4-15 (i) the par value of all shares or
4-16 participation shares of the state bank having a par value that have
4-17 been issued;
4-18 (ii) the consideration fixed by the board
4-19 in the manner provided by the Texas Business Corporation Act for
4-20 all shares or participation shares of the state bank without par
4-21 value that have been issued, except a part of that consideration
4-22 that:
4-23 (a) has been actually received;
4-24 (b) is less than all of that
4-25 consideration; and
4-26 (c) the board, by resolution adopted
4-27 not later than the 60th day after the date of issuance of those
5-1 shares, has allocated to surplus with the prior approval of the
5-2 banking commissioner; and
5-3 (iii) an amount not included in
5-4 Subparagraphs (i) and (ii) that has been transferred to capital of
5-5 the state bank, on the payment of a share dividend or on adoption
5-6 by the board of a resolution directing that all or part of surplus
5-7 be transferred to capital, minus each reduction made as permitted
5-8 by law; less
5-9 (B) all amounts otherwise included in
5-10 Subparagraphs (i) and (ii) that are attributable to the issuance of
5-11 securities by the state bank and that the banking commissioner
5-12 determines, after notice and an opportunity for hearing, should be
5-13 classified as debt rather than equity securities.
5-14 (10) "Certified surplus" means the part of surplus
5-15 designated by a vote of the board of a state bank under Section
5-16 4.104(b) of this Act and recorded in the board minutes as
5-17 certified.
5-18 (11) "Company" includes a bank, trust company,
5-19 corporation, partnership, association, business trust, or another
5-20 trust.
5-21 (12) "Conservator" means the banking commissioner or
5-22 an agent of the banking commissioner exercising the powers and
5-23 duties provided by Subchapter B, Chapter 6, of this Act.
5-24 (13) "Control" means:
5-25 (A) the ownership of or ability or power to
5-26 vote, directly, acting through one or more other persons, or
5-27 otherwise indirectly, 25 percent or more of the outstanding shares
6-1 of a class of voting securities of a bank or other company;
6-2 (B) the ability to control the election of a
6-3 majority of the board of a bank or other company;
6-4 (C) the power to exercise, directly or
6-5 indirectly, a controlling influence over the management or policies
6-6 of the bank or other company as determined by the banking
6-7 commissioner after notice and an opportunity for hearing; or
6-8 (D) the conditioning of the transfer of 25
6-9 percent or more of the outstanding shares or participation shares
6-10 of a class of voting securities of a bank or other company on the
6-11 transfer of 25 percent or more of the outstanding shares of a class
6-12 of voting securities of another bank or other company.
6-13 (14) "Department" means the Texas Department of
6-14 Banking.
6-15 (15) "Deposit" means the establishment of a
6-16 debtor-creditor relationship represented by the agreement of the
6-17 deposit debtor to act as a holding, paying, or disbursing agent for
6-18 the deposit creditor. The term:
6-19 (A) includes:
6-20 (i) an unpaid balance of money received by
6-21 the deposit debtor in the usual course of business in exchange for
6-22 conditional or unconditional credit to a commercial, checking,
6-23 savings, or time account of the deposit creditor or the creditor's
6-24 designee, or that is evidenced by a certificate of deposit or
6-25 similar instrument, a certified check or draft drawn against a
6-26 deposit account, or a letter of credit or a traveler's check on
6-27 which the deposit debtor is primarily liable, but excluding an
7-1 obligation arising under The Sale of Checks Act (Article 489d,
7-2 Vernon's Texas Civil Statutes);
7-3 (ii) money or credit given for money
7-4 received by the deposit debtor in the usual course of business for
7-5 a special purpose, including money:
7-6 (a) held as escrow funds, as
7-7 security for an obligation due to the deposit debtor or another
7-8 person, or as security for a loan;
7-9 (b) left with a deposit debtor by a
7-10 deposit creditor to meet maturing obligations that are not yet due;
7-11 and
7-12 (c) held by the deposit debtor to
7-13 meet an acceptance or letter of credit;
7-14 (iii) an outstanding draft, cashier's
7-15 check, money order, or other officer's check issued by the deposit
7-16 debtor in the usual course of business for any purpose, including
7-17 payment for services, dividends, or purchases; and
7-18 (iv) an obligation that the finance
7-19 commission by rule defines as a deposit liability, except that the
7-20 term may not include money received for immediate application to
7-21 reduction of an indebtedness; and
7-22 (B) does not include an obligation that this Act
7-23 or finance commission rule determines not to be a deposit
7-24 liability.
7-25 (16) "Depository institution" means an entity with the
7-26 power to accept deposits under applicable law.
7-27 (17) "Discount" means the retention by a lender of
8-1 advance interest from loan proceeds. The term does not include the
8-2 purchase of a promissory note or similar instrument at less than
8-3 its face value unless the party selling the note is liable on the
8-4 note as a maker, endorser, or guarantor.
8-5 (18) "Drive-in facility" means a facility offering one
8-6 or more banking services other than originating or establishing a
8-7 lending or deposit relationship solely to persons who remain
8-8 outside the facility.
8-9 (19) "Electronic terminal" means an electronic device,
8-10 other than a telephone or modem operated by a customer of a
8-11 depository institution, through which a person may initiate an
8-12 electronic fund transfer, as defined in 15 U.S.C. Section 1693a(6).
8-13 The term includes a point-of-sale terminal, automated teller
8-14 machine, or cash dispensing machine.
8-15 (20) "Equity capital" means the amount by which the
8-16 total assets of a state bank exceed the total liabilities of the
8-17 bank.
8-18 (21) "Equity security" means:
8-19 (A) stock, other than adjustable rate preferred
8-20 stock and money market (auction rate) preferred stock;
8-21 (B) a certificate of interest or participation
8-22 in a profit-sharing agreement, collateral-trust certificate,
8-23 preorganization certificate or subscription, transferable share or
8-24 participation share, investment contract, voting-trust certificate,
8-25 or partnership interest;
8-26 (C) a security immediately convertible at the
8-27 option of the holder without payment of substantial additional
9-1 consideration into a security described by this subdivision;
9-2 (D) a security carrying a warrant or right to
9-3 subscribe to or purchase a security described by this subdivision;
9-4 and
9-5 (E) a certificate of interest or participation
9-6 in, temporary or interim certificate for, or receipt for a security
9-7 described by this subdivision that evidences an existing or
9-8 contingent equity ownership interest.
9-9 (22) "Federal savings association" means a savings and
9-10 loan association organized under federal law.
9-11 (23) "Federal savings bank" means a savings bank
9-12 organized under federal law.
9-13 (24) "Finance commission" means the Finance Commission
9-14 of Texas.
9-15 (25) "Financial institution" means a bank, savings
9-16 association, or savings bank maintaining an office, branch, or
9-17 agency office in this state.
9-18 (26) "Foreign bank agency" means an agency established
9-19 and operating under Chapter 9 of this Act by a foreign bank
9-20 corporation.
9-21 (27) "Foreign bank corporation" means a banking
9-22 corporation or association incorporated or organized under the laws
9-23 of a jurisdiction other than the United States or a state,
9-24 territory, commonwealth, or other political subdivision of the
9-25 United States.
9-26 (28) "Full liability participant" means a participant
9-27 that agrees under the terms of a participation agreement to be
10-1 liable under a judgment, decree, or order of court for the entire
10-2 amount of all debts, obligations, or liabilities of a limited
10-3 banking association.
10-4 (29) "Hazardous condition" means:
10-5 (A) a refusal by a state bank to permit
10-6 examination of its books, papers, accounts, records, or affairs by
10-7 the banking commissioner;
10-8 (B) a circumstance or condition in which an
10-9 unreasonable risk of substantial loss is threatened to the
10-10 depositors, creditors, shareholders, or participants of a state
10-11 bank, including a circumstance or condition in which a state bank:
10-12 (i) has inadequate equity capital, or the
10-13 adequacy of its equity capital is threatened;
10-14 (ii) has concentrated an excessive or
10-15 unreasonable portion of its assets in a type or character of loan
10-16 or investment;
10-17 (iii) violates or refuses to comply with
10-18 this Act, another statute or rule applicable to state banks, or a
10-19 final and enforceable order of the banking commissioner;
10-20 (iv) is in a condition that renders the
10-21 continuation of a particular business practice hazardous to the
10-22 public or to its depositors and creditors;
10-23 (v) conducts business in an unsafe and
10-24 unsound manner; or
10-25 (vi) is insolvent; or
10-26 (C) a violation by a state bank of a condition
10-27 of its chartering or an agreement entered into between the bank and
11-1 the banking commissioner or the department.
11-2 (30) "Home office" means a location registered with
11-3 the banking commissioner as the bank's home office at which:
11-4 (A) the bank does business with the public;
11-5 (B) the bank keeps its corporate books and
11-6 records; and
11-7 (C) at least one officer of the bank maintains
11-8 an office.
11-9 (31) "Insolvent" means a circumstance or condition in
11-10 which a state bank:
11-11 (A) is unable or lacks the means to meet its
11-12 current obligations as they come due in the regular and ordinary
11-13 course of business, even if the value of its assets exceeds its
11-14 liabilities;
11-15 (B) has equity capital equal to two percent or
11-16 less of its assets, as determined under regulatory accounting
11-17 principles;
11-18 (C) fails to maintain deposit insurance with the
11-19 Federal Deposit Insurance Corporation or its successor if the
11-20 banking commissioner determines that deposit insurance is necessary
11-21 for the safe and sound operation of the bank;
11-22 (D) sells or attempts to sell substantially all
11-23 of its assets or merges or attempts to merge substantially all of
11-24 its assets or business with another entity other than as provided
11-25 by Chapter 3 of this Act; or
11-26 (E) attempts to dissolve or liquidate other than
11-27 as provided by Chapter 7 of this Act.
12-1 (32) "Investment security" means a marketable
12-2 obligation evidencing indebtedness of a person in the form of a
12-3 bond, note, debenture, or other debt instrument not otherwise
12-4 classified as a loan or extension of credit.
12-5 (33) "Limited banking association" means a state bank
12-6 that is organized as a limited banking association, authorized to
12-7 issue participation shares, and controlled by its participants.
12-8 (34) "Loans and extensions of credit" means direct or
12-9 indirect advances of funds by a state bank to a person that are
12-10 conditioned on the obligation of the person to repay the funds or
12-11 that are repayable from specific property pledged by or on behalf
12-12 of the person. The term includes a contractual liability of a
12-13 state bank to advance funds to or on behalf of a person,
12-14 indebtedness evidenced by a lease financing transaction in which
12-15 the bank is lessor, an overdraft funded by the bank on behalf of a
12-16 person except for an intra-day or daylight overdraft, or another
12-17 indebtedness not otherwise classified as an investment security.
12-18 The term does not include accrued and unpaid interest or discounted
12-19 interest.
12-20 (35) "Manager" means a person elected to the board of
12-21 a limited banking association.
12-22 (36) "Managing participant" means a participant in a
12-23 limited banking association in which management has been retained
12-24 by the participants.
12-25 (37) "National bank" means a banking association
12-26 organized under 12 U.S.C. Section 21.
12-27 (38) "Officer" means the presiding officer of the
13-1 board, the principal executive officer, or another officer
13-2 appointed by the board of a state bank or other company, or a
13-3 person or group of persons acting in a comparable capacity for the
13-4 state bank or other company.
13-5 (39) "Operating subsidiary" means a company for which
13-6 a state bank has the ownership, ability, or power to vote,
13-7 directly, acting through one or more other persons, or otherwise
13-8 indirectly, more than 50 percent of the outstanding shares of each
13-9 class of voting securities or its equivalent of the company.
13-10 (40) "Participant" means an owner of a participation
13-11 share in a limited banking association.
13-12 (41) "Participant-transferee" means a transferee of a
13-13 participation share who has not received the unanimous consent of
13-14 all participants to be a participant, or who becomes a
13-15 participant-transferee under Subchapter C, Chapter 4, of this Act.
13-16 (42) "Participation agreement" means the instrument
13-17 stating the agreement among the participants of a limited banking
13-18 association relating to the rights and duties of the participants
13-19 and participant-transferees, including allocations of income, loss,
13-20 deduction, credit, distributions, liquidation rights, redemption
13-21 rights, liabilities of participants, priority rights of
13-22 participant-transferees to transfer participation shares, rights of
13-23 participants to purchase participation shares of
13-24 participant-transferees, the procedures for elections and voting by
13-25 participants, and any other matter not prohibited by or
13-26 inconsistent with this Act.
13-27 (43) "Participation shares" means the units into which
14-1 the proprietary interests of a limited banking association are
14-2 divided or subdivided by means of classes, series, relative rights,
14-3 or preferences.
14-4 (44) "Person" means an individual or any legal entity.
14-5 (45) "Principal shareholder" means a person who owns
14-6 or has the ability or power to vote, directly, acting through one
14-7 or more other persons, or otherwise indirectly, 10 percent or more
14-8 of the outstanding shares or participation shares of any class of
14-9 voting securities of a bank or other company.
14-10 (46) "Regulatory accounting principles" means
14-11 generally accepted accounting principles as modified by rules
14-12 adopted under this Act or an applicable federal statute or
14-13 regulation.
14-14 (47) "Savings association" means a state or federal
14-15 savings association.
14-16 (48) "Savings bank" means a state or federal savings
14-17 bank.
14-18 (49) "Shareholder" means an owner of a share in a
14-19 banking association.
14-20 (50) "Shares" means the units into which the
14-21 proprietary interests of a banking association are divided or
14-22 subdivided by means of classes, series, relative rights, or
14-23 preferences.
14-24 (51) "State bank" means a banking association or
14-25 limited banking association organized or reorganized under this
14-26 Act, including an association organized under the laws of this
14-27 state before the effective date of this Act, with the express power
15-1 to receive and accept deposits and possessing other rights and
15-2 powers granted by this Act expressly or by implication. The term
15-3 does not include a savings association, savings bank, or credit
15-4 union.
15-5 (52) "State savings association" means a savings and
15-6 loan association organized under the laws of this state.
15-7 (53) "State savings bank" means a savings bank
15-8 organized under or subject to the Texas Savings Bank Act (Article
15-9 489e, Vernon's Texas Civil Statutes).
15-10 (54) "Subsidiary" means a bank or company that is
15-11 controlled by another person. The term includes a subsidiary of a
15-12 subsidiary.
15-13 (55) "Supervisor" means the banking commissioner or an
15-14 agent of the banking commissioner exercising the powers and duties
15-15 specified in Subchapter B, Chapter 6, of this Act.
15-16 (56) "Surplus" means the amount by which the assets of
15-17 a state bank exceed its liabilities, capital, and undivided
15-18 profits.
15-19 (57) "Unauthorized activity" means an act or practice
15-20 within this state by a person without a charter, license, permit,
15-21 registration, or other authority issued or granted by the banking
15-22 commissioner or other appropriate regulatory authority for which
15-23 such a charter, license, permit, registration, or other authority
15-24 is required.
15-25 (58) "Undivided profits" means the part of equity
15-26 capital of a state bank equal to the balance of its net profits,
15-27 income, gains, and losses since the date of its formation, minus
16-1 subsequent distributions to shareholders or participants and
16-2 transfers to surplus or capital under share dividends or
16-3 appropriate board resolutions. The term includes amounts allocated
16-4 to undivided profits as a result of a merger.
16-5 (59) "Voting security" means a share, participation
16-6 share, or other evidence of proprietary interest in a state bank or
16-7 other company that has as an attribute the right to vote or
16-8 participate in the election of the board of the state bank or other
16-9 company, regardless of whether the right is limited to the election
16-10 of fewer than all of the board members. The term includes a
16-11 security that is convertible or exchangeable into a voting security
16-12 and a nonvoting participation share of a managing participant.
16-13 (b) The definitions shall be liberally construed to
16-14 accomplish the purposes of this Act.
16-15 (c) The finance commission by rule may adopt other
16-16 definitions to accomplish the purposes of this Act.
16-17 Sec. 1.003. FINANCE COMMISSION. (a) The Finance Commission
16-18 of Texas is composed of nine members appointed by the governor with
16-19 the advice and consent of the senate.
16-20 (b) Members of the finance commission serve staggered terms
16-21 of six years with the terms of one-third of the members expiring on
16-22 February 1 of each even-numbered year.
16-23 (c) An appointment to the finance commission must be made
16-24 without regard to the race, color, age, sex, religion, disability,
16-25 or national origin of the appointee.
16-26 (d) On taking office a member of the finance commission
16-27 shall take an oath of office to discharge faithfully the duties of
17-1 the finance commission and uphold the constitution and laws of this
17-2 state and the United States.
17-3 Sec. 1.004. QUALIFICATIONS OF MEMBERS. (a) A member of the
17-4 finance commission must be a resident and registered voter of this
17-5 state. Not more than two members may be residents of the same
17-6 state senatorial district.
17-7 (b) Two members of the finance commission must be banking
17-8 executives and two members of the finance commission must be
17-9 savings executives.
17-10 (c) The five members of the finance commission who are not
17-11 banking executives or savings executives must be selected by the
17-12 governor on the basis of recognized business ability. Those
17-13 members may not be banking executives, savings executives, or
17-14 controlling shareholders in a bank, savings association, or savings
17-15 bank. At least one of those members must be a certified public
17-16 accountant.
17-17 (d) A member or employee of the finance commission may not
17-18 be:
17-19 (1) an officer, employee, or paid consultant of a
17-20 trade association representing an industry regulated by the finance
17-21 commission, the banking commissioner, the savings and loan
17-22 commissioner, or the consumer credit commissioner;
17-23 (2) a person required to register as a lobbyist under
17-24 Chapter 305, Government Code, because of activities for a member of
17-25 an industry described by Subdivision (1) of this subsection; or
17-26 (3) related within the second degree by affinity or
17-27 consanguinity, as determined under Chapter 573, Government Code, to
18-1 a person who is an officer, employee, or paid consultant of a trade
18-2 association representing an industry described by Subdivision (1)
18-3 of this subsection.
18-4 (e) For the purposes of this section:
18-5 (1) "Banking executive" means a person who:
18-6 (A) has had five years' or more executive
18-7 experience in a bank during the seven-year period preceding the
18-8 person's appointment; and
18-9 (B) at the time of the person's appointment is
18-10 an officer of a state bank.
18-11 (2) "Savings executive" means a person who:
18-12 (A) has had five years' or more executive
18-13 experience in a savings association or savings bank during the
18-14 seven-year period preceding the person's appointment; and
18-15 (B) at the time of the person's appointment is
18-16 an officer of a state savings association or savings bank.
18-17 (f) Experience as banking commissioner, deputy banking
18-18 commissioner, examiner, or supervisor of examiners for a state or
18-19 federal banking regulatory agency satisfies the executive
18-20 experience requirement of Subsection (e)(1)(A) of this section.
18-21 Experience as savings and loan commissioner, deputy savings and
18-22 loan commissioner, examiner, or supervisor of examiners for a state
18-23 or federal savings and loan regulatory agency satisfies the
18-24 executive experience requirement of Subsection (e)(2)(A) of this
18-25 section.
18-26 Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES. (a) A ground
18-27 for removal from the finance commission exists if a member:
19-1 (1) did not have at the time of appointment the
19-2 qualifications required by Section 1.004 of this Act for
19-3 appointment to the finance commission;
19-4 (2) does not maintain the qualifications required by
19-5 Section 1.004 of this Act during service on the finance commission;
19-6 (3) violates a prohibition established by Section
19-7 1.007 of this Act;
19-8 (4) cannot discharge the member's duties for a
19-9 substantial part of the term for which the member is appointed
19-10 because of illness or disability; or
19-11 (5) is absent from more than half of the regularly
19-12 scheduled finance commission meetings that the member is eligible
19-13 to attend during a calendar year unless the absence is excused by
19-14 majority vote of the finance commission.
19-15 (b) If a vacancy occurs on the finance commission for any
19-16 cause, the governor shall appoint a qualified person to fill the
19-17 unexpired term.
19-18 (c) If the executive director of the finance commission has
19-19 knowledge that a potential ground for removal exists, the executive
19-20 director shall notify the presiding officer of the finance
19-21 commission of the ground. The presiding officer shall then notify
19-22 the governor that a potential ground for removal exists.
19-23 (d) The validity of an action of the finance commission is
19-24 not affected by the fact that it was taken when a ground for
19-25 removal of a member of the finance commission existed.
19-26 Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS. A member
19-27 of the finance commission is entitled to:
20-1 (1) reimbursement for reasonable and necessary
20-2 expenses incidental to travel incurred in connection with the
20-3 performance of official duties; and
20-4 (2) per diem as set by legislative appropriation for
20-5 each day that the member engages in the business of the finance
20-6 commission.
20-7 Sec. 1.007. DISQUALIFICATION OF MEMBERS. A member of the
20-8 finance commission may not act or participate in the portion of a
20-9 finance commission meeting during which the matter under
20-10 consideration specifically relates to an entity of which the member
20-11 or the member's spouse is an officer, director, stockholder,
20-12 shareholder, manager, participant, participant-transferee, owner,
20-13 or otherwise financially interested.
20-14 Sec. 1.008. MEETINGS. (a) The finance commission shall
20-15 hold at least six regular public meetings during each calendar year
20-16 on dates set by the finance commission. The presiding officer or
20-17 three members of the finance commission may call special public
20-18 meetings of the finance commission. A majority of the members of
20-19 the finance commission constitutes a quorum for the purpose of
20-20 transacting any business coming before the finance commission.
20-21 (b) The finance commission may hold an open or closed
20-22 meeting by telephone conference call if:
20-23 (1) the meeting is a special called meeting and
20-24 immediate action is required;
20-25 (2) the convening at one location of a quorum of the
20-26 finance commission is difficult or impossible;
20-27 (3) notice is given for the telephone conference call
21-1 meeting as for other meetings, specifying a location for the
21-2 meeting at which the public may attend;
21-3 (4) each part of the telephone conference call meeting
21-4 that is required to be open to the public is audible to the public
21-5 at the location specified in the notice of the meeting; and
21-6 (5) the telephone conference call meeting is tape
21-7 recorded and the tape recording of each portion of the meeting that
21-8 is required to be open to the public is made available to the
21-9 public.
21-10 Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. (a)
21-11 The finance commission is subject to Chapters 551 and 2001,
21-12 Government Code.
21-13 (b) Notwithstanding Subsection (a) of this section, the
21-14 finance commission is not required to conduct an open meeting to
21-15 deliberate a matter made confidential by law.
21-16 Sec. 1.010. PRESIDING OFFICER. The governor shall appoint a
21-17 member of the finance commission as presiding officer of the
21-18 finance commission. The presiding officer serves at the will of
21-19 the governor. Subject to Section 1.007 of this Act, the presiding
21-20 officer is entitled to vote on all matters. The presiding officer
21-21 shall preside at all public meetings of the finance commission and
21-22 provide for the keeping of minutes of the proceedings of those
21-23 meetings. The presiding officer may:
21-24 (1) adopt rules and procedures of the finance
21-25 commission as the presiding officer considers necessary for the
21-26 orderly operation of the finance commission and for communication
21-27 among the finance commission, the department, the Savings and Loan
22-1 Department, and the Office of Consumer Credit Commissioner;
22-2 (2) adopt internal procedures governing the time and
22-3 place of meetings, the character of notice of special public
22-4 meetings, the manner in which public meetings are to be conducted,
22-5 and other similar matters; and
22-6 (3) appoint committees composed of finance commission
22-7 members as the presiding officer considers necessary to carry out
22-8 the finance commission's business.
22-9 Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES. (a) The
22-10 finance commission may designate the banking commissioner, the
22-11 savings and loan commissioner, the consumer credit commissioner, or
22-12 another person to serve full- or part-time as executive director of
22-13 the finance commission to facilitate its oversight of the
22-14 department, Savings and Loan Department, and Office of Consumer
22-15 Credit Commissioner. The executive director serves as executive
22-16 director at the pleasure of the finance commission, is responsible
22-17 for staff supervision, support, and coordination, and may be
22-18 separately compensated for those duties. The executive director
22-19 shall:
22-20 (1) develop the agenda for finance commission meetings
22-21 and supervise arrangements for the meetings;
22-22 (2) respond or coordinate responses to finance
22-23 commission requests for information and reports;
22-24 (3) coordinate the activities of committees of the
22-25 finance commission;
22-26 (4) supervise and evaluate the performance of staff
22-27 employed under this section; and
23-1 (5) maintain the permanent record of all finance
23-2 commission meetings and actions.
23-3 (b) The finance commission may employ a hearings officer and
23-4 an internal auditor to provide services to and facilitate finance
23-5 commission oversight and control over the department, Savings and
23-6 Loan Department, and Office of Consumer Credit Commissioner. For
23-7 the purposes of Section 2003.021, Government Code, a hearings
23-8 officer employed under this section is considered to be an employee
23-9 of each agency for which hearing services are provided and whose
23-10 only duty is to preside over matters related to contested cases
23-11 before the agency.
23-12 (c) The executive director, the hearings officer, the
23-13 internal auditor, and any other staff employed under this section
23-14 are not subject to direction by the department, Savings and Loan
23-15 Department, or Office of Consumer Credit Commissioner.
23-16 (d) The finance commission shall reduce administrative costs
23-17 through the sharing of support staff, equipment, and facilities
23-18 among the department, Savings and Loan Department, and Office of
23-19 Consumer Credit Commissioner to the extent that the sharing
23-20 contributes to cost efficiency without detracting from the staff
23-21 expertise needed for individual areas of agency responsibility.
23-22 The finance commission may employ staff and purchase equipment and
23-23 facilities to meet these objectives and fund its activities through
23-24 appropriations or as provided by Chapter 771, Government Code.
23-25 (e) An interagency agreement regarding shared staff must
23-26 provide that the fully allocated cost of each member of shared
23-27 staff other than the executive director will be charged to the
24-1 department, Savings and Loan Department, and Office of Consumer
24-2 Credit Commissioner in proportion to the amount of time devoted to
24-3 each agency's business. The cost of the executive director and the
24-4 unallocated cost of operation of the finance commission must be
24-5 shared by the department, Savings and Loan Department, and Office
24-6 of Consumer Credit Commissioner in proportion to the amount of cash
24-7 receipts of each of those agencies.
24-8 Sec. 1.012. BANKING RULES. (a) The finance commission may
24-9 adopt rules to accomplish the purposes of this Act, including rules
24-10 necessary or reasonable to:
24-11 (1) implement and clarify this Act;
24-12 (2) preserve or protect the safety and soundness of
24-13 state banks;
24-14 (3) grant the same rights and privileges to state
24-15 banks that are or may be granted to national banks domiciled in
24-16 this state;
24-17 (4) provide for recovery of the cost of maintenance
24-18 and operation of the department and the cost of enforcing this Act
24-19 through the imposition and collection of ratable and equitable fees
24-20 for notices, applications, and examinations; and
24-21 (5) facilitate the fair hearing and adjudication of
24-22 matters before the banking commissioner and the finance commission.
24-23 (b) In adopting the rules, the finance commission shall
24-24 consider the need to:
24-25 (1) promote a stable banking environment;
24-26 (2) provide the public with convenient, safe, and
24-27 competitive banking services;
25-1 (3) preserve and promote the competitive parity of
25-2 state banks with national banks and other depository institutions
25-3 in this state consistent with the safety and soundness of state
25-4 banks and the state bank system; and
25-5 (4) allow for economic development within this state.
