TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE A. BANKS
Subchapter A. General Provisions
This subtitle may be cited as the Texas Banking Act.
(a) In this subtitle:
(1) "Affiliate" means a company that directly or indirectly controls, is controlled by, or is under common control with a bank or other company.
(2) "Bank" means a state or national bank. If the context requires, the term includes a bank as defined by Section 201.002(a)(4) that is organized under the laws of another state or country.
(3) "Bank holding company" has the meaning assigned by the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.) or a successor to that Act.
(4) "Banking" means the performance of the exclusive depository institution functions of accepting deposits and discounting loans and the performance of related activities that are not exclusive to banks or other depository institutions, including paying drafts or checks, lending money, and providing related financial services authorized by this subtitle.
(5) "Banking association" means a state bank that is organized under this subtitle as a corporation, authorized to issue shares of stock, and controlled by its shareholders.
(6) "Banking commissioner" means the banking commissioner of Texas or a person designated by the banking commissioner and acting under the banking commissioner´s direction and authority.
(7) "Board" means the board of directors of, or a person or group of persons acting in a comparable capacity for, a state bank or other entity. As the context requires, the term includes the board of managers of a limited banking association.
(8) "Branch" means a location of a bank, other than the bank´s home office, at which the bank engages the public in the business of banking. The term does not include:
(A) a drive-in facility located not more than 2,000 feet from the nearest wall of the home office or an approved branch office of the bank;
(B) a night depository;
(C) an electronic terminal;
(D) a deposit or loan production office as described by Section 32.204;
(E) a state or federally licensed armored car service or other courier service transporting items for deposit or payment, unless:
(i) the risk of loss of items in the custody of the service is borne by the employing bank; or
(ii) the items in the custody of the service are considered to be in customer accounts at the employing bank or federally insured through the employing bank;
(F) a location at which the bank offers exclusively nondepository financial products or services to the public, including financial, investment, or economic advisory services;
(G) a location that combines permissible non-branch functions or facilities; or
(H) another office or facility as provided by this subtitle or a rule adopted under this subtitle.
(9) "Capital" means:
(A) the sum of:
(i) the par value of all shares of the state bank having a par value that have been issued;
(ii) the consideration set by the board for all shares of the state bank without par value that have been issued, except a part of that consideration that:
(a) has been actually received;
(b) is less than all of that consideration; and
(c) the board, by resolution adopted not later than the 60th day after the date of issuance of those shares, has allocated to surplus with the prior approval of the banking commissioner; and
(iii) an amount not included in Subparagraphs (i) and (ii) that has been transferred to capital of the state bank, on the payment of a share dividend or on adoption by the board of a resolution directing that all or part of surplus be transferred to capital, minus each reduction made as permitted by law; less
(B) all amounts otherwise included in Paragraphs (A)(i) and (ii) that are attributable to the issuance of securities by the state bank and that the banking commissioner determines, after notice and an opportunity for hearing, should be classified as debt rather than equity securities.
(10) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 110, §14.]
(10-a) "Commercial activity" means an activity in which a bank holding company, financial holding company, national bank, or national bank financial subsidiary may not engage under United States law.
(11) "Company" includes a bank, trust company, corporation, partnership, association, business trust, or another trust.
(12) "Conservator" means the banking commissioner or an agent of the banking commissioner exercising the powers and duties provided by Subchapter B, Chapter 35.
(13) "Control" means:
(A) the ownership of or ability or power to vote, directly, acting through one or more other persons, or otherwise indirectly, 25 percent or more of the outstanding shares of a class of voting securities of a bank or other company;
(B) the ability to control the election of a majority of the board of a bank or other company;
(C) the power to exercise, directly or indirectly, a controlling influence over the management or policies of the bank or other company as determined by the banking commissioner after notice and an opportunity for hearing; or
(D) the conditioning of the transfer of 25 percent or more of the outstanding shares of a class of voting securities of a bank or other company on the transfer of 25 percent or more of the outstanding shares of a class of voting securities of another bank or other company.
(14) "Department" means the Texas Department of Banking.
(15) "Deposit" means the establishment of a debtor-creditor relationship represented by the agreement of the deposit debtor to act as a holding, paying, or disbursing agent for the deposit creditor. The term:
(A) includes:
(i) an unpaid balance of money that is received by the deposit debtor in the usual course of business in exchange for conditional or unconditional credit to a commercial, checking, savings, or time account of the deposit creditor or the creditor´s designee, or that is evidenced by a certificate of deposit or similar instrument, a certified check or draft drawn against a deposit account, or a letter of credit or traveler´s check on which the deposit debtor is primarily liable, but excluding an obligation arising under Chapter 151;
(ii) money or credit given for money received by the deposit debtor in the usual course of business for a special purpose, including money:
(a) held as escrow money, as security for an obligation due to the deposit debtor or another person, or as security for a loan;
(b) left with a deposit debtor by a deposit creditor to meet maturing obligations that are not yet due; and
(c) held by the deposit debtor to meet an acceptance or letter of credit;
(iii) an outstanding draft, cashier´s check, money order, or other officer´s check issued by the deposit debtor in the usual course of business for any purpose, including payment for services, dividends, or purchases; and
(iv) an obligation that the finance commission by rule defines as a deposit liability, except that the term may not include money received for immediate application to reduction of an indebtedness; and
(B) does not include an obligation that this subtitle or finance commission rule determines not to be a deposit liability.
(16) "Depository institution" means an entity with the power to accept deposits under applicable law.
(17) "Discount" means the retention by a lender of advance interest from loan proceeds. The term does not include the purchase of a promissory note or similar instrument at less than its face value unless the party selling the note is liable on the note as a maker, endorser, or guarantor.
(18) "Drive-in facility" means a facility offering one or more banking services other than originating or establishing a lending or deposit relationship solely to persons who remain outside the facility.
(19) "Electronic terminal" means an electronic device, other than a telephone or modem operated by a customer of a depository institution, through which a person may initiate an electronic fund transfer, as defined by 15 U.S.C. Section 1693a(6). The term includes a point-of-sale terminal, automated teller machine, or cash dispensing machine.
(20) "Equity capital" means the amount by which the total assets of a state bank exceed the total liabilities of the bank.
(21) "Equity security" means:
(A) stock, other than adjustable rate preferred stock and money market (auction rate) preferred stock;
(B) a certificate of interest or participation in a profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share or participation share, investment contract, voting-trust certificate, or partnership interest;
(C) a security immediately convertible at the option of the holder without payment of substantial additional consideration into a security described by this subdivision;
(D) a security carrying a warrant or right to subscribe to or purchase a security described by this subdivision; and
(E) a certificate of interest or participation in, temporary or interim certificate for, or receipt for a security described by this subdivision that evidences an existing or contingent equity ownership interest.
(22) "Federal savings association" means a savings and loan association organized under federal law.
(23) "Federal savings bank" means a savings bank organized under federal law.
(24) "Finance commission" means the Finance Commission of Texas.
(25) "Financial institution" means a bank, savings association, or savings bank maintaining an office, branch, or agency office in this state.
(26) [Repealed eff. Sept. 1, 1999, by Acts 1999, 76th Leg., ch. 344, §9.002.]
(27) [Repealed eff. Sept. 1, 1999, by Acts 1999, 76th Leg., ch. 344, §9.002.]
(28) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.]
(29) "Hazardous condition" means:
(A) a refusal by a state bank to permit examination of its books, papers, accounts, records, or affairs by the banking commissioner;
(B) a circumstance or condition in which an unreasonable risk of substantial loss is threatened to the depositors, creditors,or shareholders of a state bank, including a circumstance or condition in which a state bank:
(i) has inadequate equity capital, or the adequacy of its equity capital is threatened;
(ii) has concentrated an excessive or unreasonable portion of its assets in a type or character of loan or investment;
(iii) violates or refuses to comply with this subtitle, another statute or rule applicable to state banks, or a final and enforceable order of the banking commissioner;
(iv) is in a condition that renders the continuation of a particular business practice hazardous to the public or to its depositors and creditors;
(v) conducts business in an unsafe and unsound manner; or
(vi) is insolvent; or
(C) a violation by a state bank of a condition of its chartering or an agreement entered into between the bank and the banking commissioner or the department.
(30) "Home office" means a location registered with the banking commissioner as the bank´s home office at which:
(A) the bank does business with the public;
(B) the bank keeps its corporate books and records; and
(C) at least one officer of the bank maintains an office.
(31) "Insolvent" means a circumstance or condition in which a state bank:
(A) is unable or lacks the means to meet its current obligations as they come due in the regular and ordinary course of business, even if the value of its assets exceeds its liabilities;
(B) has equity capital equal to two percent or less of its assets, as determined under regulatory accounting principles;
(C) fails to maintain deposit insurance with the Federal Deposit Insurance Corporation or its successor if the banking commissioner determines that deposit insurance is necessary for the safe and sound operation of the bank;
(D) sells or attempts to sell substantially all of its assets or merges or attempts to merge substantially all of its assets or business with another entity other than as provided by Chapter 32; or
(E) attempts to dissolve or liquidate other than as provided by Chapter 36.
(32) "Investment security" means a marketable obligation evidencing indebtedness of a person in the form of a bond, note, debenture, or commonly known as an investment security, subject to further definition by rule adopted under this subtitle.
(33) "Limited banking association" means a state bank that is organized under this subtitle as a limited liability company, authorized to issue participation shares, and controlled by its participants.
(34) "Loans and extensions of credit" means direct or indirect advances of money by a state bank to a person that are conditioned on the obligation of the person to repay the money or that are repayable from specific property pledged by or on behalf of the person. The term includes a contractual liability of a state bank to advance money to or on behalf of a person, indebtedness evidenced by a lease financing transaction in which the bank is lessor, an overdraft funded by the bank on behalf of a person except for an intraday or daylight overdraft, or another indebtedness not otherwise classified as an investment security. The term does not include accrued and unpaid interest or discounted interest.
(35) "Manager" means a person elected to the board of a limited banking association.
(36) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.]
(37) "National bank" means a banking association organized under 12 U.S.C. Section 21.
(38) "Officer" means the presiding officer of the board, the principal executive officer, or another officer appointed by the board of a state bank or other company, or a person or group of persons acting in a comparable capacity for the state bank or other company.
(39) "Operating subsidiary" means a company for which a state bank has the ownership, ability, or power to vote, directly, acting through one or more other persons, or otherwise indirectly, more than 50 percent of the outstanding shares of each class of voting securities or its equivalent of the company.
(40) "Participant" means an owner of a participation share in a limited banking association.
(41) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.]
(42) "Participation agreement" means the instrument stating the agreement among the participants of a limited banking association relating to the rights and duties of the participants, including:
(A) allocations of income, loss, deduction, credit, distributions, liquidation rights, redemption rights, and liabilities of participants;
(B) procedures for elections and voting by participants; and
(C) any other matter not prohibited by or inconsistent with this subtitle.
(43) "Participation shares" means the units into which the proprietary interests of a limited banking association are divided or subdivided by means of classes, series, relative rights, or preferences.
(44) "Principal shareholder" means a person who owns or has the ability or power to vote, directly, acting through one or more other persons, or otherwise indirectly, 10 percent or more of the outstanding shares or participation shares of any class of voting securities of a bank or other company.
(45) "Regulatory accounting principles" means generally accepted accounting principles as modified by rules adopted under:
(A) this subtitle; or
(B) an applicable federal statute or regulation.
(46) "Savings association" means a state or federal savings association.
(47) "Savings bank" means a state or federal savings bank.
(48) "Shareholder" means an owner of a share in a banking association. As the context requires, the term includes a participant.
(49) "Shares" means the units into which the proprietary interests of a banking association are divided or subdivided by means of classes, series, relative rights, or preferences. As the context requires, the term includes participation shares.
(50) "State bank" means a banking association or limited banking association organized or reorganized under this subtitle, including an association organized under the laws of this state before September 1, 1995, with the express power to receive and accept deposits and possessing other rights and powers granted by this subtitle expressly or by implication. The term does not include a savings association, savings bank, or credit union. If the context requires, the term includes a bank as defined by Section 201.002(a)(4) that is organized under the laws of another state or country.
(51) "State savings association" means a savings and loan association organized under the laws of this state.
(52) "State savings bank" means a savings bank organized under or subject to Subtitle C. If the context requires, the term includes a savings bank organized under the laws of another state.
(53) "Subsidiary" means a bank or company that is controlled by another person. The term includes a subsidiary of a subsidiary.
(54) "Supervisor" means the banking commissioner or an agent of the banking commissioner exercising the powers and duties specified in Subchapter B, Chapter 35.
(55) "Surplus" means the amount by which the assets of a state bank exceed its liabilities, capital, and undivided profits.
(55-a) "Third-party service provider" means a person who performs activities relating to the business of banking on behalf of a depository institution for the depository institution's customers or on behalf of another person directly engaged in providing financial services for the person's customers. The term:
(A) includes a person who:
(i) provides data processing services;
(ii) performs activities in support of the provision of financial services, including lending, transferring funds, fiduciary activities, trading activities, and deposit taking activities;
(iii) for the purpose of furnishing to third parties reports indicating a person's creditworthiness, credit standing, or credit capacity, regularly engages in the practice of assembling or evaluating, and maintaining, public record information and credit account information from persons who furnish that information regularly and in the ordinary course of business; or
(iv) provides Internet-related services, including web services, processing electronic bill payments, developing and maintaining mobile applications, system and software development and maintenance, and security monitoring; and
(B) does not include a provider of an interactive computer service or a general audience Internet or communications platform, except to the extent that the service or platform is specially designed or adapted for the business of banking and activities relating to the business of banking.
(56) "Unauthorized activity" means an act or practice in this state by a person without a charter, license, permit, registration, or other authority issued or granted by the banking commissioner or other appropriate regulatory authority for which such a charter, license, permit, registration, or other authority is required.
(57) "Undivided profits" means the part of equity capital of a state bank equal to the balance of its net profits, income, gains, and losses since the date of its formation, minus subsequent distributions to shareholders and transfers to surplus or capital under share dividends or appropriate board resolutions. The term includes amounts allocated to undivided profits as a result of a merger.
(58) "Voting security" means a share, or other evidence of proprietary interest in a state bank or other company that has as an attribute the right to vote or participate in the election of the board of the state bank or other company, regardless of whether the right is limited to the election of fewer than all of the board members. The term includes a security that is convertible or exchangeable into a voting security.
(b) The definitions shall be liberally construed to accomplish the purposes of this subtitle.
(c) The finance commission by rule may adopt other definitions to accomplish the purposes of this subtitle.
(a) The finance commission may adopt rules to accomplish the purposes of this subtitle and Chapters 11, 12, and 132 , including rules necessary or reasonable to:
(1) implement and clarify this subtitle and Chapters 11, 12, and 13;
(2) preserve or protect the safety and soundness of state banks;
(3) grant at least the same rights and privileges to state banks that are or may be granted to national banks domiciled in this state;
(4) recover the cost of maintaining and operating the department and the cost of enforcing this subtitle and other applicable law by imposing and collecting ratable and equitable fees for notices, applications, and examinations; and
(5) facilitate the fair hearing and adjudication of matters before the banking commissioner and the finance commission.3
(b) In adopting rules, the finance commission shall consider the need to:
(1) promote a stable banking environment;
(2) provide the public with convenient, safe, and competitive banking services;
(3) preserve and promote the competitive position of state banks with regard to national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system; and
(4) allow for economic development in this state.
(c) The presence or absence in this subtitle or Chapter 11, 12, or 13 of a specific reference to rules regarding a particular subject does not enlarge or diminish the rulemaking authority provided by this section.
(a) Except as otherwise provided by law, a person other than a depository institution authorized to conduct business in this state may not conduct the business of banking or represent to the public that it is conducting the business of banking in this state.
(b) This section does not prohibit the continued operation of a bank, trust company, bank and trust company, or savings bank by:
(1) a person, partnership, trustee, or trustee operating under a common law declaration of trust who:
(A) was actively engaged in the operation of the institution on June 13, 1923; or
(B) operated the institution for any period of at least 20 years before June 13, 1923, and resumed operations of the institution not later than June 13, 1924; or
(2) a legal representative or successor of a person or entity described by Subdivision (1).
(a) A person may not use the term "bank," "bank and trust," or a similar term or a character, ideogram, phonogram, phrase, or foreign language word in its name, stationery, or advertising in a manner that would imply to the public that the person is engaged in the business of banking in this state.
(b) Subsection (a) does not apply to a federally insured depository institution organized under the laws of this state, another state, the United States, or a foreign sovereign state to the extent that the depository institution or other entity is:
(1) authorized under its charter or the laws of this state or the United States to use a term, word, character, ideogram, phonogram, or phrase prohibited by Subsection (a); and
(2) authorized by the laws of this state or the United States to conduct the activities in which it is engaged in this state.
