FINANCE CODE
CHAPTER 32. POWERS, ORGANIZATION, AND FINANCIAL REQUIREMENTS
SUBCHAPTER A. ORGANIZATION AND POWERS IN GENERAL
§ 32.001. ORGANIZATION AND GENERAL POWERS OF STATE
BANK. (a) One or more persons, a majority of whom are residents
of this state, may organize a state bank as a banking association or
a limited banking association.
(b) A state bank may:
(1) receive and pay deposits with or without interest,
discount and negotiate promissory notes, borrow or lend money with
or without security or interest, invest and deal in securities, buy
and sell exchange, coin, and bullion, and exercise incidental
powers as necessary to carry on the business of banking as provided
by this subtitle;
(2) act as agent, or in a substantially similar
capacity, with respect to a financial activity or an activity
incidental or complementary to a financial activity;
(3) act in a fiduciary capacity, without giving bond,
as guardian, receiver, executor, administrator, or trustee,
including a mortgage or indenture trustee;
(4) provide financial, investment, or economic
advisory services;
(5) issue or sell instruments representing pools of
assets in which a bank may invest directly;
(6) with prior written approval of the banking
commissioner, engage in a financial activity or an activity that is
incidental or complementary to a financial activity; and
(7) engage in any other activity, directly or through
a subsidiary, authorized by this subtitle or rules adopted under
this subtitle.
(c) For purposes of other state law, a banking association
is considered a corporation and a limited banking association is
considered a limited liability company. To the extent consistent
with this subtitle, a banking association may exercise the powers
of a Texas business corporation and a limited banking association
may exercise the powers of a Texas limited liability company as
reasonably necessary to enable exercise of specific powers under
this subtitle.
(d) A state bank may contribute to a community fund or to
another charitable, philanthropic, or benevolent instrumentality
conducive to public welfare an amount that the bank's board
considers expedient and in the interests of the bank.
(e) A state bank may be organized or reorganized as a
community development financial institution or may serve as a
community development partner, as those terms are defined by the
Riegle Community Development and Regulatory Improvement Act of 1994
(Pub. L. No. 103-325).
(f) In the exercise of discretion consistent with the
purposes of this subtitle, the banking commissioner may require a
state bank to conduct an otherwise authorized activity through a
subsidiary.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 528, § 4, eff. Sept. 1, 2001.
§ 32.002. ARTICLES OF ASSOCIATION OF STATE
BANK. (a) The articles of association of a state bank must be
signed and acknowledged by each organizer and must contain:
(1) the name of the bank, subject to Subsection (b);
(2) the period of the bank's duration, which may be
perpetual, subject to Subsection (c);
(3) the powers of the bank, which may be stated as:
(A) all powers granted by law to a state bank; or
(B) a list of the specific powers under Section
32.001 that the bank chooses to exercise;
(4) the aggregate number of shares or participation
shares that the bank will be authorized to issue and the number of
classes of shares or participation shares, which may be one or more;
(5) if the shares or participation shares are to be
divided into classes:
(A) the designation of each class and statement
of the preferences, limitations, and relative rights of the shares
or participation shares of each class, which in the case of a
limited banking association may be more fully set forth in the
participation agreement;
(B) the number of shares or participation shares
of each class; and
(C) a statement of the par value of the shares or
participation shares of each class or that the shares or
participation shares are to be without par value;
(6) any provision limiting or denying to shareholders
or participants the preemptive right to acquire additional or
treasury shares or participation shares of the bank;
(7) any provision granting the right of shareholders
or participants to cumulative voting in the election of directors
or managers;
(8) the aggregate amount of consideration to be
received for all shares or participation shares initially issued by
the bank and a statement that:
(A) all authorized shares or participation
shares have been subscribed; and
(B) all subscriptions received provide for the
consideration to be fully paid in cash before issuance of the
charter;
(9) any provision consistent with law that the
organizers elect to set forth in the articles of association for the
regulation of the internal affairs of the bank or that is otherwise
required by this subtitle to be set forth in the articles of
association;
(10) the street address of the bank's initial home
office; and
(11) either:
(A) the number of directors or managers
constituting the initial board and the names and street addresses
of the persons who are to serve as directors or managers until the
first annual meeting of shareholders or participants or until
successor directors or managers have been elected and qualified;
or
(B) the statement described by Subsection (d).
(b) The banking commissioner may determine that a proposed
bank name is potentially misleading to the public and require the
organizers to select a different name.
(c) A state bank, other than a private bank, organized
before August 31, 1993, is considered to have perpetual existence,
notwithstanding a contrary statement in its articles of
association, unless after September 1, 1995, the bank amends its
articles of association to reaffirm its limited duration.
(d) The organizers of a limited banking association that
will not have fewer than five or more than 25 participants may
include in the articles of association a statement that management
is vested in a board composed of all participants, with management
authority vested in each participant in proportion to the
participant's contribution to capital as adjusted from time to time
to properly reflect any additional contribution, and the names and
street addresses of the persons who are to be managing
participants.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.003. APPLICATION FOR STATE BANK CHARTER; STANDARDS
FOR APPROVAL. (a) An application for a state bank charter must be
made under oath and in the form required by the banking
commissioner, who shall inquire fully into the identity and
character of each proposed director, manager, officer, managing
participant, and principal shareholder or participant. The
application must be accompanied by all charter fees and deposits
required by law.