25-6 (c) The presence or absence in this Act of a specific
25-7 reference to rules regarding a particular subject does not enlarge
25-8 or diminish the rulemaking authority conferred by this section.
25-9 Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
25-10 REGULATIONS. (a) The finance commission may adopt rules
25-11 applicable to state savings associations or to savings banks and
25-12 may authorize state savings associations and savings banks to
25-13 invest their funds in any manner permitted for a federal savings
25-14 association or federal savings bank domiciled in this state. This
25-15 authority may not be construed to confer authority to abridge,
25-16 diminish, or limit a right or power specifically given to state
25-17 savings associations or savings banks by state law.
25-18 (b) The finance commission may also adopt rules to:
25-19 (1) prevent state savings associations or savings
25-20 banks from concentrating an excessive or unreasonable portion of
25-21 their resources in a type or character of loan or security
25-22 authorized by the Texas Savings and Loan Act (Article 852a,
25-23 Vernon's Texas Civil Statutes) or the Texas Savings Bank Act
25-24 (Article 489e, Vernon's Texas Civil Statutes); and
25-25 (2) establish standards for investments by state
25-26 savings associations or savings banks, including limits on the
25-27 amount that a state savings association or savings bank may invest
26-1 in a type or character of investment to an amount or percentage of
26-2 the savings association's or savings bank's assets or net worth.
26-3 (c) Information regarding the financial condition of a state
26-4 savings association or savings bank obtained through examination or
26-5 otherwise may not be disclosed to a member of the finance
26-6 commission, except that the savings and loan commissioner may
26-7 disclose to the finance commission a file or record pertinent to a
26-8 hearing or matter pending before the finance commission.
26-9 Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS. The
26-10 finance commission may adopt rules necessary for supervising the
26-11 consumer credit commissioner and for ensuring compliance with Title
26-12 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
26-13 Civil Statutes).
26-14 Sec. 1.015. SUNSET PROVISION. The finance commission is
26-15 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
26-16 continued in existence as provided by that chapter, the commission
26-17 is abolished September 1, 2001.
26-18 (Sections 1.016-1.100 reserved for expansion)
26-19 SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT
26-20 Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. The finance
26-21 commission, by at least five affirmative votes, shall appoint a
26-22 savings and loan commissioner, who serves at the pleasure of the
26-23 finance commission, as an employee of the commission, and subject
26-24 to its orders and direction. The savings and loan commissioner is
26-25 the chief executive officer of the Savings and Loan Department.
26-26 The savings and loan commissioner must have not less than seven
26-27 years' experience in the executive management of a savings
27-1 association or savings bank or in savings association or savings
27-2 bank supervision. The finance commission shall set the
27-3 compensation of the savings and loan commissioner, which shall be
27-4 paid from funds of the Savings and Loan Department.
27-5 Sec. 1.102. DEPUTY COMMISSIONERS. The savings and loan
27-6 commissioner shall appoint one or more deputy savings and loan
27-7 commissioners. One deputy savings and loan commissioner must have
27-8 the qualifications required of the savings and loan commissioner.
27-9 That deputy savings and loan commissioner has the powers and shall
27-10 perform the duties of the savings and loan commissioner during the
27-11 absence or inability of the savings and loan commissioner. The
27-12 savings and loan commissioner shall also appoint savings
27-13 association and savings bank examiners.
27-14 Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
27-15 Subject to Subsection (b) of this section, each officer and
27-16 employee of the Savings and Loan Department is entitled to
27-17 compensation fixed by the finance commission, which shall be paid
27-18 from the funds of the Savings and Loan Department.
27-19 (b) Chapter 654, Government Code, applies to a position of
27-20 the Savings and Loan Department only if it is classified in salary
27-21 groups 1-10 under the General Appropriations Act. The legislature
27-22 in the General Appropriations Act may determine the total amount
27-23 appropriated to the Savings and Loan Department but may not
27-24 determine the number or salaries of employees other than the
27-25 positions specifically subject to Chapter 654, Government Code, as
27-26 provided by this section. The finance commission, subject to the
27-27 limits provided by this section, shall otherwise determine the
28-1 number of employees of the Savings and Loan Department and the
28-2 salaries of those employees. The Savings and Loan Department may
28-3 use funds appropriated to it for any purpose to pay the salaries
28-4 determined by the finance commission.
28-5 Sec. 1.104. OATH OF OFFICE. Before assuming the duties of
28-6 office, the savings and loan commissioner, each deputy savings and
28-7 loan commissioner, examiner, assistant examiner, conservator,
28-8 supervisor, and special agent, and each other officer or employee
28-9 specified by the savings and loan commissioner must take an oath of
28-10 office to discharge faithfully the duties assigned and uphold the
28-11 constitution and laws of this state and the United States.
28-12 Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. The savings
28-13 and loan commissioner shall:
28-14 (1) supervise and regulate the organization,
28-15 operation, and liquidation of state savings associations, as
28-16 provided by the Texas Savings and Loan Act (Article 852a, Vernon's
28-17 Texas Civil Statutes), and state savings banks, as provided by the
28-18 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
28-19 Statutes); and
28-20 (2) enforce those acts in person or through a deputy
28-21 savings and loan commissioner, examiner, supervisor, conservator,
28-22 or other agent.
28-23 Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a) The
28-24 savings and loan commissioner and the finance commission shall
28-25 establish reasonable and necessary fees for the administration of
28-26 the Texas Savings and Loan Act (Article 852a, Vernon's Texas Civil
28-27 Statutes) and the Texas Savings Bank Act (Article 489e, Vernon's
29-1 Texas Civil Statutes) and for the support of the finance commission
29-2 as provided by Section 1.011 of this Act.
29-3 (b) The savings and loan commissioner shall collect all
29-4 fees, penalties, charges, and revenues required to be paid by state
29-5 savings associations and savings banks and shall from time to time,
29-6 as directed by the finance commission, submit to the commission a
29-7 full and complete report of the receipts and expenditures of the
29-8 Savings and Loan Department.
29-9 (c) The financial transactions of the Savings and Loan
29-10 Department are subject to audit by the state auditor as provided by
29-11 Chapter 321, Government Code, and the actual costs of any audit
29-12 shall be paid to the state auditor from the funds of the Savings
29-13 and Loan Department.
29-14 (d) All money paid to the Savings and Loan Department from
29-15 all sources shall be deposited in the state treasury to the credit
29-16 of the Savings and Loan Department expense fund, which may be used
29-17 only for the expenses incurred by the Savings and Loan Department
29-18 and finance commission. All expenses incurred by the Savings and
29-19 Loan Department shall be paid only from the fund.
29-20 Sec. 1.107. CONFLICTS OF LAW. If this subchapter conflicts
29-21 with the Texas Savings and Loan Act (Article 852a, Vernon's Texas
29-22 Civil Statutes) or the Texas Savings Bank Act (Article 489e,
29-23 Vernon's Texas Civil Statutes), this subchapter controls.
29-24 Sec. 1.108. CONFLICTS OF INTEREST. (a) An officer or
29-25 employee of the Savings and Loan Department may not be an officer,
29-26 employee, or paid consultant of a trade association in the savings
29-27 association industry or the savings bank industry.
30-1 (b) An officer or employee of the Savings and Loan
30-2 Department may not be related within the second degree by affinity
30-3 or consanguinity, as determined under Chapter 573, Government Code,
30-4 to a person who is an officer, employee, or paid consultant of a
30-5 trade association in the savings association industry or the
30-6 savings bank industry.
30-7 (c) Before the 11th day after the date on which an employee
30-8 begins employment with the Savings and Loan Department, the
30-9 employee shall read the conflict-of-interest statutes applicable to
30-10 employees of the Savings and Loan Department and sign a notarized
30-11 affidavit stating that the employee has read those statutes.
30-12 Sec. 1.109. CONSUMER INFORMATION AND COMPLAINTS. (a) The
30-13 savings and loan commissioner shall prepare information of consumer
30-14 interest describing the regulatory functions of the Savings and
30-15 Loan Department and describing the procedures by which consumer
30-16 complaints are filed with and resolved by the Savings and Loan
30-17 Department. The information must be made available to the general
30-18 public and appropriate state agencies.
30-19 (b) The Savings and Loan Department shall keep an
30-20 information file about each filed complaint relating to a state
30-21 savings association or savings bank.
30-22 (c) If a written complaint is filed with the Savings and
30-23 Loan Department relating to a state savings association or savings
30-24 bank, at least as frequently as quarterly and until final
30-25 disposition of the complaint, the Savings and Loan Department shall
30-26 notify the parties to the complaint of the status of the complaint
30-27 unless the notice would jeopardize an undercover investigation.
31-1 Sec. 1.110. SUNSET PROVISION. The office of savings and
31-2 loan commissioner and the Savings and Loan Department are subject
31-3 to Chapter 325, Government Code (Texas Sunset Act). Unless
31-4 continued in existence as provided by that chapter, the office and
31-5 department are abolished September 1, 2001.
31-6 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
31-7 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
31-8 Sec. 2.001. BANKING COMMISSIONER .............................. 32
31-9 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT ............... 32
31-10 Sec. 2.003. DEPUTY BANKING COMMISSIONER ....................... 33
31-11 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS ........... 33
31-12 Sec. 2.005. DUTIES OF BANKING COMMISSIONER .................... 33
31-13 Sec. 2.006. AUDITS; FEES AND REVENUES ......................... 33
31-14 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS .............. 34
31-15 Sec. 2.008. EXAMINATION ....................................... 35
31-16 Sec. 2.009. CALL REPORTS ...................................... 37
31-17 Sec. 2.010. LIABILITIES ....................................... 37
31-18 Sec. 2.011. OFFENSES .......................................... 38
31-19 Sec. 2.012. CONFLICT OF INTEREST .............................. 39
31-20 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS ............... 39
31-21 Sec. 2.014. SUNSET PROVISION .................................. 40
31-22 (Sections 2.015-2.100 reserved for expansion)
31-23 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
31-24 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED ............... 40
31-25 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION .................. 41
31-26 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES ...................... 41
31-27 Sec. 2.104. OTHER DISCLOSURE PROHIBITED ....................... 42
32-1 Sec. 2.105. CIVIL DISCOVERY ................................... 42
32-2 Sec. 2.106. INVESTIGATIVE INFORMATION ......................... 42
32-3 Sec. 2.107. EMPLOYMENT INFORMATION ............................ 43
32-4 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS ..................... 43
32-5 CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING
32-6 SUBCHAPTER A. OPERATION OF THE DEPARTMENT
32-7 Sec. 2.001. BANKING COMMISSIONER. The finance commission,
32-8 by at least five affirmative votes, shall appoint a banking
32-9 commissioner who serves at the pleasure of the finance commission,
32-10 as an employee of the finance commission, and subject to the
32-11 finance commission's orders and directions. The banking
32-12 commissioner must have not less than seven years' experience in
32-13 banking or bank supervision and shall serve as the chief executive
32-14 officer of the Texas Department of Banking. The finance commission
32-15 shall set the compensation of the banking commissioner, which shall
32-16 be paid from funds of the department.
32-17 Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Chapter
32-18 654, Government Code, applies to a position of the department only
32-19 if it is classified in salary groups 1-10 under the currently
32-20 effective General Appropriations Act. The legislature in the
32-21 General Appropriations Act may determine the total amount
32-22 appropriated to the department but may not determine the number or
32-23 salaries of employees of the department other than positions
32-24 subject to Chapter 654, Government Code. The finance commission,
32-25 subject to the limits provided by this section, shall otherwise
32-26 determine the number of employees of the department and the
32-27 salaries of those employees. The department may use funds
33-1 appropriated to it for any purpose to pay the salaries determined
33-2 by the finance commission.
33-3 Sec. 2.003. DEPUTY BANKING COMMISSIONER. The banking
33-4 commissioner shall appoint a deputy banking commissioner who must
33-5 have the qualifications required of the banking commissioner.
33-6 During the absence or inability of the banking commissioner, the
33-7 deputy banking commissioner has the powers and shall perform the
33-8 duties of the banking commissioner.
33-9 Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS. Before
33-10 assuming the duties of office, the banking commissioner, the deputy
33-11 banking commissioner, and each examiner, assistant examiner,
33-12 conservator, supervisor, special agent, and other officer or
33-13 employee specified by the banking commissioner must take an oath of
33-14 office to discharge faithfully the duties assigned and uphold the
33-15 constitution and laws of this state and of the United States.
33-16 Sec. 2.005. DUTIES OF BANKING COMMISSIONER. The banking
33-17 commissioner shall:
33-18 (1) supervise and regulate, as provided by this Act,
33-19 state banks, trust companies, and state-licensed foreign bank
33-20 agencies;
33-21 (2) administer and enforce this Act in person or
33-22 through the deputy banking commissioner or an examiner, supervisor,
33-23 conservator, or other agent; and
33-24 (3) administer and enforce laws other than this Act as
33-25 directed by the legislature.
33-26 Sec. 2.006. AUDITS; FEES AND REVENUES. (a) The department
33-27 is subject to audit by the state auditor as provided by Chapter
34-1 321, Government Code, and the actual costs of an audit shall be
34-2 paid to the state auditor from the funds of the department.
34-3 (b) The finance commission shall establish reasonable and
34-4 necessary fees for the administration of this Act.
34-5 (c) All money paid to the department under this Act shall be
34-6 deposited in the state treasury to the credit of the Department of
34-7 Banking expense fund and may be used only for the administration of
34-8 the statutory duties of the department and finance commission under
34-9 this Act. All expenses incurred by the department in administering
34-10 this Act shall be paid only from the fund.
34-11 Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
34-12 banking commissioner may issue interpretive statements containing
34-13 matters of general policy for the guidance of state banks. The
34-14 banking commissioner shall file the statements for publication in
34-15 the Texas Register. The banking commissioner may amend or repeal a
34-16 published interpretive statement by issuing an amended statement or
34-17 notice of repeal of a statement and filing the statement or notice
34-18 for publication in the Texas Register. The secretary of state
34-19 shall publish the filed statements and notices in the Texas
34-20 Register and in a designated chapter of the Texas Administrative
34-21 Code.
34-22 (b) The banking commissioner may issue opinions in response
34-23 to specific requests from members of the public or the banking
34-24 industry directly or through the deputy banking commissioner or the
34-25 department's attorneys. If the banking commissioner determines
34-26 that the opinion is useful for the general guidance of state banks
34-27 or trust companies, the banking commissioner may file the opinion
35-1 for publication in the Texas Register. A published opinion must be
35-2 redacted in a manner that preserves the confidentiality of the
35-3 requesting party, unless the requesting party consents to be
35-4 identified in the published opinion. The banking commissioner may
35-5 amend or repeal a published opinion by issuing an amended opinion
35-6 or notice of repeal of an opinion and filing the opinion or notice
35-7 for publication in the Texas Register, except that the requesting
35-8 party may rely on the original opinion if all material facts were
35-9 originally disclosed to the banking commissioner, considerations of
35-10 safety and soundness of the affected bank are not implicated with
35-11 respect to further and prospective reliance on the original
35-12 opinion, and the text and interpretation of relevant, governing
35-13 provisions of this Act have not been changed by legislative or
35-14 judicial action. The secretary of state shall publish the filed
35-15 opinions and notices in the Texas Register and a designated chapter
35-16 of the Texas Administrative Code.
35-17 (c) An interpretive statement or opinion issued under this
35-18 section does not have the force of law and is not a rule for the
35-19 purposes of Chapter 2001, Government Code, unless adopted by the
35-20 finance commission as provided by Chapter 2001, Government Code.
35-21 An interpretive statement or opinion is an administrative
35-22 construction of this Act entitled to great weight if the
35-23 construction is reasonable and does not conflict with this Act.
35-24 Sec. 2.008. EXAMINATION. (a) The banking commissioner
35-25 shall examine each state bank annually or more often as the banking
35-26 commissioner considers necessary to safeguard the interests of
35-27 depositors, creditors, shareholders, participants, and
36-1 participant-transferees and to enforce this Act. The banking
36-2 commissioner may defer an examination for not more than six months
36-3 if the banking commissioner considers the deferment necessary for
36-4 the efficient enforcement of this Act. The banking commissioner
36-5 may accept examinations of a state bank by a federal or other
36-6 governmental agency in lieu of an examination under this section or
36-7 may conduct examinations of a state bank jointly with a federal or
36-8 other governmental agency.
36-9 (b) Each state bank shall pay the cost of examination, the
36-10 equitable or proportionate cost of maintenance and operation of the
36-11 department, and the cost of enforcement of this Act through the
36-12 imposition and collection of fees established by the finance
36-13 commission under Section 1.012(a)(4) of this Act.
36-14 (c) The performance of data processing, electronic fund
36-15 transfers, or other bank services on behalf of a state bank by a
36-16 third-party contractor, other than a national bank, and the
36-17 activities of a state bank affiliate are subject to regulation and
36-18 examination by the banking commissioner to the same extent as if
36-19 the services or activities were performed by that state bank on its
36-20 own premises. The banking commissioner may collect a fee from an
36-21 examined contractor or affiliate in connection with each
36-22 examination to cover the cost of the examination or may collect
36-23 that fee from the state banks using the third-party contractor.
36-24 For purposes of this subsection, a state bank affiliate does not
36-25 include a company in which ownership or membership is limited to
36-26 individuals and conditioned by law on the existence and maintenance
36-27 of professional licensing.
37-1 (d) The banking commissioner may administer oaths and
37-2 examine persons under oath on any subject that the banking
37-3 commissioner considers pertinent to the financial condition or the
37-4 safety and soundness of the activities of a state bank.
37-5 Sec. 2.009. CALL REPORTS. (a) Except as provided by
37-6 Subsection (b) of this section, each state bank shall periodically
37-7 file with the banking commissioner a copy of its call report
37-8 stating the bank's financial condition and results of operation.
37-9 (b) The finance commission may by rule:
37-10 (1) specify the form of a call report, including
37-11 specified confidential and public information to be in the call
37-12 report;
37-13 (2) require public information in call reports of
37-14 state banks to be published at the times and in the publications
37-15 and locations the finance commission determines; and
37-16 (3) require call reports to be filed with the banking
37-17 commissioner at the intervals the finance commission determines.
37-18 (c) A state bank that fails to timely file its call report
37-19 as required by this section is subject to a penalty not exceeding
37-20 $500 a day to be collected by suit by the attorney general on
37-21 behalf of the banking commissioner.
37-22 Sec. 2.010. LIABILITIES. (a) The banking commissioner,
37-23 each member of the finance commission, the deputy banking
37-24 commissioner, or an examiner, assistant examiner, supervisor,
37-25 conservator, agent, or other officer or employee of the department,
37-26 is not personally liable for damages arising from the person's
37-27 official act or omission, unless the act or omission is corrupt or
38-1 malicious.
38-2 (b) The attorney general shall defend an action brought
38-3 against a person because of an official act or omission under
38-4 Subsection (a) of this section, regardless of whether the defendant
38-5 has terminated service with the department before the action
38-6 commences.
38-7 Sec. 2.011. OFFENSES. (a) The banking commissioner or an
38-8 officer or employee of the department commits an offense if the
38-9 person knowingly:
38-10 (1) discloses information or permits access to a file
38-11 or record of the department in violation of Subchapter B of this
38-12 chapter;
38-13 (2) becomes directly or indirectly indebted to, or
38-14 financially interested in, a state bank, foreign bank agency, or
38-15 trust company; or
38-16 (3) purchases an asset owned by a state bank or trust
38-17 company in the possession of the banking commissioner or other
38-18 receiver for purposes of liquidation.
38-19 (b) An offense under this section is a Class A misdemeanor.
38-20 (c) A department employee, other than the banking
38-21 commissioner and deputy banking commissioner, does not commit an
38-22 offense under Subsection (a)(2) solely because the spouse of or
38-23 other person related to the officer or employee is employed by a
38-24 state bank and participates in an employee benefit plan, including
38-25 an employee stock option, bonus, or ownership plan, or other plan
38-26 the sole purpose of which is to compensate employees of the bank
38-27 for services rendered with an ownership interest in the bank.
39-1 (d) The banking commissioner shall adopt a policy requiring
39-2 each employee of the department to notify the banking commissioner
39-3 in writing of an employment relationship described by Subsection
39-4 (c) of this section, and to be recused from all matters affecting
39-5 the employing bank until the employment relationship is terminated
39-6 or the spouse or related person no longer owns equity securities
39-7 issued by the bank. Not later than one year after the date the
39-8 employment relationship described by Subsection (c) of this section
39-9 ends, the spouse or related person must divest ownership of equity
39-10 securities issued by the bank.
39-11 Sec. 2.012. CONFLICT OF INTEREST. (a) An officer or
39-12 employee of the department may not be an officer, employee, or paid
39-13 consultant of a trade association in an industry regulated by the
39-14 department.
39-15 (b) An officer or employee of the department may not be
39-16 related within the second degree by affinity or consanguinity, as
39-17 determined under Chapter 573, Government Code, to a person who is
39-18 an officer, employee, or paid consultant of a trade association in
39-19 an industry regulated by the department.
39-20 (c) Before the 11th day after the date on which an employee
39-21 begins employment with the department, the employee shall read the
39-22 conflict of interest statutes applicable to employees of the
39-23 department and sign a notarized affidavit stating that the employee
39-24 has read those statutes.
39-25 Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a) The
39-26 banking commissioner shall prepare information of consumer interest
39-27 describing the regulatory functions of the department and
40-1 describing the department's procedures by which consumer complaints
40-2 are filed with and resolved by the department. The banking
40-3 commissioner shall make the information available to the general
40-4 public and appropriate state agencies.
40-5 (b) The banking commissioner shall keep an information file
40-6 about each complaint filed with the banking commissioner relating
40-7 to any entity regulated by the department.
40-8 (c) If a written complaint is filed with the banking
40-9 commissioner relating to any entity regulated by the department,
40-10 the banking commissioner, at least as frequently as quarterly and
40-11 until final disposition of the complaint, shall notify the parties
40-12 to the complaint of the status of the complaint unless the notice
40-13 would jeopardize an undercover investigation.
40-14 Sec. 2.014. SUNSET PROVISION. The office of banking
40-15 commissioner is subject to Chapter 325, Government Code (Texas
40-16 Sunset Act). Unless continued in existence as provided by that
40-17 chapter, the office is abolished September 1, 2001.
40-18 (Sections 2.015-2.100 reserved for expansion)
40-19 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
40-20 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
40-21 (a) Information obtained directly or indirectly by the department
40-22 relative to the financial condition or business affairs of a
40-23 financial institution, or a present, former, or prospective
40-24 shareholder, participant, officer, director, manager, affiliate, or
40-25 service provider of a financial institution, other than the public
40-26 portions of call reports and profit and loss statements, whether
40-27 obtained through application, examination, or otherwise, except
41-1 published statements, and all related files and records of the
41-2 department are confidential and may not be disclosed by the banking
41-3 commissioner or an employee of the department except as expressly
41-4 provided otherwise by this Act or rules adopted under this Act.
41-5 (b) Information obtained by the department from a federal or
41-6 state regulatory agency that is confidential under federal or state
41-7 law may not be disclosed except as provided by federal or state
41-8 law.
41-9 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
41-10 information may not be disclosed to a member of the finance
41-11 commission, and a member of the finance commission may not be given
41-12 access to the files and records of the department except that the
41-13 banking commissioner may disclose to the finance commission
41-14 information, files, and records pertinent to a hearing or matter
41-15 pending before the finance commission.
41-16 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
41-17 and execution of an appropriate confidentiality agreement approved
41-18 by the banking commissioner, the banking commissioner may disclose
41-19 to a federal banking regulatory agency confidential information
41-20 relative to a financial institution within the agency's
41-21 jurisdiction, or an affiliate or service provider of the financial
41-22 institution, and may permit the agency access to files and records
41-23 or reports relating to the financial institution or its affiliate
41-24 or service provider.
41-25 (b) The banking commissioner may, if the banking
41-26 commissioner considers it necessary or proper to the enforcement of
41-27 the laws of this state, another state, the United States, or a
42-1 foreign sovereign state, or to the best interest of the public,
42-2 disclose or authorize release of confidential information to
42-3 another department of this state, another state, the United States,
42-4 a foreign sovereign state, or any related agency or
42-5 instrumentality.
42-6 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
42-7 information that is provided to a financial institution, affiliate,
42-8 or service provider of a financial institution, whether in the form
42-9 of a report of examination or otherwise, is the confidential
42-10 property of the department. The information may not be made public
42-11 or disclosed by the recipient or by its officers, directors,
42-12 managers, employees, or agents to a person not officially connected
42-13 to the recipient as officer, director, employee, attorney, auditor,
42-14 or independent auditor except as authorized by rules adopted under
42-15 this Act. A disclosure or use of the information in violation of
42-16 this section is an offense punishable as provided for an offense
42-17 under Section 37.10, Penal Code.
42-18 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
42-19 information from a person subject to this subchapter pursuant to
42-20 subpoena or other legal process must comply with rules adopted
42-21 under this Act and other applicable law. The rules may restrict
42-22 release of confidential information to solely that portion directly
42-23 relevant to the legal dispute at issue and may require that a
42-24 protective order, in form and under circumstances specified by the
42-25 rules, be issued by a court of competent jurisdiction before
42-26 release of the confidential information.
42-27 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
43-1 other law, the banking commissioner may refuse to release
43-2 information or records in the custody of the department if, in the
43-3 opinion of the banking commissioner, release of the information or
43-4 records might jeopardize an ongoing investigation of potentially
43-5 unlawful activities.
43-6 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
43-7 employment information to a financial institution or to a person
43-8 providing employment information to a financial institution
43-9 concerning the known or suspected involvement of a present or
43-10 former employee, officer, or director in a violation of any state
43-11 or federal law, rule, or regulation that has been reported to
43-12 appropriate state or federal authorities. The person may not be
43-13 held liable for providing that information unless the information
43-14 provided is false and the person provided the information with
43-15 disregard for the truth.
43-16 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
43-17 Notwithstanding Article 2.44, Texas Business Corporation Act, a
43-18 shareholder or participant of a state bank may not examine:
43-19 (1) a report of examination or other confidential
43-20 property of the department that is in the possession of the state
43-21 bank; or
43-22 (2) a book or record of the state bank that directly
43-23 or indirectly pertains to financial or other information maintained
43-24 by the bank on behalf of its customers, including a specific item
43-25 in the minutes of the board or a committee of the board regarding
43-26 loan review and approval or a loan delinquency report that would
43-27 tend to identify the bank's customer.
44-1 (b) This section does not affect the rights of a shareholder
44-2 or participant of a state bank when acting in another capacity.