(c) A person violating this section is subject to an enforcement action initiated by the banking commissioner under Subchapter C, Chapter 35, except that the maximum administrative penalty under Section 35.211 for violation involving only Subsection (a) is $500 for each day the violation continues.
(a) The provisions of the Business Organizations Code regarding liability, defenses, and indemnification of a director, officer, agent, or employee of a corporation apply to a director, officer, agent, or employee of a depository institution in this state. Except as limited by those provisions, a disinterested director, officer, or employee of a depository institution may not be held personally liable in an action seeking monetary damages arising from the conduct of the depository institution´s affairs unless the damages resulted from the gross negligence or wilful or intentional misconduct of the person during the person´s term of office or service with the depository institution.
(b) A director, officer, or employee of a depository institution is disinterested with respect to a decision or transaction if:
(1) the person fully discloses any interest in the decision or transaction and does not participate in the decision or transaction; or
(2) the decision or transaction does not involve any of the following:
(A) personal profit for the person through dealing with the depository institution or usurping an opportunity of the depository institution;
(B) buying or selling an asset of the depository institution in a transaction in which the person has a direct or indirect pecuniary interest;
(C) dealing with another depository institution or other person in which the person is a director, officer, or employee or otherwise has a significant direct or indirect financial interest; or
(D) dealing with a family member of the person.
(c) A director or officer who, in performing the person´s duties and functions, acts in good faith and reasonably believes that reliance is warranted is entitled to rely on information, including an opinion, report, financial statement or other type of statement or financial data, decision, judgment, or performance, prepared, presented, made, or rendered by:
(1) one or more directors, officers, or employees of the depository institution, or of an entity under joint or common control with the depository institution, who the director or officer reasonably believes merit confidence;
(2) legal counsel, a public accountant, or another person who the director or officer reasonably believes merits confidence; or
(3) a committee of the board of which the director is not a member.
(d) In this section, "family member" means a person´s:
(1) spouse;
(2) minor child; or
(3) adult child who resides in the person´s home.
(a) An officer, director, or employee of a bank that has its main office or a branch located in this state with fewer than 500 shareholders or of a bank holding company with fewer than 500 shareholders that controls a bank that has its main office or a branch located in this state is exempt from the registration and licensing provisions of The Securities Act (Title 12, Government Code) with respect to that person´s participation in a transaction, including a sale, involving securities issued by:
(1) the bank or bank holding company of which that person is an officer, director, or employee;
(2) a bank holding company that controls the bank of which that person is an officer, director, or employee; or
(3) a bank controlled by the bank holding company of which that person is an officer, director, or employee.
(b) A person may not be compensated for services performed under the exemption provided by this section.
Subchapter B. Regulation of Banking by Banking Commissioner
The banking commissioner shall:
(1) supervise and regulate, as provided by this subtitle, Subtitles F and G, and Chapter 12, state banks, trust companies, and state-licensed foreign bank branches, agencies, and representative offices;
(2) administer and enforce this subtitle, Subtitles F and G, and Chapter 12 in person, through a deputy banking commissioner or another officer or employee of the department, or through a supervisor, conservator, or other agent; and
(3) administer and enforce laws other than this subtitle, Subtitles F and G, and Chapter 12 as directed by those other laws.
(a) The banking commissioner may issue interpretive statements containing matters of general policy to guide the public and state banks, and may amend or repeal a published interpretive statement by issuing an amended statement or notice of repeal of a statement.
(b) An interpretive statement may be disseminated by newsletter, via an electronic medium such as the internet, in a volume of statutes or related materials published by the banking commissioner or others, or by other means reasonably calculated to notify persons affected by the interpretive statement. Notice of an amended or withdrawn statement must be disseminated in a substantially similar manner as the affected statement was originally disseminated.
(a) In response to a specific request from a member of the public or the banking industry, the banking commissioner may issue an opinion directly or through a deputy banking commissioner or department attorney.
(b) If the banking commissioner determines that the opinion is useful for the general guidance of the public, state banks, or trust companies, the commissioner may disseminate the opinion by newsletter, via an electronic medium such as the internet, in a volume of statutes or related materials published by the banking commissioner or others, or by other means reasonably calculated to notify persons affected by the opinion. A published opinion must be redacted to preserve the confidentiality of the requesting party unless the requesting party consents to be identified in the published opinion.
(c) The banking commissioner may amend or repeal a published opinion by issuing an amended opinion or notice of repeal of an opinion and disseminating the opinion or notice in a substantially similar manner as the affected statement or opinion was originally disseminated. The requesting party, however, may rely on the original opinion if:
(1) all material facts were originally disclosed to the banking commissioner;
(2) the safety and soundness of the affected bank will not be affected by further reliance on the original opinion; and
(3) the text and interpretation of relevant, governing provisions of this subtitle or Chapter 12 have not been changed by legislative or judicial action.
An interpretive statement or opinion issued under this subchapter does not have the force of law and is not a rule for the purposes of Chapter 2001, Government Code, unless adopted by the finance commission as provided by Chapter 2001, Government Code. An interpretive statement or opinion is an administrative construction of this subtitle or Chapter 12 entitled to great weight if the construction is reasonable and does not conflict with this subtitle or Chapter 12.
(a) The banking commissioner shall examine each state bank annually, or on another periodic basis as may be required by rule or policy, or as the commissioner considers necessary to:
(1) safeguard the interests of depositors, creditors, and shareholders; and
(2) efficiently enforce applicable law.
(b) The banking commissioner may:
(1) accept an examination of a state bank by a federal or other governmental agency instead of an examination under this section; or
(2) conduct an examination of a state bank jointly with a federal or other governmental agency.
(c) The banking commissioner may:
(1) administer oaths and examine persons under oath on any subject that the commissioner considers pertinent to the financial condition or the safety and soundness of the activities of a state bank; and
(2) subpoena witnesses and require and compel by subpoena the production of documents not voluntarily produced.
(c-1) If a person refuses to obey a subpoena, a district court of Travis County, on application by the commissioner, may issue an order requiring the person to appear before the commissioner and produce documents or give evidence regarding the matter under examination or investigation.
(c-2) If a person currently serving as an officer, director, employee, controlling shareholder, or other position participating in the affairs of a state bank refuses to comply with a subpoena, the banking commissioner may issue an order on an emergency basis removing the person from the person's position and prohibiting the person from participating in the affairs of the state bank or any other entity chartered, registered, permitted, or licensed by the banking commissioner until the person complies with the subpoena.
(d) Disclosure of information to the banking commissioner pursuant to an examination request or a subpoena issued under this section does not constitute a waiver of or otherwise affect or diminish an evidentiary privilege to which the information is otherwise subject. A report of an examination under this section is confidential and may be disclosed only under the circumstances provided by this subtitle.
(e) A subpoena issued to a financial institution under this section is not subject to Section 59.006.
(f) Except to the extent disclosure is necessary to locate and produce responsive records or obtain legal representation and subject to Subsection (g), a subpoena issued under this section may provide that the person to whom the subpoena is directed or any person who comes into receipt of the subpoena may not:
(1) disclose that the subpoena has been issued;
(2) disclose or describe any records requested in the subpoena;
(3) disclose whether records have been furnished in response to the subpoena; or
(4) if the subpoena requires a person to be examined under oath, disclose or describe the examination, including the questions asked, the testimony given, or the transcript produced.
(g) A subpoena issued under this section may prohibit the disclosure of information described by Subsection (f) only if the banking commissioner finds, and the subpoena states, that:
(1) the subpoena, the examination, or the records relate to an ongoing investigation; and(2) the disclosure could significantly impede or jeopardize the investigation.
Each state bank shall pay, through the imposition and collection of fees established by the finance commission under Section 31.003(a)(4):3
(1) the cost of examination;
(2) the equitable or proportionate cost of maintenance and operation of the department; and
(3) the cost of enforcement of this subtitle and Chapter 12.
(a) The banking commissioner may regulate and examine, to the same extent as if the services or activities were performed by a state bank on its own premises:
(1) the activities of a state bank affiliate; and
(2) the services or activities of a third-party service provider that a state bank or state bank affiliate has contracted for or otherwise arranged to be performed on behalf of the state bank or state bank affiliate.
(b) The banking commissioner may collect a fee from an examined third-party provider or affiliate in connection with each examination to cover the cost of the examination or may collect that fee from the state banks that use the examined third-party service provider.7
(c) For purposes of this section, a state bank affiliate does not include a company in which ownership or membership is limited to individuals and conditioned by law on the existence and maintenance of professional licensing.
(d) To promote regulatory efficiency, if, in the preceding 24 months, a third-party service provider or affiliate has been examined by a federal or state financial services regulatory agency or by a member agency of the Federal Financial Institutions Examination Council, or its successor agency, the banking commissioner may accept the results of that examination instead of conducting the banking commissioner's own examination of the third-party service provider or affiliate. Nothing in this subsection shall be construed as limiting or restricting the banking commissioner from participating in an examination of a third-party service provider or affiliate conducted by a federal or state financial services regulatory agency or by a member agency of the Federal Financial Institutions Examination Council, or its successor agency.
(e) A third-party service provider that refuses to submit to examination or to pay an assessed fee for examination under this section is subject to an enforcement action under Chapter 35. With respect to a third-party service provider's refusal to submit to examination, the banking commissioner may notify all state banks of the refusal and warn that continued use of the third-party service provider may constitute an unsafe and unsound banking practice.
(a) A state bank shall file with the banking commissioner a copy of its call report stating the bank´s financial condition and results of operation.
(b) The finance commission by rule may:8
(1) require call reports to be filed with the banking commissioner at the intervals the commission determines;
(2) specify the form of a call report, including the confidential and public information to be in the call report; and
(3) require public information in call reports of state banks to be published at the times and in the publications and locations the commission determines.
(c) A state bank that fails to timely file its call report as required by this section is subject to a penalty not exceeding $500 a day to be collected by suit by the attorney general on behalf of the banking commissioner.
Subchapter C. Administrative Procedure6
(a) The banking commissioner may convene a hearing to receive evidence and argument regarding any matter within the jurisdiction of and before the banking commissioner for decision or review. The hearing must be conducted under Chapter 2001, Government Code. A matter made confidential by law must be considered by the banking commissioner in a closed hearing.
(b) A hearing before the banking commissioner that is required or authorized by law may be conducted by a hearing officer on behalf of the banking commissioner.
(c) This section does not grant a right to hearing to a person that is not otherwise granted by governing law.
(d) The banking commissioner may informally dispose of a matter within the jurisdiction of and before the banking commissioner by consent order, agreed settlement, or default.
Except as expressly provided otherwise by this subtitle, an appellant may appeal a decision or order of the banking commissioner made under this subtitle or Chapter 12 after a hearing to a district court in Travis County as provided by Section 31.204.
A person affected by a final order of the banking commissioner may appeal the final order by filing a petition for judicial review in a district court in Travis County as provided by Chapter 2001, Government Code. A petition for judicial review filed in the district court does not stay or vacate the appealed order unless the court, after notice and hearing, expressly stays or vacates the order.
Subchapter D. Confidentiality of Information7
(a) Except as expressly provided otherwise by this subtitle, Chapter 11 or 12, or a rule adopted under this subtitle, the following are confidential and may not be disclosed by the banking commissioner or an employee of the department:
(1) information directly or indirectly obtained by the department in any manner, including an application or examination, concerning the financial condition or business affairs of a financial institution, a present, former, or prospective shareholder, officer, director, or affiliate of a financial institution, or a third-party service provider of a financial institution or its affiliate, other than information in a published statement or in the public portion of a call report or profit and loss statement; and
(2) all related files and records of the department.
(b) Information obtained by the department from a federal or state regulatory agency that is confidential under federal or state law may not be disclosed except as provided by federal or state law.
(c) The banking commissioner or an officer or employee of the department commits an offense if the person:
(1) discloses information or permits access to a file or record of the department; and
(2) knows at the time of disclosure or permission that the disclosure or permission violates this subchapter.
(d) An offense under this section is a Class A misdemeanor.
The banking commissioner may disclose to a state bank information about an affiliate or third-party service provider of the state bank.
Confidential information may not be disclosed to a member of the finance commission, and a member of the commission may not be given access to the files and records of the department except that the banking commissioner may disclose to the commission information, files, and records pertinent to a hearing or matter pending before the commission.
(a) For purposes of this section:
(1) "Affiliated group" means two or more persons affiliated through common ownership or a contractual common undertaking involving the sharing of customer information among those persons.
(2) "Agency" means a department or agency of this state, another state, the United States, or a foreign government with whom the United States currently maintains diplomatic relations, or any related agency or instrumentality.
(3) "Functional regulatory agency" means an agency that regulates and charters, licenses, or registers persons engaged in financial activities or activities incidental or complimentary to financial activities, including activities related to banking, insurance, or securities, within the jurisdiction of the agency.
(4) "Privilege" includes any work-product, attorney-client, or other privilege recognized under federal or state law.
(b) The banking commissioner may, as the commissioner considers necessary or proper to the enforcement of the laws of this state, another state, the United States, or a foreign sovereign state with whom the United States currently maintains diplomatic relations, or in the best interest of the public, disclose information in the possession of the department to another agency. The banking commissioner may not disclose information under this section that is confidential under applicable state or federal law unless:
(1) the recipient agency agrees to maintain the confidentiality and take all reasonable steps to oppose an effort to secure disclosure of the information from the agency; or
(2) the banking commissioner determines in the exercise of discretion that the interest of law enforcement outweighs and justifies the potential for disclosure of the information by the recipient agency.
(c) The banking commissioner by agreement may establish an information sharing and exchange program with a functional regulatory agency that has overlapping regulatory jurisdiction with the department, with respect to all or part of an affiliated group that includes a financial institution, to reduce the potential for duplicative and burdensome filings, examinations, and other regulatory activities. Each agency party to the agreement must agree to maintain confidentiality of information that is confidential under applicable state or federal law and take all reasonable steps to oppose any effort to secure disclosure of the information from the agency. An agreement may also specify procedures regarding use and handling of confidential information and identify types of information to be shared and procedures for sharing on a recurring basis.
(d) Disclosure of information by or to the banking commissioner under this section does not constitute a waiver of or otherwise affect or diminish an evidentiary privilege to which the information is otherwise subject, whether or not the disclosure is governed by a confidentiality agreement.
(e) Notwithstanding other law, an agency of this state:
(1) may execute, honor, and comply with an agreement to maintain confidentiality and oppose disclosure of information obtained from the banking commissioner as provided in this section; and
(2) shall treat as confidential any information obtained from the banking commissioner that is entitled to confidential treatment under applicable state or federal law and take all reasonable steps to oppose an effort to secure disclosure of the information from the agency.
(a) Confidential information that is provided to a financial institution, affiliate, or service provider of a financial institution, whether in the form of a report of examination or otherwise, is the confidential property of the department. The information may not be made public or disclosed by the recipient or by an officer, director, manager, employee, or agent of the recipient to a person not officially connected to the recipient as officer, director, employee, attorney, auditor, or independent auditor except as authorized by rules adopted under this subtitle.
(b) A person commits an offense if the person discloses or uses information in violation of this section. An offense under this section is punishable as if it were an offense under Section 37.10, Penal Code.
Civil discovery of confidential information from a person subject to Section 31.304 under subpoena or other legal process must comply with rules adopted under this subtitle and other applicable law. The rules may:
(1) restrict release of confidential information to the portion directly relevant to the legal dispute at issue; and
(2) require that a protective order, in form and under circumstances specified by the rules, be issued by a court before release of the confidential information.8
Notwithstanding any other law, the banking commissioner may refuse to release information or records in the custody of the department if, in the opinion of the commissioner, release of the information or records might jeopardize an ongoing investigation of potentially unlawful activities.
(a) A person may provide employment information concerning the known or suspected involvement of a present or former employee, officer, or director of a financial institution in a violation of a state or federal law, rule, or regulation that has been reported to appropriate state or federal authorities to:
(1) the financial institution; or
(2) a person providing employment information to the financial institution.
(b) A person may not be held liable for providing information under Subsection (a) unless the information provided is false and the person provided the information with disregard for the truth.
(a) Notwithstanding Section 21.218 or 101.502, Business Organizations Code, a shareholder of a state bank may not examine:
(1) a report of examination or other confidential property of the department that is in the possession of the state bank; or
(2) a book or record of the state bank that directly or indirectly pertains to financial or other information maintained by the bank on behalf of its customers, including a specific item in the minutes of the board or a committee of the board regarding loan review and approval or a loan delinquency report that would tend to identify the bank´s customer.