(b) The banking commissioner shall grant a state bank
charter only if the commissioner determines that the organizers
have established that public convenience and advantage will be
promoted by the establishment of the state bank. In determining
whether public convenience and advantage will be promoted, the
banking commissioner shall consider the convenience of the public
to be served and whether:
(1) the organizational and capital structure and
amount of initial capitalization is adequate for the business plan;
(2) the anticipated volume and nature of business
indicates a reasonable probability of success and profitability
based on the market sought to be served;
(3) the officers, directors, managers, and managing
participants as a group have sufficient banking experience,
ability, standing, competence, trustworthiness, and integrity to
justify a belief that the bank will operate in compliance with law
and that success of the bank is probable;
(4) each principal shareholder or participant has
sufficient experience, ability, standing, competence,
trustworthiness, and integrity to justify a belief that the bank
will be free from improper or unlawful influence or interference
with respect to the bank's operation in compliance with law; and
(5) the organizers are acting in good faith.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 528, § 5, eff. Sept. 1, 2001.
§ 32.004. NOTICE AND INVESTIGATION OF CHARTER
APPLICATION. (a) The organizers shall solicit comments and
protests by publishing notice of the application, its date of
filing, and the identity of the organizers, in the form and
frequency specified by the banking commissioner, in a newspaper of
general circulation in the county in which the bank is to be
located, or in another publication or location as directed by the
banking commissioner.
(b) At the expense of the organizers, the banking
commissioner shall thoroughly investigate the application. The
banking commissioner shall prepare a written report of the
investigation, and any person, other than a person protesting under
Section 32.005, may request a copy of the nonconfidential portions
of the application and written report as provided by Chapter 552,
Government Code.
(c) Rules adopted under this subtitle may specify the
confidential or nonconfidential character of information obtained
by the department under this chapter. Except as provided by
Subchapter D, Chapter 31, or in rules regarding confidential
information, the financial statement of a proposed officer,
director, manager, or managing participant is confidential and not
subject to public disclosure.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 412, § 2.07, eff. Sept. 1, 2001.
§ 32.005. PROTEST; HEARING; DECISION ON CHARTER
APPLICATION. (a) Any person may file a protest of an application.
(b) If a protest of the application is not filed before the
15th day after the date the organizers publish notice under Section
32.004(a), the banking commissioner may immediately determine
whether the necessary conditions set forth in Section 32.003(b)
have been established, based on the application and investigation.
The banking commissioner shall approve the charter application or
set the charter application for hearing.
(c) If a protest of the application is timely filed,
accompanied by the fees and deposits required by law, or if the
banking commissioner sets a hearing, the banking commissioner shall
conduct a public hearing and one or more prehearing conferences and
opportunities for discovery as the banking commissioner considers
advisable and consistent with the applicable law. A person
protesting the application is entitled to the confidential portion
of the application, subject to a protective order that restricts
the use of confidential information to the charter proceedings.
(d) Based on the record of the hearing, the banking
commissioner shall determine whether the application meets the
requirements of Section 32.003(b) and shall enter an order granting
or denying the charter.
(e) The banking commissioner may make approval of an
application conditional. The banking commissioner shall include
any conditions in the order approving the application.
(f) Chapter 2001, Government Code, does not apply to a
charter application filed for the purpose of assuming the assets
and liabilities of a financial institution considered by the
banking commissioner to be in hazardous condition.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. A state
bank may not engage in the business of banking until it receives a
certificate of authority from the banking commissioner. The
banking commissioner may not deliver the certificate of authority
until the bank has:
(1) received cash for the issuance of all authorized
shares or participation shares in the full amount subscribed;
(2) elected or qualified the initial officers and
directors or managers, as appropriate, named in the application for
charter or other officers and directors or managers approved by the
banking commissioner; and
(3) complied with all the other requirements of this
subtitle relating to the organization of state banks.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.007. DEADLINE TO BEGIN BUSINESS. If the state bank
does not open and engage in the business of banking within six
months after the date of the granting of its charter, the banking
commissioner may forfeit the charter or cancel the conditional
approval of application for charter without judicial action.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.008. APPLICATION OF GENERAL CORPORATE
LAW. (a) The Texas Business Corporation Act and the Texas
Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
Vernon's Texas Civil Statutes) apply to a banking association, and
the Texas Limited Liability Company Act (Article 1528n, Vernon's
Texas Civil Statutes) applies to a limited banking association, to
the extent not inconsistent with this subtitle or the proper
business of a state bank, except that:
(1) a reference in those Acts to the secretary of state
means the banking commissioner unless the context requires
otherwise; and
(2) the right of shareholders or participants to
cumulative voting in the election of directors or managers exists
only if granted by the bank's articles of association.
(b) The finance commission may adopt rules to limit or
refine the applicability of the laws listed by Subsection (a) to a
state bank or to alter or supplement the procedures and
requirements of those laws applicable to an action taken under this
chapter.
(c) Unless expressly authorized by this subtitle or a rule
adopted under this subtitle, a state bank may not take an action
authorized by a law listed by Subsection (a) regarding its
corporate status, its capital structure, or a matter of corporate
governance, of the type for which those laws would require a filing
with the secretary of state if the bank were a business corporation,
without submitting the filing to the banking commissioner and
obtaining the banking commissioner's prior written approval of the
action.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 528, § 6, eff. Sept. 1, 2001.