44-3 CHAPTER 3. POWERS; ORGANIZATION AND
44-4 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
44-5 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
44-6 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS ............ 46
44-7 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK ............. 47
44-8 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER ................ 49
44-9 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER
44-10 APPLICATION ..................................... 50
44-11 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION ....... 51
44-12 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY .............. 52
44-13 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL
44-14 BUSINESS CORPORATIONS ........................... 53
44-15 Sec. 3.008. BANKING COMMISSIONER HEARINGS ..................... 54
44-16 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS .............. 54
44-17 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS ........... 56
44-18 (Sections 3.011-3.100 reserved for expansion)
44-19 SUBCHAPTER B. AMENDMENT OF ARTICLES;
44-20 CHANGES IN CAPITAL AND SURPLUS
44-21 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
44-22 OF ASSOCIATION .................................. 59
44-23 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR
44-24 PARTICIPATION SHARES ............................ 61
44-25 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS ......... 62
44-26 Sec. 3.104. CAPITAL NOTES OR DEBENTURES ....................... 62
44-27 (Sections 3.105-3.200 reserved for expansion)
45-1 SUBCHAPTER C. BANK OFFICES
45-2 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING ............... 63
45-3 Sec. 3.202. HOME OFFICE ....................................... 64
45-4 Sec. 3.203. BRANCH OFFICES .................................... 65
45-5 Sec. 3.204. ELECTRONIC TERMINALS .............................. 66
45-6 Sec. 3.205. LOAN PRODUCTION OFFICES ........................... 67
45-7 (Sections 3.206-3.300 reserved for expansion)
45-8 SUBCHAPTER D. MERGER
45-9 Sec. 3.301. MERGER AUTHORITY .................................. 67
45-10 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER .................. 68
45-11 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER .................... 70
45-12 (Sections 3.304-3.400 reserved for expansion)
45-13 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
45-14 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
45-15 FINANCIAL INSTITUTION ........................... 70
45-16 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT .............. 70
45-17 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION ................ 71
45-18 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS ............... 72
45-19 Sec. 3.405. SALE OF ASSETS .................................... 72
45-20 (Sections 3.406-3.500 reserved for expansion)
45-21 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
45-22 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
45-23 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
45-24 BANK INTO NATIONAL BANK OR SAVINGS BANK OR
45-25 SAVINGS ASSOCIATION ............................. 73
45-26 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
45-27 BANK ............................................ 75
46-1 CHAPTER 3. POWERS; ORGANIZATION AND
46-2 ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS
46-3 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
46-4 Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
46-5 One or more persons, a majority of whom are residents of this
46-6 state, may organize a state bank as a banking association or a
46-7 limited banking association. A state bank may:
46-8 (1) receive and pay deposits with or without interest,
46-9 discount and negotiate promissory notes, borrow or lend money with
46-10 or without security or interest, invest and deal in securities, buy
46-11 and sell exchange, coin, and bullion and exercise incidental powers
46-12 as necessary to carry on the business of banking as provided by
46-13 this Act;
46-14 (2) act as agent, including a fiscal agent, registrar,
46-15 or transfer agent and, in that capacity, receive and disburse money
46-16 and transfer securities;
46-17 (3) act in a fiduciary capacity, without giving bond,
46-18 as guardian, receiver, executor, administrator, or trustee,
46-19 including a mortgage or indenture trustee; and
46-20 (4) engage in any other activity, directly or through
46-21 a subsidiary, authorized by this Act or rules adopted under this
46-22 Act or determined by the banking commissioner to be closely related
46-23 to banking.
46-24 (b) Subject to Section 3.007 of this Act, a state bank may
46-25 exercise the powers of a Texas business corporation reasonably
46-26 necessary to enable exercise of its specific powers under this Act.
46-27 (c) A state bank may contribute to community funds, or to
47-1 charitable, philanthropic, or benevolent instrumentalities
47-2 conducive to public welfare, amounts that its board considers
47-3 expedient and in the interests of the bank.
47-4 (d) A state bank may be organized or reorganized as a
47-5 community development financial institution, as defined by the
47-6 Riegle Community Development and Regulatory Improvement Act of
47-7 1994.
47-8 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. The
47-9 articles of association of a state bank must be signed and
47-10 acknowledged by each organizer and must contain:
47-11 (1) the name of the state bank, except that the
47-12 banking commissioner may determine that a proposed bank name is
47-13 potentially misleading to the public and require the organizers to
47-14 select a different name;
47-15 (2) the period of its duration, which may be
47-16 perpetual, except that a state bank, other than a private bank,
47-17 organized before August 31, 1993, is considered to have perpetual
47-18 existence, notwithstanding a contrary statement in its articles of
47-19 association, unless after the effective date of this Act the bank
47-20 amends its articles of association to reaffirm its limited
47-21 duration;
47-22 (3) the powers of the state bank, which may be stated
47-23 as:
47-24 (A) all powers granted by law to a state bank;
47-25 or
47-26 (B) a list of the specific powers under Section
47-27 3.001 of this Act that the state bank chooses to exercise;
48-1 (4) the aggregate number of shares or participation
48-2 shares that the bank will be authorized to issue, the number of
48-3 classes of shares or participation shares, which may be one or
48-4 more, the number of shares or participation shares of each class if
48-5 more than one class, and a statement of the par value of the shares
48-6 or participation shares of each class or that the shares or
48-7 participation shares are to be without par value;
48-8 (5) if the shares or participation shares are to be
48-9 divided into classes, the designation of each class and statement
48-10 of the preferences, limitations, and relative rights of the shares
48-11 or participation shares of each class, which in the case of a
48-12 limited banking association may be more fully set forth in the
48-13 participation agreement;
48-14 (6) any provision limiting or denying to shareholders
48-15 or participants the preemptive right to acquire additional or
48-16 treasury shares or participation shares of the bank;
48-17 (7) any provision granting the right of shareholders
48-18 or participants to cumulative voting in the election of directors
48-19 or managers;
48-20 (8) the aggregate amount of consideration to be
48-21 received for all shares or participation shares initially issued by
48-22 the bank, and a statement that all authorized shares or
48-23 participation shares have been subscribed and that all
48-24 subscriptions received provide for the consideration to be fully
48-25 paid in cash before issuance of the charter;
48-26 (9) any provision consistent with law that the
48-27 organizers elect to set forth in the articles of association for
49-1 the regulation of the internal affairs of the bank or that is
49-2 otherwise required by this Act to be set forth in the articles of
49-3 association;
49-4 (10) the street address of the bank's initial home
49-5 office required to be maintained under Section 3.202 of this Act;
49-6 and
49-7 (11) the number of directors or managers constituting
49-8 the initial board, which may be no fewer than five or more than 25,
49-9 and the names and street addresses of the persons who are to serve
49-10 as directors or managers until the first annual meeting of
49-11 shareholders or participants or until successor directors or
49-12 managers have been elected and qualified; or, at the option of the
49-13 organizers of a limited banking association that will have no fewer
49-14 than five or more than 25 participants, a statement that management
49-15 is vested in a board comprised of all participants, with management
49-16 authority vested in each participant in proportion to the
49-17 participant's contribution to capital as adjusted from time to time
49-18 to properly reflect any additional contribution, and the names and
49-19 street addresses of the persons who are to be managing
49-20 participants.
49-21 Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a) An
49-22 application for a state bank charter must be made under oath and in
49-23 the form required by the banking commissioner, who shall inquire
49-24 fully into the identity and character of each proposed director,
49-25 manager, officer, managing participant, and principal shareholder
49-26 or participant. The application must be accompanied by all charter
49-27 fees and deposits required by law or regulation.
50-1 (b) The banking commissioner shall grant a state bank
50-2 charter only if the commissioner determines that the organizers
50-3 have established that:
50-4 (1) a public necessity exists for the proposed state
50-5 bank;
50-6 (2) the proposed organizational and capital structure
50-7 and amount of initial capitalization is adequate for the proposed
50-8 business and location;
50-9 (3) the anticipated volume of business indicates
50-10 profitable operation;
50-11 (4) the proposed officers, directors, and managers, or
50-12 managing participants, as a group have sufficient banking
50-13 experience, ability, standing, competence, trustworthiness, and
50-14 integrity to justify a belief that the proposed state bank will
50-15 operate in compliance with law and that success of the proposed
50-16 state bank is probable;
50-17 (5) each principal shareholder or participant has
50-18 sufficient experience, ability, standing, competence,
50-19 trustworthiness, and integrity to justify a belief that the
50-20 proposed state bank will be free from improper or unlawful
50-21 influence or interference with respect to the bank's operation in
50-22 compliance with law; and
50-23 (6) the organizers are acting in good faith.
50-24 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
50-25 (a) The banking commissioner shall notify the organizers when the
50-26 application is complete and accepted for filing and all required
50-27 fees and deposits have been paid. Promptly after this notification
51-1 the organizers shall publish notice of the application and solicit
51-2 comments and protests, in the form specified by the banking
51-3 commissioner, in a newspaper of general circulation in the county
51-4 where the proposed state bank is to be located.
51-5 (b) At the expense of the organizers, the banking
51-6 commissioner shall thoroughly investigate the application. The
51-7 banking commissioner shall prepare a written report of the
51-8 investigation, and any person, other than a person protesting under
51-9 Section 3.005 of this Act, may request a copy of the
51-10 nonconfidential portions of the application and written report as
51-11 provided by Chapter 552, Government Code. Rules adopted under
51-12 this Act may specify the confidential or nonconfidential character
51-13 of information obtained by the department under this chapter.
51-14 Except as provided by Subchapter B, Chapter 2, of this Act or in
51-15 rules regarding confidential information, the financial statement
51-16 of a proposed officer, director, manager, or managing participant
51-17 is confidential and not subject to public disclosure.
51-18 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
51-19 (a) Any person may file a protest to an application.
51-20 (b) If a protest of the application is not filed before the
51-21 15th day after the date the organizers publish notice under Section
51-22 3.004(a) of this Act, the banking commissioner may immediately
51-23 determine whether the necessary conditions set forth in Section
51-24 3.003(b) of this Act have been established, based on the
51-25 application and investigation. The banking commissioner shall
51-26 approve the application for charter or set the charter application
51-27 for hearing.
52-1 (c) If a protest of the application is timely filed,
52-2 accompanied by the fees and deposits required by statute or rules,
52-3 or if the banking commissioner sets a hearing, the banking
52-4 commissioner shall conduct a public hearing and one or more
52-5 prehearing conferences and opportunities for discovery as the
52-6 banking commissioner considers advisable and consistent with the
52-7 applicable statutes and rules. A person protesting the application
52-8 is entitled to the confidential portion of the application, subject
52-9 to a protective order that restricts the use of confidential
52-10 information to the charter proceedings.
52-11 (d) Based on the record of the hearing, the banking
52-12 commissioner shall determine whether the application meets the
52-13 requirements of Section 3.003(b) of this Act and shall enter an
52-14 order granting or denying the charter.
52-15 (e) The banking commissioner may make approval of an
52-16 application conditional. The banking commissioner shall include
52-17 any conditions in the order approving the application.
52-18 (f) Chapter 2001, Government Code, does not apply to a
52-19 charter application filed for the purpose of assuming the assets
52-20 and liabilities of a financial institution considered by the
52-21 banking commissioner to be in hazardous condition.
52-22 Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) A
52-23 state bank may not engage in the business of banking until it
52-24 receives a certificate of authority from the banking commissioner.
52-25 The banking commissioner may not deliver the certificate of
52-26 authority until the bank has:
52-27 (1) received cash for the issuance of all authorized
53-1 shares or participation shares in the full amount subscribed;
53-2 (2) elected or qualified the initial officers and
53-3 directors or managers, as appropriate, named in the application for
53-4 charter or other officers and directors or managers approved by the
53-5 banking commissioner; and
53-6 (3) complied with all the other requirements of this
53-7 Act relating to the organization of state banks.
53-8 (b) If the state bank does not open and engage in the
53-9 business of banking within six months after the date of the
53-10 granting of its charter, the banking commissioner may forfeit the
53-11 charter or cancel the conditional approval of application for
53-12 charter without judicial action.
53-13 Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
53-14 CORPORATIONS. (a) The Texas Business Corporation Act and the
53-15 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
53-16 seq., Vernon's Texas Civil Statutes) apply to a state bank to the
53-17 extent not inconsistent with this Act or the proper business of a
53-18 state bank, except that:
53-19 (1) a reference in those Acts to the secretary of
53-20 state means the banking commissioner unless the context requires
53-21 otherwise; and
53-22 (2) the right of shareholders or participants to
53-23 cumulative voting in the election of directors or managers exists
53-24 only if granted by the state bank's articles of association.
53-25 (b) The finance commission may adopt rules to limit or
53-26 refine the applicability of Subsection (a) of this section to a
53-27 state bank or to alter or supplement the procedures and
54-1 requirements of the Texas Business Corporation Act applicable to an
54-2 action taken under this chapter.
54-3 (c) Unless expressly authorized by this Act or a rule
54-4 adopted under this Act, a state bank may not take an action
54-5 authorized by the Texas Business Corporation Act regarding its
54-6 corporate status, capital structure, or a matter of corporate
54-7 governance, of the type for which the Texas Business Corporation
54-8 Act would require a filing with the secretary of state if the bank
54-9 was a business corporation, without submitting the filing to the
54-10 banking commissioner and obtaining the banking commissioner's prior
54-11 written approval of the action.
54-12 Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) This
54-13 section does not grant a right to hearing to a person that is not
54-14 otherwise granted by governing law.
54-15 (b) The banking commissioner may convene a hearing to
54-16 receive evidence and argument regarding any matter before the
54-17 banking commissioner for decision or review under this Act. The
54-18 hearing must be conducted under Chapter 2001, Government Code.
54-19 (c) A hearing before the banking commissioner that is
54-20 required or authorized by law may be conducted by a hearing officer
54-21 on behalf of the banking commissioner. A matter made confidential
54-22 by law must be considered by the banking commissioner in a closed
54-23 hearing.
54-24 Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
54-25 Except as expressly provided otherwise by this Act, a decision or
54-26 order of the banking commissioner made under this Act after hearing
54-27 may be appealed directly to the District Court of Travis County as
55-1 provided by Subsection (c) of this section or, at the option of the
55-2 appellant, to the finance commission for review.
55-3 (b) The finance commission shall consider the questions
55-4 raised by the application for review and may also consider
55-5 additional matters pertinent to the appeal. An order of the
55-6 banking commissioner continues in effect pending review unless the
55-7 order is stayed by the finance commission. The finance commission
55-8 may impose any condition before granting a stay of the appealed
55-9 order. The finance commission may not be required to accept
55-10 additional evidence or hold an evidentiary hearing if a hearing was
55-11 held and a record made before the banking commissioner. The
55-12 finance commission shall remand the proceeding to the banking
55-13 commissioner for the purpose of receiving any additional evidence
55-14 the finance commission chooses to consider. A hearing before the
55-15 finance commission that is required or authorized by law may be
55-16 conducted by a hearing officer on behalf of the finance commission.
55-17 A matter made confidential by law must be considered by the finance
55-18 commission in a closed hearing.
55-19 (c) A person affected by a final order of the banking
55-20 commissioner that elects to appeal directly to district court, or a
55-21 person affected by a final order of the finance commission under
55-22 this section, may appeal the final order by filing a petition for
55-23 judicial review under the substantial evidence rule in the District
55-24 Court of Travis County as provided by Chapter 2001, Government
55-25 Code. A petition for appeal filed in the district court does not
55-26 stay or vacate the appealed order unless the court, after notice
55-27 and hearing, expressly stays or vacates the order.
56-1 Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS.
56-2 (a) Section 16(a), Article XVI, Texas Constitution, empowers the
56-3 legislature to authorize the incorporation of state banks and
56-4 provide for a system of state regulation and control of state banks
56-5 that will adequately protect and secure depositors and creditors.
56-6 Section 16(c), Article XVI, Texas Constitution, grants to state
56-7 banks, created by virtue of the power vested in the legislature by
56-8 Section 16(a) of that article, the same rights and privileges that
56-9 are or may be granted to national banks domiciled in this state.
56-10 The legislature finds that Section 16(c) of that article does not
56-11 restrict the legislature's power to provide a system of state
56-12 regulation pursuant to Section 16(a) of that article that differs
56-13 from the regulatory scheme imposed on national banks under federal
56-14 law or prevent the finance commission, acting under authority
56-15 granted by the legislature for the purpose of implementing this
56-16 Act, from adopting rules that differ from federal statutes and
56-17 regulations or that reasonably regulate the method or manner by
56-18 which a state bank exercises its rights and privileges, if the
56-19 rules are adopted after due consideration of the factors listed in
56-20 Section 1.012(b) of this Act. The legislature further finds that
56-21 Section 16(c) does not diminish or limit any rights or powers
56-22 specifically given to state banks by the laws of this state.
56-23 (b) A state bank that intends to exercise a right or
56-24 privilege granted to national banks that is not authorized for
56-25 state banks under the statutes and rules of this state shall submit
56-26 a letter to the banking commissioner, describing in detail the
56-27 activity in which the state bank intends to engage and the specific
57-1 authority of a national bank that authorizes the activity for a
57-2 national bank and shall attach copies, if available, of relevant
57-3 federal law, regulations, and interpretive letters. The bank may
57-4 begin to perform the proposed activity after the 30th day after the
57-5 date the banking commissioner receives the bank's letter unless the
57-6 banking commissioner specifies an earlier or later date or
57-7 prohibits the activity. The banking commissioner may prohibit the
57-8 state bank from performing the activity only if the banking
57-9 commissioner finds that:
57-10 (1) a national bank domiciled in this state does not
57-11 possess the specific right or privilege to perform the activity the
57-12 state bank seeks to perform; or
57-13 (2) the performance of the activity by the state bank
57-14 would adversely affect the safety and soundness of the requesting
57-15 state bank.
57-16 (c) The banking commissioner may extend the 30-day period
57-17 under Subsection (b) of this section if the banking commissioner
57-18 determines that the bank's letter raises issues requiring
57-19 additional information or additional time for analysis. If the
57-20 30-day period is extended, the bank may perform the proposed
57-21 activity only on prior written approval by the banking
57-22 commissioner, except that the banking commissioner must approve or
57-23 prohibit the proposed activity or convene a hearing under Section
57-24 3.008 of this Act not later than the 60th day after the date the
57-25 commissioner receives the bank's letter. If a hearing is convened
57-26 under Section 3.008 of this Act, the banking commissioner must
57-27 approve or prohibit the proposed activity not later than the 30th
58-1 day after the date the hearing is completed.
58-2 (d) A state bank that is denied the requested right or
58-3 privilege to engage in an activity by the banking commissioner
58-4 under this section may appeal as provided by Section 3.009 of this
58-5 Act or may resubmit a letter under this subsection with additional
58-6 information or authority relevant to the banking commissioner's
58-7 determination. A denial is immediately final for purposes of
58-8 appeal.
58-9 (e) To effectuate the Texas Constitution, the finance
58-10 commission may adopt rules implementing the method or manner in
58-11 which a state bank exercises specific rights and privileges granted
58-12 pursuant to Section 16(c), Article XVI, Texas Constitution,
58-13 including rules regarding the exercise of rights and privileges
58-14 that would be prohibited to state banks but for Section 16(c). The
58-15 finance commission may not adopt rules under this subsection unless
58-16 it considers the factors listed in Section 1.012(b) of this Act and
58-17 finds that:
58-18 (1) national banks domiciled in this state possess the
58-19 rights or privileges to perform activities the rule would permit
58-20 state banks to perform; and
58-21 (2) the rules contain adequate safeguards and
58-22 controls, consistent with safety and soundness, to address the
58-23 concern of the legislature evidenced by the state law the rules
58-24 would impact.
58-25 (f) The exercise of rights and privileges by a state bank in
58-26 compliance with and in the manner authorized by this section is not
58-27 a violation of any statute of this state.
59-1 (Sections 3.011-3.100 reserved for expansion)
59-2 SUBCHAPTER B. AMENDMENT OF ARTICLES;
59-3 CHANGES IN CAPITAL AND SURPLUS
59-4 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
59-5 OF ASSOCIATION. (a) A state bank that has been granted a
59-6 certificate of authority under Section 3.006 of this Act may amend
59-7 or restate its articles of association for any lawful purpose,
59-8 including the creation of authorized but unissued shares or
59-9 participation shares in one or more classes or series.
59-10 (b) An amendment authorizing the issuance of shares or
59-11 participation shares in series must contain:
59-12 (1) the designation of each series and a statement of
59-13 any variations in the preferences, limitations, and relative rights
59-14 among series to the extent that the preferences, limitations, and
59-15 relative rights are to be established in the articles of
59-16 association; and
59-17 (2) a statement of any authority to be vested in the
59-18 board to establish series and determine the preferences,
59-19 limitations, and relative rights of each series.
59-20 (c) A limited banking association may not amend its articles
59-21 of association to extend its period of existence for a perpetual
59-22 period or for any period of years, unless the period of existence
59-23 is expressly contingent on those events resulting in dissolution of
59-24 the limited banking association under Section 4.207 of this Act.
59-25 (d) Amendment or restatement of the articles of association
59-26 of a state bank and approval of the board and shareholders or
59-27 participants must be made or obtained in accordance with provisions
60-1 of the Texas Business Corporation Act for the amendment or
60-2 restatement of articles of incorporation except as otherwise
60-3 provided by this Act or rules adopted under this Act. The original
60-4 and one copy of the articles of amendment or restated articles of
60-5 association must be filed with the banking commissioner for
60-6 approval. Unless the submission presents novel or unusual
60-7 questions, the banking commissioner shall approve or reject the
60-8 amendment or restatement not later than the 31st day after the date
60-9 the banking commissioner considers the submission informationally
60-10 complete and accepted for filing. The banking commissioner may
60-11 require the submission of additional information as considered
60-12 necessary to an informed decision to approve or reject any
60-13 amendment or restatement of articles of association under this
60-14 section. If the banking commissioner finds that the amendment or
60-15 restatement conforms to law and any conditions imposed by the
60-16 banking commissioner, and any required filing fee has been paid,
60-17 the banking commissioner shall:
60-18 (1) endorse the face of the original and copy of the
60-19 amendment or restatement with the date of approval and the word
60-20 "Approved";
60-21 (2) file the original of the amendment or restatement
60-22 in the department's records; and
60-23 (3) deliver a certified copy of the amendment or
60-24 restatement to the state bank.
60-25 (e) An amendment or restatement, if approved, takes effect
60-26 on the date of approval, unless the amendment or restatement
60-27 provides for a different effective date.
61-1 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
61-2 SHARES. (a) If the articles of association expressly give the
61-3 board authority to establish series and determine the preferences,
61-4 limitations, and relative rights of each series, the board may do
61-5 so only on compliance with this section and any rules adopted under
61-6 this Act.
61-7 (b) A series of shares or participation shares may be
61-8 established in the manner provided by the Texas Business
61-9 Corporation Act as if the state bank were a domestic corporation,
61-10 but the shares or participation shares of the series may not be
61-11 issued and sold without the prior written approval of the banking
61-12 commissioner under Section 3.103 of this Act. The state bank shall
61-13 file the original and one copy of the statement of action required
61-14 by the Texas Business Corporation Act with the banking
61-15 commissioner. Unless the submission presents novel or unusual
61-16 questions, the banking commissioner shall approve or reject the
61-17 series not later than the 31st day after the date the banking
61-18 commissioner considers the submission informationally complete and
61-19 accepted for filing. The banking commissioner may require the
61-20 submission of additional information as considered necessary to an
61-21 informed decision to approve or reject a proposed series under this
61-22 section. If the banking commissioner finds that the interests of
61-23 depositors and creditors will not be adversely affected by the
61-24 series, that the series conforms to law and any conditions imposed
61-25 by the banking commissioner, and that any required filing fee has
61-26 been paid, the banking commissioner shall:
61-27 (1) endorse the face of the original and copy of the
62-1 statement with the date of approval and the word "Approved";
62-2 (2) file the original of the statement in the
62-3 department's records; and
62-4 (3) deliver a certified copy of the statement to the
62-5 state bank.
62-6 Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
62-7 A state bank may not reduce or increase its outstanding capital and
62-8 surplus through dividend, redemption, issuance of shares or
62-9 participation shares, or otherwise, without the prior written
62-10 approval of the banking commissioner, except as permitted by this
62-11 section or rules adopted under this Act.
62-12 (b) Unless otherwise restricted by rules, prior written
62-13 approval is not required for an increase in capital and surplus
62-14 accomplished through:
62-15 (1) issuance of shares of common stock or their
62-16 equivalent in participation shares for cash;
62-17 (2) declaration and payment of pro rata share
62-18 dividends as defined in the Texas Business Corporation Act; or
62-19 (3) adoption by the board of a resolution directing
62-20 that all or part of undivided profits be transferred to capital or
62-21 surplus.
62-22 (c) Prior approval is not required for a decrease in capital
62-23 or surplus caused by losses in excess of undivided profits.
62-24 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
62-25 prior written approval of the banking commissioner a state bank
62-26 may, at any time, through action of its board, and without
62-27 requiring action of its shareholders or participants, issue and
63-1 sell its capital notes or debentures, which must be subordinate to
63-2 the claims of depositors and may be subordinate to other claims,
63-3 including the claims of other creditors or the shareholders or
63-4 participants.
63-5 (b) Capital notes or debentures may be convertible into
63-6 shares or participation shares of any class or series. The
63-7 issuance and sale of convertible capital notes or debentures are
63-8 subject to satisfaction of preemptive rights, if any, to the extent
63-9 provided by law.
63-10 (c) Without the prior written approval of the banking
63-11 commissioner, interest due or principal repayable on outstanding
63-12 capital notes or debentures may not be paid by a state bank at a
63-13 time when the bank is in hazardous condition or is insolvent, or to
63-14 the extent that payment will cause the bank to be in hazardous
63-15 condition or insolvent, as determined by the banking commissioner.
63-16 (d) The amount of any outstanding capital notes or
63-17 debentures that meet the requirements of this section and that are
63-18 subordinated to unsecured creditors of the bank may be included in
63-19 equity capital of the bank for purposes of determining hazardous
63-20 condition or insolvency and for other purposes provided by rules
63-21 adopted under this Act.
63-22 (Sections 3.105-3.200 reserved for expansion)
63-23 SUBCHAPTER C. BANK OFFICES
63-24 Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
63-25 state bank may engage in the banking business at its home office,
63-26 at an approved branch office location, and through electronic
63-27 terminals. A drive-in facility must be approved as a branch if it
64-1 is more than 2,000 feet from the nearest wall of the bank's home
64-2 office or another approved branch office.
64-3 (b) A function of a state bank that does not involve banking
64-4 contact with the public may be conducted at any location without
64-5 prior written approval of the banking commissioner. The finance
64-6 commission may adopt rules further defining functions of a state
64-7 bank that are not required to be conducted at an approved location.
64-8 (c) Under Section 3.010 of this Act the finance commission
64-9 may by rule authorize a new form of banking facility. The banking
64-10 commissioner may approve a new form of banking facility other than
64-11 as provided in this subchapter if the banking commissioner does not
64-12 have a significant supervisory or regulatory concern regarding the
64-13 proposed facility.
64-14 Sec. 3.202. HOME OFFICE. (a) Each state bank must have and
64-15 continuously maintain in this state a home office, which must be a
64-16 location at which the bank does business with the public and keeps
64-17 its corporate books and records. At least one officer of the bank
64-18 must maintain an office at the home office and each officer at the
64-19 home office is an agent for service of process for the bank.
64-20 (b) A state bank may change its home office to one of its
64-21 previously established branch locations within this state, if the
64-22 location that is the home office before the change is to remain as
64-23 a branch of the bank, by filing a written notice with the banking
64-24 commissioner setting forth the name of the state bank, the street
64-25 address of its home office before the change, the street address of
64-26 the location to which the home office is to be changed, and a copy
64-27 of the resolution adopted by the board authorizing the change. The
65-1 change of home office takes effect on the 31st day after the date
65-2 the banking commissioner receives the notice unless the banking
65-3 commissioner consents to a different effective date.