(b) This section does not affect a right of a shareholder of a state bank acting in another capacity.
Subchapter A. Organization and Powers in General
(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;1
(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.2
(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.
(a) The certificate of formation 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 that the bank will be authorized to issue and the number of classes of shares, which may be one or more;
(5) if the 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 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 of each class; and
(C) a statement of the par value of the 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 the preemptive right to acquire additional or treasury shares of the bank;
(7) any provision granting the right of shareholders to cumulative voting in the election of directors;
(8) the aggregate amount of consideration to be received for all shares initially issued by the bank and a statement that:
(A) all authorized shares have been subscribed; and
(B) all subscriptions received have been irrevocably paid in cash.;3
(9) any provision that is otherwise required by this subtitle to be set forth in the certificate of formation;
(10) the street address of the bank´s initial home office;
(11) the number of directors constituting the initial board and the names and street addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until successor directors have been elected and qualified; and
(12) subject to Section 32.008, any provision consistent with law that organizers elect to set forth in the certificate of formation for the regulation of the internal affairs of the bank, including provisions permissible under the Business Organizations Code for:
(A) a for-profit corporation, in the case of a proposed banking association; or
(B) a limited liability company, in the case of a proposed limited banking association.
(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 certificate of formation or articles of association to reaffirm its limited duration.
(d) Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.
(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, officer, and principal shareholder. The application must be accompanied by all charter fees and deposits required by law.4
(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 and directors 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 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.
(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.
(c) Rules adopted under this subtitle may specify the confidential or nonconfidential character of information obtained or prepared by the department under this chapter.5 Except as provided by Subchapter D, Chapter 31, or in rules regarding confidential information, the business plan of the applicant and the financial statement of a proposed officer or director are confidential and not subject to public disclosure.
(a) A protest of a charter application must be received by the department before the 15th day after the date the organizers publish notice under Section 32.004(a) and must be accompanied by the fees and deposits required by law.6 If the protest is untimely, the department shall return all submitted fees and deposits to the protesting party. If the protest is timely, the department shall notify the applicant of the protest and mail or deliver a complete copy of the nonconfidential sections of the charter application to the protesting party before the 15th day after the later of the date of receipt of the protest or receipt of the charter application.
(b) A protesting party must file a detailed protest responding to each contested statement contained in the nonconfidential portion of the application not later than the 20th day after the date the protesting party receives the application from the department, and relate each statement and response to the standards for approval set forth in Section 32.003(b).7 The applicant must file a written reply to the protesting party's detailed response on or before the 10th day after the date the response is filed. The protesting party's response and the applicant's reply must be verified by affidavit and must certify that a copy was served on the opposing party. If applicable, statements in the response and in the reply may be supported by references to data available in sources of which official notice may properly be taken. Any comment received by the department and any reply of the applicant to the comment shall be made available to the protesting party.
(c) The banking commissioner may not be compelled to hold a hearing before granting or denying the charter application. In the exercise of discretion, the banking commissioner may consider granting a hearing on a charter application at the request of the applicant or a protesting party. The banking commissioner may order a hearing regardless of whether a hearing has been requested by a party. A party requesting a hearing must indicate with specificity the issues involved that cannot be determined on the basis of the record compiled under Subsection (b) and why the issues cannot be determined. A request for hearing and the banking commissioner's decision with regard to granting a hearing shall be made a part of the record. 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, except that the banking commissioner may not permit discovery of confidential information in the charter application or the investigation report.
(d) Based on the record, 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.
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 in the full amount subscribed;
(2) elected or qualified the initial officers and directors named in the application for charter or other officers and directors approved by the banking commissioner; and
(3) complied with all the other requirements of this subtitle relating to the organization of state banks.
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.
(a) The Business Organizations Code applies to a banking association as if it were a for-profit corporation, and to a limited banking association as if it were a limited liability company, to the extent not inconsistent with this subtitle or the proper business of a state bank, except that:
(1) a reference in the Business Organizations Code to the secretary of state means the banking commissioner unless the context requires otherwise; and
(2) the right of shareholders to cumulative voting in the election of directors exists only if granted by the bank's certificate of formation.
(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.8
(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 filing entity, without submitting the filing to the banking commissioner and obtaining the banking commissioner's prior written approval of the action.
(d) In this subtitle, a reference to a term or phrase listed in a subdivision of Section 1.006, Business Organizations Code, includes a synonymous term or phrase referenced by the same subdivision in Section 1.006 of that code.
(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.9
(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 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.
(a) Notwith-standing 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.10
(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 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.
(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.
Subchapter B. Amendment of Certificate; Changes in Capital and Surplus 1
(a) A state bank that has been granted a certificate of authority may amend or restate its certificate of formation for any lawful purpose, including the creation of authorized but unissued shares or participation shares in one or more classes or series.11
(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 certificate of formation; 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) Amendment or restatement of the certificate of formation of a state bank and approval of the bank´s board and shareholders must be made or obtained as provided by the Business Organizations Code except as otherwise provided by this subtitle or rules adopted under this subtitle. The original and one copy of the certificate of amendment or restated certificate of formation 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 a certificate of formation 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,12 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.
(d) Expired.
(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.
(a) If the certificate of formation expressly gives the board of a state bank authority to establish 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 may be established in the manner provided by the Business Organizations Code, but the 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 Business Organizations Code 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.
(a) A state bank may not reduce or increase its outstanding capital and surplus through dividend, redemption, issuance of shares or otherwise, without the prior written approval of the banking commissioner, except as permitted by this section or rules adopted under this subtitle.13
(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 cash or a cash contribution to surplus by shareholders that does not result in issuance of additional common stock or other securities;
(2) declaration and payment of pro rata share dividends as defined by the Business Organizations Code; 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:
(1) a decrease in capital or surplus caused by losses in excess of undivided profits; or
(2) a change in capital and surplus resulting from accounting adjustments required by a transaction approved by the banking commissioner if the accounting adjustments are reasonably disclosed in the submitted application.
(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, 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.
(b) Capital notes or debentures may be convertible into 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.
Subchapter C. Bank Offices
(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.
(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.
(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.14
(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.15
(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.
(a) A state bank may establish and maintain a branch office at any location16 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.17
(c) A state bank may not establish or maintain a branch on the premises or property of an affiliate if the affiliate engages in a commercial activity.
(a) A state bank may establish one or more deposit or loan production offices for the purpose of:
(1) soliciting deposit accounts, applications for loans, or equivalent transactions;
(2) performing ministerial duties related to solicitations described by Subdivision (1); and
(3) conducting other activities as permitted by rules adopted under this subtitle.
(b) The bank shall notify the banking commissioner in writing of the location of and activities to be conducted at a proposed deposit or loan production office of the bank. The bank may establish the proposed office beginning on the 31st day after the date the banking commissioner receives the bank's notice unless the banking commissioner specifies that the proposed office be established on an earlier or later date.
(c) The banking commissioner may extend the 30-day period prescribed by Subsection (b) on a determination that the bank's notice raises issues that require additional information or time for analysis. If the period is extended, the bank may establish the proposed deposit or loan production office only with the prior written approval of the banking commissioner.
Subchapter D. Merger
(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.19 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, or owners of the parties must be made or obtained in accordance with the Business Organizations Code as if the state bank were a filing entity and all other parties to the merger were foreign entities, except as may be otherwise provided by applicable rules.
(c) A consummated merger has the effect provided by the Business Organizations Code. 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.
(a) If the merger is subject to the prior written approval of the banking commissioner, the original certificate of merger and a number of copies of the certificate 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.20
(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 certificate of merger with the date of approval and the word "Approved";
(2) file the original of the certificate of merger in the department´s records; and
(3) deliver a certified copy of the certificate 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.
A shareholder may dissent from the merger to the extent, and by following the procedure provided, by the Business Organizations Code or any rules adopted under this subtitle.
(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.
Subchapter E. Purchase or Sale of Assets
(a) A state bank may purchase assets from another financial institution or other seller, except that the prior written approval of the banking commissioner is required if the purchase price exceeds an amount equal to three times the bank's unimpaired capital and surplus. The finance commission by rule may require a state bank to obtain the prior written approval of the banking commissioner for a transaction not otherwise subject to approval that involves potentially substantial risks to the safety and soundness of the purchasing bank.22
(b) Except as otherwise expressly provided by another statute, the purchase of all or part of the assets of the selling entity does not make the purchasing bank responsible for any liability or obligation of the selling entity that the purchasing bank does not expressly assume.
(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.
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 and to the selling institution´s receiver, depositors, creditors, and shareholders.
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.
(a) A state bank may sell a portion of its assets to another financial institution or other buyer, except that the prior written approval of the banking commissioner is required if the sales price exceeds an amount equal to three times the bank's unimpaired capital and surplus. The finance commission by rule may require a state bank to obtain the prior written approval of the banking commissioner for a transaction not otherwise subject to approval that involves potentially substantial risks to the safety and soundness of the selling bank.
(b) If the prior approval of the banking commissioner for a sale of assets is not required under Subsection (a) and the sale involves the disposition of a branch office or another established location of the state bank, the state bank must provide written notice of the transaction to the banking commissioner at least 30 days before the expected closing date of the transaction.
(c) 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 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;24 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.
(d) A sale under Subsection (c) 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.
(e) 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 approval is considered a voluntary dissolution and liquidation and is governed by Subchapter B, Chapter 36.
(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.
Subsection F. Exit of State Bank or Entry of 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 and shareholders must be obtained in accordance with the Business Organizations Code as if the state bank were a filing entity and all other parties to the transaction, if any, were foreign 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;25
(2) 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; and
(B) a certified copy of all minutes of board meetings and shareholder meetings at which action was taken regarding the merger or conversion;
(3) 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
(4) 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.
(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.26 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 and directors 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 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.
Subchapter A. Transfer of Ownership Interest
(a) Except as otherwise expressly permitted by this subtitle, without the prior written approval of the banking commissioner a person may not directly or indirectly acquire a legal or beneficial interest in voting securities of a state bank or a corporation or other entity owning voting securities of a state bank if, after the acquisition, the person would control the bank.
(b) For purposes of this subchapter and except as otherwise provided by rules adopted under this subtitle, the principal shareholder of a state bank that directly or indirectly owns or has the power to vote a greater percentage of voting securities of the bank than any other shareholder is considered to control the bank.
(c) This subchapter does not prohibit a person from negotiating to acquire, but not acquiring, control of a state bank or a person that controls a state bank.
(a) The proposed transferee in an acquisition of control of a state bank or of a person that controls a state bank must file an application for approval of the acquisition. The application must:
(1) be under oath and in a form prescribed by the banking commissioner;
(2) contain all information that:
(A) is required by rules adopted under this subtitle;1 or
(B) the banking commissioner requires in a particular application as necessary to an informed decision to approve or reject the proposed acquisition; and
(3) be accompanied by any filing fee required by law.
(a-1) The banking commissioner shall promptly notify the applicant of the date the banking commissioner determines the application to be informationally complete and accepted for filing.
(b) If a person proposing to acquire voting securities in a transaction subject to this section includes any group of persons acting in concert, the information required by the banking commissioner may be required of each member of the group.
(c) Rules adopted under this subtitle may specify the confidential or nonconfidential character of information obtained by the banking commissioner under this section. In the absence of rules, information obtained by the banking commissioner under this section is confidential and may not be disclosed by the banking commissioner or any employee of the department except as provided by Subchapter D, Chapter 31.2
(d) The applicant shall publish notice of the application, the date the application is accepted for filing, and the identity of the applicant and, if the applicant includes a group, the identity of each group member. The notice must be published in the form and frequency specified by the banking commissioner and in a newspaper of general circulation in the county in which the bank´s home office is located, or in another publication or location as directed by the banking commissioner.
(e) The applicant may defer publication of the notice until not later than the 34th day after the date the application is accepted for filing if:
(1) the application is filed in contemplation of a public tender offer subject to 15 U.S.C. Section 78n(d)(1);
(2) the applicant requests confidential treatment and represents that a public announcement of the tender offer and the filing of appropriate forms with the Securities and Exchange Commission or the appropriate federal banking agency, as applicable, will occur within the period of deferral; and
(3) the banking commissioner determines that the public interest will not be harmed by the requested confidential treatment.
(f) The banking commissioner may waive the requirement that a notice be published or permit delayed publication on a determination that waiver or delay is in the public interest. If publication of notice is waived under this subsection, the information that would be contained in a published notice becomes public information under Chapter 552, Government Code, on the 35th day after the date the application is accepted for filing.
(a) Not later than the 60th day after the date the notice is published, the banking commissioner shall approve the application or set the application for hearing. If the banking commissioner sets a hearing, the department shall participate as the opposing party and the banking commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the banking commissioner considers advisable and consistent with governing law. A hearing held under this section is confidential and closed to the public.3
(b) Based on the record, the banking commissioner may issue an order denying an application if:
(1) the acquisition would substantially lessen competition, restrain trade, result in a monopoly, or further a combination or conspiracy to monopolize or attempt to monopolize the banking industry in any part of this state, unless:
(A) the anticompetitive effects of the proposed acquisition are clearly outweighed in the public interest by the probable effect of the acquisition in meeting the convenience and needs of the community to be served; and
(B) the proposed acquisition does not violate the law of this state or the United States;
(2) the financial condition of the proposed transferee, or any member of a group comprising the proposed transferee, might jeopardize the financial stability of the bank being acquired;
(3) plans or proposals to operate, liquidate, or sell the bank or its assets are not in the best interests of the bank;
(4) the experience, ability, standing, competence, trustworthiness, and integrity of the proposed transferee, or any member of a group comprising the proposed transferee, are insufficient 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;
(5) the bank will not be solvent, have adequate capitalization, or comply with the law of this state after the acquisition;
(6) the proposed transferee has not furnished all information pertinent to the application reasonably required by the banking commissioner; or
(7) the proposed transferee is not acting in good faith.
(c) If the banking commissioner approves the application, the transaction may be consummated. If the approval is conditioned on a written commitment from the proposed transferee offered to and accepted by the banking commissioner, the commitment is enforceable against the bank and the transferee and is considered for all purposes an agreement under this subtitle.
(a) If a hearing has been held, the banking commissioner has entered an order denying the application, and the order has become final, the proposed transferee may appeal the order by filing a petition for judicial review.
(b) The filing of an appeal under this section does not stay the order of the banking commissioner.
The following acquisitions are exempt from Section 33.001:
(1) an acquisition of securities in connection with the exercise of a security interest or otherwise in full or partial satisfaction of a debt previously contracted for in good faith and the acquiring person files written notice of acquisition with the banking commissioner before the person votes the securities acquired;
(2) unless the banking commissioner provides otherwise in writing, an acquisition of voting securities in any class or series by a controlling person who:
(A) was identified as a controlling person in a state bank in a prior application filed with and approved by the banking commissioner;
(B) has from the date of receipt of approval under this subchapter continuously held power to vote 25 percent or more of any class of voting securities of the state bank; or
(C) is considered to have from the date of receipt of approval under this subchapter continuously controlled the state bank under Section 33.001(b);
(3) an acquisition or transfer by operation of law, will, or intestate succession and the acquiring person files written notice of acquisition with the banking commissioner before the person votes the securities acquired;
(4) a transaction subject to Chapter 202 if:
(A) the acquiring bank holding company currently owns and controls a state bank; or
(B) the post-transaction controlling person is identified as the controlling person in a merger or other acquisition-related application filed with the banking commissioner concurrently with the submission required by Section 202.001; and
(5) a transaction exempted by the banking commissioner or by rules adopted under this subtitle because the transaction is not within the purposes of this subchapter or the regulation of the transaction is not necessary or appropriate to achieve the objectives of this subchapter.
This subchapter does not prevent the banking commissioner from investigating, commenting on, or seeking to enjoin or set aside a transfer of voting securities that evidence a direct or indirect interest in a state bank, regardless of whether the transfer is governed by this subchapter, if the banking commissioner considers the transfer to be against the public interest.
(a) If the banking commissioner believes that a person has violated or is about to violate this subchapter or a rule of the finance commission or order of the banking commissioner pertaining to this subchapter, the attorney general on behalf of the banking commissioner may apply to a district court of Travis County for an order enjoining the violation and for other equitable relief the nature of the case requires.
(b) A person who knowingly fails or refuses to file the application required by Section 33.002 commits an offense. An offense under this subsection is a Class A misdemeanor.