§ 32.009. PARITY BETWEEN STATE AND NATIONAL
BANKS. (a) Section 16(a), Article XVI, Texas Constitution,
empowers the legislature to authorize the incorporation of state
banks and provide for a system of state regulation and control of
state banks that will adequately protect and secure depositors and
creditors. Section 16(c), Article XVI, Texas Constitution, grants
to state banks created by virtue of the power vested in the
legislature by Section 16(a) of that article the same rights and
privileges that are or may be granted to national banks domiciled in
this state. The legislature finds that Section 16(c) of that
article does not restrict the legislature's power to provide a
system of state regulation under Section 16(a) of that article that
differs from the regulatory scheme imposed on national banks under
federal law or prevent the finance commission, acting under
authority granted by the legislature for the purpose of
implementing this subtitle, from adopting rules that differ from
federal statutes and regulations or that reasonably regulate the
method or manner by which a state bank exercises its rights and
privileges if the rules are adopted after due consideration of the
factors listed in Section 31.003(b). The legislature further finds
that Section 16(c), Article XVI, Texas Constitution, does not limit
any rights or powers specifically given to state banks by the laws
of this state.
(b) A state bank that intends to exercise a right or
privilege granted to national banks that is not authorized for
state banks under the statutes and rules of this state shall submit
a letter to the banking commissioner describing in detail the
activity in which the bank intends to engage and the specific
authority of a national bank to engage in that activity. The bank
shall attach copies, if available, of relevant federal law,
regulations, and interpretive letters. The bank may begin to
perform the proposed activity after the 30th day after the date the
banking commissioner receives the bank's letter unless the banking
commissioner specifies an earlier or later date or prohibits the
activity. The banking commissioner may prohibit the bank from
performing the activity only if the banking commissioner finds
that:
(1) a national bank domiciled in this state does not
possess the specific right or privilege to perform the activity the
bank seeks to perform; or
(2) the performance of the activity by the bank would
adversely affect the safety and soundness of the bank.
(c) The banking commissioner may extend the 30-day period
under Subsection (b) if the banking commissioner determines that
the bank's letter raises issues requiring additional information or
additional time for analysis. If the 30-day period is extended, the
bank may perform the proposed activity only on prior written
approval by the banking commissioner, except that the banking
commissioner must approve or prohibit the proposed activity or
convene a hearing under Section 31.201 not later than the 60th day
after the date the banking commissioner receives the bank's letter.
If a hearing is convened, the banking commissioner must approve or
prohibit the proposed activity not later than the 30th day after the
date the hearing is completed.
(d) A state bank that is denied the requested right or
privilege to engage in an activity by the banking commissioner
under this section may appeal as provided by Sections 31.202,
31.203, and 31.204 or may resubmit a letter under this subsection
with additional information or authority relevant to the banking
commissioner's determination. A denial is immediately final for
purposes of appeal.
(e) To effectuate the Texas Constitution, the finance
commission may adopt rules implementing the method or manner in
which a state bank exercises specific rights and privileges granted
under Section 16(c), Article XVI, Texas Constitution, including
rules regarding the exercise of rights and privileges that would be
prohibited to state banks but for Section 16(c) of that article.
The finance commission may not adopt rules under this subsection
unless it considers the factors listed in Section 31.003(b) and
finds that:
(1) national banks domiciled in this state possess the
rights or privileges to perform activities the rule would permit
state banks to perform; and
(2) the rules contain adequate safeguards and
controls, consistent with safety and soundness, to address the
concern of the legislature evidenced by the state law the rules
would impact.
(f) The exercise of rights and privileges by a state bank in
compliance with and in the manner authorized by this section is not
a violation of any statute of this state.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.010. ADDITIONAL POWERS. (a) Notwithstanding
another law, a Texas state bank may perform an act, own property, or
offer a product or service that is at the time permissible within
the United States for a depository institution organized under
federal law or the law of this state or another state, if the
banking commissioner approves the exercise of the power as provided
by this section, subject to the same limitations and restrictions
applicable to the other depository institution by pertinent law,
except to the extent the limitations and restrictions are modified
by rules adopted under Subsection (e). This section may not be used
by a Texas state bank to alter or negate the application of the laws
of this state with respect to:
(1) establishment and maintenance of a branch in this
state or another state or country;
(2) permissible interest rates and loan fees
chargeable in this state;
(3) fiduciary duties owed to a client or customer by
the bank in its capacity as fiduciary in this state;
(4) consumer protection laws applicable to
transactions in this state; or
(5) licensing and regulatory requirements
administered by a functional regulatory agency in this state, as
defined by Section 31.303, including licensing and regulatory
requirements pertaining to:
(A) insurance activities;
(B) securities activities; and
(C) real estate development, marketing, and
sales activities.