65-4 (c) A state bank may change its home office to any location
65-5 within this state, other than as permitted by Subsection (b) of
65-6 this section, on prior written approval of the banking
65-7 commissioner. The banking commissioner shall grant an application
65-8 under this subsection if the banking commissioner does not have a
65-9 significant supervisory or regulatory concern regarding the
65-10 proposed banking facility, the applicant, or an affiliate of the
65-11 applicant. Any standard established by the banking commissioner or
65-12 the finance commission regarding the establishment of a branch
65-13 under Section 3.203 of this Act applies to an application for a
65-14 change of home office that is subject to this subsection, except as
65-15 otherwise provided by rules adopted under this Act.
65-16 (d) If the proposed relocation of the bank's home office
65-17 would effect an abandonment of all or part of the community served
65-18 by the bank, the bank must also establish to the satisfaction of
65-19 the banking commissioner that the abandonment is consistent with
65-20 the original determination of public necessity for the
65-21 establishment of a bank at that location.
65-22 Sec. 3.203. BRANCH OFFICES. A state bank may establish and
65-23 maintain branch offices at any location on prior written approval
65-24 of the banking commissioner. If the banking commissioner does not
65-25 have a significant supervisory or regulatory concern regarding the
65-26 proposed branch, the applicant, or an affiliate, the banking
65-27 commissioner shall approve the application. The finance commission
66-1 may adopt rules establishing additional standards for the approval
66-2 of branch offices.
66-3 Sec. 3.204. ELECTRONIC TERMINALS. (a) A person or group of
66-4 persons, for the convenience of customers of depository
66-5 institutions, may install, maintain, and operate one or more
66-6 electronic terminals at any location within this state.
66-7 (b) Depository institutions may agree in writing to share in
66-8 the use of an electronic terminal on a reasonable,
66-9 nondiscriminatory basis and on the condition that a depository
66-10 institution using one or more electronic terminals may be required
66-11 to meet necessary and reasonable technical standards and to pay
66-12 charges for the use of the electronic terminal. The standards or
66-13 charges imposed must be reasonable, fair, equitable, and
66-14 nondiscriminatory among the depository institutions. Any charges
66-15 imposed must:
66-16 (1) not exceed an equitable proportion of the cost of
66-17 establishing the electronic terminal, including provisions for
66-18 amortization of development costs and capital expenditures over a
66-19 reasonable period, and the cost of operation and maintenance of the
66-20 electronic terminal, plus a reasonable return on those costs; and
66-21 (2) be related to the services provided to the
66-22 depository institution or its customers.
66-23 (c) This section does not apply to:
66-24 (1) an electronic terminal located at the domicile or
66-25 home office or a branch of a depository institution; or
66-26 (2) the use by a person of an electronic terminal,
66-27 regardless of location, solely to withdraw cash, make account
67-1 balance inquiries, or make transfers among the person's accounts
67-2 within the same depository institution.
67-3 Sec. 3.205. LOAN PRODUCTION OFFICES. (a) A state bank may
67-4 establish one or more loan production offices solely for the
67-5 purpose of soliciting loans, accepting loan applications, and
67-6 performing ministerial duties related to consummating a granted
67-7 loan such as execution of loan documents and dispensing of loan
67-8 proceeds by draft or check, including a certified or cashier's
67-9 check, but not by cash. A credit decision, commitment to make a
67-10 loan, and preparation of a check or draft to dispense loan proceeds
67-11 must occur at the bank's home office or a branch office and may not
67-12 occur at a loan production office.
67-13 (b) The bank shall notify the banking commissioner in
67-14 writing before the 31st day preceding the date of establishment of
67-15 a loan production office, except that the banking commissioner may
67-16 waive or shorten the period if the banking commissioner does not
67-17 have a significant supervisory or regulatory concern regarding the
67-18 bank or its planned loan production office.
67-19 (Sections 3.206-3.300 reserved for expansion)
67-20 SUBCHAPTER D. MERGER
67-21 Sec. 3.301. MERGER AUTHORITY. (a) Two or more financial
67-22 institutions, corporations, or other entities with all requisite
67-23 legal authority to participate in a merger, at least one of which
67-24 is a state bank, may adopt and implement a plan of merger in
67-25 accordance with this section. The merger may not be made without
67-26 the prior written approval of the banking commissioner if any
67-27 surviving, new, or acquiring entity that is a party to the merger
68-1 or created by the terms of the merger is a state bank or is not a
68-2 financial institution.
68-3 (b) Implementation of the merger by the parties and approval
68-4 of the board, shareholders, participants, or owners of the parties
68-5 must be made or obtained in accordance with the Texas Business
68-6 Corporation Act as if the state bank were a domestic corporation
68-7 and all other parties to the merger were foreign corporations and
68-8 other entities, except as may be otherwise provided by applicable
68-9 rules.
68-10 (c) A consummated merger has the effect provided by the
68-11 Texas Business Corporation Act. A separate application is not
68-12 required to relocate the home office of a surviving state bank or
68-13 to grant authority to a surviving bank to operate new branch
68-14 offices that previously existed as part of a merging financial
68-15 institution if the intent of the surviving bank is clearly stated
68-16 as part of the plan of merger.
68-17 Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) If the
68-18 transaction is subject to the prior written approval of the banking
68-19 commissioner, the original articles of merger and a number of
68-20 copies of the articles equal to the number of surviving, new, and
68-21 acquiring entities must be filed with the banking commissioner. On
68-22 this filing, the banking commissioner shall investigate the
68-23 condition of the merging parties. The banking commissioner may
68-24 require the submission of additional information the banking
68-25 commissioner determines necessary to an informed decision to
68-26 approve or reject a merger under this subchapter.
68-27 (b) The banking commissioner shall approve the merger only
69-1 if:
69-2 (1) each resulting state bank will be solvent and have
69-3 adequate capitalization for its business and location;
69-4 (2) each resulting state bank has in all respects
69-5 complied with the laws of this state relative to the organization
69-6 of state banks;
69-7 (3) all deposit and other liabilities of every state
69-8 bank that is a party to the merger have been properly discharged or
69-9 otherwise assumed or retained by a financial institution;
69-10 (4) each surviving, new, or acquiring entity that is
69-11 not a depository institution will not be engaged in the
69-12 unauthorized business of banking;
69-13 (5) the parties have in all respects complied with the
69-14 laws of this state; and
69-15 (6) all conditions imposed by the banking commissioner
69-16 have been satisfied or otherwise resolved.
69-17 (c) If the banking commissioner approves the merger and
69-18 finds that all required filing fees and investigative costs have
69-19 been paid, the banking commissioner shall:
69-20 (1) endorse the face of the original and each copy
69-21 with the date of approval and the word "Approved";
69-22 (2) file the original of the articles of merger in the
69-23 department's records; and
69-24 (3) deliver a certified copy of the articles of merger
69-25 to each surviving, new, or acquiring entity.
69-26 (d) An approved merger takes effect on the date of approval,
69-27 unless the merger agreement provides for a different effective
70-1 date.
70-2 Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
70-3 participant, or participant-transferee may dissent from the merger
70-4 to the extent and by following the procedure provided by the Texas
70-5 Business Corporation Act or any rules adopted under this Act.
70-6 (Sections 3.304-3.400 reserved for expansion)
70-7 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
70-8 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
70-9 FINANCIAL INSTITUTION. A state bank with the prior written
70-10 approval of the banking commissioner may purchase all or
70-11 substantially all of the assets of another financial institution.
70-12 Except as otherwise expressly provided by another statute, the
70-13 purchase of all or part of the assets of the selling institution
70-14 does not make the purchasing bank responsible for any liability or
70-15 obligation of the selling institution that the purchasing bank does
70-16 not expressly assume. Except as otherwise provided by this Act,
70-17 this subchapter does not govern or prohibit the purchase by a state
70-18 bank of all or part of the assets of a corporation or other entity
70-19 that is not a financial institution.
70-20 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
70-21 purchasing bank may hold the purchase price and any additional
70-22 funds delivered to it by the selling institution in trust for, or
70-23 as a deposit to the credit of, the selling institution and may act
70-24 as agent of the selling institution in disbursing those funds in
70-25 trust or on deposit by paying the depositors and creditors of the
70-26 selling institution. If the purchasing bank acts under written
70-27 contract of agency approved by the banking commissioner that
71-1 specifically names each depositor and creditor and the amount to be
71-2 paid each, and if the agency is limited to the purely ministerial
71-3 act of paying those depositors and creditors the amounts due them
71-4 as determined by the selling institution and reflected in the
71-5 contract of agency and does not involve discretionary duties or
71-6 authority other than the identification of the depositors and
71-7 creditors named, the purchasing bank:
71-8 (1) may rely on the contract of agency and the
71-9 instructions included in it; and
71-10 (2) is not responsible for:
71-11 (A) any error made by the selling institution in
71-12 determining its liabilities, the depositors and creditors to whom
71-13 the liabilities are due, or the amounts due the depositors and
71-14 creditors; or
71-15 (B) any preference that results from the
71-16 payments made under the contract of agency and the instructions
71-17 included in it.
71-18 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
71-19 selling financial institution is at any time after the sale of
71-20 assets voluntarily or involuntarily closed for liquidation by a
71-21 state or federal regulatory agency, the purchasing bank shall pay
71-22 to the receiver of the selling institution the balance of the funds
71-23 held by it in trust or on deposit for the selling institution and
71-24 not yet paid to the depositors and creditors of the selling
71-25 institution. Without further action the purchasing bank is
71-26 discharged of all responsibilities to the selling institution, its
71-27 receiver, or its depositors, creditors, shareholders, participants,
72-1 or participant-transferees.
72-2 Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Payment to
72-3 a depositor or creditor of the selling institution of the amount to
72-4 be paid the person under the terms of the contract of agency may be
72-5 made by the purchasing bank by opening an account in the name of
72-6 the depositor or creditor, crediting the account with the amount to
72-7 be paid the depositor or creditor under the terms of the agency
72-8 contract, and mailing or personally delivering a duplicate deposit
72-9 ticket evidencing the credit to the depositor or creditor at the
72-10 person's address shown in the records of the selling institution.
72-11 The relationship between the purchasing bank and the depositor or
72-12 creditor is that of debtor to creditor only to the extent of the
72-13 credit reflected by the deposit ticket.
72-14 Sec. 3.405. SALE OF ASSETS. (a) The board of a state bank,
72-15 with the prior written approval of the banking commissioner, may
72-16 cause a bank to sell all or substantially all of its assets without
72-17 shareholder or participant approval if:
72-18 (1) the banking commissioner finds the interests of
72-19 depositors and creditors are jeopardized because of insolvency or
72-20 imminent insolvency and that the sale is in their best interest;
72-21 and
72-22 (2) the Federal Deposit Insurance Corporation or its
72-23 successor approves the transaction and agrees to provide assistance
72-24 to the prospective buyer under 12 U.S.C. Section 1823(c) or a
72-25 comparable law unless the deposits of the bank are not insured.
72-26 (b) A sale under this section must include an assumption and
72-27 promise by the buyer to pay or otherwise discharge:
73-1 (1) all of the bank's liabilities to depositors;
73-2 (2) all of the bank's liabilities for salaries of the
73-3 bank's employees incurred before the date of the sale;
73-4 (3) obligations incurred by the banking commissioner
73-5 arising out of the supervision or sale of the bank; and
73-6 (4) fees and assessments due the department.
73-7 (c) This section does not affect the banking commissioner's
73-8 right to take action under another law. The sale by a state bank
73-9 of all or substantially all of its assets with shareholder or
73-10 participant approval is considered a voluntary dissolution and
73-11 liquidation and is governed by Subchapter B, Chapter 7, of this
73-12 Act.
73-13 (Sections 3.406-3.500 reserved for expansion)
73-14 SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
73-15 EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL INSTITUTION
73-16 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
73-17 BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS ASSOCIATION.
73-18 (a) A state bank may act as necessary under the laws of the United
73-19 States or this state to merge, reorganize, or convert into a
73-20 national bank, state or federal savings bank, or state or federal
73-21 savings association.
73-22 (b) The merger, reorganization, or conversion by the state
73-23 bank must be made and approval of its board, shareholders, or
73-24 participants must be obtained in accordance with the Texas Business
73-25 Corporation Act as if the state bank were a domestic corporation
73-26 and all other parties to the transaction, if any, were foreign
73-27 corporations and other entities, except as may be otherwise
74-1 provided by rules. For purposes of this subsection, a conversion
74-2 is considered a merger into the successor form of financial
74-3 institution.
74-4 (c) The state bank does not cease to be a state bank subject
74-5 to the supervision of the banking commissioner unless:
74-6 (1) the banking commissioner has been given written
74-7 notice of the intention to merge, reorganize, or convert before the
74-8 31st day preceding the date of the proposed transaction;
74-9 (2) the bank has published notice of the transaction,
74-10 in the form and frequency specified by the banking commissioner, in
74-11 a newspaper of general circulation published in the county of its
74-12 home office, or, if such a newspaper is not published in the
74-13 county, in an adjacent county and in other locations that the
74-14 banking commissioner considers appropriate;
74-15 (3) the bank has filed with the banking commissioner:
74-16 (A) a copy of the application filed with the
74-17 successor regulatory authority, including a copy of each contract
74-18 evidencing or implementing the merger, reorganization, or
74-19 conversion, or other documents sufficient to show compliance with
74-20 applicable law;
74-21 (B) a certified copy of all minutes of board
74-22 meetings and shareholder or participant meetings at which action
74-23 was taken regarding the merger, reorganization, or conversion; and
74-24 (C) a publisher's certificate showing
74-25 publication of the required notice;
74-26 (4) the banking commissioner determines that:
74-27 (A) all deposit and other liabilities of the
75-1 state bank are fully discharged, assumed, or otherwise retained by
75-2 the successor form of financial institution;
75-3 (B) any conditions imposed by the banking
75-4 commissioner for the protection of depositors and creditors have
75-5 been met or otherwise resolved; and
75-6 (C) any required filing fees have been paid; and
75-7 (5) the bank has received a certificate of authority
75-8 to do business as a national bank, state or federal savings bank,
75-9 or state or federal savings association.
75-10 Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
75-11 BANK. (a) A financial institution may apply to the banking
75-12 commissioner for conversion into a state bank on a form prescribed
75-13 by the banking commissioner accompanied by any required fee, if the
75-14 institution follows the procedures prescribed by the laws of the
75-15 United States or this state governing the exit of the institution
75-16 for the purpose of conversion into a state bank from the regulatory
75-17 system applicable before the conversion. A banking association or
75-18 limited banking association may convert its organizational form
75-19 under this section.
75-20 (b) An institution applying to convert into a state bank may
75-21 receive a certificate of authority to do business as a state bank
75-22 if the banking commissioner finds that:
75-23 (1) the institution is not engaging in a pattern or
75-24 practice of unsafe and unsound banking practices;
75-25 (2) the institution has adequate capitalization for a
75-26 state bank to engage in business at the same locations as the
75-27 institution is engaged in business before the conversion;
76-1 (3) the institution can be expected to operate
76-2 profitably after the conversion;
76-3 (4) the officers, directors, managers and managing
76-4 participants of the institution as a group have sufficient banking
76-5 experience, ability, standing, competence, trustworthiness, and
76-6 integrity to justify a belief that the institution will operate in
76-7 compliance with law; and
76-8 (5) each principal shareholder or participant has
76-9 sufficient experience, ability, standing, competence,
76-10 trustworthiness, and integrity to justify a belief that the
76-11 institution will be free from improper or unlawful influence or
76-12 interference with respect to the institution's operation in
76-13 compliance with law.
76-14 (c) The banking commissioner may:
76-15 (1) request additional or supplemental information
76-16 considered necessary to an informed decision under this section;
76-17 (2) perform an examination of the converting
76-18 institution at the expense of the converting institution; and
76-19 (3) require that examination fees be paid before a
76-20 certificate of authority is issued.
76-21 (d) In connection with the application, the converting
76-22 institution must submit a statement of the law governing the exit
76-23 of the institution from the regulatory system applicable before the
76-24 conversion and the terms of the transition into a state bank. The
76-25 financial institution must also demonstrate that all applicable law
76-26 has been fully satisfied.
76-27 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
77-1 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
77-2 SUBCHAPTER A. TRANSFER OF OWNERSHIP
77-3 INTERESTS IN STATE BANK
77-4 Sec. 4.001. ACQUISITION OF CONTROL ............................ 78
77-5 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL ...... 79
77-6 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL .... 80
77-7 Sec. 4.004. APPEAL FROM ADVERSE DECISION ...................... 82
77-8 Sec. 4.005. EXEMPTIONS ........................................ 82
77-9 Sec. 4.006. OBJECTION TO OTHER TRANSFER ....................... 83
77-10 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES ............. 84
77-11 (Sections 4.008-4.100 reserved for expansion)
77-12 SUBCHAPTER B. BOARD AND OFFICERS
77-13 Sec. 4.101. VOTING SECURITIES HELD BY BANK .................... 84
77-14 Sec. 4.102. BYLAWS ............................................ 85
77-15 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
77-16 PARTICIPANTS .................................... 85
77-17 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS ................... 88
77-18 Sec. 4.105. OFFICERS .......................................... 88
77-19 Sec. 4.106. CERTAIN CRIMINAL OFFENSES ......................... 89
77-20 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES ....... 89
77-21 (Sections 4.108-4.200 reserved for expansion)
77-22 SUBCHAPTER C. SPECIAL PROVISIONS
77-23 FOR LIMITED BANKING ASSOCIATIONS
77-24 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY ................ 90
77-25 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS ............ 91
77-26 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS ................. 91
77-27 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION ......... 92
78-1 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
78-2 CONTRIBUTION TO CAPITAL ......................... 93
78-3 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
78-4 TRANSFERABILITY OF INTEREST ..................... 94
78-5 Sec. 4.207. DISSOLUTION ....................................... 94
78-6 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES .................. 95
78-7 Sec. 4.209. DISTRIBUTIONS ..................................... 96
78-8 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
78-9 ASSOCIATIONS .................................... 96
78-10 CHAPTER 4. SHARES AND PARTICIPATION SHARES;
78-11 SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT
78-12 SUBCHAPTER A. TRANSFER OF OWNERSHIP
78-13 INTERESTS IN STATE BANK
78-14 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
78-15 expressly otherwise permitted by this Act, a person may not without
78-16 the prior written approval of the banking commissioner directly or
78-17 indirectly acquire a legal or beneficial interest in voting
78-18 securities of a state bank or a corporation or other entity owning
78-19 voting securities of a state bank if, after the acquisition, the
78-20 person would control the state bank. For purposes of this
78-21 subchapter and except as otherwise provided by rules adopted under
78-22 this Act, the principal shareholder or principal participant of a
78-23 state bank that directly or indirectly owns or has the power to
78-24 vote a greater percentage of voting securities of the bank than any
78-25 other shareholder or participant is considered to control the state
78-26 bank.
78-27 (b) This subchapter does not prohibit a person from
79-1 negotiating to acquire, but not acquiring, control of a state bank
79-2 or a person that controls a state bank.
79-3 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
79-4 (a) An application for approval to acquire control of a state bank
79-5 or a person that controls a state bank must be filed under oath by
79-6 the proposed transferee on a form prescribed by the banking
79-7 commissioner and accompanied by any filing fee required by statute
79-8 or rule. The application must contain all information required by
79-9 rules adopted under this Act or that the banking commissioner
79-10 requires in a particular application as necessary to an informed
79-11 decision to approve or reject the proposed acquisition.
79-12 (b) If a person or proposed transferee proposing to acquire
79-13 voting securities subject to this section includes any group of
79-14 individuals or entities acting in concert, the information required
79-15 by the banking commissioner may be required of each member of the
79-16 group.
79-17 (c) Information obtained by the banking commissioner under
79-18 this section is confidential and may not be disclosed by the
79-19 banking commissioner or any employee of the department except as
79-20 provided by Subchapter B, Chapter 2, of this Act.
79-21 (d) The applicants shall publish notice of the application,
79-22 its date of filing, and the identity of each applicant, in the form
79-23 specified by the banking commissioner, in a newspaper of general
79-24 circulation in the county where the bank's home office is located,
79-25 promptly after the applicants are notified by the banking
79-26 commissioner that the application is complete and accepted for
79-27 filing. Publication of notice of an application filed in
80-1 contemplation of a public tender offer subject to the requirements
80-2 of 15 U.S.C. Section 78n(d)(1) may be deferred for not more than 34
80-3 days after the date the application is filed if:
80-4 (1) the applicant requests confidential treatment and
80-5 represents that a public announcement of the tender offer and the
80-6 filing of appropriate forms with the Securities and Exchange
80-7 Commission or the appropriate federal banking agency, as
80-8 applicable, will occur within the period of deferral; and
80-9 (2) the banking commissioner determines that the
80-10 public interest will not be harmed by the requested confidential
80-11 treatment.
80-12 (e) The banking commissioner may waive the requirement that
80-13 a notice be published or permit delayed publication on a
80-14 determination that waiver or delay is in the public interest. If
80-15 publication of notice is waived under this subsection, the
80-16 information that would be contained in a published notice becomes
80-17 public information under Chapter 552, Government Code, on the 35th
80-18 day after the date the application is filed.
80-19 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
80-20 (a) Not later than the 60th day after the date the notice is
80-21 published, the banking commissioner shall approve the application
80-22 or set the application for hearing. If the banking commissioner
80-23 sets a hearing, the department shall participate as the opposing
80-24 party and the banking commissioner shall conduct a hearing and one
80-25 or more prehearing conferences and opportunities for discovery as
80-26 the banking commissioner considers advisable and consistent with
80-27 governing statutes and rules. A hearing held under this section is
81-1 confidential and closed to the public.
81-2 (b) Based on the record, the banking commissioner may issue
81-3 an order denying an application if:
81-4 (1) the acquisition would substantially lessen
81-5 competition, be in restraint of trade, result in a monopoly, or be
81-6 in furtherance of a combination or conspiracy to monopolize or
81-7 attempt to monopolize the banking industry in any part of this
81-8 state, unless:
81-9 (A) the anticompetitive effects of the proposed
81-10 acquisition are clearly outweighed in the public interest by the
81-11 probable effect of acquisition in meeting the convenience and needs
81-12 of the community to be served; and
81-13 (B) the proposed acquisition is not in violation
81-14 of law of this state or the United States;
81-15 (2) the financial condition of the proposed
81-16 transferee, or any member of a group comprising the proposed
81-17 transferee, might jeopardize the financial stability of the bank
81-18 being acquired;
81-19 (3) plans or proposals to operate, liquidate, or sell
81-20 the bank or its assets are not in the best interests of the bank;
81-21 (4) the experience, ability, standing, competence,
81-22 trustworthiness, and integrity of the proposed transferee, or any
81-23 member of a group comprising the proposed transferee, are
81-24 insufficient to justify a belief that the bank will be free from
81-25 improper or unlawful influence or interference with respect to the
81-26 bank's operation in compliance with law;
81-27 (5) the bank will not be solvent, have adequate
82-1 capitalization, or be in compliance with the laws of this state
82-2 after the acquisition;
82-3 (6) the proposed transferee has failed to furnish all
82-4 information pertinent to the application reasonably required by the
82-5 banking commissioner; or
82-6 (7) the proposed transferee is not acting in good
82-7 faith.
82-8 (c) If an application filed under this section is approved
82-9 by the banking commissioner, the transaction may be consummated.
82-10 Any written commitment from the proposed transferee offered to and
82-11 accepted by the banking commissioner as a condition that the
82-12 application will be approved is enforceable against the bank and
82-13 the transferee and is considered for all purposes an agreement
82-14 under this Act.
82-15 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
82-16 has been held, the banking commissioner has entered an order
82-17 denying the application, and the order has become final, the
82-18 proposed transferee may appeal the final order by filing a petition
82-19 for judicial review under the substantial evidence rule in the
82-20 District Court of Travis County as provided by Chapter 2001,
82-21 Government Code.
82-22 (b) The filing of an appeal under this section does not stay
82-23 the order of the banking commissioner.
82-24 Sec. 4.005. EXEMPTIONS. The following acquisitions are
82-25 exempt from Section 4.001 of this Act:
82-26 (1) the acquisition of securities in connection with
82-27 the exercise of a security interest or otherwise in full or partial
83-1 satisfaction of a debt previously contracted for in good faith if
83-2 the acquiring person files written notice of acquisition with the
83-3 banking commissioner before the person votes the securities
83-4 acquired;
83-5 (2) the acquisition of voting securities in any class
83-6 or series by a controlling person who has previously complied with
83-7 and received approval under this subchapter or who was identified
83-8 as a controlling person in a prior application filed with and
83-9 approved by the banking commissioner;
83-10 (3) an acquisition or transfer by operation of law,
83-11 will, or intestate succession if the acquiring person files written
83-12 notice of acquisition with the banking commissioner before the
83-13 person votes the securities acquired;
83-14 (4) a transaction subject to Subchapter D, Chapter 8,
83-15 of this Act; or
83-16 (5) a transaction exempted by the banking commissioner
83-17 or by rules adopted under this Act because the transaction is not
83-18 within the purposes of this subchapter or the regulation of which
83-19 is not necessary or appropriate to achieve the objectives of this
83-20 subchapter.
83-21 Sec. 4.006. OBJECTION TO OTHER TRANSFER. This subchapter
83-22 may not be construed to prevent the banking commissioner from
83-23 investigating, commenting on, or seeking to enjoin or set aside a
83-24 transfer of voting securities that evidence a direct or indirect
83-25 interest in a state bank, regardless of whether the transfer is
83-26 included within this subchapter, if the banking commissioner
83-27 considers the transfer to be against the public interest.
84-1 Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
84-2 the banking commissioner believes that a person has committed or is
84-3 about to commit a violation of this subchapter or a rule or order
84-4 of the banking commissioner pertaining to this subchapter, the
84-5 attorney general on behalf of the banking commissioner may apply to
84-6 the District Court of Travis County for an order enjoining the
84-7 violation and for other equitable relief the nature of the case
84-8 requires.
84-9 (b) A person who knowingly fails or refuses to file the
84-10 application required by Section 4.002 of this Act commits an
84-11 offense. An offense under this subsection is a Class A
84-12 misdemeanor.
84-13 (Sections 4.008-4.100 reserved for expansion)
84-14 SUBCHAPTER B. BOARD AND OFFICERS
84-15 Sec. 4.101. VOTING SECURITIES HELD BY BANK. (a) Voting
84-16 securities of a state bank held by the state bank in a fiduciary
84-17 capacity under a will or trust, whether registered in its own name
84-18 or in the name of its nominee, may not be voted in the election of
84-19 directors or managers or on a matter affecting the compensation of
84-20 directors, managers, officers, or employees of the bank in that
84-21 capacity, unless:
84-22 (1) under the terms of the will or trust, the manner
84-23 in which the voting securities are to be voted may be determined by
84-24 a donor or beneficiary of the will or trust and the donor or
84-25 beneficiary actually makes the determination in the matter at
84-26 issue;
84-27 (2) the terms of the will or trust expressly direct
85-1 the manner in which the securities must be voted to the extent that
85-2 no discretion is vested in the bank as fiduciary; or
85-3 (3) the securities are voted solely by a cofiduciary
85-4 that is not an affiliate of the bank, as if the cofiduciary were
85-5 the sole fiduciary.
