By Shapleigh S.B. No. 1493
77R7827 ATP-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to requirements for a financial institution that serves as
1-3 a depository of public funds.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by
1-6 adding Chapter 278 to read as follows:
1-7 CHAPTER 278. DEPOSIT OF PUBLIC FUNDS
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 278.001. DEFINITIONS. In this chapter:
1-10 (1) "Branch" means a location of a financial
1-11 institution, other than the financial institution's home office, at
1-12 which the financial institution does business.
1-13 (2) "County in which the financial institution does
1-14 business" means any county in which:
1-15 (A) the financial institution has a branch or a
1-16 home office; or
1-17 (B) a public agency that deposits funds in the
1-18 financial institution is wholly or partly located.
1-19 (3) "Depository of public funds" means a financial
1-20 institution in which funds are deposited by a public agency,
1-21 including funds deposited under Chapter 105 or 116, Local
1-22 Government Code, and funds deposited by the comptroller under
1-23 Chapter 404, Government Code.
1-24 (4) "Home office" means a location at which:
2-1 (A) the financial institution does business;
2-2 (B) the financial institution keeps its
2-3 corporate books and records; and
2-4 (C) at least one executive officer of the
2-5 financial institution maintains an office.
2-6 (5) "Financial institution" has the meaning assigned
2-7 by Section 201.101.
2-8 (6) "Public agency" means a state agency, political
2-9 subdivision, or publicly owned utility.
2-10 (7) "State agency" means any institution, agency, or
2-11 organ of state government established by the constitution or laws
2-12 of this state, including any department, bureau, board, commission,
2-13 office, or council of this state.
2-14 Sec. 278.002. RESTRICTION ON DEPOSITORY OF PUBLIC FUNDS. A
2-15 financial institution doing business in this state may serve as a
2-16 depository of public funds only if the financial institution:
2-17 (1) files the reports required by Sections 278.011 and
2-18 278.014;
2-19 (2) complies with the advertising regulations under
2-20 Section 278.012; and
2-21 (3) meets the rating requirements under Section
2-22 278.013.
2-23 (Sections 278.003-278.010 reserved for expansion
2-24 SUBCHAPTER B. REQUIREMENTS FOR DEPOSITORIES OF PUBLIC FUNDS
2-25 Sec. 278.011. ANNUAL REPORT OF DEPOSITS AND LOANS. A
2-26 financial institution doing business in this state may serve as a
2-27 depository of public funds only if the financial institution, on or
3-1 before June 30 of each year, submits an itemized report to the
3-2 state agency that regulates the financial institution or, if the
3-3 financial institution is not regulated by an agency of this state,
3-4 to the Texas Department of Banking, covering the preceding calendar
3-5 year and stating, separately for each county in which the financial
3-6 institution does business, the financial institution's:
3-7 (1) deposits;
3-8 (2) loans for home purchases or home improvements;
3-9 (3) commercial loans, as defined by Section 306.001;
3-10 (4) loans for small businesses, as defined by Section
3-11 2006.001, Government Code; and
3-12 (5) loans for the purchase or lease of goods or
3-13 services for personal, family, or household use.
3-14 Sec. 278.012. ADVERTISEMENT OF SMALL BUSINESS LOAN SERVICES.
3-15 A financial institution may serve as a depository of public funds
3-16 only if the financial institution does not display or publish, or
3-17 cause to be displayed or published, except to the extent permitted
3-18 by federal law, a written advertisement in a newspaper that
3-19 contains information regarding small business loan services offered
3-20 by the financial institution unless the advertisement states the
3-21 financial institution's prime lending rate for small businesses
3-22 printed in at least eight-point type.
3-23 Sec. 278.013. RATING OF FINANCIAL INSTITUTION. A financial
3-24 institution that has been assigned a rating below "satisfactory
3-25 record of meeting community credit needs" under 12 U.S.C. Section
3-26 2906 may not serve as a depository of public funds.