(b) A state bank that intends to exercise a power, directly
or through a subsidiary, granted by Subsection (a) that is not
otherwise authorized for state banks under the statutes of this
state shall submit a letter to the banking commissioner describing
in detail the power that the bank proposes to exercise and the
specific authority of another depository institution to exercise
the power. The bank shall attach copies, if available, of relevant
law, regulations, and interpretive letters. The bank may begin to
exercise the proposed power after the 30th day after the date the
banking commissioner receives the bank's letter unless the banking
commissioner specifies an earlier or later date or prohibits the
activity. The banking commissioner may prohibit the bank from
exercising the power only if the banking commissioner finds that:
(1) specific authority does not exist for another
depository institution to exercise the proposed power;
(2) if the state bank is insured by the Federal Deposit
Insurance Corporation, the state bank is prohibited from exercising
the power pursuant to Section 24, Federal Deposit Insurance Act (12
U.S.C. Section 1831a), and related regulations; or
(3) the exercise of the power by the bank would
adversely affect the safety and soundness of the bank.
(c) The banking commissioner may extend the 30-day period
under Subsection (b) if the banking commissioner determines that
the bank's letter raises issues requiring additional information or
additional time for analysis. If the 30-day period is extended, the
bank may exercise the proposed power only on prior written approval
by the banking commissioner, except that the banking commissioner
must approve or prohibit the proposed power or convene a hearing
under Section 31.201 not later than the 60th day after the date the
banking commissioner receives the bank's letter. If a hearing is
convened, the banking commissioner must approve or prohibit the
proposed power not later than the 30th day after the date the
hearing is completed.
(d) A state bank that is denied the requested power by the
banking commissioner under this section may appeal as provided by
Sections 31.202, 31.203, and 31.204 or may resubmit a letter under
this section with additional information or authority relevant to
the banking commissioner's determination. A denial is immediately
final for purposes of appeal.
(e) To effectuate this section, the finance commission may
adopt rules implementing the method or manner in which a state bank
exercises specific powers granted under this section, including
rules regarding the exercise of a power that would be prohibited to
state banks under state law but for this section. The finance
commission may not adopt rules under this subsection unless it
considers the factors listed in Section 31.003(b) and finds that:
(1) the conditions for prohibition by the banking
commissioner under Subsection (b) do not exist; and
(2) if the rights and privileges would be prohibited
to state banks under other state law, the rules contain adequate
safeguards and controls, consistent with safety and soundness, to
address the concern of the legislature evidenced by the state law
the rules would affect.
(f) The exercise of a power by a state bank in compliance
with and in the manner authorized by this section is not a violation
of any statute of this state.
Added by Acts 1999, 76th Leg., ch. 344, § 2.006, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 528, § 7, eff. Sept.
1, 2001.
§ 32.011. FINANCIAL ACTIVITIES. (a) The finance
commission by rule may determine that an activity not otherwise
approved or authorized for a state bank under this subtitle or other
law is:
(1) a financial activity;
(2) incidental to a financial activity; or
(3) complementary to a financial activity.
(b) In adopting a rule under Subsection (a), the finance
commission shall consider:
(1) the purposes of this subtitle and the
Gramm-Leach-Bliley Act (Pub. L. No. 106-102);
(2) changes or reasonably expected changes in the
marketplace in which state banks compete;
(3) changes or reasonably expected changes in the
technology for delivering financial services;
(4) whether the activity is necessary or appropriate
to allow a state bank to:
(A) compete effectively with another company
seeking to provide financial services;
(B) efficiently deliver information and services
that are financial in nature through the use of technological
means, including an application necessary to protect the security
or efficacy of systems for the transmission of data or financial
transactions; or
(C) offer customers available or emerging
technological means for using financial services or for the
document imaging of data;
(5) whether the activity would pose a substantial risk
to the safety or soundness of a state bank or the financial system
generally;
(6) if otherwise determined to be permissible, whether
the conduct of the activity by a state bank should be qualified
through the imposition of reasonable and necessary conditions to
protect the public and require appropriate regard for safety and
soundness of the bank and the financial system generally; and
(7) whether a state bank would be permitted to engage
in the activity under applicable federal law, including 12 U.S.C.
Section 1831a, and related regulations.
(c) A rule adopted by the finance commission under this
section does not alter or negate applicable licensing and
regulatory requirements administered by a functional regulatory
agency of this state, as defined by Section 31.303, including
licensing and regulatory requirements pertaining to:
(1) insurance activities;
(2) securities activities; and
(3) real estate development, marketing, and sales
activities.
Added by Acts 2001, 77th Leg., ch. 528, § 8, eff. Sept. 1, 2001.
SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN CAPITAL AND
SURPLUS
§ 32.101. AMENDMENT OR RESTATEMENT OF STATE BANK
ARTICLES OF ASSOCIATION. (a) A state bank that has been granted a
certificate of authority may amend or restate its articles of
association for any lawful purpose, including the creation of
authorized but unissued shares or participation shares in one or
more classes or series.
(b) An amendment authorizing the issuance of shares or
participation shares in series must contain:
(1) the designation of each series and a statement of
any variations in the preferences, limitations, and relative rights
among series to the extent that the preferences, limitations, and
relative rights are to be established in the articles of
association; and
(2) a statement of any authority to be vested in the
bank's board to establish series and determine the preferences,
limitations, and relative rights of each series.
(c) A limited banking association may not amend its articles
of association to extend its period of existence for a perpetual
period or for any period of years, unless the period of existence is
expressly contingent on the events resulting in dissolution of the
limited banking association under Section 33.208.