85-6 (b) Voting securities of a state bank that cannot be voted
85-7 under this section are considered to be authorized but unissued for
85-8 purposes of determining the procedures for and results of the
85-9 affected vote.
85-10 Sec. 4.102. BYLAWS. (a) Each state bank shall adopt bylaws
85-11 and may amend its bylaws from time to time for the purposes and in
85-12 accordance with the procedures set forth in the Texas Business
85-13 Corporation Act.
85-14 (b) A limited banking association in which management is
85-15 retained by the participants is not required to adopt bylaws if
85-16 provisions required by law to be contained in the bylaws are
85-17 contained in the articles of association or the participation
85-18 agreement.
85-19 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
85-20 PARTICIPANTS. (a) The board of a state bank must consist of not
85-21 fewer than five or more than 25 directors, managers, or managing
85-22 participants, the majority of whom must be residents of this state.
85-23 Except for a limited banking association in which management has
85-24 been retained by its participants, the principal executive officer
85-25 of the bank is a member of the board. The principal executive
85-26 officer acting in the capacity of board member is the board's
85-27 presiding officer unless the board elects a different presiding
86-1 officer to perform the duties as designated by the board.
86-2 (b) Unless the banking commissioner consents otherwise in
86-3 writing, a person may not serve as director, manager, or managing
86-4 participant of a state bank if:
86-5 (1) the bank incurs an unreimbursed loss attributable
86-6 to a charged-off obligation of or holds a judgment against the
86-7 person or an entity that was controlled by the person at the time
86-8 of funding and at the time of default on the loan that gave rise to
86-9 the judgment or charged-off obligation; or
86-10 (2) the person has been convicted of a felony.
86-11 (c) If a state bank other than a limited banking association
86-12 operated by managing participants does not elect directors or
86-13 managers before the 61st day after the date of its regular annual
86-14 meeting, the banking commissioner may appoint a conservator under
86-15 Chapter 6 of this Act to operate the bank and elect directors or
86-16 managers, as appropriate. If the conservator is unable to locate
86-17 or elect persons willing and able to serve as directors or
86-18 managers, the banking commissioner may close the bank for
86-19 liquidation.
86-20 (d) A vacancy on the board that reduces the number of
86-21 directors, managers, or managing participants to fewer than five
86-22 must be filled not later than the 30th day after the date the
86-23 vacancy occurs. A limited banking association with fewer than five
86-24 managing participants must add one or more new participants or
86-25 elect a board of managers of not fewer than five persons to resolve
86-26 the vacancy. After 30 days after the date the vacancy occurs, the
86-27 banking commissioner may appoint a conservator under Chapter 6 of
87-1 this Act to operate the bank and elect a board of not fewer than
87-2 five persons to resolve the vacancy. If the conservator is unable
87-3 to locate or elect five persons willing and able to serve as
87-4 directors or managers, the banking commissioner may close the bank
87-5 for liquidation.
87-6 (e) Before each term to which a person is elected to serve
87-7 as a director or manager of a state bank, or annually for a person
87-8 who is a managing participant, the person shall submit an affidavit
87-9 for filing in the minutes of the bank stating that the person, to
87-10 the extent applicable:
87-11 (1) accepts the position and is not disqualified from
87-12 serving in the position;
87-13 (2) will not violate or knowingly permit an officer,
87-14 director, manager, managing participant, or employee of the bank to
87-15 violate any law applicable to the conduct of business of the bank;
87-16 and
87-17 (3) will diligently perform the duties of the
87-18 position.
87-19 (f) An advisory director or manager is not considered a
87-20 director if the advisory director or manager:
87-21 (1) is not elected by the shareholders or participants
87-22 of the bank;
87-23 (2) does not vote on matters before the board or a
87-24 committee of the board and is not counted for purposes of
87-25 determining a quorum of the board or committee; and
87-26 (3) provides solely general policy advice to the
87-27 board.
88-1 Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) The board
88-2 of a state bank shall hold at least one regular meeting each month.
88-3 At each regular meeting the board shall review and approve the
88-4 minutes of the prior meeting and review the operations, activities,
88-5 and financial condition of the bank. The board may designate
88-6 committees from among its members to perform these duties and
88-7 approve or disapprove the committees' reports at each regular
88-8 meeting. All actions of the board must be recorded in its minutes.
88-9 (b) Periodically the board may vote to designate and record
88-10 the amount of certified surplus in its minutes. Except to absorb
88-11 losses in excess of undivided profits and uncertified surplus,
88-12 certified surplus may not be reduced without the prior written
88-13 approval of the banking commissioner.
88-14 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
88-15 the officers of the bank, who serve at the pleasure of the board.
88-16 The bank must have a principal executive officer primarily
88-17 responsible for the execution of board policies and operation of
88-18 the bank and an officer responsible for the maintenance and storage
88-19 of all corporate books and records of the bank and for required
88-20 attestation of signatures. These positions may not be held by the
88-21 same person. The board may appoint other officers of the bank as
88-22 the board considers necessary.
88-23 (b) Unless expressly authorized by a resolution of the board
88-24 recorded in its minutes, an officer or employee may not create or
88-25 dispose of a bank asset or create or incur a liability on behalf of
88-26 the bank.
88-27 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
89-1 director, manager, managing participant, employee, shareholder or
89-2 participant of a state bank commits an offense if the person
89-3 knowingly:
89-4 (1) conceals information or a fact or removes,
89-5 destroys, or conceals a book or record of the bank for the purpose
89-6 of concealing information or a fact from the banking commissioner
89-7 or an agent of the banking commissioner; or
89-8 (2) removes, destroys, or conceals any book or record
89-9 of the bank that is material to a pending or anticipated legal or
89-10 administrative proceeding.
89-11 (b) An officer, director, manager, managing participant, or
89-12 employee of a state bank commits an offense if the person:
89-13 (1) knowingly makes a false entry in the books or
89-14 records or in any report or statement of the bank; or
89-15 (2) violates or knowingly participates in or permits
89-16 another of the bank's officers, directors, managers, managing
89-17 participants, or employees to violate the prohibition on lending
89-18 trust funds under Section 113.052, Property Code.
89-19 (c) An offense under this section is a felony of the third
89-20 degree.
89-21 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
89-22 (a) Without the prior approval of a disinterested majority of the
89-23 board recorded in the minutes, or if a disinterested majority
89-24 cannot be obtained the prior written approval of the banking
89-25 commissioner, a state bank may not directly or indirectly:
89-26 (1) sell or lease an asset of the bank to an officer,
89-27 director, manager, managing participant, or principal shareholder
90-1 or participant of the bank or an affiliate of the bank; or
90-2 (2) purchase or lease an asset in which an officer,
90-3 director, manager, managing participant, or principal shareholder
90-4 or participant of the bank or an affiliate of the bank has an
90-5 interest.
90-6 (b) Notwithstanding Subsection (a) of this section, a lease
90-7 transaction described in Subsection (a)(2) of this section
90-8 involving real property may not be consummated, renewed, or
90-9 extended without the prior written approval of the banking
90-10 commissioner. For purposes of this subsection only, an affiliate
90-11 of the bank does not include a subsidiary of the bank.
90-12 (c) An officer, director, manager, or managing participant
90-13 of the bank who knowingly participates in or permits a violation of
90-14 this section commits an offense. An offense under this subsection
90-15 is a felony of the third degree.
90-16 (Sections 4.108-4.200 reserved for expansion)
90-17 SUBCHAPTER C. SPECIAL PROVISIONS
90-18 FOR LIMITED BANKING ASSOCIATIONS
90-19 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
90-20 limited banking association shall file with the banking
90-21 commissioner a copy of any participation agreement by which a
90-22 participant of the limited banking association agrees to become a
90-23 full liability participant and the name and address of each full
90-24 liability participant. The filed copy is a public record.
90-25 (b) The banking commissioner may require a complete copy of
90-26 the participation agreement to be filed with the department,
90-27 regardless of whether the state bank has a full liability
91-1 participant, except that the provisions of the participation
91-2 agreement other than those by which a participant of the limited
91-3 banking association agrees to become a full liability participant
91-4 are confidential and subject to release only as provided by
91-5 Subchapter B, Chapter 2, of this Act.
91-6 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
91-7 (a) Except as provided by Subsection (b), the participants,
91-8 participant-transferees, and managers of a limited banking
91-9 association may not be held liable for a debt, obligation, or
91-10 liability of the limited banking association, including a debt,
91-11 obligation, or liability under a judgment, decree, or order of
91-12 court. A participant, other than a full liability participant, or
91-13 a manager of a limited banking association is not a proper party to
91-14 proceedings by or against a limited banking association, unless the
91-15 object of the proceeding is to enforce a participant's or manager's
91-16 right against or liability to a limited banking association.
91-17 (b) A full liability participant of a limited banking
91-18 association is liable under a judgment, decree, or order of court
91-19 for a debt, obligation, or liability of the limited banking
91-20 association that accrued during the participation of the full
91-21 liability participant in the limited banking association and before
91-22 the full liability participant or a successor in interest files a
91-23 notice of withdrawal as a full liability participant from the
91-24 limited banking association with the banking commissioner. The
91-25 filed notice of withdrawal is a public record.
91-26 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
91-27 provided by this section or the articles of association of the
92-1 limited banking association, debts, liabilities, and other
92-2 obligations may be contracted for or incurred on behalf of a
92-3 limited banking association by:
92-4 (1) a majority of the managers, if management of the
92-5 limited banking association has been vested in a board of managers;
92-6 (2) a majority of the managing participants; or
92-7 (3) an officer or other agent vested with actual or
92-8 apparent authority to contract for or incur the debt, liability, or
92-9 other obligation.
92-10 Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
92-11 Management of a limited banking association is vested in the
92-12 participants in proportion to each participant's contribution to
92-13 capital, as adjusted periodically to properly reflect any
92-14 additional contribution. The articles of association may provide
92-15 that management of a limited banking association is vested in a
92-16 board of managers to be elected annually by the participants as
92-17 prescribed by the bylaws.
92-18 (b) Participants of a limited banking association may not
92-19 retain management and must elect a board of managers if:
92-20 (1) any participant is disqualified from serving as a
92-21 managing participant under Section 4.103 of this Act;
92-22 (2) the limited banking association has fewer than
92-23 five or more than 25 participants; or
92-24 (3) any participant has been removed by the banking
92-25 commissioner under Subchapter A, Chapter 6, of this Act.
92-26 (c) The articles of association, bylaws, and participation
92-27 agreement of a limited banking association may use the terms
93-1 "director" and "board" instead of "manager" and "board of
93-2 managers," respectively.
93-3 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
93-4 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
93-5 limited banking association any part of the participant's
93-6 contribution to capital until:
93-7 (1) all liabilities of the bank, except liabilities to
93-8 participants on account of contribution to capital, have been paid
93-9 or, if after the withdrawal or reduction, sufficient property of
93-10 the bank will remain to pay all liabilities of the bank, except
93-11 liabilities to participants on account of contribution to capital;
93-12 (2) all participants consent, unless the return of the
93-13 contribution to capital may be demanded as provided by this
93-14 chapter; or
93-15 (3) the articles of association are canceled or
93-16 amended to set out the withdrawal or reduction.
93-17 (b) A participant may demand the return of the participant's
93-18 contribution to capital on the dissolution of the association and
93-19 the failure by the full liability participants to exercise the
93-20 right for the business of the limited banking association to be
93-21 carried on by the remaining participants as provided by Section
93-22 4.207 of this Act.
93-23 (c) Unless allowed by the articles of association or by the
93-24 unanimous consent of all participants of the limited banking
93-25 association, a participant may demand the return of the
93-26 participant's contribution to capital only in cash.
93-27 Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
94-1 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
94-2 participant-transferee in a limited banking association is the
94-3 personal estate of the participant or the participant-transferee
94-4 and may be transferred as provided by the bylaws or the
94-5 participation agreement. A transferee of a participant's interest
94-6 has the status of a participant-transferee and does not by the
94-7 transfer become a participant or obtain a right to participate in
94-8 the management of the limited banking association. A
94-9 participant-transferee is entitled to receive only a share of
94-10 profits, return of contribution, or other distributive benefit in
94-11 respect to the interest transferred to which the participant who
94-12 transferred the interest would have been entitled. A
94-13 participant-transferee may become a participant only as provided by
94-14 the bylaws or the participation agreement.
94-15 (b) A limited banking association may add additional
94-16 participants in the same manner as participant-transferees after
94-17 payment in full of the capital contribution to the limited banking
94-18 association payable for the issuance of additional participation
94-19 interests.
94-20 Sec. 4.207. DISSOLUTION. (a) A limited banking association
94-21 organized under this chapter is dissolved on:
94-22 (1) the expiration of the period fixed for the
94-23 duration of the limited banking association;
94-24 (2) a vote to dissolve or the execution of a written
94-25 consent to dissolve by all full liability participants, if any, and
94-26 a sufficient number of other participants that combined with all
94-27 full liability participants hold at least two-thirds of the
95-1 participation shares in each class in the association, or a greater
95-2 fraction as provided by the articles of association;
95-3 (3) except as provided by the articles of association,
95-4 the death, insanity, expulsion, bankruptcy, retirement, or
95-5 resignation of a participant unless a majority in interest of all
95-6 remaining participants elect in writing not later than the 90th day
95-7 after the date of the event to continue the business of the
95-8 association; or
95-9 (4) the occurrence of an event of dissolution
95-10 specified in the articles of association.
95-11 (b) A dissolution under this section is considered to be the
95-12 initiation of a voluntary liquidation under Subchapter B, Chapter
95-13 7, of this Act.
95-14 (c) An event of dissolution described by Subsection (a)(3)
95-15 of this section does not cancel or revoke a contract to which the
95-16 bank is a party, including a trust indenture or agreement or
95-17 voluntary dissolution under Subchapter B, Chapter 7, of this Act,
95-18 until the period for the remaining participants to continue the
95-19 business of the bank has expired without the remaining participants
95-20 having completed the necessary action to continue the business of
95-21 the bank.
95-22 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
95-23 and losses of a limited banking association may be allocated among
95-24 the participants and among classes of participants as provided by
95-25 the participation agreement. Without the prior written approval of
95-26 the banking commissioner, the profits and losses must be allocated
95-27 based on the relative interests of the participants as reflected in
96-1 the articles of association and related documents filed with and
96-2 approved by the banking commissioner.
96-3 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
96-4 Act, distributions of cash or other assets of a limited banking
96-5 association may be made to the participants as provided by the
96-6 participation agreement. Without the prior written approval of the
96-7 banking commissioner, distributions must be made to the
96-8 participants based on the relative interests of the participants as
96-9 reflected in the articles of association and related documents
96-10 filed with and approved by the banking commissioner.
96-11 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
96-12 ASSOCIATIONS. For purposes of the provisions of this Act other
96-13 than this subchapter, as the context requires:
96-14 (1) a manager and the board of managers are considered
96-15 to be a director and the board of directors, respectively;
96-16 (2) if there is not a board of managers, a participant
96-17 is considered to be a director and all of the participants are
96-18 considered to be the board of directors;
96-19 (3) a participant or participant-transferee is
96-20 considered to be a shareholder;
96-21 (4) a participation share is considered to be a share
96-22 of stock; and
96-23 (5) a distribution is considered to be a dividend.
96-24 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
96-25 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
96-26 OF BANK FACILITIES AND OTHER REAL ESTATE
96-27 Sec. 5.001. INVESTMENT IN BANK FACILITIES .................... 98
97-1 Sec. 5.002. OTHER REAL ESTATE ................................ 100
97-2 (Sections 5.003-5.100 reserved for expension)
97-3 SUBCHAPTER B. INVESTMENTS
97-4 Sec. 5.101. SECURITIES ....................................... 101
97-5 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
97-6 SHARES ......................................... 103
97-7 Sec. 5.103. BANK SUBSIDIARIES ................................ 104
97-8 Sec. 5.104. MUTUAL FUNDS ..................................... 106
97-9 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS .................. 107
97-10 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE ................... 110
97-11 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED .................. 110
97-12 (Sections 5.108-5.200 reserved for expansion)
97-13 SUBCHAPTER C. LOANS
97-14 Sec. 5.201. LENDING LIMITS ................................... 111
97-15 Sec. 5.202. LOAN EXPENSES AND FEES ........................... 115
97-16 Sec. 5.203. LEASE FINANCING TRANSACTIONS ..................... 116
97-17 (Sections 5.204-5.300 reserved for expansion)
97-18 SUBCHAPTER D. DEPOSITS
97-19 Sec. 5.301. NATURE OF DEPOSIT CONTRACT ....................... 117
97-20 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT ................... 117
97-21 Sec. 5.303. FEES; DISCLOSURES ................................ 119
97-22 Sec. 5.304. SECURING DEPOSITS ................................ 119
97-23 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS ....................... 120
97-24 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION ........ 121
97-25 Sec. 5.307. RIGHT OF SET-OFF ................................. 123
97-26 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
97-27 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
98-1 OF BANK FACILITIES AND OTHER REAL ESTATE
98-2 Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) In this
98-3 subchapter, "bank facility" means real estate, including an
98-4 improvement, owned, or leased to the extent the lease or the
98-5 leasehold improvements are capitalized, by a state bank for the
98-6 purpose of:
98-7 (1) providing space for bank employees to perform
98-8 their duties and space for parking by bank employees and customers;
98-9 (2) conducting bank business, including meeting the
98-10 reasonable needs and convenience of the public and the bank's
98-11 customers, computer operations, document and other item processing,
98-12 maintenance and storage of foreclosed collateral pending disposal,
98-13 and record retention and storage;
98-14 (3) holding, improving, and occupying as an incident
98-15 to future expansion of the bank's facilities; or
98-16 (4) conducting another activity authorized by rules
98-17 adopted under this Act.
98-18 (b) Without the prior written approval of the banking
98-19 commissioner, a state bank may not directly or indirectly invest an
98-20 amount in excess of its capital and certified surplus in bank
98-21 facilities, furniture, fixtures, and equipment. Except as
98-22 otherwise provided by rules adopted under this Act, in computing
98-23 this limitation a state bank:
98-24 (1) shall include:
98-25 (A) its direct investment in bank facilities;
98-26 (B) any investment in equity or investment
98-27 securities of a company holding title to a facility used by the
99-1 bank for the purposes specified by Subsection (a) of this section;
99-2 (C) any loan made by the bank to or on the
99-3 security of equity or investment securities issued by a company
99-4 holding title to a facility used by the bank; and
99-5 (D) any indebtedness incurred on bank facilities
99-6 by a company:
99-7 (i) that holds title to the facility;
99-8 (ii) that is an affiliate of the bank; and
99-9 (iii) in which the bank is invested in the
99-10 manner described by Paragraph (B) or (C) of this subdivision; and
99-11 (2) may exclude an amount included under Subdivisions
99-12 (1)(B)-(D) of this subsection to the extent any lease of a facility
99-13 from the company holding title to the facility is capitalized on
99-14 the books of the bank.
99-15 (c) Real estate acquired under Subsection (a)(3) of this
99-16 section and not improved and occupied by the bank ceases to be a
99-17 bank facility on the third anniversary of the date of its
99-18 acquisition, unless the banking commissioner on application grants
99-19 written approval to further delay in the improvement and occupation
99-20 of the property by the bank.
99-21 (d) A bank shall comply with regulatory accounting
99-22 principles in accounting for its investment in and depreciation of
99-23 bank facilities, furniture, fixtures, and equipment.
99-24 Sec. 5.002. OTHER REAL ESTATE. (a) A state bank may not
99-25 acquire real estate except:
99-26 (1) as permitted by Section 5.001 of this Act or as
99-27 otherwise provided by this Act, including rules adopted under this
100-1 Act;
100-2 (2) with the prior written approval of the banking
100-3 commissioner; or
100-4 (3) if necessary to avoid or minimize a loss on a loan
100-5 or investment previously made in good faith.
100-6 (b) With the prior written approval of the banking
100-7 commissioner, a state bank may exchange real estate for other real
100-8 estate or personal property, invest additional funds in or improve
100-9 real estate acquired under this subsection or Subsection (a) of
100-10 this section, or acquire additional real estate to avoid or
100-11 minimize loss on real estate acquired as permitted by Subsection
100-12 (a) of this section.
100-13 (c) A state bank shall dispose of any real estate subject to
100-14 this section not later than:
100-15 (1) the fifth anniversary of the date:
100-16 (A) it was acquired, except as otherwise
100-17 provided by rules adopted under this Act; or
100-18 (B) it ceases to be used as a bank facility; or
100-19 (2) the second anniversary of the date it ceases to be
100-20 a bank facility as provided by Section 5.001(c) of this Act.
100-21 (d) The banking commissioner on application may grant one or
100-22 more extensions of time for disposing of real estate if the banking
100-23 commissioner determines that:
100-24 (1) the bank has made a good faith effort to dispose
100-25 of the real estate; or
100-26 (2) disposal of the real estate would be detrimental
100-27 to the bank.
101-1 (Sections 5.003-5.100 reserved for expansion)
101-2 SUBCHAPTER B. INVESTMENTS
101-3 Sec. 5.101. SECURITIES. (a) A state bank may purchase and
101-4 sell equity and investment securities without recourse, solely on
101-5 the order and for the account of a customer, and may not underwrite
101-6 an issue of securities except as otherwise provided by this Act or
101-7 rules adopted under this Act.
101-8 (b) Except as otherwise provided by this Act or rules
101-9 adopted under this Act, a state bank may not invest its funds in
101-10 equity securities except as necessary to avoid or minimize a loss
101-11 on a loan or investment previously made in good faith.
101-12 (c) A state bank may purchase investment securities for its
101-13 own account under limitations and restrictions prescribed by rules
101-14 adopted under this Act. Except as otherwise provided by this
101-15 section, the total amount of the investment securities of any one
101-16 obligor or maker, held by the bank for its own account, may not
101-17 exceed an amount equal to 15 percent of the bank's capital and
101-18 certified surplus.
101-19 (d) Notwithstanding Subsections (a)-(c) of this section, a
101-20 state bank may, with prudent banking judgment, deal in, underwrite,
101-21 or purchase for its own account:
101-22 (1) bonds and other legally created general
101-23 obligations of a state, an agency or political subdivision of a
101-24 state, the United States, or an agency or instrumentality of the
101-25 United States;
101-26 (2) an investment security that this state, an agency
101-27 or political subdivision of this state, the United States, or an
102-1 agency or instrumentality of the United States has unconditionally
102-2 agreed to purchase, insure, or guarantee;
102-3 (3) securities that are offered and sold under 15
102-4 U.S.C. Section 77d(5);
102-5 (4) mortgage related securities, as defined by 15
102-6 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
102-7 the Riegle Community Development and Regulatory Improvement Act of
102-8 1994, a note or obligation that is secured by a first lien on one
102-9 or more parcels of real estate on which is located one or more
102-10 commercial structures is subject to the limitations of Subsection
102-11 (c) of this section;
102-12 (5) investment securities issued or guaranteed by the
102-13 Federal Home Loan Mortgage Corporation, the Federal National
102-14 Mortgage Association, the Government National Mortgage Association,
102-15 the Federal Agriculture Mortgage Association, or the Federal Farm
102-16 Credit Banks Funding Corporation;
102-17 (6) investment securities issued or guaranteed by the
102-18 North American Development Bank; or
102-19 (7) securities issued by a Federal Home Loan Bank.
102-20 (e) Subsection (a) of this section does not apply to an
102-21 obligation issued by a state or an agency or political subdivision
102-22 of a state for housing, higher education, health care, or public
102-23 welfare purposes if the state bank evaluates the obligation, before
102-24 dealing in, underwriting, or purchasing the obligation, to
102-25 determine whether the obligation is of sufficient investment
102-26 quality and marketability for investment by the bank, and whether
102-27 the obligation has been issued for the appropriate purpose by a
103-1 qualifying issuer. If the bank has made a firm commitment to
103-2 underwrite the obligation, the bank is considered to hold the
103-3 obligation for purposes of the limitations of Subsection (c) of
103-4 this section.
103-5 (f) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
103-6 (c) of this section applies to investments in small business
103-7 related securities as defined by 15 U.S.C. Section 78c(a).
103-8 (g) A state bank may not invest more than an amount equal to
103-9 25 percent of its capital and certified surplus in investment grade
103-10 adjustable rate preferred stock and money market (auction rate)
103-11 preferred stock.
103-12 (h) A state bank may deposit funds in a federally insured
103-13 financial institution, a Federal Reserve Bank, or a Federal Home
103-14 Loan Bank without limitation.
103-15 (i) The finance commission may adopt rules to administer and
103-16 carry out this section, including rules to define or further define
103-17 terms used by this section, establish limits, requirements, or
103-18 exemptions other than those specified by this section for
103-19 particular classes or categories of investment securities, or limit
103-20 or expand investment authority for state banks for particular
103-21 classes or categories of investment securities.
103-22 Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
103-23 SHARES. (a) Except as otherwise provided by this section, a state
103-24 bank may not acquire a lien by pledge or otherwise on its own
103-25 shares or participation shares or otherwise purchase or acquire
103-26 title to its own shares or participation shares, except as
103-27 necessary to avoid or minimize a loss on a loan or investment
104-1 previously made in good faith.
104-2 (b) With the prior written approval of the banking
104-3 commissioner or as permitted by rules adopted under this Act, a
104-4 state bank may acquire title to its own shares or participation
104-5 shares and hold those shares or participation shares as treasury
104-6 stock. Treasury stock acquired under this subsection is not
104-7 considered an equity investment.
104-8 (c) If a state bank acquires a lien on or title to its own
104-9 shares or participation shares under this section, the lien may not
104-10 by its original terms extend for more than two years. Except with
104-11 the prior written approval of the banking commissioner, the bank
104-12 may not hold title to its own shares or participation shares for
104-13 more than one year.
104-14 (d) For purposes of this section and except as otherwise
104-15 provided by rules adopted under this Act, equity securities in a
104-16 bank holding company that are not publicly held and traded on a
104-17 national securities exchange or automated quotation system are
104-18 considered to be shares or participation shares of each of the bank
104-19 holding company's subsidiary state banks.
104-20 Sec. 5.103. BANK SUBSIDIARIES. (a) Except as otherwise
104-21 provided by this Act or rules adopted under this Act, a state bank
104-22 may conduct any activity or investment through an operating
104-23 subsidiary that a state bank or a bank holding company is
104-24 authorized to conduct under the laws of this state, if the
104-25 operating subsidiary is adequately empowered and appropriately
104-26 licensed to conduct its business.
104-27 (b) Except for investment in a subsidiary engaging solely in
105-1 activities that may be engaged in directly by the bank, a state
105-2 bank without the prior written approval of the banking commissioner
105-3 may not invest more than an amount equal to 10 percent of its
105-4 capital and certified surplus in a single subsidiary and may not
105-5 invest more than the amount of its equity capital in all
105-6 subsidiaries. The amount of a state bank's investment in a
105-7 subsidiary is the total amount of the bank's investment in equity
105-8 or investment securities issued by its subsidiary and any loans and
105-9 extensions of credit from the bank to its subsidiary.
105-10 (c) A state bank may establish or acquire a subsidiary as
105-11 provided by 12 C.F.R. Section 337.4 to conduct securities
105-12 activities that the bank is prohibited from conducting directly.