Subchapter B. Board and Officers
(a) Voting securities of a state bank held by the bank in a fiduciary capacity under a will or trust, whether registered in the bank´s name or in the name of its nominee, may not be voted in the election of directors or on a matter affecting the compensation of directors, officers, or employees of the bank in that capacity unless:
(1) under the terms of the will or trust, the manner in which the voting securities are to be voted may be determined by a donor or beneficiary of the will or trust and the donor or beneficiary makes the determination in the matter at issue;
(2) the terms of the will or trust expressly direct the manner in which the securities must be voted so that discretion is not vested in the bank as fiduciary; or
(3) the securities are voted solely by a cofiduciary that is not an affiliate of the bank, as if the cofiduciary were the sole fiduciary.
(b) Voting securities of a state bank that cannot be voted under this section are considered to be authorized but unissued for purposes of determining the procedures for and results of the affected vote.
Each state bank shall adopt bylaws and may amend its bylaws for the purposes and according to the procedures provided by the Business Organizations Code.
(a) The board of a state bank must consist of not fewer than five but not more than 25 directors, a majority of whom are residents of this state. The principal executive officer of the bank is a member of the board. The principal executive officer acting in the capacity of a board member is the board´s presiding officer unless the board elects a different presiding officer to perform the duties as designated by the board.
(b) Unless the banking commissioner consents otherwise in writing, a person may not serve as director of a state bank if:
(1) the bank incurs an unreimbursed loss attributable to a charged-off obligation of or holds a judgment against:
(A) the person; or
(B) an entity that was controlled by the person at the time of funding and at the time of default on the loan that gave rise to the judgment or charged-off obligation;
(2) the person is the subject of an order described by Section 35.007(a); or
(3) the person has been convicted of a felony.
(c) If a state bank does not elect directors before the 61st day after the date of its regular annual meeting, the banking commissioner may appoint a conservator under Chapter 35 to operate the bank and elect directors, as appropriate. If the conservator is unable to locate or elect persons willing and able to serve as directors, the banking commissioner may close the bank for liquidation.
(d) A vacancy on the board that reduces the number of directors to fewer than five must be filled not later than the 30th day after the date the vacancy occurs. If the vacancy is not timely filled, the banking commissioner may appoint a conservator under Chapter 35 to operate the bank and elect a board of not fewer than five persons to resolve the vacancy. If the conservator is unable to locate or elect five persons willing and able to serve as directors, the banking commissioner may close the bank for liquidation.
(e) Before each term to which a person is elected to serve as a director of a state bank, the person shall submit an affidavit for filing in the minutes of the bank stating that the person, to the extent applicable:
(1) accepts the position and is not disqualified from serving in the position;
(2) will not violate or knowingly permit an officer, director, or employee of the bank to violate any law applicable to the conduct of business of the bank; and
(3) will diligently perform the duties of the position.
(f) The banking commissioner in the exercise of discretion may waive or reduce the residency requirements for directors set forth in Subsection (a).
(a) An advisory director is not considered a director if the advisory director:
(1) is not elected by the shareholders of the bank;
(2) does not vote on matters before the board or a committee of the board;
(3) is not counted for purposes of determining a quorum of the board or committee; and
(4) provides solely general policy advice to the board.
(b) A state bank may not disclose to an advisory director confidential information pertaining to the bank or the bank's customers unless:
(1) the board adopts a resolution that designates the advisory director as a person who is officially connected to the bank and that describes the purpose for disclosure of the information, which must be a reasonable business purpose; and
(2) the disclosure is made under a written confidentiality agreement between the bank and the advisory director.
(a) Except as provided by Subsection (b), the board of a state bank shall hold at least one regular meeting each month.
(b) On application by the board, the banking commissioner may grant the board approval to hold regular meetings on a less frequent basis than the period prescribed by Subsection (a). The commissioner may revoke or modify a prior approval granted under this subsection if the commissioner determines that more frequent regular meetings of the board are necessary to promote the safety and soundness of the bank.
(c) At each regular meeting the board shall review and approve the minutes of the prior meeting and review the operations, activities, and financial condition of the bank. The board may designate a committee from among its members to perform those duties and approve or disapprove the committee´s report at each regular meeting. Each action of the board must be recorded in its minutes.
(a) The board shall annually appoint the officers of the bank, who serve at the will of the board. Unless the banking commissioner consents otherwise in writing, a person may not serve as an officer of the state bank if:
(1) the person is the subject of an order described by Section 35.007(a); or
(2) the person has been convicted of a felony.
(b) The bank must have a principal executive officer primarily responsible for the execution of board policies and operation of the bank and an officer responsible for the maintenance and storage of all corporate books and records of the bank and for required attestation of signatures. Those positions may not be held by the same person. The board may appoint other officers of the bank as the board considers necessary.
Unless expressly authorized by a resolution of the board recorded in its minutes, an officer or employee may not create or dispose of a bank asset or create or incur a liability on behalf of the bank.
(a) An officer, director, employee, or shareholder of a state bank commits an offense if the person knowingly:
(1) conceals information or a fact, or removes, destroys, or conceals a book or record of the bank for the purpose of concealing information or a fact, from the banking commissioner or an agent of the banking commissioner; or
(2) removes, destroys, or conceals any book or record of the bank that is material to a pending or anticipated legal or administrative proceeding.
(b) An officer, director, or employee of a state bank commits an offense if the person:
(1) knowingly makes a false entry in a book, record, report, or statement of the bank; or
(2) violates or knowingly participates in a violation of, or permits another of the bank´s officers, directors, or employees to violate, the prohibition on lending trust funds under Section 113.052, Property Code.
(c) An offense under this section is a felony of the third degree.
(a) Without the prior approval of a disinterested majority of the board recorded in the minutes or, if a disinterested majority cannot be obtained, the prior written approval of the banking commissioner,4 a state bank may not directly or indirectly:
(1) sell or lease an asset of the bank to an officer, director, or principal shareholder of the bank or of an affiliate of the bank; or
(2) purchase or lease an asset in which an officer, director, or principal shareholder of the bank or of an affiliate of the bank has an interest.
(b) An officer or director of the bank who knowingly participates in or permits a violation of this section commits an offense. An offense under this subsection is a felony of the third degree.
Subchapter C. Limited Banking Association
(a) A participant or manager of a limited banking association is not liable for a debt, obligation, or liability of the limited banking association, including a debt, obligation, or liability under a judgment, decree, or order of court. A participant or a manager of a limited banking association is not a proper party to a proceeding by or against a limited banking association unless the object of the proceeding is to enforce a participant´s or manager´s right against or liability to a limited banking association.
(b) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.]
(a) Management of a limited banking association is vested in a board of managers elected by the participants as prescribed by the bylaws.
(b) A board of managers operates in substantially the same manner as, and has substantially the same rights, powers, privileges, duties, and responsibilities, as a board of directors of a banking association, and a manager must meet the qualifications for a director under Section 33.103.
(c) The certificate of formation, bylaws, and participation agreement of a limited banking association may use "director" instead of "manager" and "board" instead of "board of managers."
(a) The interest of a participant in a limited banking association is the personal property of the participant and may be transferred as provided by the bylaws or the participation agreement.
(b) The bylaws or the participation agreement may not require the consent of any other participant in order for a participant to transfer participation shares, including voting rights.
The bylaws or the participation agreement may not require automatic termination, dissolution, or suspension of the limited banking association on the death, disability, bankruptcy, expulsion, or withdrawal of a participant, or on the happening of any other event than the passage of time.
The profits and losses of a limited banking association may be allocated among the participants and among classes of participants as provided by the participation agreement. Without the prior written approval of the banking commissioner to use a different allocation method, the profits and losses must be allocated according to the relative interests of the participants as reflected in the certificate of formation and related documents filed with and approved by the banking commissioner.
Subject to Section 32.103, distributions of cash or other assets of a limited banking association may be made to the participants as provided by the participation agreement. Without the prior written approval of the banking commissioner to use a different distribution method, distributions must be made to the participants according to the relative interests of the participants as reflected in the certificate of formation and related documents filed with and approved by the banking commissioner.
For purposes of the provisions of Subtitle A and this subtitle other than this subchapter, as the context requires:
(1) a manager is considered to be a director and the board of managers is considered to be the board of directors;
(2) a participant is considered to be a shareholder;
(3) a participation share is considered to be a share; and
(4) a distribution is considered to be a dividend.
Subchapter A. Acquisition and Ownership of Bank Facilities and Other Real Property
In this subchapter, "bank facility" means real property, including an improvement, that a state bank owns or leases, to the extent the lease or the leasehold improvement is capitalized, for the purpose of:
(1) providing space for bank employees to perform their duties and for bank employees and customers to park;
(2) conducting bank business, including meeting the reasonable needs and convenience of the public and the bank´s customers, computer operations, document and other item processing, maintenance and storage of foreclosed collateral pending disposal, and record retention and storage;
(3) holding, improving, and occupying as an incident to future expansion of the bank´s facilities; or
(4) conducting another activity authorized by rules adopted under this subtitle.
(a) Without the prior written approval of the banking commissioner, a state bank may not directly or indirectly invest an amount in excess of its unimpaired capital and surplus1 in bank facilities, furniture, fixtures, and equipment. Except as otherwise provided by rules adopted under this subtitle, in computing this limitation the bank:
(1) shall include:
(A) its direct investment in bank facilities;
(B) an investment in equity or investment securities of a company holding title to a facility used by the bank for a purpose specified by Section 34.001;
(C) a loan made by the bank to or on the security of equity or investment securities issued by a company holding title to a facility used by the bank; and
(D) any indebtedness incurred on bank facilities by a company:
(i) that holds title to the facility;
(ii) that is an affiliate of the bank; and
(iii) in which the bank is invested in the manner described by Paragraph (B) or (C); and
(2) may exclude an amount included under Subdivisions (1)(B)-(D) to the extent a lease of a facility from the company holding title to the facility is capitalized on the books of the bank.
(b) Real property acquired for the purposes described by Section 34.001(3) and not improved and occupied by the bank ceases to be a bank facility on the third anniversary of the date of its acquisition unless the banking commissioner on application grants written approval to further delay in the improvement and occupation of the property by the bank.
(c) A bank shall comply with regulatory accounting principles in accounting for its investment in and depreciation of bank facilities, furniture, fixtures, and equipment.
(a) A state bank may not acquire real property except:
(1) as permitted by this subtitle or rules adopted under this subtitle;
(2) with the prior written approval of the banking commissioner; or
(3) as necessary to avoid or minimize a loss on a loan or investment previously made in good faith.
(b) With the prior written approval of the banking commissioner, a state bank may:
(1) exchange real property for other real property or personal property;
(2) invest additional money in or improve real property acquired under this subsection or Subsection (a); or
(3) acquire additional real property to avoid or minimize loss on real property acquired as permitted by Subsection (a).
(c) A state bank shall dispose of real property subject to this section not later than the fifth anniversary of the date the real property:
(1) was acquired except as otherwise provided by rules adopted under this subtitle;
(2) ceases to be used as a bank facility; or
(3) ceases to be a bank facility as provided by Section 34.002(b).
(d) The banking commissioner on application may grant one or more extensions of time for disposing of real property if the banking commissioner determines that:
(1) the bank has made a good faith effort to dispose of the real property; or
(2) disposal of the real property would be detrimental to the bank.
(a) Notwithstanding Section 34.003(a), a state bank may hold nonparticipating royalty interests if:
(1) the state bank acquires the interest pursuant to Section 34.003(a)(3) or retains the interest in a sale of property acquired under that section;
(2) the interest is nonparticipating due to the fact the interest:
(A) is nonpossessory;
(B) does not bear executive rights, the right of ingress and egress, the right to receive bonus payments, or the right to receive delay rentals; and
(C) is accordingly not subject to expenses of exploration, development, production, operation, maintenance, or abandonment, or other expenses associated with extracting and marketing the minerals subject to the interest;
(3) the interest is reasonably valued on the books of the state bank for not more than a nominal amount, and the aggregate amount of earnings from such interests is separately disclosed in the annual financial statements of the state bank;
(4) the state bank does not make any new investments relating to the interests without the approval of the banking commissioner; and
(5) the banking commissioner determines that the possession of such interests is not inconsistent with the safety and soundness of the state bank.
(b) The banking commissioner may order a state bank that holds nonparticipating royalty interests to divest such interests at any time if the banking commissioner determines that continued ownership of such interests is detrimental to the state bank.
(c) Subject to compliance with this section, nonparticipating royalty interests are not considered to be real property for purposes of this subtitle.3
Subchapter B. Investments
(a) A state bank may purchase and sell securities without recourse solely on the order and for the account of a customer.4
(b) Except as otherwise provided by this subtitle or rules adopted under this subtitle, a state bank may not:
(1) underwrite an issue of securities;5 or
(2) invest its money in equity securities except as necessary to avoid or minimize a loss on a loan or investment previously made in good faith.
(c) A state bank may purchase investment securities for its own account under limitations and restrictions prescribed by rules adopted under this subtitle. Except as otherwise provided by this section, the amount of the investment securities of any one obligor or maker held by the bank for its own account may not exceed an amount equal to 15 percent of the bank´s unimpaired capital and surplus.6 The banking commissioner may authorize investments in excess of this limitation on written application if the banking commissioner determines that:
(1) the excess investment is not prohibited by other applicable law; and
(2) the safety and soundness of the requesting state bank is not adversely affected.
(d) Notwithstanding Subsections (a)-(c), a state bank may, without limit and subject to the exercise of prudent banking judgment, deal in, underwrite, or purchase for its own account:
(1) bonds and other legally created general obligations of a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States;
(2) obligations that this state, an agency or political subdivision of this state, the United States, or an instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee;
(3) securities that are offered and sold under 15 U.S.C. Section 77d(5);
(4) mortgage related securities or small business related securities, as those terms are defined by 15 U.S.C. Section 78c(a);
(5) mortgages, obligations, or other securities that are or ever have been sold by the Federal Home Loan Mortgage Corporation under 12 U.S.C. Sections 1434 and 1455;
(6) obligations, participation, or other instruments of or issued by the Federal National Mortgage Association or the Government National Mortgage Association;
(7) obligations issued by the Federal Agricultural Mortgage Corporation, the Federal Farm Credit Banks Funding Corporation, or a Federal Home Loan Bank;
(8) obligations of the Federal Financing Bank or the Environmental Financing Authority;
(9) obligations or other instruments or securities of the Student Loan Marketing Association;
(10) qualified Canadian government obligations, as defined by 12 U.S.C. Section 24; or
(11) if the state bank is well capitalized, as defined by Section 38, Federal Deposit Insurance Act (12 U.S.C. Section 1831o), obligations, including limited obligation bonds, revenue bonds, and obligations that satisfy the requirements of 26 U.S.C. Section 142(b)(1), issued by or on behalf of a state or a political subdivision of a state, including a municipal corporate instrumentality of one or more states or a public agency or authority of a state or political subdivision of a state.
(e) Notwithstanding Subsections (a) and (b), subject to the exercise of prudent banking judgment, a state bank may deal in, underwrite, or purchase for its own account, including for purposes of Subsection (c) obligations as to which the bank is under commitment, the following:
(1) obligations issued by a development bank, corporation, or other entity created by international agreement if the United States is a member and a capital stock shareholder;
(2) obligations issued by a state or political subdivision or an agency of a state or political subdivision for housing, university, or dormitory purposes, that are at the time eligible for purchase by a state bank for its own account; or
(3) bonds, notes, and other obligations issued by the Tennessee Valley Authority or by the United States Postal Service.
(f) A state bank may not invest more than an amount equal to 25 percent of the bank´s unimpaired capital and surplus in investment grade adjustable rate preferred stock and money market (auction rate) preferred stock.
(g) A state bank may deposit money in a federally insured financial institution, a Federal Reserve Bank, or a Federal Home Loan Bank without limitation.
(h) The finance commission may adopt rules to administer and carry out this section, including rules to:
(1) define or further define terms used by this section;
(2) establish limits, requirements, or exemptions other than those specified by this section for particular classes or categories of securities; and
(3) limit or expand investment authority for state banks for particular classes or categories of securities.
(a) A state bank may not acquire a lien by pledge or otherwise on its own shares, or otherwise purchase or acquire title to its own shares, except:
(1) as necessary to avoid or minimize a loss on a loan or investment previously made in good faith; or
(2) as provided by Subsection (b).
(b) With the prior written approval of the banking commissioner or as permitted by rules adopted under this subtitle, a state bank may acquire title to its own shares and hold those shares as treasury stock. Treasury stock acquired under this subsection is not considered an equity investment.7
(c) If a state bank acquires a lien on or title to its own shares under this section, the lien may not by its original terms extend for more than two years. Except with the prior written approval of the banking commissioner, the bank may not hold title to its own shares for more than one year.