(d) Amendment or restatement of the articles of association
of a state bank and approval of the bank's board and shareholders or
participants must be made or obtained as provided by the Texas
Business Corporation Act for the amendment or restatement of
articles of incorporation except as otherwise provided by this
subtitle or rules adopted under this subtitle. The original and one
copy of the articles of amendment or restated articles of
association must be filed with the banking commissioner for
approval. Unless the submission presents novel or unusual
questions, the banking commissioner shall approve or reject the
amendment or restatement not later than the 31st day after the date
the banking commissioner considers the submission informationally
complete and accepted for filing. The banking commissioner may
require the submission of additional information as considered
necessary to an informed decision to approve or reject any
amendment or restatement of articles of association under this
section. If the banking commissioner finds that the amendment or
restatement conforms to law and any conditions imposed by the
banking commissioner, and any required filing fee has been paid,
the banking commissioner shall:
(1) endorse the face of the original and copy of the
amendment or restatement with the date of approval and the word
"Approved";
(2) file the original of the amendment or restatement
in the department's records; and
(3) deliver a certified copy of the amendment or
restatement to the bank.
(e) An amendment or restatement, if approved, takes effect
on the date of approval unless the amendment or restatement
provides for a different effective date.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
SHARES. (a) If the articles of association expressly give the
board of a state bank authority to establish shares or
participation shares in series and determine the preferences,
limitations, and relative rights of each series, the board may do so
only in compliance with this section and any rules adopted under
this subtitle.
(b) A series of shares or participation shares may be
established in the manner provided by the Texas Business
Corporation Act as if the state bank were a domestic corporation,
but the shares or participation shares of the series may not be
issued and sold without the prior written approval of the banking
commissioner under Section 32.103. The bank shall file the
original and one copy of the statement of action required by the
Texas Business Corporation Act with the banking commissioner.
(c) Unless the submission presents novel or unusual
questions, the banking commissioner shall approve or reject the
series not later than the 31st day after the date the banking
commissioner considers the submission informationally complete and
accepted for filing. The banking commissioner may require the
submission of additional information as considered necessary to an
informed decision to approve or reject a proposed series under this
section.
(d) If the banking commissioner finds that the interests of
depositors and creditors will not be adversely affected by the
series, that the series conforms to law and any conditions imposed
by the banking commissioner, and that any required filing fee has
been paid, the banking commissioner shall:
(1) endorse the face of the original and copy of the
statement with the date of approval and the word "Approved";
(2) file the original of the statement in the
department's records; and
(3) deliver a certified copy of the statement to the
state bank.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.103. CHANGE IN OUTSTANDING CAPITAL AND
SURPLUS. (a) A state bank may not reduce or increase its
outstanding capital and surplus through dividend, redemption,
issuance of shares or participation shares, or otherwise, without
the prior written approval of the banking commissioner, except as
permitted by this section or rules adopted under this subtitle.
(b) Unless restricted by rule, prior written approval is not
required for an increase in capital and surplus accomplished
through:
(1) issuance of shares of common stock or their
equivalent in participation shares for cash;
(2) declaration and payment of pro rata share
dividends as defined by the Texas Business Corporation Act; or
(3) adoption by the board of a resolution directing
that all or part of undivided profits be transferred to capital or
surplus.
(c) Prior approval is not required for a decrease in capital
or surplus caused by losses in excess of undivided profits.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.104. CAPITAL NOTES OR DEBENTURES. (a) With the
prior written approval of the banking commissioner, a state bank
may at any time, through action of its board and without requiring
action of its shareholders or participants, issue and sell its
capital notes or debentures. The capital notes or debentures must
be subordinate to the claims of depositors and may be subordinate to
other claims, including the claims of other creditors or the
shareholders or participants.
(b) Capital notes or debentures may be convertible into
shares or participation shares of any class or series. The issuance
and sale of convertible capital notes or debentures are subject to
satisfaction of preemptive rights, if any, to the extent provided
by law.
(c) Without the prior written approval of the banking
commissioner, a state bank may not pay interest due or principal
repayable on outstanding capital notes or debentures when the bank
is in hazardous condition or is insolvent, or to the extent that
payment will cause the bank to be in hazardous condition or
insolvent, as determined by the banking commissioner.
(d) The amount of any outstanding capital notes or
debentures that meet the requirements of this section and that are
subordinated to unsecured creditors of the bank may be included in
equity capital of the bank for purposes of determining hazardous
condition or insolvency and for other purposes provided by rules
adopted under this subtitle.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. BANK OFFICES
§ 32.201. CONDUCT OF THE BUSINESS OF BANKING. (a) A
state bank may engage in the banking business at its home office, at
an approved branch office location, and through electronic
terminals. A drive-in facility must be approved as a branch if it
is more than 2,000 feet from the nearest wall of the bank's home
office or another approved branch office.
(b) A function of a state bank that does not involve banking
contact with the public may be conducted at any location without
prior written approval of the banking commissioner. The finance
commission may adopt rules further defining functions of a state
bank that are not required to be conducted at an approved location.