105-13 (d) Except as otherwise provided by a rule adopted under
105-14 this Act, a state bank may make a minority investment indirectly
105-15 through an operating subsidiary in equity securities of:
105-16 (1) another bank;
105-17 (2) a company that engages solely in an activity that
105-18 is permissible for a bank service corporation or a bank holding
105-19 company subsidiary; or
105-20 (3) a company that engages solely in activities as
105-21 agent or trustee or in a brokerage, custodial, advisory, or
105-22 administrative capacity.
105-23 (e) A state bank that intends to acquire, establish, or
105-24 perform new activities through a subsidiary shall submit a letter
105-25 to the banking commissioner describing in detail the proposed
105-26 activities of the subsidiary.
105-27 (f) The bank may acquire or establish a subsidiary or
106-1 perform new activities in an existing subsidiary beginning on the
106-2 31st day after the date the banking commissioner receives the
106-3 bank's letter, unless the banking commissioner specifies an earlier
106-4 or later date. The banking commissioner may extend the 30-day
106-5 period on a determination that the bank's letter raises issues that
106-6 require additional information or additional time for analysis. If
106-7 the period is extended, the bank may acquire or establish a
106-8 subsidiary, or may perform new activities in an existing
106-9 subsidiary, only on prior written approval of the banking
106-10 commissioner.
106-11 (g) A subsidiary of a state bank is subject to regulation by
106-12 the banking commissioner to the extent provided by this Act or
106-13 rules adopted under this Act. In the absence of limiting rules,
106-14 the banking commissioner may regulate a subsidiary as if it were a
106-15 state bank.
106-16 Sec. 5.104. MUTUAL FUNDS. (a) A state bank may invest for
106-17 its own account in equity securities of an investment company
106-18 registered under the Investment Company Act of 1940 (15 U.S.C.
106-19 Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C.
106-20 Section 77a et seq.) if the portfolio of the investment company
106-21 consists wholly of investments in which the bank could invest
106-22 directly for its own account.
106-23 (b) If the portfolio of an investment company described by
106-24 Subsection (a) of this section consists wholly of investments in
106-25 which the bank could invest directly without limitation under
106-26 Section 5.101(d) of this Act, the bank may invest in the investment
106-27 company without limitation.
107-1 (c) If the portfolio of an investment company described by
107-2 Subsection (a) of this section contains an investment or obligation
107-3 that is subject to the limits of Section 5.101(c) or 5.201(a) of
107-4 this Act, the bank may invest in the investment company not more
107-5 than an amount equal to 15 percent of the bank's capital and
107-6 certified surplus.
107-7 (d) A state bank that invests in an investment company as
107-8 provided by Subsection (c) of this section shall periodically
107-9 determine that its pro rata share of any security in the portfolio
107-10 of the investment company is not in excess of applicable investment
107-11 and lending limits by reason of being combined with the bank's pro
107-12 rata share of that security held by all other investment companies
107-13 in which the bank has invested and with the bank's own direct
107-14 investment and loan holdings.
107-15 Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) A state
107-16 bank may purchase for its own account equity securities of any
107-17 class issued by:
107-18 (1) a bank service corporation, except that not more
107-19 than an amount equal to 15 percent of the bank's capital and
107-20 certified surplus may be invested in a single bank service
107-21 corporation and not more than an amount equal to five percent of
107-22 its assets may be invested in all bank service corporations;
107-23 (2) an agricultural credit corporation, but the bank
107-24 may not invest more than an amount equal to 30 percent of the
107-25 bank's capital and certified surplus in the agricultural credit
107-26 corporation unless the bank owns at least 80 percent of the equity
107-27 securities of the agricultural credit corporation;
108-1 (3) a small business investment company if the
108-2 aggregate investment does not exceed an amount equal to 10 percent
108-3 of the bank's capital and certified surplus;
108-4 (4) a banker's bank if the aggregate investment does
108-5 not exceed an amount equal to 15 percent of the bank's capital and
108-6 certified surplus or result in the bank acquiring or retaining
108-7 ownership, control, or power to vote more than five percent of any
108-8 class of voting securities of the banker's bank; and
108-9 (5) a housing corporation if the sum of the amount of
108-10 investment and the amount of loans and commitments for loans to the
108-11 housing corporation does not exceed an amount equal to 10 percent
108-12 of the bank's capital and certified surplus.
108-13 (b) The banking commissioner may authorize investments in
108-14 excess of the limitations of Subsection (a) of this section in
108-15 response to a written application if the banking commissioner
108-16 concludes that:
108-17 (1) the excess investment is not precluded by other
108-18 applicable law; and
108-19 (2) the safety and soundness of the requesting bank
108-20 would not be adversely affected.
108-21 (c) For the purposes of this section:
108-22 (1) "Agricultural credit corporation" means a company
108-23 organized solely for the purpose of making loans to farmers and
108-24 ranchers for agriculture purposes, including the breeding, raising,
108-25 fattening, or marketing of livestock.
108-26 (2) "Banker's bank" means a bank insured by the
108-27 Federal Deposit Insurance Corporation or a bank holding company
109-1 that owns or controls such an insured bank, if:
109-2 (A) all equity securities of the bank or bank
109-3 holding company, other than director's qualifying shares or shares
109-4 issued under an employee compensation plan, are owned by depository
109-5 institutions or depository institution holding companies; and
109-6 (B) the bank or bank holding company and all its
109-7 subsidiaries are engaged exclusively in providing:
109-8 (i) services to or for other depository
109-9 institutions, depository institution holding companies, and the
109-10 directors, managers, managing participants, officers, and employees
109-11 of other depository institutions and depository institution holding
109-12 companies; and
109-13 (ii) correspondent banking services at the
109-14 request of other depository institutions or depository institution
109-15 holding companies.
109-16 (3) "Bank service corporation" has the meaning
109-17 assigned by the Bank Service Corporation Act (12 U.S.C. Section
109-18 1861 et seq.) or a successor to that Act.
109-19 (4) "Housing corporation" means a corporation
109-20 organized under Title IX of the Housing and Urban Development Act
109-21 of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited
109-22 partnership, or joint venture organized under Section 907(a) or (c)
109-23 of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing
109-24 corporation organized pursuant to the laws of this state for the
109-25 purpose of engaging in or financing low- and moderate-income
109-26 housing developments or projects.
109-27 Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) A state
110-1 bank may make investments of a predominantly civic, community, or
110-2 public nature designed primarily to promote the public welfare,
110-3 including the welfare of low and moderate income communities or
110-4 families, including investments providing housing, services, or
110-5 jobs. The state bank may make the investments directly or by
110-6 purchasing equity securities in an entity primarily engaged in
110-7 making those investments. The state bank may not make the
110-8 investment if it would expose the bank to unlimited liability. In
110-9 addition, a bank may serve as a community partner and make
110-10 investments in a community partnership, as those terms are defined
110-11 by the Riegle Community Development and Regulatory Improvement Act
110-12 of 1994.
110-13 (b) A bank's aggregate investments under this section,
110-14 including loans and commitments for loans, may not exceed an amount
110-15 equal to 10 percent of the bank's capital and certified surplus.
110-16 The banking commissioner may authorize investments in excess of
110-17 this limitation in response to a written application if the banking
110-18 commissioner concludes that:
110-19 (1) the excess investment is not precluded by other
110-20 applicable law; and
110-21 (2) the safety and soundness of the requesting bank
110-22 would not be adversely affected.
110-23 Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Except as
110-24 otherwise provided by this Act or rules adopted under this Act, a
110-25 state bank may not invest its funds in trade or commerce by buying,
110-26 selling, or otherwise dealing in goods or by owning or operating a
110-27 business not part of the business of banking, except as necessary
111-1 to avoid or minimize a loss on a loan or investment previously made
111-2 in good faith.
111-3 (Sections 5.108-5.200 reserved for expansion)
111-4 SUBCHAPTER C. LOANS
111-5 Sec. 5.201. LENDING LIMITS. (a) Without the prior written
111-6 approval of the banking commissioner, the total loans and
111-7 extensions of credit by a state bank to a person outstanding at one
111-8 time may not exceed an amount equal to 25 percent of the bank's
111-9 capital and certified surplus. This limitation does not apply to:
111-10 (1) liability as endorser or guarantor of commercial
111-11 or business paper discounted by or assigned to the bank by its
111-12 owner who has acquired it in the ordinary course of business;
111-13 (2) indebtedness evidenced by bankers' acceptances as
111-14 described by 12 U.S.C. Section 372 and issued by other banks;
111-15 (3) indebtedness secured by a bill of lading,
111-16 warehouse receipt, or similar document transferring or securing
111-17 title to readily marketable goods, except that:
111-18 (A) the goods shall be insured if it is
111-19 customary to insure those goods; and
111-20 (B) the aggregate indebtedness of a person under
111-21 this paragraph may not exceed an amount equal to 50 percent of the
111-22 bank's capital and certified surplus;
111-23 (4) indebtedness evidenced by notes or other paper
111-24 secured by liens on agricultural products in secure and properly
111-25 documented storage in bonded warehouses or elevators if the value
111-26 of the collateral is not less than 125 percent of the amount of the
111-27 indebtedness and the bank's interest in the collateral is
112-1 adequately insured against loss, except that the aggregate
112-2 indebtedness of a person under this subdivision may not exceed an
112-3 amount equal to 50 percent of the bank's capital and certified
112-4 surplus;
112-5 (5) indebtedness of another depository institution
112-6 arising out of loans with settlement periods of less than one week;
112-7 (6) indebtedness arising out of the daily transaction
112-8 of the business of a clearinghouse association in this state;
112-9 (7) liability under an agreement by a third party to
112-10 repurchase from the bank an investment security listed in
112-11 Subsection 5.101(d) of this Act to the extent that the agreed
112-12 repurchase price does not exceed the original purchase price to the
112-13 bank or the market value of the investment security;
112-14 (8) that portion of an indebtedness that this state,
112-15 an agency or political subdivision of this state, the United
112-16 States, or an agency or instrumentality of the United States has
112-17 unconditionally agreed to purchase, insure, or guarantee;
112-18 (9) indebtedness secured by investment securities
112-19 listed in Subsection 5.101(d) of this Act to the extent that the
112-20 market value of the investment securities equals or exceeds the
112-21 indebtedness;
112-22 (10) that portion of an indebtedness that is fully
112-23 secured by a segregated deposit account in the lending bank;
112-24 (11) loans and extensions of credit arising from the
112-25 purchase of negotiable or nonnegotiable installment consumer paper
112-26 that carries a full recourse endorsement or unconditional guarantee
112-27 by the person transferring the paper if the bank's files or the
113-1 knowledge of its officers of the financial condition of each maker
113-2 of the consumer paper is reasonably adequate and if an officer of
113-3 the bank designated for that purpose by the board certifies in
113-4 writing that the bank is relying primarily on the responsibility of
113-5 each maker for payment of the loans or extensions of credit and not
113-6 on a full or partial recourse endorsement or guarantee by the
113-7 transferor;
113-8 (12) that portion of an indebtedness in excess of the
113-9 limitation of Subsection (a) of this section that is fully secured
113-10 by marketable securities or bullion with a market value at least
113-11 equal to the amount of the overage, as determined by reliable and
113-12 continuously available price quotations, except that the exempted
113-13 indebtedness or overage of a person under this subdivision may not
113-14 exceed an amount equal to 15 percent of the bank's capital and
113-15 certified surplus;
113-16 (13) indebtedness of an affiliate of the bank if the
113-17 transaction with the affiliate is subject to the restrictions and
113-18 limitations of 12 U.S.C. Section 371c;
113-19 (14) indebtedness of an operating subsidiary of the
113-20 bank; and
113-21 (15) that portion of the indebtedness of a person
113-22 secured in good faith by a purchase money lien taken by the bank in
113-23 exchange for the sale of real or personal property owned by the
113-24 bank if the sale is in the best interest of the bank.
113-25 (b) The finance commission may adopt rules to administer and
113-26 carry out this section, including rules to:
113-27 (1) define or further define terms used by this
114-1 section;
114-2 (2) establish limits, requirements, or exemptions
114-3 other than those specified by this section for particular classes
114-4 or categories of loans or extensions of credit; and
114-5 (3) establish collective lending and investment
114-6 limits.
114-7 (c) The banking commissioner may determine whether a loan or
114-8 extension of credit putatively made to a person will be attributed
114-9 to another person for purposes of this section.
114-10 (d) An officer, director, manager, managing participant, or
114-11 employee of a state bank who approves or participates in the
114-12 approval of a loan with actual knowledge that the loan violates
114-13 this section is jointly and severally liable to the bank for the
114-14 lesser of the amount by which the loan exceeded applicable lending
114-15 limits or the bank's actual loss, and remains liable for that
114-16 amount until the loan and all prior indebtedness of the borrower to
114-17 the bank have been fully repaid. The bank may initiate a
114-18 proceeding to collect an amount due under this subsection at any
114-19 time before four years after the date the borrower defaults on the
114-20 subject loan or any prior indebtedness. A person that is liable
114-21 for and pays amounts to the bank under this subsection is entitled
114-22 to an assignment of the bank's claim against the borrower to the
114-23 extent of the payments. For purposes of this subsection, an
114-24 officer, director, manager, managing participant, or employee of a
114-25 state bank is presumed to know the amount of the bank's lending
114-26 limit under Subsection (a) of this section and the amount of the
114-27 borrower's aggregate outstanding indebtedness to the bank
115-1 immediately before a new loan or extension of credit to that
115-2 borrower.
115-3 Sec. 5.202. LOAN EXPENSES AND FEES. (a) Notwithstanding
115-4 any other statute to the contrary, a bank may require a borrower to
115-5 pay all reasonable expenses and fees incurred in connection with
115-6 the making, closing, disbursing, extending, readjusting, or
115-7 renewing of a loan, regardless of whether those expenses or fees
115-8 are paid to third parties. A fee charged by the bank under this
115-9 section may not exceed the cost the bank reasonably expects to
115-10 incur in connection with the transaction to which the fee relates.
115-11 Payment for these expenses may be collected by the bank from the
115-12 borrower and retained by the bank or paid to a person rendering
115-13 services for which a charge has been made, or the payments may be
115-14 paid directly by the borrower to a third party to whom they are
115-15 payable. This section does not authorize the bank to charge its
115-16 borrower for payment of fees and expenses to an officer, director,
115-17 manager, or managing participant of the bank for services rendered
115-18 in the person's capacity as an officer, director, manager, or
115-19 managing participant.
115-20 (b) A bank may charge a penalty for prepayment or late
115-21 payment. Only one penalty may be charged by the bank on each past
115-22 due payment. Unless otherwise agreed in writing, prepayment of
115-23 principal must be applied on the final installment of the note or
115-24 other obligation until that installment is fully paid, and further
115-25 prepayments must be applied on installments in the inverse order of
115-26 their maturity.
115-27 (c) Notwithstanding any statute to the contrary, fees and
116-1 expenses charged and collected as provided by this section are not
116-2 considered a part of the interest or compensation charged by the
116-3 bank for the use, forbearance, or detention of money.
116-4 Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) With the
116-5 prior written approval of the banking commissioner or to the
116-6 extent permitted by rules adopted under this Act, a state bank may
116-7 purchase or construct a building or other facility on the specific
116-8 request and for the use of a customer and, as holder of legal
116-9 title, lease the building or other facility to a customer having
116-10 sufficient resources to pay all rentals as they become due. A
116-11 lease under this subsection must provide that legal title to the
116-12 property transfers to the lessee on consummation and expiration of
116-13 the lease.
116-14 (b) Subject to rules adopted under this Act, a state bank
116-15 may become the owner and lessor of tangible personal property for
116-16 lease financing transactions on a net lease basis on the specific
116-17 request and for the use of a customer. Without the written
116-18 approval of the banking commissioner to continue holding property
116-19 acquired for leasing purposes under this subsection, the bank may
116-20 not hold the property more than six months after the date of
116-21 expiration of the original or any extended or renewed lease period
116-22 agreed to by the customer for whom the property was acquired or by
116-23 a subsequent lessee.
116-24 (c) Rental payments received by the bank in a lease
116-25 financing transaction under this section are considered to be rent
116-26 and not interest or compensation for the use, forbearance, or
116-27 detention of money. However, a lease financing transaction is
117-1 considered to be a loan or extension of credit for purposes of
117-2 Section 5.201 of this Act.
117-3 (Sections 5.204-5.300 reserved for expansion)
117-4 SUBCHAPTER D. DEPOSITS
117-5 Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) A deposit
117-6 contract between a bank and an account holder is considered a
117-7 contract in writing for all purposes and may be evidenced by one or
117-8 more agreements, deposit tickets, signature cards, or notices as
117-9 provided by Section 5.302 of this Act, or by other documentation as
117-10 provided by law.
117-11 (b) A cause of action for denial of deposit liability on a
117-12 deposit contract without a maturity date does not accrue until the
117-13 bank has denied liability and given notice of the denial to the
117-14 account holder. A bank that provides an account statement or
117-15 passbook to the account holder is considered to have denied
117-16 liability and given the notice as to any amount not shown on the
117-17 statement or passbook.
117-18 Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) A bank and
117-19 its account holder may amend the deposit contract as permitted by
117-20 Subsection (b) of this section, by agreement, or as otherwise
117-21 permitted by law.
117-22 (b) A bank may amend a deposit contract by mailing a written
117-23 notice of the amendment to the account holder, separately or as an
117-24 enclosure with or part of the account holder's statement of account
117-25 or passbook. The notice must include the text and effective date
117-26 of the amendment. The bank is required to deliver the notice to
117-27 only one of the account holders of a deposit account that has more
118-1 than one account holder. The effective date may not be earlier
118-2 than the 30th day after the date of mailing the notice, unless the
118-3 amendment:
118-4 (1) is made to comply with a statute or rule that
118-5 authorizes an earlier effective date;
118-6 (2) does not reduce the interest rate on the account
118-7 or otherwise adversely affect the account holder; or
118-8 (3) is made for reasons relating to security of
118-9 accounts.
118-10 (c) Except for a disclosure required to be made under
118-11 Section 5.303 of this Act or the Truth in Savings Act (12 U.S.C.
118-12 Section 4301 et seq.) or other federal law, before renewal of an
118-13 account, a notice of amendment is not required under Subsection
118-14 (b) of this section for:
118-15 (1) a change in the interest rate on a variable-rate
118-16 account, including a money market or negotiable order of withdrawal
118-17 account;
118-18 (2) a change in a term for a time account with a
118-19 maturity of one month or less, if the deposit contract authorizes
118-20 the change in the term; or
118-21 (3) a change contemplated and permitted by the
118-22 original contract.
118-23 (d) An amendment under Subsection (b) of this section may
118-24 reduce the rate of interest or eliminate interest on an account
118-25 without a maturity date.
118-26 (e) Amendment of a deposit contract made in compliance with
118-27 this section is not a violation of the Deceptive Trade
119-1 Practices-Consumer Protection Act (Section 17.41 et seq., Business
119-2 & Commerce Code).
119-3 Sec. 5.303. FEES; DISCLOSURES. (a) Except as otherwise
119-4 provided by law, a bank may charge an account holder a fee, service
119-5 charge, or penalty relating to service or activity of a deposit
119-6 account, including a fee for an overdraft, insufficient fund check,
119-7 or stop payment order.
119-8 (b) Except as otherwise provided by the Truth in Savings Act
119-9 (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall
119-10 disclose the amount of each fee, charge, or penalty related to an
119-11 account, or if the amount of a fee, charge, or penalty cannot be
119-12 stated, the method of computing the fee, charge, or penalty, by
119-13 written notice delivered or mailed to each customer opening an
119-14 account not later than the 10th business day after the date the
119-15 account is opened. A bank that increases or adds a new fee,
119-16 charge, or penalty shall give notice of the change to each affected
119-17 account holder in the manner provided by Section 5.302(b) of this
119-18 Act for notice of an amendment of a deposit contract.
119-19 Sec. 5.304. SECURING DEPOSITS. (a) A state bank may not
119-20 pledge or create a lien on its assets or secure the repayment of a
119-21 deposit except as authorized or required by this section, rules
119-22 adopted under this Act, or other law.
119-23 (b) A state bank may pledge its assets to secure a deposit
119-24 of this state, an agency or political subdivision of this state,
119-25 the United States, or an instrumentality of the United States.
119-26 (c) This section does not prohibit the pledge of assets to
119-27 secure the repayment of money borrowed or the purchase of excess
120-1 deposit insurance from a private insurance company. An act, deed,
120-2 conveyance, pledge, or contract in violation of this section is
120-3 void.
120-4 Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Except as
120-5 otherwise provided by this section, a bank lawfully doing business
120-6 in this state may enter a deposit account with a minor as the sole
120-7 and absolute owner of the account and may pay checks and
120-8 withdrawals and otherwise act with respect to the account on the
120-9 order of the minor. A payment or delivery of rights to a minor who
120-10 holds a deposit account evidenced by a receipt or acquittance
120-11 signed by the minor discharges the bank to the extent of the
120-12 payment made or rights delivered.
120-13 (b) If the minor is the sole and absolute owner of the
120-14 deposit account, the disabilities of minority are removed for the
120-15 limited purpose of enabling:
120-16 (1) the minor to enter into a depository contract with
120-17 the bank; and
120-18 (2) the bank to enforce the contract against the
120-19 minor, including collection of overdrafts and account fees and
120-20 submission of account history to account reporting agencies and
120-21 credit reporting bureaus.
120-22 (c) A parent or legal guardian of a minor may deny the
120-23 minor's authority to control, transfer, draft on, or make
120-24 withdrawals from the minor's deposit account by notifying the bank
120-25 in writing. On receipt of the notice by the bank, the minor may
120-26 not control, transfer, draft on, or make withdrawals from the
120-27 account during minority except with the joinder of a parent or
121-1 legal guardian of the minor.
121-2 (d) If a minor with a deposit account dies, the receipt or
121-3 acquittance of the minor's parent or legal guardian discharges the
121-4 liability of the bank to the extent of the receipt or acquittance,
121-5 except that the aggregate discharges under this subsection may not
121-6 exceed $3,000.
121-7 (e) Subsection (a) of this section does not authorize a loan
121-8 to the minor by the bank, whether on pledge of the minor's savings
121-9 account or otherwise, or bind the minor to repay a loan made except
121-10 as provided by Subsection (b) of this section or other law or
121-11 unless the depository institution has obtained the express consent
121-12 and joinder of a parent or legal guardian of the minor. This
121-13 subsection does not apply to an inadvertent extension of credit
121-14 because of an overdraft from insufficient funds, returned checks or
121-15 deposits, or other shortages in a depository account resulting from
121-16 normal banking operations.
121-17 Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION.
121-18 (a) If a deposit account is opened with a bank by one or more
121-19 persons expressly as a trustee for one or more other named persons
121-20 and further notice of the existence and terms of a legal and valid
121-21 trust is not given in writing to the bank, the bank may accept and
121-22 administer the account, subject to Chapter XI, Probate Code.
121-23 (b) If a deposit account is opened with a bank by one or
121-24 more persons expressly as a trustee for one or more other named
121-25 persons pursuant to or purporting to be pursuant to a written trust
121-26 agreement, the trustee may provide the bank with a certificate of
121-27 trust to evidence the trust relationship. The certificate must be
122-1 an affidavit of the trustee and must include the effective date of
122-2 the trust, the name of the trustee, the name or method for choosing
122-3 successor trustees, the name and address of each beneficiary, the
122-4 authority granted to the trustee, the disposition of the account on
122-5 the death of the trustee or the survivor of two or more trustees,
122-6 other information required by the bank, and an indemnification of
122-7 the bank. The bank may accept and administer the account, subject
122-8 to Chapter XI, Probate Code, in accordance with the certificate of
122-9 trust without requiring a copy of the trust agreement. The bank is
122-10 not liable for administering the account as provided by the
122-11 certificate of trust, even if the certificate of trust is contrary
122-12 to the terms of the trust agreement, unless the bank has actual
122-13 knowledge of the terms of the trust agreement.
122-14 (c) On the death of the trustee or the survivor of two or
122-15 more trustees, the bank may pay all or part of the withdrawal value
122-16 of the account with interest as provided by the certificate of
122-17 trust. If the trustee did not deliver a certificate of trust, the
122-18 bank's right to treat the account as owned by a trustee ceases on
122-19 the death of the trustee. On the death of the trustee or the
122-20 survivor of two or more trustees, the bank shall, unless the
122-21 certificate of trust provides otherwise, pay the withdrawal value
122-22 of the account with interest in equal shares to the persons who
122-23 survived the trustee, are named as beneficiaries in the certificate
122-24 of trust, and can be located by the bank from its own records. If
122-25 there is not a certificate of trust, payment of the withdrawal
122-26 value and interest shall be made as provided by Chapter XI, Probate
122-27 Code. Any payment made under this section for all or part of the
123-1 withdrawal value and interest discharges any liability of the bank
123-2 to the extent of the payment. The bank may pay all or part of the
123-3 withdrawal value and interest in the manner provided by this
123-4 section, regardless of whether it has knowledge of a competing
123-5 claim, unless the bank receives actual knowledge that payment has
123-6 been restrained by order of a court of competent jurisdiction.
123-7 (d) This section does not obligate a bank to accept a
123-8 deposit account from a trustee who does not furnish a copy of the
123-9 trust agreement or to search beyond its own records for the
123-10 location of a named beneficiary.
123-11 (e) This section does not affect a contractual provision to
123-12 the contrary that otherwise complies with the laws of this state.
123-13 Sec. 5.307. RIGHT OF SET-OFF. (a) Except as otherwise
123-14 provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
123-15 seq.) or other federal law, a bank has a right of set-off, without
123-16 further agreement or action, against all accounts owned by a
123-17 depositor to whom or on whose behalf the bank has made an advance
123-18 of money by loan, overdraft, or otherwise, if the bank has
123-19 previously disclosed this right to the depositor. If the depositor
123-20 defaults in the repayment or satisfaction of the obligation, the
123-21 bank may, without notice to or consent of the depositor, set off or
123-22 cancel on its books all or part of the accounts owned by the
123-23 depositor and apply the value of the accounts in payment of and to
123-24 the extent of the obligation.
123-25 (b) For purposes of this section, a default occurs when an
123-26 obligor has failed to make a payment as provided by the terms of
123-27 the loan or other credit obligation and a grace period provided for
124-1 by the agreement or law has expired. An obligation is not required
124-2 to be accelerated or matured for a default to authorize set-off of
124-3 the depositor's obligation against the defaulted payment.
124-4 (c) A bank may not exercise its right of set-off under this
124-5 section against an account unless the account is due and owing to
124-6 the depositor in the same capacity as the defaulted credit
124-7 obligation. A trust account for which a depositor is trustee,
124-8 including a trustee under a certificate of trust delivered under
124-9 Section 5.306(b) of this Act, is not subject to the right of
124-10 set-off under this section unless the trust relationship is solely
124-11 evidenced by the account card as provided by Chapter XI, Probate
124-12 Code.
124-13 (d) This section does not limit or prohibit the exercise of
124-14 another right of set-off, including a right under contract or
124-15 common law.