(d) A state bank may make loans on the collateral security of securities issued by an affiliate, if the loan is subject to and in compliance with the provisions of Sections 23A and 23B, Federal Reserve Act (12 U.S.C. Sections 371c and 371c-1), as amended, applicable to nonmember insured state banks by virtue of Section 18(j)(1), Federal Deposit Insurance Act (12 U.S.C. Section 1828(j)(1)), as amended.
(a) Subject to this section and except as otherwise provided by this subtitle or rules adopted under this subtitle, a state bank may conduct any activity or make any investment through an operating subsidiary that a state bank or a bank holding company, including a financial holding company, is authorized to conduct or make under state or federal law if the operating subsidiary is adequately empowered and appropriately licensed to conduct its business.8
(b) Except for investment in a subsidiary engaging solely in activities that may be engaged in directly by the bank and that are conducted on the same terms and conditions that govern the conduct of the activities by the bank, a state bank without the prior written approval of the banking commissioner may not invest more than an amount equal to 10 percent of its unimpaired capital and surplus in a single subsidiary. For purposes of this subsection, the amount of a state bank´s investment in a subsidiary is the sum of the amount of the bank´s investment in securities issued by the subsidiary and any loans and extensions of credit from the bank to the subsidiary.
(c) A state bank may not establish or acquire a subsidiary or a controlling interest in a subsidiary that engages in activities as principal in which the bank is prohibited from engaging directly unless:
(1) the state bank´s investment in the subsidiary has been allowed by the Federal Deposit Insurance Corporation under Section 24, Federal Deposit Insurance Act (12 U.S.C. Section 1831a); or
(2) with respect to a subsidiary engaged in activities as principal that a national bank may conduct only through a financial subsidiary, including firm underwriting of equity securities other than as permitted by Section 34.101, and not otherwise engaged in activities as principal that are impermissible for a state bank or a financial subsidiary of a national bank, the subsidiary´s activities and the bank´s investment are in compliance with the restrictions and requirements of Section 46, Federal Deposit Insurance Act (12 U.S.C. Section 1831w).
(d) Except as otherwise provided by this subtitle or a rule adopted under this subtitle, a state bank may not make a non-controlling minority investment in equity securities of a company unless:
(1) the investment or company is described by Subsection (c)(2) or Section 34.104 or 34.105;
(2) the company engages solely in activities that are part of or incidental to the permissible business of a state bank under this subtitle and:
(A) the state bank is adequately empowered to prevent the company from engaging in activities not part of or incidental to the permissible business of a state bank or, as a practical matter, is otherwise enabled to withdraw or liquidate its investment in the company in such an event;
(B) as a legal and accounting matter, the loss exposure of the state bank with respect to the activities of the company is limited and does not include any open-ended liability for an obligation of the company; and
(C) the investment is convenient or useful to the state bank in carrying out its business and is not a mere passive investment unrelated to the bank´s banking business; or
(3) the investment is made indirectly through an operating subsidiary in equity securities issued by:
(A) another bank;
(B) a company that engages solely in an activity that is permissible for a bank service corporation or a bank holding company subsidiary; or
(C) a company that engages solely in activities as agent or trustee or in a brokerage, custodial, advisory, or administrative capacity, or in a substantially similar capacity.
(e) A state bank that intends to acquire, establish, or perform new activities through a subsidiary shall submit a letter to the banking commissioner describing in detail the proposed activities of the subsidiary.9 The bank may acquire or establish a subsidiary or perform new activities in an existing subsidiary beginning on the 31st day after the date the banking commissioner receives the bank´s letter unless the banking commissioner specifies an earlier or later date. The banking commissioner may extend the 30-day period on a determination that the bank´s letter raises issues that require additional information or additional time for analysis. If the period is extended, the bank may acquire or establish a subsidiary, or may perform new activities in an existing subsidiary, only on prior written approval of the banking commissioner.
(f) A subsidiary of a state bank is subject to regulation by the banking commissioner to the extent provided by Chapter 11 or 12, this subtitle, or rules adopted under this subtitle. In the absence of limiting rules, the banking commissioner may regulate a subsidiary as if it were a state bank.
(a) A state bank may invest for its own account in equity securities of an investment company registered under the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.) and the Securities Act of 1933 (15 U.S.C. Section 77a et seq.) if the portfolio of the investment company consists wholly of investments in which the bank could invest directly for its own account.
(b) If the portfolio of an investment company described by Subsection (a) consists wholly of investments in which the bank could invest directly without limitation, the bank may invest in the investment company without limitation.
(c) The bank may invest not more than an amount equal to 15 percent of the bank´s unimpaired capital and surplus in an investment company described by Subsection (a) the portfolio of which contains an investment or obligation in which the bank could not invest directly without limitation under this chapter.
(d) A state bank that invests in an investment company as provided by Subsection (c) shall periodically determine that its pro rata share of any security in the portfolio of the investment company combined with the bank´s pro rata share of that security held by all other investment companies in which the bank has invested and with the bank´s own direct investment and loan holdings is not in excess of applicable investment and lending limitations.
(a) A state bank may purchase for its own account equity securities of any class issued by:
(1) a bank service corporation, except that the bank may not invest more than an amount equal to 15 percent of the bank´s unimpaired capital and surplus in a single bank service corporation or more than an amount equal to five percent of its assets in all bank service corporations;
(2) an agricultural credit corporation, except that the bank may not invest more than an amount equal to 30 percent of the bank´s unimpaired capital and surplus in the agricultural credit corporation unless the bank owns at least 80 percent of the equity securities of the agricultural credit corporation;
(3) a small business investment company if the aggregate investment does not exceed an amount equal to 10 percent of the bank´s unimpaired capital and surplus;
(4) a banker´s bank if the aggregate investment does not exceed an amount equal to 15 percent of the bank´s unimpaired capital and surplus or result in the bank acquiring or retaining ownership, control, or power to vote more than five percent of any class of voting securities of the banker´s bank; or
(5) a housing corporation if the sum of the amount of investment and the amount of loans and commitments for loans to the housing corporation does not exceed an amount equal to 10 percent of the bank´s unimpaired capital and surplus.
(b) On written application, the banking commissioner may authorize investments in excess of a limitation of Subsection (a) if the banking commissioner concludes that:
(1) the excess investment is not precluded by other applicable law; and
(2) the safety and soundness of the requesting bank would not be adversely affected.
(c) For purposes of this section:
(1) "Agricultural credit corporation" means a company organized solely to make loans to farmers and ranchers for agricultural purposes, including the breeding, raising, fattening, or marketing of livestock.
(2) "Banker´s bank" means a bank insured by the Federal Deposit Insurance Corporation or a bank holding company that owns or controls such an insured bank if:
(A) all equity securities of the bank or bank holding company, other than director´s qualifying shares or shares issued under an employee compensation plan, are owned by depository institutions or depository institution holding companies; and
(B) the bank or bank holding company and all its subsidiaries are engaged exclusively in providing:
(i) services to or for other depository institutions, depository institution holding companies, and the directors, officers, and employees of other depository institutions and depository institution holding companies; and
(ii) correspondent banking services at the request of other depository institutions, depository institution holding companies, or their subsidiaries.
(3) "Bank service corporation" has the meaning assigned by the Bank Service Corporation Act (12 U.S.C. Section 1861 et seq.) or a successor to that Act.
(4) "Housing corporation" means a corporation organized under Title IX of the Housing and Urban Development Act of 1968 (42 U.S.C. Section 3931 et seq.), a partnership, limited partnership, or joint venture organized under Section 907(a) or (c) of that Act (42 U.S.C. Section 3937(a) or (c)), or a housing corporation organized under the laws of this state to engage in or finance low-income and moderate-income housing developments or projects.
(a) A state bank may make investments of a predominantly civic, community, or public nature, including investments providing housing, services, or jobs or promoting the welfare of low-income and moderate-income communities or families.
(b) The bank may make the investments directly or by purchasing equity securities in an entity primarily engaged in making those investments. The bank may not make an investment that would expose the bank to unlimited liability.
(c) A bank may serve as a community partner and make investments in a community partnership, as those terms are defined by the Riegle Community Development and Regulatory Improvement Act of 1994 (Pub. L. 103-325).
(d) A bank´s aggregate investments under this section may not exceed an amount equal to 15 percent of the bank´s unimpaired capital and surplus.
(e) Notwithstanding any other law, a bank's exposure to a single project or entity described by this section, including all investments, loans, and commitments for loans, may not exceed 25 percent of the bank's unimpaired capital and surplus without the prior authorization of the banking commissioner in response to a written application.
(a) A state bank may not buy, sell, or otherwise deal in goods in trade or commerce or own or operate a business not part of the business of banking except:
(1) as necessary to avoid or minimize a loss on a loan or investment previously made in good faith; or
(2) as otherwise provided by this subtitle or rules adopted under this subtitle.
(b) Engaging in an approved activity, directly or through a subsidiary, that is a financial activity or incidental or complementary to a financial activity, whether as principal or agent, is not considered to be engaging in commerce.
Subchapter C. Loans
(a) Without the prior written approval of the banking commissioner, the total loans and extensions of credit by a state bank to a person outstanding at one time may not exceed an amount equal to 25 percent of the bank´s unimpaired capital and surplus. This limitation does not apply to:
(1) liability as endorser or guarantor of commercial or business paper discounted by or assigned to the bank by its owner who has acquired it in the ordinary course of business;
(2) indebtedness evidenced by bankers´ acceptances as described by 12 U.S.C. Section 372 and issued by other banks;
(3) indebtedness secured by a bill of lading, warehouse receipt, or similar document transferring or securing title to readily marketable goods, except that:
(A) the goods must be insured if it is customary to insure those goods; and
(B) the aggregate indebtedness of a person under this subdivision may not exceed an amount equal to 50 percent of the bank´s unimpaired capital and surplus;
(4) indebtedness evidenced by notes or other paper secured by liens on agricultural products in secure and properly documented storage in bonded warehouses or elevators if the value of the collateral is not less than 125 percent of the amount of the indebtedness and the bank´s interest in the collateral is adequately insured against loss, except that the aggregate indebtedness of a person under this subdivision may not exceed an amount equal to 50 percent of the bank´s unimpaired capital and surplus;
(5) indebtedness of another depository institution arising out of loans with settlement periods of less than one week;
(6) indebtedness arising out of the daily transaction of the business of a clearinghouse association in this state;
(7) liability under an agreement by a third party to repurchase from the bank an investment security listed in Section 34.101(d) to the extent that the agreed repurchase price does not exceed the original purchase price to the bank or the market value of the investment security;
(8) the portion of an indebtedness that this state, an agency or political subdivision of this state, the United States, or an instrumentality of the United States has unconditionally agreed to repay, purchase, insure, or guarantee;
(9) indebtedness secured by securities listed in Section 34.101(d) to the extent that the market value of the securities equals or exceeds the indebtedness;
(10) the portion of an indebtedness that is fully secured by a segregated deposit account in the lending bank;
(11) loans and extensions of credit arising from the purchase of negotiable or nonnegotiable installment consumer paper that carries a full recourse endorsement or unconditional guarantee by the person transferring the paper if:
(A) the bank´s files or the knowledge of its officers of the financial condition of each maker of the consumer paper is reasonably adequate; and
(B) an officer of the bank designated for that purpose by the board certifies in writing that the bank is relying primarily on the responsibility of each maker for payment of the loans or extensions of credit and not on a full or partial recourse endorsement or guarantee by the transferor;
(12) the portion of an indebtedness in excess of the limitation of this subsection that is fully secured by marketable securities or bullion with a market value at least equal to the amount of the overage, as determined by reliable and continuously available price quotations, except that the exempted indebtedness or overage of a person under this subdivision may not exceed an amount equal to 15 percent of the bank´s unimpaired capital and surplus;
(13) indebtedness of an affiliate of the bank if the transaction with the affiliate is subject to the restrictions and limitations of 12 U.S.C. Section 371c;
(14) indebtedness of an operating subsidiary of the bank other than a subsidiary described by Section 34.103(c)(2); and
(15) the portion of the indebtedness of a person secured in good faith by a purchase money lien taken by the bank in exchange for the sale of real or personal property owned by the bank if the sale is in the best interest of the bank.
(b) The finance commission may adopt rules to administer this section, including rules to:
(1) define or further define terms used by this section;
(2) establish limits, requirements, or exemptions other than those specified by this section for particular classes or categories of loans or extensions of credit; and
(3) establish collective lending and investment limits.
(c) The banking commissioner may determine whether a loan or extension of credit putatively made to a person will be attributed to another person for purposes of this section.
(a) An officer, director, or employee of a state bank who approves or participates in the approval of a loan with actual knowledge that the loan violates Section 34.201 is jointly and severally liable to the bank for the lesser of the amount by which the loan exceeded applicable lending limits or the bank´s actual loss. The person remains liable for that amount until the loan and all prior indebtedness of the borrower to the bank have been fully repaid.
(b) The bank may initiate a proceeding to collect an amount due under this section at any time before the fourth anniversary of the date the borrower defaults on the subject loan or any prior indebtedness.
(c) A person who is liable for and pays amounts to the bank under this section is entitled to an assignment of the bank´s claim against the borrower to the extent of the payments.
(d) For purposes of this section, an officer, director, or employee of a state bank is presumed to know the amount of the bank´s lending limit under Section 34.201(a) and the amount of the borrower´s aggregate outstanding indebtedness to the bank immediately before a new loan or extension of credit to that borrower.
(a) A bank may require a borrower to pay all reasonable expenses and fees incurred in connection with the making, closing, disbursing, extending, readjusting, or renewing of a loan, regardless of whether those expenses or fees are paid to third parties. A fee charged by the bank under this section may not exceed the cost the bank reasonably expects to incur in connection with the transaction to which the fee relates. Payment for those expenses may be:
(1) collected by the bank from the borrower and:
(A) retained by the bank; or
(B) paid to a person rendering services for which a charge has been made; or
(2) paid directly by the borrower to a third party to whom they are payable.
(b) This section does not authorize the bank to charge its borrower for payment of fees and expenses to an officer or director of the bank for services rendered in the person´s capacity as an officer or director.
(c) A bank may charge a penalty for prepayment or late payment. Only one penalty may be charged by the bank on each past due payment. Unless otherwise agreed in writing, prepayment of principal must be applied on the final installment of the note or other obligation until that installment is fully paid, and further prepayments must be applied on installments in the inverse order of their maturity.
(d) Fees and expenses charged and collected as provided by this section are not considered a part of the interest or compensation charged by the bank for the use, forbearance, or detention of money.
(e) To the extent of any conflict between this section and a provision of Subtitle B, Title 4, the provision of Subtitle B, Title 4, prevails.
(a) Subject to rules adopted under this subtitle, a state bank may, directly or indirectly through an operating subsidiary, provide the equivalent of a financing transaction by acting as lessor under a lease for the benefit of a customer.
(b) Without the written approval of the banking commissioner to continue holding property acquired for leasing purposes under this subsection, the bank may not hold personal property more than six months or real property more than two years after the date of expiration of the original or any extended or renewed lease period agreed to by the customer for whom the property was acquired or by a subsequent lessee.
(c) A rental payment received by the bank in a lease financing transaction under this section is considered to be rent and not interest or compensation for the use, forbearance, or detention of money. However, a lease financing transaction is considered to be a loan or extension of credit for purposes of Sections 34.201 and 34.202.
Subchapter D. Deposits
(a) A deposit contract between a bank and an account holder is considered a contract in writing for all purposes and may be evidenced by one or more agreements, deposit tickets, signature cards, or notices as provided by Section 34.302, or by other documentation as provided by law.
(b) A cause of action for denial of deposit liability on a deposit contract without a maturity date does not accrue until the bank has denied liability and given notice of the denial to the account holder. A bank that provides an account statement or passbook to the account holder is considered to have denied liability and given the notice as to any amount not shown on the statement or passbook.
(c) To the extent provided by Section 4.102(c), Business & Commerce Code, the laws of this state govern a deposit contract between a bank and a consumer account holder if the branch or separate office of the bank that accepts the deposit contract is located in this state.
(a) A bank and its account holder may amend the deposit contract by agreement or as permitted by Subsection (b) or other law.
(b) A bank may amend a deposit contract by mailing a written notice of the amendment to the account holder, separately or as an enclosure with or part of the account holder´s statement of account or passbook. The notice must include the text and effective date of the amendment. The bank is required to deliver the notice to only one of the account holders of a deposit account that has more than one account holder. The effective date may not be earlier than the 30th day after the date of mailing the notice unless the amendment:
(1) is made to comply with a statute or rule that authorizes an earlier effective date;
(2) does not reduce the interest rate on the account or otherwise adversely affect the account holder; or
(3) is made for a reason relating to security of an account.