(c) The finance commission by rule under Section 32.009 may
authorize a new form of banking facility. The banking commissioner
may approve a new form of banking facility other than as provided by
this subchapter if the banking commissioner does not have a
significant supervisory or regulatory concern regarding the
proposed facility.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.202. HOME OFFICE. (a) Each state bank must have
and continuously maintain in this state a home office. The home
office must be a location at which the bank does business with the
public and keeps its corporate books and records. At least one
officer of the bank must maintain an office at the home office. In
addition to the registered agent for the bank, if one is maintained
pursuant to Section 201.103, each officer at the home office is an
agent for service of process for the bank.
(b) A state bank may change its home office to one of its
previously established branch locations in this state, if the
location that is the home office before the change is to remain as a
branch of the bank, by filing a written notice with the banking
commissioner. The notice must set forth the name of the bank, the
street address of its home office before the change, the street
address of the location to which the home office is to be changed,
and a copy of the resolution adopted by the bank's board authorizing
the change. The change of home office takes effect on the 31st day
after the date the banking commissioner receives the notice unless
the banking commissioner consents to a different effective date.
(c) A state bank may change its home office to any location
in this state, other than as permitted by Subsection (b), on prior
written approval of the banking commissioner. The banking
commissioner shall grant an application under this subsection if
the banking commissioner does not have a significant supervisory or
regulatory concern regarding the proposed banking facility, the
applicant, or an affiliate of the applicant. Any standard
established by the banking commissioner or the finance commission
regarding the establishment of a branch under Section 32.203
applies to an application for a change of home office that is
subject to this subsection, except as otherwise provided by rules
adopted under this subtitle.
(d) If the proposed relocation of the bank's home office
would effect an abandonment of all or part of the community served
by the bank, the bank must establish to the satisfaction of the
banking commissioner that the abandonment is consistent with the
original determination of public necessity for the establishment of
a bank at that location.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.007, eff. Sept. 1, 1999.
§ 32.203. BRANCH OFFICES. (a) A state bank may
establish and maintain a branch office at any location on prior
written approval of the banking commissioner. If the banking
commissioner does not have a significant supervisory or regulatory
concern regarding the proposed branch, the applicant, or an
affiliate of the applicant, the banking commissioner shall approve
the application.
(b) The finance commission may adopt rules establishing
additional standards for the approval of branch offices.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.204. LOAN PRODUCTION OFFICES. (a) A state bank
may establish one or more loan production offices for the purpose of
soliciting loans or equivalent transactions, accepting loan
applications, and performing ministerial duties related to
consummating a granted loan, such as execution of loan documents
and dispensation of loan proceeds by check or other draft,
including a certified or cashier's check, but not by cash. A credit
decision, commitment to make a loan, and preparation of a check or
other draft to dispense loan proceeds must occur at the bank's home
office or a branch office and may not occur at a loan production
office.
(b) The bank shall notify the banking commissioner in
writing before the 31st day before the date of establishment of a
loan production office, except that the banking commissioner may
waive or shorten the period if the banking commissioner does not
have a significant supervisory or regulatory concern regarding the
bank or its planned loan production office.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 412, § 2.08, eff. Sept. 1, 2001.
SUBCHAPTER D. MERGER
§ 32.301. MERGER AUTHORITY. (a) Two or more financial
institutions, corporations, or other entities with the authority to
participate in a merger, at least one of which is a state bank, may
adopt and implement a plan of merger in accordance with this
section. The merger may not be made without the prior written
approval of the banking commissioner if any surviving, new, or
acquiring entity that is a party to the merger or created by the
terms of the merger is a state bank or is not a financial
institution.
(b) Implementation of the merger by the parties and approval
of the board, shareholders, participants, or owners of the parties
must be made or obtained in accordance with the Texas Business
Corporation Act as if the state bank were a domestic corporation and
all other parties to the merger were foreign corporations and other
entities, except as may be otherwise provided by applicable rules.
(c) A consummated merger has the effect provided by the
Texas Business Corporation Act. A separate application is not
required to relocate the home office of a surviving state bank or to
grant authority to a surviving bank to operate new branch offices
that previously existed as part of a merging financial institution
if the intent of the surviving bank is clearly stated as part of the
plan of merger.
(d) A merger under this subchapter does not confer
additional powers on a state bank beyond the powers conferred by
other provisions of this subtitle.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.302. APPROVAL OF BANKING COMMISSIONER. (a) If
the merger is subject to the prior written approval of the banking
commissioner, the original articles of merger and a number of
copies of the articles equal to the number of surviving, new, and
acquiring entities must be filed with the banking commissioner. On
this filing, the banking commissioner shall investigate the
condition of the merging parties. The banking commissioner may
require the submission of additional information the banking
commissioner determines necessary to an informed decision to
approve or reject a merger under this subchapter.
(b) The banking commissioner shall approve the merger only
if:
(1) each resulting state bank:
(A) has complied with the laws of this state
relating to the organization and operation of state banks; and
(B) will be solvent and have adequate
capitalization for its business and location;
(2) all deposit and other liabilities of each state
bank that is a party to the merger have been properly discharged or
otherwise assumed or retained by a financial institution;
(3) each surviving, new, or acquiring entity that is
not a depository institution will not be engaged in the
unauthorized business of banking, and each state bank will not be
engaged in a business other than banking or a business incidental to
banking;
(4) the parties have complied with the laws of this
state; and
(5) all conditions imposed by the banking commissioner
have been satisfied or otherwise resolved.