3-27 Sec. 278.014. ANNUAL REPORT OF COMMUNITY LOANS. A financial
4-1 institution doing business in this state may serve as a depository
4-2 of public funds only if the financial institution, on or before
4-3 June 30 of each year, submits an itemized report to the state
4-4 agency that regulates the financial institution or, if the
4-5 financial institution is not regulated by an agency of this state,
4-6 to the Texas Department of Banking, covering the five preceding
4-7 calendar years and describing, separately for each year and each
4-8 county in which the financial institution does business:
4-9 (1) the community reinvestment initiatives and special
4-10 loan programs offered by the financial institution, including:
4-11 (A) the funding level for each program; and
4-12 (B) the amount of funds actually disbursed in
4-13 the program;
4-14 (2) the total number and amount of loans provided for
4-15 small businesses, as defined by Section 2006.001, Government Code;
4-16 (3) the total number and amount of loans for small
4-17 businesses, as defined by Section 2006.001, Government Code,
4-18 excluding extensions of credit made pursuant to a credit card
4-19 transaction;
4-20 (4) the total number and amount of loans guaranteed in
4-21 whole or in part by the Small Business Administration;
4-22 (5) the business planning and loan application
4-23 assistance programs offered to customers;
4-24 (6) the financial institution's total number of
4-25 employees, the number of employees who transferred to another
4-26 county or state, and the number of employees who left employment
4-27 with the financial institution; and
5-1 (7) the amount of charitable contributions.
5-2 (Sections 278.015-278.030 reserved for expansion)
5-3 SUBCHAPTER C. WITHDRAWAL OF PUBLIC FUNDS
5-4 Sec. 278.031. WITHDRAWAL WITHOUT PENALTY. The depository
5-5 contract between a financial institution and a public agency must
5-6 authorize the withdrawal without penalty of the public funds on
5-7 deposit if:
5-8 (1) the financial institution fails to make a report
5-9 under Section 278.011 or 278.014;
5-10 (2) the financial institution does not comply with
5-11 Section 278.012; or
5-12 (3) the rating of the financial institution is changed
5-13 to a rating below "satisfactory record of meeting community credit
5-14 needs" under 12 U.S.C. Section 2906.
5-15 Sec. 278.032. MANDATORY WITHDRAWAL. If a financial
5-16 institution is assigned a rating below "satisfactory record of
5-17 meeting community credit needs" under 12 U.S.C. Section 2906, the
5-18 public agency that deposited the funds shall take immediate action
5-19 to transfer all public funds on deposit with the institution to a
5-20 financial institution that complies with this chapter.
5-21 SECTION 2. Section 404.0212, Government Code, is amended by
5-22 adding Subsection (g) to read as follows:
5-23 (g) Not later than August 1 of each year, the comptroller
5-24 shall publish and make available for public inspection a report
5-25 that shows the ratings assigned under 12 U.S.C. Section 2906 to the
5-26 financial institutions that serve as depositories of public funds,
5-27 as defined by Section 278.001, Finance Code, for which the
6-1 comptroller has information of the ratings.
6-2 SECTION 3. (a) A financial institution must submit the first
6-3 reports under Sections 278.011 and 278.014, Finance Code, as added
6-4 by this Act, on or before June 30, 2002.
6-5 (b) Section 278.012, Finance Code, as added by this Act,
6-6 applies only to a written advertisement published or displayed in a
6-7 newspaper on or after September 1, 2001.
6-8 (c) Except as provided by Subsection (d) of this section,
6-9 the state and each state agency, political subdivision, and
6-10 publicly owned utility shall ensure that funds deposited by the
6-11 entity are deposited in compliance with Chapter 278, Finance Code,
6-12 as added by this Act, not later than January 1, 2003.
6-13 (d) A depository contract executed on or after the effective
6-14 date of this Act must comply with Chapter 278, Finance Code, as
6-15 added by this Act.
6-16 SECTION 4. This Act takes effect September 1, 2001.