(c) Except for a disclosure required to be made under Section 34.303 or the Truth in Savings Act (12 U.S.C. Section 4301 et seq.) or other federal law, before renewal of an account a notice of amendment is not required under Subsection (b) for:
(1) a change in the interest rate on a variable-rate account, including a money market or negotiable order of withdrawal account;
(2) a change in a term for a time account with a maturity of one month or less if the deposit contract authorizes the change in the term; or
(3) a change contemplated and permitted by the original contract.
(d) An amendment under Subsection (b) may reduce the rate of interest or eliminate interest on an account without a maturity date.
(e) Amendment of a deposit contract made in compliance with this section is not a violation of the Deceptive Trade Practices-Consumer Protection Act (Section 17.41 et seq., Business & Commerce Code).
(a) Except as otherwise provided by law, a bank may charge an account holder a fee, service charge, or penalty relating to service or activity of a deposit account, including a fee for an overdraft, insufficient fund check, or stop payment order.
(b) Except as otherwise provided by the Truth in Savings Act (12 U.S.C. Section 4301 et seq.) or other federal law, a bank shall disclose the amount of each fee, charge, or penalty related to an account or, if the amount of a fee, charge, or penalty cannot be stated, the method of computing the fee, charge, or penalty. The disclosure must be made by written notice delivered or mailed to each customer opening an account not later than the 10th business day after the date the account is opened. A bank that increases or adds a new fee, charge, or penalty shall give notice of the change to each affected account holder in the manner provided by Section 34.302(b) for notice of an amendment of a deposit contract.
(a) A state bank may not create a lien on its assets or secure the repayment of a deposit except as authorized or required by this section, rules adopted under this subtitle, or other law.
(b) A state bank may pledge its assets to secure a deposit of:
(1) any state or an agency, political subdivision, or instrumentality of any state;
(2) the United States or an agency or instrumentality of the United States;
(3) any federally recognized Indian tribe; or
(4) another entity to the same extent and subject to the same limitations as may be authorized by the law of this state or of the United States for any other depository institution doing business in this state
(c) This section does not prohibit the pledge of assets to secure the repayment of money borrowed or the purchase of excess deposit insurance from a private insurance company.
(d) An act, deed, conveyance, pledge, or contract in violation of this section is void.
(a) Except as otherwise provided by this section, a bank lawfully doing business in this state may enter into a deposit account with a minor as the sole and absolute owner of the account and may pay checks and withdrawals and otherwise act with respect to the account on the order of the minor. A payment or delivery of rights to a minor who holds a deposit account evidenced by an acquittance signed by the minor discharges the bank to the extent of the payment made or rights delivered.
(b) The disabilities of minority of a minor who is the sole and absolute owner of the deposit account are removed for the limited purpose of enabling:
(1) the minor to enter into a depository contract with the bank; and
(2) the bank to enforce the contract against the minor, including collection of an overdraft or account fee and submission of account history to an account reporting agency or credit reporting bureau.
(c) A parent or legal guardian of a minor may deny the minor´s authority to control, transfer, draft on, or make a withdrawal from the minor´s deposit account by notifying the bank in writing. On receipt of the notice by the bank, the minor may not control, transfer, draft on, or make a withdrawal from the account during minority except with the joinder of a parent or legal guardian of the minor.
(d) If a minor with a deposit account dies, the acquittance of the minor´s parent or legal guardian discharges the liability of the bank to the extent of the acquittance, except that the aggregate discharges under this subsection may not exceed $3,000.
(e) Subsection (a) does not authorize a loan to the minor by the bank, whether on pledge of the minor´s savings account or otherwise, or bind the minor to repay a loan made except as provided by Subsection (b) or other law or unless the depository institution has obtained the express consent and joinder of a parent or legal guardian of the minor. This subsection does not apply to an inadvertent extension of credit because of an overdraft from insufficient funds, a returned check or deposit, or another shortage in a depository account resulting from normal banking operations.
(a) Subject to Subchapter B, Chapter 111 and Chapters 112 and 113, Estates Code, a bank may accept and administer a deposit account:
(1) that is opened with the bank by one or more persons expressly as a trustee for one or more other named persons; and
(2) for which further notice of the existence and terms of a trust is not given in writing to the bank.
(b) For a deposit account that is opened with a bank by one or more persons expressly as a trustee for one or more other named persons under or purporting to be under a written trust agreement, the trustee may provide the bank with a certificate of trust to evidence the trust relationship. The certificate must be an affidavit of the trustee and must include the effective date of the trust, the name of the trustee, the name of or method for choosing successor trustees, the name and address of each beneficiary, the authority granted to the trustee, the disposition of the account on the death of the trustee or the survivor of two or more trustees, other information required by the bank, and an indemnification of the bank. The bank may accept and administer the account, subject to Subchapter B, Chapter 111, and Chapter 112 and 113, Estates Code, in accordance with the certificate of trust without requiring a copy of the trust agreement. The bank is not liable for administering the account as provided by the certificate of trust, even if the certificate of trust is contrary to the terms of the trust agreement, unless the bank has actual knowledge of the terms of the trust agreement.
(c) On the death of the trustee or of the survivor of two or more trustees, the bank may pay all or part of the withdrawal value of the account with interest as provided by the certificate of trust. If the trustee did not deliver a certificate of trust, the bank´s right to treat the account as owned by a trustee ceases on the death of the trustee. On the death of the trustee or of the survivor of two or more trustees, the bank, unless the certificate of trust provides otherwise, shall pay the withdrawal value of the account with interest in equal shares to the persons who survived the trustee, are named as beneficiaries in the certificate of trust, and can be located by the bank from its own records. If there is not a certificate of trust, payment of the withdrawal value and interest shall be made as provided by Subchapter B, Chapter 111, and Chapter 112 and 113, Estates Code. Any payment made under this section for all or part of the withdrawal value and interest discharges any liability of the bank to the extent of the payment. The bank may pay all or part of the withdrawal value and interest in the manner provided by this section, regardless of whether it has knowledge of a competing claim, unless the bank receives actual knowledge that payment has been restrained by court order.
(d) This section does not obligate a bank to accept a deposit account from a trustee who does not furnish a copy of the trust agreement or to search beyond its own records for the location of a named beneficiary.
(e) This section does not affect a contractual provision to the contrary that otherwise complies with the laws of this state.
(a) Except as otherwise provided by the Truth in Lending Act (15 U.S.C. Section 1601 et seq.) or other federal law, a bank has a right of set-off, without further agreement or action, against all accounts owned by a depositor to whom or on whose behalf the bank has made an advance of money by loan, overdraft, or otherwise if the bank has previously disclosed this right to the depositor. If the depositor defaults in the repayment or satisfaction of the obligation, the bank, without notice to or consent of the depositor, may set off or cancel on its books all or part of the accounts owned by the depositor and apply the value of the accounts in payment of and to the extent of the obligation.
(b) For purposes of this section, a default occurs when an obligor has failed to make a payment as provided by the terms of the loan or other credit obligation and a grace period provided for by the agreement or law has expired. An obligation is not required to be accelerated or matured for a default to authorize set-off of the depositor´s obligation against the defaulted payment.
(c) A bank may not exercise its right of set-off under this section against an account unless the account is due the depositor in the same capacity as the defaulted credit obligation. A trust account for which a depositor is trustee, including a trustee under a certificate of trust delivered under Section 34.306(b), is not subject to the right of set-off under this section unless the trust relationship is solely evidenced by the account card as provided by Subchapter B, Chapter 111, and Chapter 112 and 113, Estates Code.
(d) This section does not limit the exercise of another right of set-off, including a right under contract or common law.
Subchapter A. Enforcement Orders: Banks and Management
This subchapter applies to a subsidiary of a state bank, a present or former officer, director, or employee of a subsidiary, or a controlling shareholder or other person participating in the affairs of a subsidiary in the same manner as the subchapter applies to a state bank, a present or former officer, director, or employee of a state bank, or a controlling shareholder or other person participating in the affairs of a state bank.
(a) If the banking commissioner determines from examination or other credible evidence that a state bank is in a condition that may warrant the issuance of an enforcement order under this chapter, the banking commissioner may notify the bank in writing of the determination, the requirements the bank must satisfy to abate the determination, and the time in which the requirements must be satisfied to avert further administrative action. The determination letter must be delivered by personal delivery or by registered or certified mail, return receipt requested.
(b) The determination letter may be issued in connection with the issuance of a cease and desist, removal, or prohibition order under this subchapter or an order of supervision or conservatorship under Subchapter B.
(a) The banking commissioner has grounds to issue a cease and desist order to a current or former officer, employee or director of a state bank, or the bank itself acting through an authorized person, if the banking commissioner determines from examination or other credible evidence that the bank or person directly or indirectly has:
(1) violated this subtitle or another applicable law;
(2) engaged in a breach of trust or other fiduciary duty;
(3) refused to submit to examination or examination under oath;
(4) conducted business in an unsafe or unsound manner; or
(5) violated a condition of the bank´s charter or an agreement between the bank or the person and the banking commissioner or the department.
(b) If the banking commissioner has grounds for action under Subsection (a) and finds that an order to cease and desist from a violation appears to be necessary and in the best interest of the bank involved and its depositors, creditors, and shareholders, the banking commissioner may serve a proposed cease and desist order on the bank and each person who committed or participated in the action. The proposed order must:
(1) be delivered by personal delivery or by registered or certified mail, return receipt requested;
(2) state with reasonable certainty the grounds for the proposed order; and
(3) state the effective date of the order, which may not be before the 21st day after the date the proposed order is delivered or mailed.
(b-1) A proposed cease and desist order may require an officer, employee, or director of a state bank, or the bank itself acting through an authorized person, to cease or desist from a violation or other practice or to take affirmative action to correct the conditions resulting from a violation or other practice, including the payment of restitution or other action that the banking commissioner determines is appropriate.
(c) The order takes effect if the bank or person against whom the proposed order is directed does not request a hearing in writing before the effective date. After taking effect, the order is final and nonappealable as to that bank or person.
(a) The banking commissioner has grounds to remove or prohibit a present or former officer, director, or employee of a state bank from office or employment in, or prohibit a controlling shareholder or other person participating in the affairs of a state bank from further participation in the affairs of, a state bank or any other entity chartered, registered, permitted, or licensed by the banking commissioner if the banking commissioner determines from examination or other credible evidence that:
(1) the person:
(A) intentionally committed or participated in the commission of an act described by Section 35.002(a) with regard to the affairs of a financial institution, as defined by Section 201.101;
(B) violated a final cease and desist order issued by a state or federal regulatory agency against the person or an entity in which the person is or was an officer, director, or employee; or
(C) made, or caused to be made, false entries in the records of a financial institution;
(2) because of this action by the person:
(A) the financial institution has suffered or will probably suffer financial loss or expense, or other damage;
(B) the interests of the depositors, creditors, or shareholders of the financial institution have been or could be prejudiced; or
(C) the person has received financial gain or other benefit by reason of the action, or likely would have if the action had not been discovered; and
(3) the action:
(A) involves personal dishonesty on the part of the person; or
(B) demonstrates wilful or continuing disregard for the safety or soundness of the financial institution.
(b) If the banking commissioner has grounds for action under Subsection (a) and finds that a removal or prohibition order appears to be necessary and in the best interest of the public, the banking commissioner may serve a proposed removal or prohibition order, as appropriate, on a person alleged to have committed or participated in the action. The proposed order must:
(1) be delivered by personal delivery or by registered or certified mail, return receipt requested;
(2) state with reasonable certainty the grounds for removal or prohibition; and
(3) state the effective date of the order, which may not be before the 21st day after the date the proposed order is delivered or mailed; and
(4) state the duration of the order, including whether the duration of the order is perpetual.
(b-1) The banking commissioner may make a removal or prohibition order perpetual or effective for a specific period of time, may probate the order, or may impose other conditions on the order.
(c) The order takes effect if the person against whom the proposed order is directed does not request a hearing in writing before the effective date. After taking effect, the order is final and nonappealable as to that person.
(a) For purposes of this section, a person is considered to have been finally convicted of an offense if the person's case is not subject to further appellate review and:
(1) a sentence was imposed on the person;
(2) the person received probation or community supervision, including deferred adjudication community supervision; or
(3) the court deferred final disposition of the person's case.
(b) The banking commissioner has grounds to remove or prohibit a present or former officer, director, or employee of a state bank from office or employment in, or prohibit a controlling shareholder or other person participating in the affairs of a state bank from further participation in the affairs of, a state bank or any other entity chartered, registered, permitted, or licensed by the banking commissioner if the person has been finally convicted of a felony offense involving:
(1) a bank or other financial institution;
(2) dishonesty; or
(3) breach of trust.
(c) If the banking commissioner has grounds for action under Subsection (b), the banking commissioner may serve a removal or prohibition order, as appropriate, on the person who has been finally convicted of a felony offense. The banking commissioner shall also serve a copy of the order on any state bank that the person is affiliated with at the time of service of the order.
(d) An order issued under this section becomes effective immediately on service and continues in effect unless the order is:
(1) stayed or terminated by the banking commissioner;
(2) set aside by the banking commissioner after a hearing; or
(3) stayed or vacated on appeal.
(e) Not later than the 30th day after the date an order is served under this section, the person against whom the order is issued may request in writing a hearing before the banking commissioner to show that the person's continued service to a state bank or participation in the affairs of a state bank does not, or is unlikely to, threaten the interests of the depositors, creditors, or shareholders of the state bank or the public confidence in the state bank.
(f) Not later than the 30th day after the date the request for a hearing is received under this section, the banking commissioner shall hold the hearing, unless the party requesting the hearing requests a later date. At the hearing, the party requesting the hearing has the burden of proof.
(g) After the hearing, the banking commissioner may affirm, modify, or set aside, in whole or in part, the order. An order affirming or modifying the order is immediately final for purposes of enforcement and appeal. The order may be appealed as provided by Sections 31.202 and 31.204.
(a) A requested hearing on a proposed order shall be held not later than the 30th day after the date the first request for a hearing on the order was received by the department unless the parties agree to a later hearing date. Not later than the 11th day before the date of the hearing, each party shall be given written notice by personal delivery or by registered or certified mail, return receipt requested, of the date set by the banking commissioner for the hearing. At the hearing, the department has the burden of proof and each person against whom the proposed order is directed may cross-examine and present evidence to show why the proposed order should not be issued.
(b) After the hearing, the banking commissioner shall issue or decline to issue the proposed order. The proposed order may be modified as necessary to conform to the findings at the hearing and to require the board to take necessary affirmative action to correct the conditions cited in the order.
(c) An order issued under this section is immediately final for purposes of enforcement and appeal. The order may be appealed as provided by Sections 31.202 and 31.204.
(a) If the banking commissioner believes that immediate action is necessary to prevent immediate and irreparable harm to the bank and its depositors, creditors, and shareholders, the banking commissioner may issue one or more cease and desist, removal, or prohibition orders as emergency orders to become effective immediately on service without prior notice or hearing. Service must be by personal delivery or by registered or certified mail, return receipt requested.
(b) In each emergency order the banking commissioner shall notify the bank and any person against whom the emergency order is directed of:
(1) the specific conduct requiring the order;
(2) the citation of each law alleged to have been violated;
(3) the immediate and irreparable harm alleged to be threatened;
(4) the duration of the order, including whether the duration of the order is perpetual; and
(5) the right to a hearing.
(c) Unless a person against whom the emergency order is directed requests a hearing in writing before the 11th day after the date it is served on the person, the emergency order is final and nonappealable as to that person.
(d) A hearing requested under Subsection (c) must be:
(1) given priority over all other matters pending before the banking commissioner; and
(2) held not later than the 20th day after the date that it is requested unless the parties agree to a later hearing date.
(e) After the hearing, the banking commissioner may affirm, modify, or set aside in whole or part the emergency order. An order affirming or modifying the emergency order is immediately final for purposes of enforcement and appeal. The order may be appealed as provided by Sections 31.202 and 31.204.
(f) An emergency order continues in effect unless the order is stayed by the banking commissioner. The banking commissioner may impose any condition before granting a stay of the emergency order.
A copy of a determination letter, proposed order, emergency order, or final order issued by the banking commissioner under this subchapter shall be immediately brought to the attention of the board of the affected bank, regardless of whether the bank is a party, and filed in the minutes of the board. Each director shall immediately certify to the banking commissioner in writing that the certifying person has read and understood the determination letter, proposed order, emergency order, or final order. The required certification may not be considered an admission of a person in a subsequent legal or administrative proceeding.