(c) If the banking commissioner approves the merger and
finds that all required filing fees and investigative costs have
been paid, the banking commissioner shall:
(1) endorse the face of the original and each copy of
the articles of merger with the date of approval and the word
"Approved";
(2) file the original of the articles of merger in the
department's records; and
(3) deliver a certified copy of the articles of merger
to each surviving, new, or acquiring entity.
(d) An approved merger takes effect on the date of approval
unless the merger agreement provides for a different effective
date.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.303. RIGHTS OF DISSENTERS FROM MERGER. A
shareholder, participant, or participant-transferee may dissent
from the merger to the extent, and by following the procedure
provided, by the Texas Business Corporation Act or any rules
adopted under this subtitle.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.304. LIMITATION ON CONTROL OF DEPOSITS. (a) A
merger is not permitted under this subchapter if, on consummation
of the transaction, the resulting state bank, including all insured
depository institution affiliates of the resulting state bank,
would control 20 percent or more of the total amount of deposits in
this state held by all insured depository institutions in this
state.
(b) On request of the banking commissioner the applicant
shall provide supplemental information to the banking commissioner
to aid in a determination under this section, including information
that is more current than or in addition to information in the most
recently available summary of deposits, reports of condition, or
similar reports filed with or produced by state or federal
authorities.
(c) In this section, "deposit" and "insured depository
institution" have the meanings assigned by Section 3, Federal
Deposit Insurance Act (12 U.S.C. Section 1813), as amended.
Added by Acts 1999, 76th Leg., ch. 344, § 2.008, eff. Sept. 1,
1999.
SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
§ 32.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER
FINANCIAL INSTITUTION. (a) A state bank with the prior written
approval of the banking commissioner may purchase all or
substantially all of the assets of another financial institution.
(b) Except as otherwise expressly provided by another
statute, the purchase of all or part of the assets of the selling
institution does not make the purchasing bank responsible for any
liability or obligation of the selling institution that the
purchasing bank does not expressly assume.
(c) Except as otherwise provided by this subtitle, this
subchapter does not govern or prohibit the purchase by a state bank
of all or part of the assets of a corporation or other entity that is
not a financial institution.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.402. AUTHORITY TO ACT AS DISBURSING
AGENT. (a) The purchasing bank may hold the purchase price and
any additional money delivered to it by the selling institution in
trust for, or as a deposit to the credit of, the selling institution
and may act as agent of the selling institution in disbursing the
money in trust or on deposit by paying the depositors and creditors
of the selling institution.
(b) If the purchasing bank acts under written contract of
agency approved by the banking commissioner that specifically names
each depositor and creditor and the amount to be paid each, and if
the agency is limited to the purely ministerial act of paying those
depositors and creditors the amounts due them as determined by the
selling institution and reflected in the contract of agency and
does not involve discretionary duties or authority other than the
identification of the depositors and creditors named, the
purchasing bank:
(1) may rely on the contract of agency and the
instructions included in it; and
(2) is not responsible for:
(A) any error made by the selling institution in
determining its liabilities, the depositors and creditors to whom
the liabilities are due, or the amounts due the depositors and
creditors; or
(B) any preference that results from the payments
made under the contract of agency and the instructions included in
it.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.403. LIQUIDATION OF SELLING INSTITUTION. If the
selling financial institution is at any time after the sale of
assets voluntarily or involuntarily closed for liquidation by a
state or federal regulatory agency, the purchasing bank shall pay
to the receiver of the selling institution the balance of the money
held by it in trust or on deposit for the selling institution and
not yet paid to the depositors and creditors of the selling
institution. Without further action the purchasing bank is
discharged from all responsibilities to the selling institution or
the selling institution's receiver, depositors, creditors,
shareholders, participants, or participant-transferees.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.404. PAYMENT TO DEPOSITORS AND CREDITORS. The
purchasing bank may pay a depositor or creditor of the selling
institution the amount to be paid the person under the terms of the
contract of agency by opening an account in the name of the
depositor or creditor, crediting the account with the amount to be
paid the depositor or creditor under the terms of the agency
contract, and mailing or personally delivering a duplicate deposit
ticket evidencing the credit to the depositor or creditor at the
person's address shown in the records of the selling institution.
The relationship between the purchasing bank and the depositor or
creditor is that of debtor to creditor only to the extent of the
credit reflected by the deposit ticket.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.405. SALE OF ASSETS. (a) The board of a state
bank, with the prior written approval of the banking commissioner,
may cause the bank to sell all or substantially all of its assets
without shareholder or participant approval if:
(1) the banking commissioner finds the interests of
depositors and creditors are jeopardized because of insolvency or
imminent insolvency and that the sale is in their best interest;
and
(2) the Federal Deposit Insurance Corporation or its
successor approves the transaction and agrees to provide assistance
to the prospective buyer under 12 U.S.C. Section 1823(c) or a
comparable law unless the deposits of the bank are not insured.
(b) A sale under this section must include an assumption and
promise by the buyer to pay or otherwise discharge:
(1) all of the bank's liabilities to depositors;
(2) all of the bank's liabilities for salaries of the
bank's employees incurred before the date of the sale;
(3) obligations incurred by the banking commissioner
arising out of the supervision or sale of the bank; and
(4) fees and assessments due the department.