124-16 CHAPTER 6. ENFORCEMENT ACTIONS
124-17 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
124-18 Sec. 6.001. DETERMINATION LETTER ............................. 126
124-19 Sec. 6.002. CEASE AND DESIST ORDER ........................... 127
124-20 Sec. 6.003. REMOVAL OR PROHIBITION ORDER ..................... 128
124-21 Sec. 6.004. HEARING ON PROPOSED ORDER ........................ 130
124-22 Sec. 6.005. EMERGENCY ORDERS ................................. 131
124-23 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS .......... 132
124-24 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION
124-25 ORDER .......................................... 132
124-26 Sec. 6.008. LIMITATION ON ACTION ............................. 133
124-27 Sec. 6.009. ENFORCEMENT OF FINAL ORDER ....................... 134
125-1 Sec. 6.010. ADMINISTRATIVE PENALTIES ......................... 134
125-2 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE
125-3 PENALTIES ...................................... 135
125-4 Sec. 6.012. CONFIDENTIALITY OF RECORDS ....................... 136
125-5 Sec. 6.013. COLLECTION OF FEES ............................... 136
125-6 (Sections 6.014-6.100 reserved for expansion)
125-7 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
125-8 Sec. 6.101. ORDER OF SUPERVISION ............................. 136
125-9 Sec. 6.102. ORDER OF CONSERVATORSHIP ......................... 137
125-10 Sec. 6.103. HEARING .......................................... 137
125-11 Sec. 6.104. POST-HEARING ORDER ............................... 138
125-12 Sec. 6.105. CONFIDENTIALITY OF RECORDS ....................... 139
125-13 Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION ................. 139
125-14 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR ................. 140
125-15 Sec. 6.108. QUALIFICATIONS OF APPOINTEE ...................... 141
125-16 Sec. 6.109. EXPENSES ......................................... 141
125-17 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR
125-18 DECISIONS ...................................... 142
125-19 Sec. 6.111. VENUE ............................................ 143
125-20 Sec. 6.112. DURATION ......................................... 143
125-21 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES .............. 144
125-22 (Sections 6.114-6.200 reserved for expansion)
125-23 SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
125-24 INVESTIGATION AND ENFORCEMENT
125-25 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY ........... 144
125-26 Sec. 6.202. SUBPOENA AUTHORITY ............................... 146
125-27 Sec. 6.203. ENFORCEMENT OF SUBPOENA .......................... 147
126-1 Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS ............ 148
126-2 Sec. 6.205. EVIDENCE ......................................... 149
126-3 Sec. 6.206. CEASE AND DESIST ORDER REGARDING
126-4 UNAUTHORIZED ACTIVITY .......................... 149
126-5 Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER
126-6 REGARDING UNAUTHORIZED ACTIVITY ................ 150
126-7 Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER
126-8 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-9 Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
126-10 REGARDING UNAUTHORIZED ACTIVITY ................ 152
126-11 Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY .......... 153
126-12 Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER .............. 154
126-13 Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER ................. 155
126-14 Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND .................. 156
126-15 CHAPTER 6. ENFORCEMENT ACTIONS
126-16 SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT
126-17 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
126-18 commissioner determines from examination or other credible evidence
126-19 that a state bank is in a condition that may warrant the issuance
126-20 of an enforcement order under this chapter, the banking
126-21 commissioner may, by personal delivery or by registered or
126-22 certified mail, return receipt requested, notify the bank in
126-23 writing of the determination, the requirements the bank must
126-24 satisfy to abate the determination, and the time in which the
126-25 requirements must be satisfied to avert further administrative
126-26 action.
126-27 (b) The determination letter may be issued in connection
127-1 with the issuance of a cease and desist, removal, or prohibition
127-2 order under this subchapter or an order of supervision or
127-3 conservatorship under Subchapter B of this chapter.
127-4 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
127-5 commissioner has grounds to issue a cease and desist order to an
127-6 officer, employee, director, manager, or managing participant of a
127-7 state bank, or the bank itself acting through an authorized person,
127-8 if the banking commissioner determines from examination or other
127-9 credible evidence that the bank or person, directly or indirectly:
127-10 (1) has violated this Act or another applicable law or
127-11 rule;
127-12 (2) has engaged in a breach of trust or other
127-13 fiduciary duty;
127-14 (3) has refused to submit to examination or
127-15 examination under oath;
127-16 (4) has conducted business in an unsafe or unsound
127-17 manner; or
127-18 (5) has violated a condition of the bank's charter or
127-19 an agreement between the bank or the person and the banking
127-20 commissioner or the department.
127-21 (b) If the banking commissioner has grounds for action under
127-22 Subsection (a) of this section and further finds that an order to
127-23 cease and desist from a violation appears to be necessary and in
127-24 the best interest of the bank involved and its depositors,
127-25 creditors, and shareholders or participants, the banking
127-26 commissioner, by personal delivery or by registered or certified
127-27 mail, return receipt requested, may serve a proposed cease and
128-1 desist order on the bank and each person who committed or
128-2 participated in the violation. The proposed order must state the
128-3 grounds for the proposed order with reasonable certainty. The
128-4 proposed order must state its effective date, which may not be
128-5 before the 21st day after the date the proposed order is mailed or
128-6 delivered. The order takes effect for the bank if the bank does
128-7 not request a hearing in writing before the effective date and
128-8 takes effect for each other person against whom the proposed order
128-9 is directed if that person does not request a hearing in writing
128-10 before the effective date. After taking effect the order is final
128-11 and nonappealable as to that bank or other person.
128-12 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
128-13 commissioner has grounds to remove a present or former officer,
128-14 director, manager, managing participant, or employee of a state
128-15 bank from office or employment in, or prohibit a controlling
128-16 shareholder or participant or other person participating in the
128-17 affairs of a state bank from further participation in the affairs
128-18 of, a state bank, trust company, or other entity chartered or
128-19 licensed by the banking commissioner under the laws of this state,
128-20 if the banking commissioner determines from examination or other
128-21 credible evidence that:
128-22 (1) the person committed, participated, or acted, in
128-23 other than an inadvertent or unintentional manner, as described by
128-24 Section 6.002(a) of this Act with regard to the affairs of the
128-25 bank, or violated a final cease and desist order issued in response
128-26 to the same or a similar act; and
128-27 (2) because of this action by the person:
129-1 (A) the bank has suffered or will probably
129-2 suffer financial loss or other damage;
129-3 (B) the interests of the bank's depositors have
129-4 been or could be prejudiced; or
129-5 (C) the person has received financial gain or
129-6 other benefit by reason of the violation; and
129-7 (3) this action by the person:
129-8 (A) involves personal dishonesty on the part of
129-9 the person; or
129-10 (B) demonstrates wilful or continuing disregard
129-11 for the safety or soundness of the bank.
129-12 (b) If the banking commissioner finds grounds for action
129-13 under Subsection (a) of this section and further finds that a
129-14 removal or prohibition order appears to be necessary and in the
129-15 best interest of the bank involved and its depositors, creditors,
129-16 and shareholders or participants, the banking commissioner, by
129-17 personal delivery or by registered or certified mail, return
129-18 receipt requested, may serve a proposed removal or prohibition
129-19 order, as appropriate, on an officer, employee, director, manager
129-20 or managing participant, controlling shareholder or participant, or
129-21 other person alleged to have committed or participated in the
129-22 violation. The proposed order must state the grounds for removal
129-23 or prohibition with reasonable certainty. The proposed order must
129-24 state its effective date, which may not be before the 21st day
129-25 after the date the proposed order is mailed or delivered. The
129-26 order takes effect for a person against whom the proposed order is
129-27 directed if the person does not request a hearing in writing before
130-1 the effective date. After taking effect the order is final and
130-2 nonappealable as to that person.
130-3 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
130-4 hearing on a proposed order shall be held not later than the 30th
130-5 day after the date the first request for a hearing on the order was
130-6 received by the department unless the parties agree to a later
130-7 hearing date. Each party shall be given written notice by personal
130-8 delivery or by registered or certified mail, return receipt
130-9 requested, of the date set by the banking commissioner for the
130-10 hearing not later than the 11th day before that date. The hearing
130-11 shall be conducted as provided by Chapter 2001, Government Code.
130-12 At the hearing, the department has the burden of proof and each
130-13 person against whom the proposed order is directed may
130-14 cross-examine and present evidence to show why the proposed order
130-15 should not be issued.
130-16 (b) After the hearing, the banking commissioner shall issue
130-17 or decline to issue the proposed order. The proposed order may be
130-18 modified as necessary to conform to the findings at the hearing and
130-19 to require the board to take necessary affirmative action to
130-20 correct the conditions cited in the order.
130-21 (c) An order issued under this section is immediately final
130-22 for purposes of enforcement and appeal. The order may be appealed
130-23 as provided by Section 3.009 of this Act.
130-24 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
130-25 commissioner believes that immediate action is needed to prevent
130-26 immediate and irreparable harm to the bank and its depositors,
130-27 creditors, and shareholders or participants, the banking
131-1 commissioner may issue one or more cease and desist, removal, or
131-2 prohibition orders as emergency orders to become effective
131-3 immediately on service without prior notice or hearing. Service
131-4 must be by personal delivery or by registered or certified mail,
131-5 return receipt requested.
131-6 (b) In each emergency order the banking commissioner shall
131-7 notify the bank and any person against whom the emergency order is
131-8 directed of the specific conduct, activity, or omission requiring
131-9 the order, the citation of each statute or rule alleged to have
131-10 been violated, the immediate and irreparable harm alleged to be
131-11 threatened, and the right to a hearing. A hearing on the order may
131-12 be requested in writing not later than the 10th day after the date
131-13 that the order is served. Unless a person against whom the
131-14 emergency order is directed requests a hearing in writing before
131-15 the 11th day after the date it is served on the person, the
131-16 emergency order is final and nonappealable as to that person.
131-17 (c) A hearing on an emergency order, if requested, must be
131-18 given priority over all other matters pending before the banking
131-19 commissioner and must be held not later than the 20th day after the
131-20 date that it is requested unless the parties agree to a later
131-21 hearing date.
131-22 (d) Until the hearing, an emergency order continues in
131-23 effect unless the order is stayed by the banking commissioner. The
131-24 banking commissioner may impose any condition before granting a
131-25 stay of the emergency order.
131-26 (e) After the hearing, the banking commissioner may affirm,
131-27 modify, or set aside in whole or part the emergency order. An
132-1 order affirming or modifying the emergency order is immediately
132-2 final for purposes of enforcement and appeal. The order may be
132-3 appealed as provided by Section 3.009 of this Act.
132-4 Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS. A copy
132-5 of any determination letter, proposed order, emergency order, or
132-6 final order issued by the banking commissioner under this
132-7 subchapter shall be immediately brought to the attention of the
132-8 board of the affected bank, regardless of whether the bank is a
132-9 party, and filed in the minutes of the board. Each director,
132-10 manager, or managing participant shall immediately certify to the
132-11 banking commissioner in writing that the certifying person has read
132-12 and understood the determination letter, proposed order, emergency
132-13 order, or final order. The required certification may not be
132-14 considered an admission of a person in a subsequent legal or
132-15 administrative proceeding.
132-16 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
132-17 (a) Without the prior written approval of the banking
132-18 commissioner, a person subject to a final and enforceable removal
132-19 or prohibition order issued by the banking commissioner:
132-20 (1) may not serve as a director, officer, or employee
132-21 of any state bank, trust company, or other entity chartered or
132-22 licensed by the banking commissioner under the laws of this state
132-23 while the order is in effect;
132-24 (2) may not directly or indirectly participate in any
132-25 manner in the management of such an entity;
132-26 (3) may not directly or indirectly vote for a director
132-27 of such an entity;
133-1 (4) may not solicit, procure, transfer, attempt to
133-2 transfer, vote, or attempt to vote a proxy, consent, or
133-3 authorization with respect to voting rights in such an entity; and
133-4 (5) remains entitled to receive dividends or a share
133-5 of profits, return of contribution, or other distributive benefit
133-6 from such an entity with respect to voting securities in the entity
133-7 owned by the person.
133-8 (b) If voting securities of an entity identified in
133-9 Subsection (a)(1) of this section cannot be voted under this
133-10 section, the voting securities are considered to be authorized but
133-11 unissued for purposes of determining the procedures for and results
133-12 of the affected vote<code>. A trust company may incorporate for the
237-5 following purpose: to act as a trustee, executor, administrator,
237-6 or guardian when designated by any person, corporation, or court to
237-7 do so and as agent for the performance of any lawful act, including
237-8 the right to receive deposits made by agencies of the United States
237-9 of America for the authorized account of any individual, and to
237-10 lend and accumulate money without banking privileges, when licensed
237-11 under provisions of Subtitle 2, Title 79, Revised Statutes.
237-12 (b) The Banking Commissioner <State Banking Board> shall
237-13 hear and determine applications for state trust company charters.
237-14 A final order of the Banking Commissioner on a charter application
237-15 may be appealed as provided by Section 3.009, Texas Banking Act.
237-16 Sec. 2. (a) Subject to Subsection (b), every trust company
237-17 with a capital of not less than $1 million <$500,000> shall, in
237-18 addition to all other powers conferred by law, have the power: to
237-19 purchase, sell, discount, and negotiate, with or without its
237-20 endorsement or guaranty, notes, drafts, checks, bills of exchange,
237-21 acceptances, including bankers' acceptances, cable transfers, and
237-22 other evidences of indebtedness; to purchase and sell, with or
237-23 without its endorsement or guaranty, stocks, bonds, securities,
237-24 including the obligations of the United States or of any states
237-25 thereof; to issue debentures, bonds, and promissory notes, to
237-26 accept bills or drafts drawn upon it, but in no event having
237-27 liabilities outstanding thereon at any one time exceeding five
238-1 times its capital stock and surplus; provided, however, that with
238-2 the consent in writing of the Banking Commissioner it may have
238-3 outstanding at any one time 10 times the capital stock and surplus;
238-4 and generally, to exercise such powers as are incidental to the
238-5 powers conferred by this article.
238-6 (b) The <Banking Section of The> Finance Commission of Texas
238-7 shall prescribe regulations pursuant to which the Banking
238-8 Commissioner may require such additional capital over and above the
238-9 minimum amount of $1 million <$500,000> prescribed in Subsection
238-10 (a) as may be necessary to assure the safety and soundness of trust
238-11 companies engaging in activities under Subsection (a).
238-12 (b) Article 2, Chapter XI, The Texas Banking Code (Article
238-13 342-1102, Vernon's Texas Civil Statutes), is amended to read as
238-14 follows:
238-15 Art. 2. Applicability of State Banking Code; Venue.
238-16 Sec. 1. Unless otherwise provided in this chapter, a trust company
238-17 is subject to the provisions of Chapters 1-4, 6-8, and Subchapters
238-18 A and B, Chapter 5, Texas Banking Act, <I, II, III, IV, V, VIII,
238-19 and IX of this code> as if the trust company were a state bank;
238-20 provided, however, that Section 3.001 of that Act <Article 1,
238-21 Chapter III>, relating to banking powers, and Section 8.008 of that
238-22 Act <Article 11a, Chapter IV>, relating to securities law
238-23 exemption, <Article 4a, Chapter VIII, relating to priority of
238-24 distribution in liquidation, and Article 3, Chapter IX, relating to
238-25 limited branch banking> shall not apply.
238-26 Sec. 2. Venue for an action instituted to effect, contest,
238-27 or otherwise intervene in the liquidation of a trust company as
239-1 provided in this chapter and Chapter 7, Texas Banking Act, <VIII of
239-2 this code (Article 342-801 et seq., Vernon's Texas Civil Statutes)>
239-3 is in Travis County, except that on motion filed and served
239-4 concurrently with or before the filing of the answer, the court
239-5 may, upon a finding of good cause, transfer the action to the
239-6 county of the trust company's principal place of business.
239-7 (c) Sections 1 and 5, Article 3, Chapter XI, The Texas
239-8 Banking Code (Article 342-1103, Vernon's Texas Civil Statutes), are
239-9 amended to read as follows:
239-10 Sec. 1. Annual Statement. (a) Every trust company shall be
239-11 subject to regulation by the Banking Commissioner of Texas and
239-12 shall file with the banking commissioner on or before March 1 of
239-13 each year a statement of its condition on the previous December 31,
239-14 in such form as may be required by the banking commissioner,
239-15 showing under oath its assets and liabilities, together with a fee
239-16 of $50 for filing; and such statement shall be published in a
239-17 newspaper of general circulation published in the county in which
239-18 the trust company is located. The banking commissioner may, for
239-19 good cause shown, extend the time for filing such statement for not
239-20 more than 60 days. In addition, each trust company shall make and
239-21 publish statements of its financial condition as provided by
239-22 Section 2.009, Texas Banking Act <Article 9 of Chapter II of this
239-23 code>.
239-24 (b) Each trust company annually may be required by the
239-25 commissioner to obtain an external audit of its books and records
239-26 by a certified public accountant and provide the commissioner a
239-27 copy of the audit report.
240-1 Sec. 5. Confidentiality. The confidentiality provisions of
240-2 Subchapter B, Chapter 2, Texas Banking Act, <Article 10, Chapter
240-3 II, of this code> apply to all information obtained by the
240-4 Department relative to the financial condition of trust companies
240-5 other than the annual statements required under Section 1 of this
240-6 article.
240-7 (d) Article 4, Chapter XI, The Texas Banking Code (Article
240-8 342-1104, Vernon's Texas Civil Statutes), is amended to read as
240-9 follows:
240-10 Art. 4. Action by Banking Commissioner; Officers and
240-11 Directors; Cease and Desist Orders; Removal; Review. (a) With
240-12 regard to a trust company, the Banking Commissioner of Texas may
240-13 take action in accordance with Subchapter A, Chapter 6, Texas
240-14 Banking Act <Article 12, Chapter IV, of this code>, as if the trust
240-15 company were a state bank if the banking commissioner finds that an
240-16 officer, director, or employee of the trust company, or the trust
240-17 company itself acting through any authorized person:
240-18 (1) violates any law or rule applicable to the trust
240-19 company;
240-20 (2) refuses to comply with any law or rule applicable
240-21 to the trust company;
240-22 (3) wilfully neglects to perform his or its duties or
240-23 commits a breach of trust or of fiduciary duty;
240-24 (4) commits any fraudulent or questionable practice in
240-25 the conduct of the trust company's business that threatens the
240-26 trust company's solvency;
240-27 (5) refuses to submit to examination under oath;
241-1 (6) conducts business in an unsafe or unauthorized
241-2 manner; or
241-3 (7) violates any conditions of the trust company's
241-4 charter or of any agreement entered with the Banking Commissioner
241-5 of the Banking Department.
241-6 (b) An individual or trust company against which action is
241-7 taken under this section may request review of that action in
241-8 accordance with Subchapter A, Chapter 6, Texas Banking Act <Article
241-9 12, Chapter IV, of this code>, as if the trust company were a state
241-10 bank.
241-11 (e) Sections (a) and (b), Article 5, Chapter XI, The Texas
241-12 Banking Code (Article 342-1105, Vernon's Texas Civil Statutes), are
241-13 amended to read as follows:
241-14 (a) With regard to a trust company, the Banking Commissioner
241-15 of Texas may take action in accordance with Subchapter B, Chapter
241-16 6, Texas Banking Act <Article 1a, Chapter VIII, of this code>, as
241-17 if the trust company were a state bank if:
241-18 (1) it appears to the banking commissioner that the
241-19 trust company is in a condition that would be a hazardous <an
241-20 unsafe> condition for a state bank <under Article 1a> and the trust
241-21 company's condition renders the continuance of its business
241-22 hazardous to the public or to the shareholders or creditors of the
241-23 trust company;
241-24 (2) it appears to the banking commissioner
241-25 <considering Article 1a> that the trust company has exceeded its
241-26 powers;
241-27 (3) the trust company had failed to comply with the
242-1 law; or
242-2 (4) the trust company gives written consent to
242-3 supervision or conservatorship under this section.
242-4 (b) A trust company against which action is taken under this
242-5 section may request review of that action in accordance with
242-6 Subchapter B, Chapter 6, Texas Banking Act <Article 1a, Chapter
242-7 VIII, of this code>, as if it were a state bank.
242-8 (f) Section (a), Article 6, Chapter XI, The Texas Banking
242-9 Code (Article 342-1106, Vernon's Texas Civil Statutes), is amended
242-10 to read as follows:
242-11 (a) The Finance Commission <State Banking Board> shall
242-12 promulgate and adopt such rules and procedural regulations as may
242-13 be necessary to facilitate the fair hearing and adjudication of
242-14 charter applications.
242-15 (g) Section (a), Article 8, Chapter XI, The Texas Banking
242-16 Code (Article 342-1108, Vernon's Texas Civil Statutes), is amended
242-17 to read as follows:
242-18 (a) A trust company shall have and maintain a fully paid-in
242-19 capital of not less than $1 million <$500,000>.
242-20 (h) Article 13, Chapter XI, The Texas Banking Code (Article
242-21 342-1113, Vernon's Texas Civil Statutes), is amended to read as
242-22 follows:
242-23 Art. 13. Exemptions. The provisions of this chapter shall
242-24 not affect or apply to:
242-25 (1) any state or federal credit union doing business
242-26 in this state provided that such credit union is otherwise
242-27 authorized to exercise trust powers; or
243-1 (2) an institution of higher education or a university
243-2 system acting as trustee as provided by the Education Code.
243-3 (i) Section 2, Article 14, Chapter XI, The Texas Banking
243-4 Code (Article 342-1114, Vernon's Texas Civil Statutes), is amended
243-5 to read as follows:
243-6 Sec. 2. Subject to the provisions of Sections 7.310 and
243-7 7.313, Texas Banking Act <Articles 14 and 15 of Chapter VIII of
243-8 this Act>, after fully satisfying all timely filed and approved
243-9 claims of a higher priority, the commissioner may make a ratable
243-10 distribution to approved claimants within a particular class or
243-11 priority if there are insufficient funds to fully satisfy all of
243-12 those claims, after reserving funds for administrative expenses, if
243-13 necessary.
243-14 (j) A trust company that possesses a charter on September 1,
243-15 1995, and that has capital and surplus of less than the amount
243-16 required by Article 8, Chapter XI, The Texas Banking Code, as
243-17 amended by this section, shall increase its capital and surplus to
243-18 the amount required by that article before September 1, 2000. The
243-19 finance commission may adopt rules specifying procedures for
243-20 ratable increases in capital and surplus under this section and for
243-21 deferrals and extensions of time for a trust company acting in good
243-22 faith to achieve minimum required capital and surplus.
243-23 (k) This section does not take effect if another enactment
243-24 of the 74th Legislature, Regular Session, 1995, repeals Chapter XI,
243-25 The Texas Banking Code (Article 342-1101 et seq., Vernon's Texas
243-26 Civil Statutes).
243-27 SECTION 3. Chapter 30, Civil Practice and Remedies Code, is
244-1 amended by adding Section 30.007 to read as follows:
244-2 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
244-3 (a) In this section:
244-4 (1) "Customer" means a person who uses, purchases, or
244-5 obtains an account, extension of credit, or product of a financial
244-6 institution or for whom a financial institution acts as a
244-7 fiduciary, agent, or custodian or in another representative
244-8 capacity.
244-9 (2) "Financial institution" means a state or national
244-10 bank, state or federal savings and loan association, state or
244-11 federal savings bank, foreign bank, foreign bank agency, or trust
244-12 company.
244-13 (3) "Record" means financial or other information of a
244-14 customer maintained by a financial institution.
244-15 (4) "Record request" means a valid and enforceable
244-16 subpoena, request for production, or other instrument issued under
244-17 authority of a tribunal that compels production of a customer
244-18 record.
244-19 (5) "Tribunal" means a court or other adjudicatory
244-20 tribunal with jurisdiction to issue a request for records,
244-21 including a government agency exercising adjudicatory functions and
244-22 an alternative dispute resolution mechanism, voluntary or required,
244-23 under which a party may compel the production of records.
244-24 (b) This section provides the exclusive method for compelled
244-25 discovery of a record of a financial institution relating to one or
244-26 more customers, does not create a right of privacy in a record, and
244-27 does not apply to:
245-1 (1) a demand or inquiry from a state or federal
245-2 government agency authorized by law to conduct an examination of
245-3 the financial institution;
245-4 (2) a record request from a state or federal
245-5 government agency or instrumentality under statutory or
245-6 administrative authority that provides for, or is accompanied by, a
245-7 specific mechanism for discovery and protection of a customer
245-8 record of a financial institution, including a record request from
245-9 a federal agency subject to the Right to Financial Privacy Act of
245-10 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
245-11 Service under 26 U.S.C. Section 7609;
245-12 (3) a record request from or report to a government
245-13 agency arising out of the investigation or prosecution of a
245-14 criminal offense;
245-15 (4) a record request in connection with a garnishment
245-16 proceeding in which the financial institution is garnishee and the
245-17 customer is debtor;
245-18 (5) an investigative demand or inquiry from a state
245-19 legislative investigating committee;
245-20 (6) an investigative demand or inquiry from the
245-21 attorney general of this state as authorized by law other than the
245-22 procedural law governing discovery in civil cases; or
245-23 (7) the voluntary use or disclosure of a record by a
245-24 financial institution subject to other applicable state or federal
245-25 law.
245-26 (c) A financial institution shall produce a record in
245-27 response to a record request only if:
246-1 (1) it is served with the record request not later
246-2 than the 24th day before the date that compliance with the record
246-3 request is required;
246-4 (2) before the financial institution complies with the
246-5 record request the requesting party pays the financial
246-6 institution's reasonable costs of complying with the record
246-7 request, including costs of reproduction, postage, research,
246-8 delivery, and attorney's fees, or posts a cost bond in an amount
246-9 estimated by the financial institution to cover those costs; and
246-10 (3) when the customer is not a party to the proceeding
246-11 in which the request was issued, the requesting party complies with
246-12 Subsections (d) and (e) and:
246-13 (A) the financial institution receives the
246-14 customer's written consent to release the record after a request
246-15 under Subsection (d)(3); or
246-16 (B) the tribunal takes further action based on
246-17 action initiated by the requesting party under Subsection (e).
246-18 (d) If the affected customer is not a party to the
246-19 proceeding in which the record request was issued, in addition to
246-20 serving the financial institution with a record request, the
246-21 requesting party shall:
246-22 (1) give notice stating the rights of the customer
246-23 under Subsection (f) and a copy of the request to each affected
246-24 customer in the manner and within the time provided by Rule 21a,
246-25 Texas Rules of Civil Procedure;
246-26 (2) file a certificate of service indicating that the
246-27 customer has been mailed or served with the notice and a copy of
247-1 the record request as required by this subsection with the tribunal
247-2 and the financial institution; and
247-3 (3) request the customer's written consent authorizing
247-4 the financial institution to comply with the request.
247-5 (e) If the customer refuses to execute the written consent
247-6 or fails to respond to the requesting party's request under
247-7 Subsection (d)(3) on or before the date that compliance with the
247-8 request is required, the requesting party may by written motion
247-9 seek an in camera inspection of the requested record as its sole
247-10 means of obtaining access to the requested record. In response to
247-11 a motion for in camera inspection, the tribunal may inspect the
247-12 requested record to determine its relevance to the matter before
247-13 the tribunal. The tribunal may order redaction of portions of the
247-14 records that the tribunal determines should not be produced and
247-15 shall enter a protective order preventing the record that it orders
247-16 produced from being:
247-17 (1) disclosed to a person who is not a party to the
247-18 proceeding before the tribunal; and
247-19 (2) used by a person for any purpose other than
247-20 resolving the dispute before the tribunal.