(a) Except as otherwise provided by law, without the prior written approval of the banking commissioner, a person subject to a final and enforceable removal or prohibition order issued by the banking commissioner, or by another state, federal, or foreign financial institution regulatory agency, may not:
(1) serve as a director, officer, or employee of a state bank, state trust company, or holding company of a state bank, or as a director, officer, or employee with financial responsibility of any other entity chartered, registered, permitted, or licensed by the banking commissioner under the laws of this state;
(2) directly or indirectly participate in any manner in the management of such an entity;
(3) directly or indirectly vote for a director of such an entity; or
(4) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote a proxy, consent, or authorization with respect to voting rights in such an entity.
(b) The person subject to the order remains entitled to receive dividends or a share of profits, return of contribution, or other distributive benefit from such an entity with respect to voting securities owned by the person.
(c) If voting securities of an entity identified in Subsection (a)(1) cannot be voted under this section, the voting securities are considered to be authorized but unissued for purposes of determining the procedures for and results of an affected vote.
(d) [Repealed eff. Sept. 1, 2007, by Acts 2007, 80th Leg., ch. 237, §80.]
(e) This section and Section 35.008 do not prohibit a removal or prohibition order that has indefinite duration or that by its terms is perpetual.
(a) After the expiration of 10 years from date of issuance, a person who is subject to a prohibition or removal order issued under this subchapter, regardless of the order's stated duration or date of issuance, may apply to the banking commissioner to be released from the order.
(b) The application must be made under oath and in the form required by the banking commissioner. The application must be accompanied by any required fees.
(c) The banking commissioner, in the exercise of discretion, may approve or deny an application filed under this section.
(d) The banking commissioner's decision under Subsection (c) is final and not appealable.
The banking commissioner may not initiate an enforcement action under this subchapter later than the fifth anniversary of the date the banking commissioner discovered or reasonably should have discovered the conduct involved.
(a) If the banking commissioner reasonably believes that a bank or other person has violated any of the following, the banking commissioner may take any action authorized under Subsection (a-1):
(1) this subtitle or rules enacted under this subtitle and, as a result of that violation, exposed or could have exposed the bank or the bank's depositors, creditors, or shareholders to harm;
(2) other applicable law of this state and, as a result of that violation, exposed or could have exposed the bank or the bank's depositors, creditors, or shareholders to harm; or
(3) a final order issued by the banking commissioner.
(a-1) The banking commissioner may:
(1) initiate an administrative penalty proceeding against the bank or other person, in accordance with Sections 35.010 and 35.011;
(2) refer the matter to the attorney general for enforcement by injunction or other available remedy; or
(3) pursue any other action the banking commissioner considers appropriate under applicable law.
(b) If the attorney general prevails in an action brought under Subsection (a-1)(2), the attorney general is entitled to recover reasonable attorney's fees from the bank or person committing the violation.
(a) The banking commissioner may initiate a proceeding for an administrative penalty against a bank or other person by serving on the bank or other person, as applicable, notice of the time and place of a hearing on the penalty. The hearing may not be held earlier than the 20th day after the date the notice is served. The notice must:
(1) be served by personal delivery or by registered or certified mail, return receipt requested;
(2) contain a statement of the conduct alleged to constitute a violation; and
(3) if the alleged violation is described by Section 35.009(a)(1) or (2), identify corrective action that the bank or other person must take to avoid or reduce the amount of a penalty that would otherwise be imposed under this section.
(b) In determining the amount of any penalty to be imposed, the banking commissioner shall consider the following factors:
(1) the financial resources of the bank or other person;
(2) the good faith of the bank or other person, including any corrective action taken;
(3) the gravity of the violation;
(4) the history of previous violations;
(5) an offset of the amount of the penalty by the amount of any penalty imposed by another state or federal agency for the same conduct; and
(6) any other matter that justice may require.
(c) If the banking commissioner determines after the hearing that the alleged conduct occurred and that the conduct constitutes a violation, the banking commissioner may impose an administrative penalty against a bank or other person, as applicable, in an amount:
(1) if imposed against a bank, not more than $10,000 for each violation for each day the violation continues, except that the maximum administrative penalty that may be imposed is the lesser of $500,000 or one percent of the bank's assets; or
(2) if imposed against a person other than a bank, not more than $5,000 for each violation for each day the violation continues, except that the maximum administrative penalty that may be imposed is $250,000.
(a) When a penalty order under Section 35.010 becomes final, the bank or other person, as applicable, shall pay the penalty or appeal by filing a petition for judicial review.
(b) The petition for judicial review stays the penalty order during the period preceding the decision of the court. If the court sustains the order, the court shall order the bank or other person, as applicable, to pay the full amount of the penalty or a lower amount determined by the court. If the court does not sustain the order, a penalty is not owed. If the final judgment of the court requires payment of a penalty, interest accrues on the penalty, at the rate charged on loans to depository institutions by the Federal Reserve Bank of New York, beginning on the date the judgment is final and ending on the date the penalty and interest are paid.
(c) If the bank or other person, as applicable, does not pay the penalty imposed under a final and nonappealable penalty order, the banking commissioner shall refer the matter to the attorney general for enforcement. The attorney general is entitled to recover reasonable attorney's fees from the bank or other person, as applicable, if the attorney general prevails in judicial action necessary for collection of the penalty.
A copy of a notice, correspondence, transcript, pleading, or other document in the records of the department relating to an order issued under this subchapter is confidential and may be released only as provided by Subchapter D, Chapter 31,2 except that the banking commissioner periodically shall publish all final removal and prohibition orders. The banking commissioner may release a final cease and desist order, a final order imposing an administrative penalty, or information regarding the existence of any of those orders to the public if the banking commissioner concludes that the release would enhance effective enforcement of the order.
The department may sue to enforce the collection of a fee owed to the department under a law administered by the depatment. In the suit a certificate by the banking commissioner showing the delinquency is prima facie evidence of:
(1) the levy of the fee or the delinquency of the stated fee amount; and
(2) compliance by the department with the law relating to the computation and levy of the fee.
Subchapter B. Supervision and Conservatorship3
This subchapter applies to a subsidiary of a state bank, a present or former officer, director, or employee of a subsidiary, or a controlling shareholder or other person participating in the affairs of a subsidiary in the same manner as the subchapter applies to a state bank, a present or former officer, director, or employee of a state bank, or a controlling shareholder or other person participating in the affairs of a state bank.
(a) The banking commissioner by order may appoint a supervisor over a state bank if the banking commissioner determines from examination or other credible evidence that the bank is in hazardous condition and that an order of supervision appears to be necessary and in the best interest of the bank and its depositors, creditors, and shareholders, or the public.
(b) The banking commissioner may issue the order without prior notice.
(c) Subject to Subsection (d), a supervisor serves until the earlier of:
(1) the expiration of the period stated in the order of supervision; or
(2) the date the banking commissioner determines that the requirements for abatement of the order have been satisfied.
(d) The banking commissioner may terminate an order of supervision at any time.
(a) The banking commissioner by order may appoint a conservator for a state bank if the banking commissioner determines from examination or other credible evidence that the bank is in hazardous condition and immediate and irreparable harm is threatened to the bank, its depositors, creditors, or shareholders, or the public.
(b) The banking commissioner may issue the order without prior notice at any time before, during, or after the period of supervision.
(c) An order of conservatorship issued under this section must specifically state the basis for the order.
(a) An order issued under Section 35.101 or 35.102 must contain or be accompanied by a notice that, at the request of the bank, a hearing before the banking commissioner will be held at which the bank may cross-examine and present evidence to contest the order or show that the bank has satisfied all requirements for abatement of the order. The department has the burden of proof for any continuation of the order or the issuance of a new order.
(b) To contest or modify the order or demonstrate that the bank has satisfied all requirements for abatement of the order, the bank must submit to the banking commissioner a written request for a hearing. The request must state the grounds for the request to set aside or modify the order. On receiving a request for hearing, the banking commissioner shall serve notice of the place and time of the hearing, which must be not later than the 10th day after the date the banking commissioner receives the request for a hearing unless the parties agree to a later hearing date. The notice must be delivered by personal delivery or by registered or certified mail, return receipt requested.
(c) The banking commissioner may:
(1) delay a decision for a prompt examination of the bank; and
(2) reopen the record as necessary to allow presentation of the results of the examination and appropriate opportunity for cross-examination and presentation of other relevant evidence.
(a) If after the hearing the banking commissioner finds that the bank has been rehabilitated, that its hazardous condition has been remedied, that irreparable harm is no longer threatened, or that the bank should otherwise be released from the order, the banking commissioner shall release the bank from the order, subject to conditions the banking commissioner from the evidence believes are warranted to preserve the safety and soundness of the bank.
(b) If after the hearing the banking commissioner finds that the bank has failed to comply with the lawful requirements of the banking commissioner, has not been rehabilitated, is insolvent, or otherwise continues in hazardous condition, the banking commissioner by order shall:
(1) appoint or reappoint a supervisor under Section 35.101;
(2) appoint or reappoint a conservator under Section 35.102; or
(3) take other appropriate action authorized by law.
(c) An order issued under Subsection (b) is immediately final for purposes of appeal. The order may be appealed as provided by Sections 31.202 and 31.204.
An order issued under this subchapter and a copy of a notice, correspondence, transcript, pleading, or other document in the records of the department relating to the order are confidential and may be released only as provided by Subchapter D, Chapter 31, except that the banking commissioner may release to the public an order or information regarding the existence of an order if the banking commissioner concludes that the release would enhance effective enforcement of the order.
During a period of supervision, a bank, without the prior approval of the banking commissioner or the supervisor or as otherwise permitted or restricted by the order of supervision, may not:
(1) dispose of, sell, transfer, convey, or encumber the bank´s assets;
(2) lend or invest the bank´s money;
(3) incur a debt, obligation, or liability;
(4) pay a cash dividend to the bank´s shareholders;
(5) remove an executive officer or director, change the number of executive officers or directors, or have any other change in the position of executive officer or director; or
(6) engage in any other activity determined by the banking commissioner to threaten the safety and soundness of the bank.
(a) A conservator appointed under this subchapter shall immediately take charge of the bank and all of its property, books, records, and affairs on behalf and at the direction and control of the banking commissioner.
(b) Subject to any limitation in the order of appointment or other direction of the banking commissioner, the conservator has all the powers of the directors, officers, and shareholders of the bank and shall conduct the business of the bank and take all steps the conservator considers appropriate to remove the conditions causing the conservatorship. During the conservatorship, the board may not direct or participate in the affairs of the bank.
(c) Except as otherwise provided by this subchapter, by rules adopted under this subtitle, or by Section 12.106, the conservator has the rights and privileges and is subject to the duties, restrictions, penalties, conditions, and limitations of the directors, officers, and employees of state banks.
The banking commissioner may appoint as a supervisor or conservator any person who in the judgment of the banking commissioner is qualified to serve. The banking commissioner may serve as, or may appoint an employee of the department to serve as, supervisor or conservator.
(a) The banking commissioner shall determine and approve the reasonable expenses attributable to the service of a supervisor or conservator, including costs incurred by the department and the compensation and expenses of the supervisor or conservator and any professional employees appointed to represent or assist the supervisor or conservator. The banking commissioner or an employee of the department may not receive compensation in addition to salary for serving as supervisor or conservator, but the department may receive reimbursement for the fully allocated personnel cost associated with service of the banking commissioner or an employee of the department as supervisor or conservator.
(b) All approved expenses shall be paid by the bank as the banking commissioner determines. The banking commissioner has a lien against the assets and money of the bank to secure payment of approved expenses. The lien has a higher priority than any other lien against the bank.
(c) Notwithstanding any other provision of this subchapter, the bank may employ an attorney and other persons the bank selects to assist the bank in contesting or satisfying the requirements of an order of supervision or conservatorship. The banking commissioner shall authorize the payment of reasonable fees and expenses from the bank for the attorney and other persons as expenses of the supervision or conservatorship.
(d) The banking commissioner may defer collection of assessment and examination fees by the department from the bank during a period of supervision or conservatorship if deferral would appear to aid prospects for rehabilitation. As a condition of release from supervision or conservatorship, the banking commissioner may require the rehabilitated bank to pay or develop a reasonable plan for payment of deferred fees.
(a) Notwithstanding Section 35.107(b), a majority of the bank´s board, acting directly or through counsel who affirmatively represents that the requisite majority has been obtained, may request in writing that the banking commissioner review an action taken or proposed by the supervisor or conservator. The request must specify why the action would not be in the best interest of the bank. The banking commissioner shall investigate to the extent necessary and make a prompt written ruling on the request. If the action has not yet been taken or if the effect of the action can be postponed, the banking commissioner may stay the action on request pending review.
(b) If a majority of the bank´s board objects to the banking commissioner´s ruling, the majority may request a hearing before the banking commissioner. The request must be made not later than the 10th day after the date the bank is notified of the ruling.
(c) The banking commissioner shall give the board notice of the time and place of the hearing by personal delivery or by registered or certified mail, return receipt requested. The hearing may not be held later than the 10th day after the date the banking commissioner receives the request for a hearing unless the parties agree to a later hearing date. At the hearing the board has the burden of proof to demonstrate that the action is not in the best interest of the bank.
(d) After the hearing, the banking commissioner may affirm, modify, or set aside in whole or part the prior ruling. An order supporting the action contested by the board is immediately final for purposes of appeal. The order may be appealed as provided by Sections 31.202 and 31.204.
(a) A suit filed against a bank while the bank is under conservatorship, or against a person in connection with an action taken or decision made by that person as a supervisor or conservator of a bank, must be brought in Travis County regardless of whether the bank remains under supervision or conservatorship.
(b) A conservator may sue a person on the bank´s behalf to preserve, protect, or recover a bank asset, including a claim or cause of action. Venue is in:
(1) Travis County; or
(2) another location provided by law.
A supervisor or conservator serves for the period necessary to accomplish the purposes of the supervision or conservatorship as intended by this subchapter. A rehabilitated bank shall be returned to its former or new management under conditions reasonable and necessary to prevent recurrence of the conditions causing the supervision or conservatorship.
The banking commissioner may take any action authorized by Chapter 36 regardless of the existence of supervision or conservatorship. A period of supervision or conservatorship is not required before a bank is closed for liquidation or other remedial action is taken.
This subchapter does not prevent release of the bank from supervision or conservatorship before a hearing if the banking commissioner is satisfied that requirements for abatement have been adequately satisfied.
Subchapter C. Unauthorized Activity: Investigation and Enforcement
This subchapter does not apply to a financial institution, as that term is defined by Section 201.101, that lawfully maintains its main office or a branch in this state.
(a) If the banking commissioner has reason to believe that a person has engaged, is engaging, or is likely to engage in an unauthorized activity, the banking commissioner may:
(1) investigate as necessary within or outside this state to:
(A) determine whether the unauthorized activity has occurred or is likely to occur; or
(B) aid in the enforcement of the laws administered by the banking commissioner;
(2) initiate appropriate disciplinary action as provided by this subchapter; and
(3) report unauthorized activity to a law enforcement agency or another regulatory agency with appropriate jurisdiction.
(b) The banking commissioner may:
(1) on written request furnish to a law enforcement agency evidence the banking commissioner has compiled in connection with the unauthorized activity, including materials, documents, reports, and complaints; and
(2) assist the law enforcement agency or other regulatory agency as requested.
(c) A person acting without malice, fraudulent intent, or bad faith is not subject to liability, including liability for libel, slander, or another relevant tort, because the person files a report or furnishes, orally or in writing, information concerning a suspected, anticipated, or completed unauthorized activity to a law enforcement agency, the banking commissioner, another regulatory agency with appropriate jurisdiction, or an agent or employee of a law enforcement agency, the banking commissioner, or other regulatory agency. The person is entitled to attorney´s fees and court costs if the person prevails in an action for libel, slander, or another relevant tort based on the report or other information the person furnished as provided by this subchapter.
(d) This section does not:
(1) affect a common law or statutory privilege or immunity;
(2) preempt the authority or relieve the duty of a law enforcement agency or other regulatory agency with appropriate jurisdiction to investigate and prosecute suspected criminal acts;
(3) prohibit a person from voluntarily disclosing information to a law enforcement agency or other regulatory agency; or
(4) limit a power or duty granted to the banking commissioner under this subtitle or other law.
(a) This section applies only to an investigation of an unauthorized activity as provided by Section 35.202 and does not affect the conduct of a contested case under Chapter 2001, Government Code.
(b) The banking commissioner may issue a subpoena to compel the attendance and testimony of a witness or the production of a book, account, record, paper, or correspondence relating to a matter that the banking commissioner has authority to consider or investigate at the department´s offices in Austin or at another place the banking commissioner designates.
(c) The subpoena must be signed and issued by the banking commissioner or a deputy banking commissioner.