(c) This section does not affect the banking commissioner's
right to take action under another law. The sale by a state bank of
all or substantially all of its assets with shareholder or
participant approval is considered a voluntary dissolution and
liquidation and is governed by Subchapter B, Chapter 36.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 32.406. LIMITATION ON CONTROL OF DEPOSITS. (a) A
purchase of assets is not permitted under Section 32.401 if, on
consummation of the transaction, the acquiring state bank,
including all insured depository institution affiliates of the
resulting state bank, would control 20 percent or more of the total
amount of deposits in this state held by all insured depository
institutions in this state.
(b) On request of the banking commissioner the applicant
shall provide supplemental information to the banking commissioner
to aid in a determination under this section, including information
that is more current than or in addition to information in the most
recently available summary of deposits, reports of condition, or
similar reports filed with or produced by state or federal
authorities.
(c) In this section, "deposit" and "insured depository
institution" have the meanings assigned by Section 3, Federal
Deposit Insurance Act (12 U.S.C. Section 1813), as amended.
Added by Acts 1999, 76th Leg., ch. 344, § 2.009, eff. Sept. 1,
1999.
SUBCHAPTER F. EXIT OF STATE BANK OR ENTRY OF ANOTHER FINANCIAL
INSTITUTION
§ 32.501. MERGER OR CONVERSION OF STATE BANK INTO
ANOTHER FINANCIAL INSTITUTION. (a) Subject to Subtitle G, a
state bank may act as necessary under and to the extent permitted by
the laws of the United States, this state, another state, or another
country to merge or convert into another financial institution, as
that term is defined by Section 201.101.
(b) The merger or conversion by the state bank must be made
and approval of its board, shareholders, or participants must be
obtained in accordance with the Texas Business Corporation Act as
if the state bank were a domestic corporation and all other parties
to the transaction, if any, were foreign corporations and other
entities, except as provided by rule. For purposes of this
subsection, a conversion is considered a merger into the successor
form of financial institution.
(c) The state bank does not cease to be a state bank subject
to the supervision of the banking commissioner unless:
(1) the banking commissioner has been given written
notice of the intention to merge or convert before the 31st day
before the date of the proposed transaction;
(2) the bank has published notice of the transaction,
in the form and frequency specified by the banking commissioner,
in:
(A) a newspaper of general circulation published
in the county of its home office or, if such a newspaper is not
published in the county, in an adjacent county; and
(B) other locations that the banking
commissioner considers appropriate;
(3) the bank has filed with the banking commissioner:
(A) a copy of the application filed with the
successor regulatory authority, including a copy of each contract
evidencing or implementing the merger or conversion, or other
documents sufficient to show compliance with applicable law;
(B) a certified copy of all minutes of board
meetings and shareholder or participant meetings at which action
was taken regarding the merger or conversion; and
(C) a publisher's certificate showing
publication of the required notice;
(4) the banking commissioner determines that:
(A) all deposit and other liabilities of the
state bank are fully discharged, assumed, or otherwise retained by
the successor form of financial institution;
(B) any conditions imposed by the banking
commissioner for the protection of depositors and creditors have
been met or otherwise resolved; and
(C) any required filing fees have been paid; and
(5) the bank has received a certificate of authority
to do business as the successor financial institution.
(d) Section 32.304 applies to a proposed merger under this
section.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.010, eff. Sept. 1, 1999.
§ 32.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
BANK. (a) A financial institution, as that term is defined by
Section 201.101, may apply to the banking commissioner for
conversion into a state bank on a form prescribed by the banking
commissioner and accompanied by any required fee if the institution
follows the procedures prescribed by the laws of the United States,
this state, another state, or another country governing the exit of
the financial institution for the purpose of conversion into a
state bank from the regulatory system applicable before the
conversion. A banking association or limited banking association
may convert its organizational form under this section.
(b) A financial institution applying to convert into a state
bank may receive a certificate of authority to do business as a
state bank if the banking commissioner finds that:
(1) the financial institution is not engaging in a
pattern or practice of unsafe and unsound banking practices;
(2) the financial institution has adequate
capitalization for a state bank to engage in business at the same
locations as the financial institution is engaged in business
before the conversion;
(3) the financial institution can be expected to
operate profitably after the conversion;
(4) the officers, directors, managers, and managing
participants of the financial institution as a group have
sufficient banking experience, ability, standing, competence,
trustworthiness, and integrity to justify a belief that the
financial institution will operate as a state bank in compliance
with law;
(5) each principal shareholder or participant has
sufficient experience, ability, standing, competence,
trustworthiness, and integrity to justify a belief that the
financial institution will be free from improper or unlawful
influence or interference with respect to the financial
institution's operation as a state bank in compliance with law; and
(6) if the converting financial institution did not
have general depository powers and the state bank will have those
powers, the factors set forth in Section 32.003(b) are satisfied.
(c) The banking commissioner may:
(1) request additional information considered
necessary to an informed decision under this section;
(2) perform an examination of the converting financial
institution at the expense of the converting financial institution;
and
(3) require that examination fees be paid before a
certificate of authority is issued.
(d) In connection with the application, the converting
financial institution must:
(1) submit a statement of the law governing the exit of
the financial institution from the regulatory system applicable
before the conversion and the terms of the transition into a state
bank; and
(2) demonstrate that all applicable law has been fully
satisfied.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.010, eff. Sept. 1, 1999.