247-21 (f) The customer bears the burden of preventing or limiting
247-22 the financial institution's compliance with a record request
247-23 subject to this section by seeking an appropriate remedy, including
247-24 filing a motion to quash the record request or a motion for a
247-25 protective order. The customer has standing to appear before the
247-26 tribunal for that purpose if the customer is not otherwise a party.
247-27 Any motion filed shall be served on the financial institution and
248-1 the requesting party before the date that compliance with the
248-2 request is required. A financial institution is not liable to its
248-3 customer or another person for disclosure of a record in compliance
248-4 with this section.
248-5 (g) A financial institution may not be required to produce a
248-6 record under this section before the later of:
248-7 (1) the 24th day after the date of receipt of the
248-8 record request as provided by Subsection (c)(1);
248-9 (2) the 15th day after the date of receipt of a
248-10 customer consent to disclose a record as provided by Subsection
248-11 (c)(3); or
248-12 (3) the 15th day after the date a court orders
248-13 production of a record after an in camera inspection of a requested
248-14 record as provided by Subsection (e).
248-15 (h) An order to quash or for protection or other remedy
248-16 entered or denied by the tribunal under Subsection (e) or (f) is
248-17 not a final order and an interlocutory appeal may not be taken.
248-18 SECTION 4. Section 2001.223, Government Code, is amended to
248-19 read as follows:
248-20 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
248-21 Enforcement, and Contested Case Provisions. Section 2001.038 and
248-22 Subchapters C through H do not apply to:
248-23 (1) the granting, payment, denial, or withdrawal of
248-24 financial or medical assistance or benefits under service programs
248-25 of the Texas Department of Human Services;
248-26 (2) action by the Banking Commissioner or the Finance
248-27 Commission of Texas <State Banking Board> regarding the issuance of
249-1 a state bank charter for a bank to assume the assets and
249-2 liabilities of a financial institution <state bank> that the
249-3 commissioner considers <determines> to be in hazardous <an unsafe>
249-4 condition as defined by Section 1.002(a) <Section 1, Article 1a,
249-5 Chapter VIII>, The Texas Banking Act <Code (Article 342-801a,
249-6 Vernon's Texas Civil Statutes)>;
249-7 (3) a hearing or interview conducted by the Board of
249-8 Pardons and Paroles or the pardons and paroles division of the
249-9 Texas Department of Criminal Justice relating to the grant,
249-10 rescission, or revocation of parole or other form of administrative
249-11 release; or
249-12 (4) the suspension, revocation, or termination of the
249-13 certification of a breath analysis operator or technical supervisor
249-14 under the rules of the Department of Public Safety.
249-15 SECTION 5. Sections 2257.002(1) and (3), Government Code,
249-16 are amended to read as follows:
249-17 (1) "Bank holding company" has the meaning assigned by
249-18 Section 1.002(a), Texas Banking Act <Article 2, Chapter I, The
249-19 Texas Banking Code (Article 342-102, Vernon's Texas Civil
249-20 Statutes)>.
249-21 (3) "Control" has the meaning assigned by Section
249-22 1.002(a), Texas Banking Act <Article 2, Chapter I, The Texas
249-23 Banking Code (Article 342-102, Vernon's Texas Civil Statutes)>.
249-24 SECTION 6. Section 712.042(b), Health and Safety Code, is
249-25 amended to read as follows:
249-26 (b) The banking department shall receive and disburse
249-27 revenues collected under this chapter in accordance with Section
250-1 2.006, Texas Banking Act <Article 12, Chapter I, The Texas Banking
250-2 Code of 1943 (Article 342-112, Vernon's Texas Civil Statutes)>.
250-3 SECTION 7. Section 1(c), Article 1.19-1, Insurance Code, is
250-4 amended to read as follows:
250-5 (c) A subpoena issued to a bank or other financial
250-6 institution as part of a criminal investigation is not subject to
250-7 Section 30.007, Civil Practice and Remedies Code <Article 5,
250-8 Chapter VII, The Texas Banking Code (Article 342-705, Vernon's
250-9 Texas Civil Statutes)>.
250-10 SECTION 8. Section 1, Article 9.05, Insurance Code, is
250-11 amended to read as follows:
250-12 Sec. 1. Any corporation heretofore chartered under the
250-13 provisions of Article 9.03 of this Act, or its antecedents, Article
250-14 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
250-15 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
250-16 having as one of its powers "to act as trustee under any lawful
250-17 trust committed to it by contract or will, appointment by any court
250-18 having jurisdiction of the subject matter, as trustee, receiver or
250-19 guardian and as executor or guardian under the terms of any will
250-20 and as any administrator of the estates of decedents under the
250-21 appointment of the court" may transfer and assign to a state bank
250-22 or trust company created under the provisions of the Texas Banking
250-23 Act or a predecessor of that Act <Code of 1943>, as amended, all of
250-24 its fiduciary business in which such corporation is named or acting
250-25 as guardian, trustee, executor, administrator or in any other
250-26 fiduciary capacity, whereupon said state bank or trust company
250-27 shall, without the necessity of any judicial action in the courts
251-1 of the State of Texas or any action by the creator or beneficiary
251-2 of such trust or estate, continue the guardianship, trusteeship,
251-3 executorship, administration or other fiduciary relationship, and
251-4 perform all of the duties and obligations of such corporation, and
251-5 exercise all of the powers and authority relative thereto now being
251-6 exercised by such corporation, and provided further that the
251-7 transfer or assignment by such corporation of such fiduciary
251-8 business being conducted by it under the powers granted in its
251-9 original charter, as amended, shall not constitute or be deemed a
251-10 resignation or refusal to act upon the part of such corporation as
251-11 to any such guardianship, trust, executorship, administration, or
251-12 any other fiduciary capacity; and provided further that the naming
251-13 or designation by a testator or the creator of a living trust of
251-14 such corporation to act as trustee, guardian, executor, or in any
251-15 other fiduciary capacity, shall be considered the naming or
251-16 designation of the state bank or trust company and authorizing such
251-17 state bank or trust company to act in said fiduciary capacity. All
251-18 transfers and assignments of fiduciary business by such
251-19 corporations to a state bank or trust company consistent with the
251-20 provisions of this Act are hereby validated.
251-21 SECTION 9. Section 105.001(13), Local Government Code, is
251-22 amended to read as follows:
251-23 (13) "State bank" has the meaning assigned by Section
251-24 1.002(a), Texas Banking Act <The Texas Banking Code (Article
251-25 342-101 et seq., Vernon's Texas Civil Statutes)>.
251-26 SECTION 10. Sections 105A(c) and (d), Texas Probate Code,
251-27 are amended to read as follows:
252-1 (c) No foreign bank or trust company shall establish or
252-2 maintain any branch office, agency or other place of business
252-3 within this state, or shall in any way solicit, directly or
252-4 indirectly, any fiduciary business in this state of the types
252-5 embraced by subdivision (a) hereof. Except as authorized herein or
252-6 as may otherwise be authorized by the laws of this state, no
252-7 foreign bank or trust company shall act in a fiduciary capacity in
252-8 this state. Nothing in this Section shall be construed to
252-9 authorize foreign banks and trust companies to issue or to sell or
252-10 otherwise market or distribute in this state any investment
252-11 certificates, trust certificates, or other types of securities
252-12 (including without limiting the generality of the foregoing any
252-13 securities of the types authorized by Chapter 7 of the Insurance
252-14 Code of 1951 prior to the repeal thereof), or to conduct any
252-15 activities or exercise any powers of the type embraced and
252-16 regulated by the Texas Banking Act <Code of 1943> other than those
252-17 conducted and exercised in a fiduciary capacity under the terms and
252-18 conditions hereof.
252-19 (d) Any foreign bank or trust company acting in a fiduciary
252-20 capacity in this state in strict accordance with the provisions of
252-21 this Section shall not be deemed to be doing business in the State
252-22 of Texas within the meaning of Article 8.01 of the Texas Business
252-23 Corporation Act; shall be deemed qualified to serve in such
252-24 capacity under the provisions of Section 105 of this Code; and
252-25 notwithstanding other law shall not be prohibited <by the
252-26 provisions of Chapter 137, Acts of the 55th Legislature, Regular
252-27 Session, 1957, amending Article 342-902 of the Texas Banking Code
253-1 of 1943,> from using in its name and stationery the terms "bank,"
253-2 "trust," or "bank and trust."
253-3 SECTION 11. Section 73.003(c), Property Code, is amended to
253-4 read as follows:
253-5 (c) This section does not affect the provisions of
253-6 Subchapter B, Chapter 8, Texas Banking Act <Article 6, Chapter IX,
253-7 The Texas Banking Code of 1943 (Article 342-906, Vernon's Texas
253-8 Civil Statutes)>.
253-9 SECTION 12. Section 171.001(b)(1), Tax Code, is amended to
253-10 read as follows:
253-11 (1) "Banking corporation" means each state, national,
253-12 domestic, or foreign bank, including a limited banking association,
253-13 as defined by Section 1.002(a), Texas Banking Act <organized under
253-14 Subchapter C, Chapter III, The Texas Banking Code (Article 342-360
253-15 et seq., Vernon's Texas Civil Statutes)>, and each bank organized
253-16 under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
253-17 (edge corporations), but does not include a bank holding company as
253-18 that term is defined by Section 2, Bank Holding Company Act of 1956
253-19 (12 U.S.C. Sec. 1841).
253-20 SECTION 13. Section 171.1031(c), Tax Code, is amended to
253-21 read as follows:
253-22 (c) To the extent that this subsection is not preempted by
253-23 federal law, the Texas Department of Banking <does not conflict
253-24 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
253-25 342-908, Vernon's Texas Civil Statutes), the Banking Department of
253-26 Texas> is required to appoint a conservator under Subchapter B,
253-27 Chapter 6, Texas Banking Act, to pay the franchise tax <revoke the
254-1 chapter> of any banking corporation certified by the Comptroller as
254-2 being delinquent in the payment of its franchise tax.
254-3 SECTION 14. Section 2.13, Texas Savings Bank Act (Article
254-4 489e, Vernon's Texas Civil Statutes), is amended to read as
254-5 follows:
254-6 Sec. 2.13. Corporate Name. The name of a savings bank must
254-7 include the words "State Savings Bank" or the abbreviation "SSB."
254-8 These words or the abbreviation must be preceded by an appropriate
254-9 descriptive word or words approved by the commissioner. The
254-10 commissioner may not approve the incorporation of a savings bank
254-11 having the same name as another financial institution authorized to
254-12 do business in this state under this Act, the Texas Savings and
254-13 Loan Act (Article 852a, Vernon's Texas Civil Statutes), or the
254-14 Texas Banking Act <The Texas Banking Code (Article 342-101 et seq.,
254-15 Vernon's Texas Civil Statutes)> or a name so nearly resembling the
254-16 name of another financial institution as to be calculated to
254-17 deceive unless the savings bank is formed by the reincorporation,
254-18 reorganization, or consolidation of the other financial institution
254-19 or on the sale of the property or franchise of the other savings
254-20 bank. A person or company, either domestic or foreign, other than
254-21 a state or federal savings bank, may not do business under a name
254-22 or title that contains the words "savings bank," that indicates or
254-23 reasonably implies that the business is the character or kind of
254-24 business carried on or transacted by a savings bank, or that is
254-25 calculated to lead any person to believe that its business is that
254-26 of a savings bank. On application by the commissioner or any
254-27 savings bank, a court of competent jurisdiction may issue an
255-1 injunction to restrain a person or company from violating this
255-2 section.
255-3 SECTION 15. Section 4.07, Texas Savings Bank Act (Article
255-4 489e, Vernon's Texas Civil Statutes), is amended to read as
255-5 follows:
255-6 Sec. 4.07. Fees. The commissioner and the finance
255-7 commission, acting under the rulemaking power delegated by Section
255-8 1.106, Texas Banking Act <Article 5, Chapter II, The Texas Banking
255-9 Code (Article 342-205, Vernon's Texas Civil Statutes)>, and Section
255-10 4.04 of this Act, shall establish the amount of the fees to be
255-11 charged by the commissioner for supervision and examination of
255-12 savings banks, for filing an application or other documents, for
255-13 conducting a hearing, and for other services performed by the
255-14 commissioner and the commission's office and the time and manner of
255-15 payment of the fees. Fees collected by the commissioner shall be
255-16 deposited and used in accordance with Section 1.106, Texas Banking
255-17 Act <(h), Article 5, Chapter II, The Texas Banking Code (Article
255-18 342-205, Vernon's Texas Civil Statutes)>.
255-19 SECTION 16. Section 12.07, Texas Savings Bank Act (Article
255-20 489e, Vernon's Texas Civil Statutes), is amended to read as
255-21 follows:
255-22 Sec. 12.07. Initiation of Rulemaking by Savings Banks. If
255-23 20 percent or more of the savings banks subject to this Act
255-24 petition the commissioner in writing requesting the adoption,
255-25 amendment, or repeal of a rule, the commissioner shall initiate
255-26 rulemaking proceedings under Chapter 2001, Government Code
255-27 <Subsection (e), Article 5, Chapter II, The Texas Banking Code
256-1 (Article 342-205, Vernon's Texas Civil Statutes)>.
256-2 SECTION 17. Section 12.12(b), Texas Savings Bank Act
256-3 (Article 489e, Vernon's Texas Civil Statutes), is amended to read
256-4 as follows:
256-5 (b) Subsection (a) of this section does not apply to this
256-6 Act, the Texas Savings and Loan Act (Article 852a, Vernon's Texas
256-7 Civil Statutes), the Texas Banking Act <The Texas Banking Code
256-8 (Article 342-101 et seq., Vernon's Texas Civil Statutes)>, or the
256-9 Penal Code.
256-10 SECTION 18. Section 11.05, Texas Savings and Loan Act
256-11 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
256-12 as follows:
256-13 Sec. 11.05. Fees. The amount of the fees to be charged by
256-14 the Commissioner for supervision and examination of associations,
256-15 filing of applications and other documents and for other services
256-16 performed by the Commissioner and his office and the time and
256-17 manner of payment thereof shall be fixed by rule and regulation
256-18 adopted by the Commissioner and the Finance Commission, acting
256-19 pursuant to the rule-making power delegated by Section 1.106, Texas
256-20 Banking Act <Article 5, Chapter II, the Texas Banking Code of 1943
256-21 (Article 342-205, Vernon's Texas Civil Statutes)>. All fees
256-22 collected by the Commissioner shall be deposited and used in
256-23 accordance with Section 1.106, Texas Banking Act <(h), Article 5,
256-24 Chapter II, The Texas Banking Code of 1943 (Article 342-205,
256-25 Vernon's Texas Civil Statutes)>.
256-26 SECTION 19. Section 11.20(l), Texas Savings and Loan Act
256-27 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
257-1 as follows:
257-2 (l) The Finance Commission of Texas by rule shall adopt a
257-3 schedule of fees for the filing of applications and the holding of
257-4 hearings. The schedule may be graduated so that those applications
257-5 and hearings that are more difficult to review or administer will
257-6 require a larger fee. An application fee is not refundable on
257-7 denial of the application, but the commissioner may refund a
257-8 portion of the fee if the application is withdrawn before he
257-9 completes review of it. Fees collected under this section shall be
257-10 deposited and used in accordance with Section 1.106, Texas Banking
257-11 Act <(h), Article 5, Chapter II, The Texas Banking Code of 1943
257-12 (Article 342-205, Vernon's Texas Civil Statutes)>.
257-13 SECTION 20. Section A(2), Article 7.06, Texas Miscellaneous
257-14 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
257-15 Statutes), is amended to read as follows:
257-16 (2) "Corporation" means:
257-17 (a) Any corporation, association, or other
257-18 organization incorporated or organized under the Texas Business
257-19 Corporation Act, the Texas Non-Profit Corporation Act (Article
257-20 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
257-21 Banking Act or a predecessor of that Act <The Texas Banking Code of
257-22 1943 (Article 342-1.01 et seq., Vernon's Texas Civil Statutes)>,
257-23 the Insurance Code, the Texas Savings and Loan Act (Article 852a,
257-24 Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
257-25 Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
257-26 Texas Civil Statutes), the Texas Credit Union Act (Article
257-27 2461-1.01 et seq., Vernon's Texas Civil Statutes), the Cooperative
258-1 Association Act (Article 1396-50.01, Vernon's Texas Civil
258-2 Statutes), Articles 1399 through 1407, Revised Statutes, Article
258-3 1448, Revised Statutes, Section 2, Chapter 42, Acts of the 42nd
258-4 Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
258-5 Texas Civil Statutes), the State Housing Law (Article 1528a,
258-6 Vernon's Texas Civil Statutes), the Electric Cooperative
258-7 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
258-8 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
258-9 Statutes), the Automobile Club Services Act (Article 1528d,
258-10 Vernon's Texas Civil Statutes), The Texas Professional Corporation
258-11 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
258-12 Professional Association Act (Article 1528f, Vernon's Texas Civil
258-13 Statutes), the Texas Mutual Trust Investment Company Act (Article
258-14 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
258-15 Safety Code, the Texas Transportation Corporation Act (Article
258-16 1528l, Vernon's Texas Civil Statutes), the Cultural Education
258-17 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
258-18 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
258-19 and Safety Code, Title 4, Agricultural Code, Subchapter A, Chapter
258-20 301, Health and Safety Code, Subchapter B, Chapter 301, Health and
258-21 Safety Code, or the Higher Education Authority Act, Chapter 53,
258-22 Education Code;
258-23 (b) Any corporation, association, or other
258-24 organization incorporated or organized under the laws of this state
258-25 that is governed in whole or in part by the Texas Business
258-26 Corporation Act, the Texas Non-Profit Corporation Act (Article
258-27 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
259-1 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
259-2 Vernon's Texas Civil Statutes); or
259-3 (c) To the extent permitted by federal law, any
259-4 federally chartered bank, savings and loan association, or credit
259-5 union.
259-6 SECTION 21. Subsections (d) and (k), Article 2.01, Title 79,
259-7 Revised Statutes (Article 5069-2.01, Vernon's Texas Civil
259-8 Statutes), are amended to read as follows:
259-9 (d) "Bank" shall mean any person doing business under the
259-10 authority of and as permitted by the Texas Banking Act <Code of
259-11 1943, as amended,> or any person organized under the provisions of
259-12 Title 12, United States Code, Section 21 (U.S.Rev.Statutes 5133)
259-13 and the amendments thereto.
259-14 (k) "Finance Commission" means the Finance Commission of
259-15 Texas <created by the Texas Banking Code of 1943>, or any
259-16 subcommittee created by any rule or regulation of the Finance
259-17 Commission of Texas.
259-18 SECTION 22. Section (1), Article 2.02B, Title 79, Revised
259-19 Statutes (Article 5069-2.02B, Vernon's Texas Civil Statutes), is
259-20 amended to read as follows:
259-21 (1) All money collected under this Act shall be deposited in
259-22 the Office of the Consumer Credit Commissioner expense fund, which
259-23 is created as a special fund in the State Treasury. Money in the
259-24 fund may be used only for the administration of this Act and
259-25 support of The Finance Commission of Texas as provided by Section
259-26 1.011, Texas Banking Act <Article 11C, Chapter I, The Texas Banking
259-27 Code (Article 342-111C, Vernon's Texas Civil Statutes)>. Income
260-1 earned on money deposited in the expense fund shall be credited to
260-2 that fund.
260-3 SECTION 23. Subsection (d), Article 15.01, Title 79, Revised
260-4 Statutes (Article 5069-15.01, Vernon's Texas Civil Statutes), is
260-5 amended to read as follows:
260-6 (d) "Bank" means a person doing business under the
260-7 authority of and as permitted by the Texas Banking Act <The Texas
260-8 Banking Code of 1943, as amended (Article 342-101 et seq., Vernon's
260-9 Texas Civil Statutes)>, and any person organized under Title 12,
260-10 United States Code, as amended.
260-11 SECTION 24. Section 6, Acts of the 60th Legislature, Regular
260-12 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
260-13 is amended to read as follows:
260-14 Sec. 6. ACT CUMULATIVE. The provisions of this Act are
260-15 cumulative of the Texas Banking Act <Code of 1943, as amended>; the
260-16 "Texas Savings and Loan Act," as amended; and Articles 2461 through
260-17 2484, Revised Civil Statutes of Texas, 1925, as amended and the
260-18 amendments thereto, and Section 5 of House Bill No. 47, Acts of the
260-19 46th Legislature, Regular Session, 1939, and Chapter 173, Acts of
260-20 the 51st Legislature, Regular Session, 1949, relating to Credit
260-21 Unions and the amendments thereto.
260-22 SECTION 25. The following laws are repealed:
260-23 (1) Chapters I-X, The Texas Banking Code (Article
260-24 342-101 et seq., Vernon's Texas Civil Statutes);
260-25 (2) Chapter 183, General Laws, Acts of the 44th
260-26 Legislature, Regular Session, 1935 (Article 489b, Vernon's Texas
260-27 Civil Statutes); and
261-1 (3) Article 3921, Revised Statutes.
261-2 SECTION 26. A change in law made by this Act does not
261-3 affect:
261-4 (1) the validity of any action taken by the Finance
261-5 Commission of Texas, banking commissioner of Texas, savings and
261-6 loan commissioner, or State Banking Board before the effective date
261-7 of this Act; or
261-8 (2) a civil, criminal, or administrative proceeding
261-9 completed before the effective date of this Act.
261-10 SECTION 27. A state bank or private bank that exists on the
261-11 effective date of this Act retains the powers provided by its
261-12 charter and is subject to the jurisdiction and control of the
261-13 Banking Commissioner of Texas as if it were a state bank chartered
261-14 under the Texas Banking Act, as added by this Act.
261-15 SECTION 28. (a) The changes in criminal law made by this
261-16 Act apply only to an offense committed on or after the effective
261-17 date of this Act. For purposes of this section, an offense is
261-18 committed before the effective date of this Act if any element of
261-19 the offense occurs before that date.
261-20 (b) The repeal of a criminal law made by this Act does not
261-21 apply to an offense committed under the repealed law before the
261-22 effective date of this Act.
261-23 (c) An offense committed before the effective date of this
261-24 Act is covered by the law in effect when the offense was committed,
261-25 and the former law is continued in effect for that purpose.
261-26 SECTION 29. (a) The change in law made by this Act does not
261-27 affect the standards for approval to be applied to an application
262-1 accepted for filing by the Texas Department of Banking before the
262-2 effective date of this Act under:
262-3 (1) Article 6, Chapter III, The Texas Banking Code
262-4 (Article 342-306, Vernon's Texas Civil Statutes);
262-5 (2) Article 7, Chapter III, The Texas Banking Code
262-6 (Article 342-307, Vernon's Texas Civil Statutes);
262-7 (3) Article 9, Chapter III, The Texas Banking Code
262-8 (Article 342-309, Vernon's Texas Civil Statutes);
262-9 (4) Article 10, Chapter III, The Texas Banking Code
262-10 (Article 342-310, Vernon's Texas Civil Statutes);
262-11 (5) Article 11, Chapter III, The Texas Banking Code
262-12 (Article 342-311, Vernon's Texas Civil Statutes);
262-13 (6) Article 31, Chapter III, The Texas Banking Code
262-14 (Article 342-331, Vernon's Texas Civil Statutes);
262-15 (7) Article 32, Chapter III, The Texas Banking Code
262-16 (Article 342-332, Vernon's Texas Civil Statutes);
262-17 (8) Article 63, Chapter III, The Texas Banking Code
262-18 (Article 342-363, Vernon's Texas Civil Statutes);
262-19 (9) Article 68, Chapter III, The Texas Banking Code
262-20 (Article 342-368, Vernon's Texas Civil Statutes);
262-21 (10) Article 1a, Chapter IV, The Texas Banking Code
262-22 (Article 342-401a, Vernon's Texas Civil Statutes);
262-23 (11) Article 12, Chapter IX, The Texas Banking Code
262-24 (Article 342-912, Vernon's Texas Civil Statutes);
262-25 (12) Article 6, Chapter X, The Texas Banking Code
262-26 (Article 342-1006, Vernon's Texas Civil Statutes).
262-27 (b) The standards for approval under former law applicable
263-1 to the applications listed in Subsection (a) of this section
263-2 continue in effect as if this Act had not been enacted.
263-3 SECTION 30. (a) A principal shareholder or participant that
263-4 is considered to control a state bank under Section 4.001(a), Texas
263-5 Banking Act, as added by this Act, is not required to file a change
263-6 of control application under Section 4.002, Texas Banking Act, as
263-7 added by this Act until the person acquires one or more additional
263-8 shares or participation shares of the state bank on or after the
263-9 effective date of this Act.
263-10 (b) With respect to an office of an out-of-state bank that
263-11 exists on the effective date of this Act, the out-of-state bank
263-12 must file the documentation and information required by Section
263-13 8.003, Texas Banking Act, as added by this Act, before September 1,
263-14 1996.
263-15 (c) With respect to a representative office of a foreign
263-16 bank corporation in this state that exists as of the effective date
263-17 of this Act, the foreign bank corporation must file before
263-18 September 1, 1996:
263-19 (1) a registration of the representative office with
263-20 the banking commissioner containing the information required by
263-21 Section 9.006(a), Texas Banking Act, as added by this Act; and
263-22 (2) with the secretary of state the fees,
263-23 documentation, and information required by Section 9.007, Texas
263-24 Banking Act, as added by this Act.
263-25 SECTION 31. The changes in civil enforcement provisions,
263-26 penalties, and procedures made by Chapter 6, Texas Banking Act, as
263-27 added by this Act, do not apply to a civil enforcement proceeding
264-1 begun by the service of a notice for hearing or proposed civil
264-2 enforcement order by the banking commissioner before the effective
264-3 date of this Act. That proceeding is governed by the law in effect
264-4 when the proceeding was begun, and that law is continued in effect
264-5 for that purpose.
264-6 SECTION 32. (a) If this Act conflicts with another Act of
264-7 the 74th Legislature, Regular Session, 1995:
264-8 (1) the change in law made in the other Act prevails
264-9 and the substance of the change is given effect as part of the
264-10 Texas Banking Act adopted by this Act unless:
264-11 (A) this Act or the conflicting Act expressly
264-12 provides otherwise; or
264-13 (B) it is not possible to give the conflicting
264-14 law effect within the context of the Texas Banking Act, in which
264-15 event the Texas Banking Act prevails; and
264-16 (2) the text of a law that is reenacted in the other
264-17 Act only because of the constitutional requirement that the amended
264-18 law be reenacted at length is superseded by this Act.
264-19 (b) If this Act and another Act of the 74th Legislature,
264-20 Regular Session, 1995, make the same substantive change from the
264-21 current law but differ in text, this Act prevails regardless of the
264-22 relative dates of enactment.
264-23 SECTION 33. Except as provided by Section 2(k) of this Act,
264-24 this Act takes effect September 1, 1995.
264-25 SECTION 34. The importance of this legislation and the
264-26 crowded condition of the calendars in both houses create an
264-27 emergency and an imperative public necessity that the
265-1 constitutional rule requiring bills to be read on three several
265-2 days in each house be suspended, and this rule is hereby suspended.