BILL ANALYSIS

 

 

Senate Research Center

S.B. 1646

 

By: Parker

 

Business & Commerce

 

5/25/2023

 

Enrolled

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

The Texas Department of Banking (TDB) has observed some statutory language that requires technical correction or enhancement to address regulatory issues that have come up since last legislative session.

 

S.B. 1646 amends sections of the Finance Code to align provisions already existing for banks by applying those same provisions to state trust companies.

 

S.B. 1646's Section 1 amends Section 182.506(b) of the Texas Finance Code by striking "banking experience" and instead using the word "fiduciary" for the requirements necessary for officers and directors of a trust institution when applying for the conversion of a state trust company.

 

Section 2 makes changes to Section 184.002(c) to mirror provisions for banks in relation to a state trust company's investment in and deprecation of a state trust company's facilities, furniture, fixtures, and equipment.

 

Section 3 adds a prior written approval of the banking commissioner for the purpose of a state trust company investing its restricted capital in real property and removes the second anniversary provision when disposing of real property when it ceases to be a state trust company facility as provided by Section 184.002(b).

 

Section 4 clarifies that S.B. 1646 only applies to applications for conversion filed on or after the effective date of this Act. An application for conversion filed before this Act is governed by the law in effect on the date the application was filed, and the former law is continued in effect for that purpose.

 

S.B. 1646 amends current law relating to the regulation of state trust companies.

 

RULEMAKING AUTHORITY

 

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Section 182.502(b), Finance Code, as follows:

 

(b)  Authorizes a trust institution applying to convert into a state trust company to receive a certificate of authority to do business as a state trust company if the banking commissioner finds that:

 

(1)-(3) makes no changes to these subdivisions;

 

(4) the officers and directors of the trust institution as a group have sufficient fiduciary, rather than banking, experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the trust institution will operate as a state trust company in compliance with law; and

 

(5) makes no changes to this subdivision.

 

SECTION 2. Amends Section 184.002(c), Finance Code, as follows:

 

(c)  Requires a state trust company to comply with regulatory accounting principles in accounting for its investment in and depreciation of trust company facilities, furniture, fixtures, and equipment.

 

Deletes existing text requiring a state trust company to dispose of any real property subject to Subsection (a) (relating to prohibiting a state trust company from investing an amount in excess of the company's restricted capitol in state trust company facilities, furniture, fixtures, or equipment, without commissioner approval) not later than the fifth anniversary of the date the real property was acquired, except as otherwise provided by rules adopted under Subtitle F (Trust Companies); the date the real property ceases to be used as a state trust company facility; or the date the real property ceases to be a state trust company facility as provided by Subsection (b) (relating to certain real property that is not improved and occupied by a state trust company ceasing to be a state trust company after a certain period of time).

 

SECTION 3. Amends Sections 184.003(a) and (c), Finance Code, as follows:

 

(a)  Prohibits a state trust company from investing its restricted capital in real property except:

 

(1) makes a nonsubstantive change to this subdivision;

 

(2) with the prior written approval of the banking commissioner; or

 

(3) creates this subdivision from existing text.

 

(c) Requires a state trust company to dispose of any real property subject to Subsection (a) not later than the fifth anniversary of the date the real property:

 

(1)-(2) redesignates Paragraphs (A) and (B) as Subdivisions (1) and (2); or

 

(3) ceases to be a state trust company facility as provided by Section 184.002(b).

 

Deletes existing text requiring a state trust company to dispose of any real property subject to Subsection (a) not later than the second anniversary of the date the real property ceases to be a state trust company facility as provided by Section 184.002(b).

 

SECTION 4. Makes application of Section 182.502(b), Finance Code, as amended by this Act, prospective.

 

SECTION 5. Effective date: upon passage or September 1, 2023.