(d) A person who is required by subpoena to attend a proceeding before the banking commissioner is entitled to receive:
(1) reimbursement for mileage, in the amount provided for travel by a state employee, for traveling to or returning from a proceeding that is more than 25 miles from the witness´s residence; and
(2) a fee for each day or part of a day the witness is necessarily present as a witness in an amount equal to the per diem travel allowance of a state employee.
(e) The banking commissioner may serve the subpoena or have it served by an authorized agent of the banking commissioner, a sheriff, or a constable. The sheriff´s or constable´s fee for serving the subpoena is the same as the fee paid the sheriff or constable for similar services.
(f) A person possessing materials located outside this state that are requested by the banking commissioner may make the materials available to the banking commissioner or a representative of the banking commissioner for examination at the place where the materials are located. The banking commissioner may:
(1) designate a representative, including an official of the state in which the materials are located, to examine the materials; and
(2) respond to a similar request from an official of another state, the United States, or a foreign country.
(g) A subpoena issued under this section to a financial institution is not subject to Section 59.006.
(h) Except to the extent disclosure is necessary to locate and produce responsive records or obtain legal representation and subject to Subsection (i), a subpoena issued under this section may provide that the person to whom the subpoena is directed or any person who comes into receipt of the subpoena may not:
(1) disclose that the subpoena has been issued;
(2) disclose or describe any records requested in the subpoena;
(3) disclose whether records have been furnished in response to the subpoena; or
(4) if the subpoena requires a person to be examined under oath, disclose or describe the examination, including the questions asked, the testimony given, or the transcript produced.
(i) A subpoena issued under this section may prohibit the disclosure of information described by Subsection (h) only if the banking commissioner finds, and the subpoena states, that:
(1) the subpoena, the examination, or the records relate to an ongoing investigation; and
(2) the disclosure could significantly impede or jeopardize the investigation.
(a) If necessary, the banking commissioner may apply to a district court of Travis County or of the county in which the subpoena was served for enforcement of the subpoena, and the court may issue an order compelling compliance.
(b) If the court orders compliance with the subpoena or finds the person in contempt for failure to obey the order, the banking commissioner, or the attorney general if representing the banking commissioner, may recover reasonable court costs, attorney´s fees, and investigative costs incurred in the proceeding.
(a) A book, account, record, paper, correspondence, or other document subpoenaed and produced under Section 35.203 that is otherwise made privileged or confidential by law remains privileged or confidential unless admitted into evidence at an administrative hearing or in a court. The banking commissioner may issue an order protecting the confidentiality or privilege of the document and restricting its use or distribution by any person or in any proceeding, other than a proceeding before the banking commissioner.
(b) Subject to Subchapter D, Chapter 31, and confidentiality provisions of other law administered by the banking commissioner, information or material acquired under Section 35.203 under a subpoena is not a public record for the period the banking commissioner considers reasonably necessary to complete the investigation, to protect the person being investigated from unwarranted injury, or to serve the public interest. The information or material is not subject to a subpoena, except a grand jury subpoena, until released for public inspection by the banking commissioner or until, after notice and a hearing, a district court determines that the public interest and any investigation by the banking commissioner would not be jeopardized by obeying the subpoena. The district court order may not apply to:
(1) a record or communication received from another law enforcement or regulatory agency except on compliance with the confidentiality laws governing the records of the other agency; or
(2) an internal note, memorandum, report, or communication made in connection with a matter that the banking commissioner has the authority to consider or investigate, except on good cause and in compliance with applicable confidentiality laws.
(a) On certification by the banking commissioner, a book, record, paper, or document produced or testimony taken as provided by Section 35.203 and held by the department is admissible as evidence in any case without prior proof of its correctness and without other proof. The certified book, record, document, or paper, or a certified copy, is prima facie evidence of the facts it contains.
(b) This section does not limit another provision of this subtitle or a law that provides for the admission of evidence or its evidentiary value.
(a) The banking commissioner may serve a proposed cease and desist order on a person that the banking commissioner believes is engaging or is likely to engage in an unauthorized activity. The order must:
(1) be delivered by personal delivery or registered or certified mail, return receipt requested, to the person´s last known address;
(2) state each act or practice alleged to be an unauthorized activity; and
(3) state the effective date of the order, which may not be before the 21st day after the date the proposed order is delivered or mailed.
(b) Unless the person against whom the proposed order is directed requests a hearing in writing before the effective date of the proposed order, the order takes effect and is final and nonappealable as to that person.
(c) A requested hearing on a proposed order shall be held not later than the 30th day after the date the first written request for a hearing on the order is received by the department unless the parties agree to a later hearing date. At the hearing, the department has the burden of proof and must present evidence in support of the order. Each person against whom the order is directed may cross-examine and show cause why the order should not be issued.
(d) After the hearing, the banking commissioner shall issue or decline to issue a cease and desist order. The proposed order may be modified as necessary to conform to the findings at the hearing. An order issued under this subsection:
(1) is immediately final for purposes of enforcement and appeal; and
(2) must require the person to immediately cease and desist from the unauthorized activity.
(a) The banking commissioner may issue an emergency cease and desist order to a person whom the banking commissioner reasonably believes is engaging in a continuing unauthorized activity that is fraudulent or threatens immediate and irreparable public harm.
(b) The order must:
(1) be delivered on issuance to each person affected by the order by personal delivery or registered or certified mail, return receipt requested, to the person´s last known address;
(2) state the specific charges and require the person immediately to cease and desist from the unauthorized activity; and
(3) contain a notice that a request for hearing may be filed under this section.
(c) Unless a person against whom the order is directed requests a hearing in writing before the 11th day after the date it is served on the person, the emergency order is final and nonappealable as to that person. A request for a hearing must:
(1) be in writing and directed to the banking commissioner; and
(2) state the grounds for the request to set aside or modify the order.
(d) On receiving a request for a hearing, the banking commissioner shall serve notice of the time and place of the hearing by personal delivery or registered or certified mail, return receipt requested. The hearing must be held not later than the 10th day after the date the banking commissioner receives the request for a hearing unless the parties agree to a later hearing date. At the hearing, the department has the burden of proof and must present evidence in support of the order. The person requesting the hearing may cross-examine witnesses and show cause why the order should not be affirmed.
(e) After the hearing, the banking commissioner shall affirm, modify, or set aside in whole or part the emergency cease and desist order. An order affirming or modifying the emergency cease and desist order is immediately final for purposes of enforcement and appeal.
(f) An order continues in effect unless the order is stayed by the banking commissioner. The banking commissioner may impose any condition before granting a stay of the order.
(a) A person affected by a cease and desist order issued, affirmed, or modified after a hearing may file a petition for judicial review.
(b) A filed petition for judicial review does not stay or vacate the order unless the court, after hearing, specifically stays or vacates the order.
(a) If the banking commissioner reasonably believes that a person has violated a final and enforceable cease and desist order, the banking commissioner may:
(1) initiate an administrative penalty proceeding under Section 35.211;
(2) refer the matter to the attorney general for enforcement by injunction and any other available remedy; or
(3) pursue any other action the banking commissioner considers appropriate under applicable law.
(b) If the attorney general prevails in an action brought under Subsection (a)(2), the attorney general is entitled to reasonable attorney´s fees.
(a) The banking commissioner may initiate an action for an administrative penalty against a person for violation of a cease and desist order by serving on the person notice of the time and place of a hearing on the penalty. The notice must be delivered by personal delivery or certified mail, return receipt requested, to the person´s last known address. The hearing may not be held earlier than the 20th day after the date the notice is served. The notice must contain a statement of the facts or conduct alleged to violate the cease and desist order.
(b) In determining whether a cease and desist order has been violated, the banking commissioner shall consider the maintenance of procedures reasonably adopted to ensure compliance with the order.
(c) If the banking commissioner after the hearing determines that a cease and desist order has been violated, the banking commissioner may:
(1) impose an administrative penalty in an amount not to exceed $25,000 for each discrete unauthorized act;
(2) direct the person against whom the order was issued to make complete restitution, in the form and amount and within the period determined by the banking commissioner, to each resident of this state and entity operating in this state damaged by the violation; or
(3) both impose the penalty and direct restitution.
(d) In determining the amount of the penalty and whether to impose restitution, the banking commissioner shall consider:
(1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of any prohibited act;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter future violations;
(5) efforts to correct the violation;
(6) whether the violation was intentional or unintentional;
(7) the financial ability of the person against whom the penalty is to be assessed; and
(8) any other matter that justice may require.
(a) When an administrative penalty order under Section 35.211 becomes final, a person affected by the order, within the time permitted by law for appeal, shall:
(1) pay the amount of the penalty;
(2) pay the amount of the penalty and file a petition for judicial review contesting the occurrence of the violation, the amount of the penalty, or both; or
(3) without paying the amount of the penalty, file a petition for judicial review contesting the occurrence of the violation, the amount of the penalty, or both.
(b) Within the time permitted by law for appeal, a person who acts under Subsection (a)(3) may:
(1) stay enforcement of the penalty by:
(A) paying the amount of the penalty to the court for placement in an escrow account; or
(B) giving the court a supersedeas bond that is approved by the court for the amount of the penalty and that is effective until all judicial review of the order is final; or
(2) request the court to stay enforcement of the penalty by:
(A) filing with the court a sworn affidavit of the person stating that the person is financially unable to pay the amount of the penalty and is financially unable to give the supersedeas bond; and
(B) giving a copy of the affidavit to the banking commissioner by certified mail.
(c) Not later than the fifth day after the date the banking commissioner receives a copy of an affidavit under Subsection (b)(2), the banking commissioner may file with the court a contest to the affidavit. The court shall hold a hearing on the facts alleged in the affidavit as soon as practicable and shall stay the enforcement of the penalty on finding that the alleged facts are true. The person who files an affidavit has the burden of proving that the person is financially unable to pay the amount of the penalty and to give a supersedeas bond.
(d) If the person does not pay the amount of the penalty and the enforcement of the penalty is not stayed, the banking commissioner may refer the matter to the attorney general for collection of the amount of the penalty.
(a) If on judicial review the court sustains the penalty order, the court shall order the person to pay the full amount of the penalty or a lower amount determined by the court. If the court does not sustain the order, a penalty is not owed.
(b) When the judgment of the court becomes final, if the person paid the amount of the penalty and if that amount is reduced or is not upheld by the court, the court shall order that the appropriate amount plus accrued interest computed at the annual rate of 10 percent be remitted by the department. The interest shall be paid for the period beginning on the date the penalty was paid and ending on the date the penalty is remitted. If the person gave a supersedeas bond and if the amount of the penalty is not upheld by the court, the court shall order the release of the bond. If the person gave a supersedeas bond and if the amount of the penalty is reduced, the court shall order the release of the bond after the person pays the amount owed.
(c) If the judgment of the court requires payment of a penalty that has not previously been paid, the court shall order as part of its judgment that interest accrues on the penalty at the annual rate of 10 percent, beginning on the date the judgment is final and ending on the date the penalty and interest are paid.
Subchapter A. General Provisions
In this chapter, "administrative expense" means:
(1) an expense designated as an administrative expense by Subchapter C or D;
(2) court costs and expenses of operation and liquidation of a bank estate;
(3) wages owed to an employee of a bank for services rendered within three months before the date the bank was closed for liquidation and not exceeding:
(A) $2,000 to each employee; or
(B) another amount set by rules adopted under this subtitle;
(4) current wages owed to a bank employee whose services are retained by the receiver for services rendered after the date the bank is closed for liquidation;
(5) an unpaid expense of supervision or conservatorship of the bank before its closing for liquidation; and
(6) any unpaid fees or assessments owed to the department.
(a) Unless the banking commissioner so requests, a court may not:
(1) order the closing or suspension of operation of a state bank; or
(2) appoint for a state bank a receiver, supervisor, conservator, liquidator, or other person with similar responsibility.
(b) A person may not be designated a receiver, supervisor, conservator, or liquidator without the voluntary approval of the banking commissioner.
(c) This chapter prevails over any conflicting law of this state.
(a) The banking commissioner without court action may tender a state bank that has been closed for liquidation to the Federal Deposit Insurance Corporation or its successor as receiver and liquidating agent if the deposits of the bank were insured by the Federal Deposit Insurance Corporation or its successor on the date of closing.
(b) After acceptance of tender of the bank, the Federal Deposit Insurance Corporation or its successor shall perform the acts and duties as receiver of the bank that it considers necessary or desirable and that are permitted or required by federal law or this chapter.
(c) If the Federal Deposit Insurance Corporation or its successor refuses to accept tender of the bank, the banking commissioner shall act as receiver.
(a) On request of the banking commissioner, the court in which a liquidation proceeding is pending may:
(1) appoint an independent receiver; and
(2) require a suitable bond of the independent receiver.
(b) On appointment of an independent receiver, the banking commissioner is discharged as receiver and remains a party to the liquidation proceeding with standing to initiate or contest any motion. The views of the banking commissioner are entitled to deference unless they are inconsistent with the plain meaning of this chapter.
(a) If a state bank in the process of voluntary or involuntary dissolution and liquidation is acting as trustee, guardian, executor, administrator, or escrow agent, or in another fiduciary or custodial capacity, the banking commissioner may authorize the sale of the bank´s administration of fiduciary accounts to a successor entity with fiduciary powers.
(b) The successor entity, without the necessity of action by a court or the creator or a beneficiary of the fiduciary relationship, shall:
(1) continue the office, trust, or fiduciary relationship; and
(2) perform all the duties and exercise all the powers connected with or incidental to the fiduciary relationship as if the successor entity had been originally designated as the fiduciary.
(c) This section applies to all fiduciary relationships, including a trust established for the benefit of a minor by court order under Section 142.005, Property Code. This section does not affect any right of a court or a party to the instrument governing the fiduciary relationship to subsequently designate another trustee as the successor fiduciary.
Subchapter B. Voluntary Dissolution
(a) A state bank may initiate voluntary dissolution and surrender its charter as provided by this subchapter:
(1) with the approval of the banking commissioner;
(2) after complying with the provisions of the Business Organizations Code regarding board and shareholder approval for voluntary dissolution; and
(3) by filing the documents as provided by Section 36.102.
(b) The shareholders of a state bank initiating voluntary dissolution by resolution shall appoint one or more persons to act as the liquidating agent or committee. The liquidating agent or committee shall conduct the liquidation as provided by law and under the supervision of the bank´s board. The board, in consultation with the banking commissioner, shall require the liquidating agent or committee to give a suitable bond.
After resolutions to dissolve and liquidate a state bank have been adopted by the bank´s board and shareholders, a majority of the directors shall verify and file with the banking commissioner certified copies of:
(1) the resolutions of the shareholders that:
(A) are adopted at a meeting for which proper notice was given or by unanimous written consent; and
(B) approve the dissolution and liquidation of the bank;
(2) the resolutions of the board approving the dissolution and liquidation of the bank; and
(3) the notice to the shareholders or participants informing them of the meeting.
The banking commissioner shall review the documentation submitted under Section 36.102 and conduct any necessary investigation or examination. If the proceedings appear to have been properly conducted and the bond to be given by the liquidating agent or committee is adequate for its purposes, the banking commissioner shall consent to dissolution and direct the bank to publish notice of its pending dissolution.
(a) A state bank initiating voluntary dissolution shall publish notice of its pending dissolution in a newspaper of general circulation in each community where its home office or a branch is located:
(1) at least once each week for eight consecutive weeks; or
(2) at other times specified by the banking commissioner or rules adopted under this subtitle.
(b) The notice must:
(1) be in the form and include the information required by the banking commissioner; and
(2) state that:
(A) the bank is liquidating;
(B) depositors and creditors must present their claims for payment on or before a specified date; and
(C) all safe deposit box holders and bailors of property left with the bank should remove their property on or before a specified date.
(c) The dates selected by the bank under Subsection (b) must:
(1) be approved by the banking commissioner; and
(2) allow:
(A) the affairs of the bank to be wound up as quickly as feasible; and
(B) creditors, depositors, and owners of property adequate time for presentation of claims, withdrawal of accounts, and redemption of property.
(d) The banking commissioner may adjust the dates under Subsection (b) with or without republication of notice if additional time appears needed for the activities to which the dates pertain.
(e) At the time of or promptly after publication of the notice, the bank shall mail to each of the bank´s known depositors, creditors, safe deposit box holders, and bailors of property left with the bank, at the mailing address shown on the bank´s records, an individual notice containing:
(1) the information required in a notice under Subsection (b); and
(2) specific information pertinent to the account or property of the addressee.
(a) A contract between the bank and a person for bailment, of deposit for hire, or for lease of a safe, vault, or box ceases on the date specified in the notice as the date for removal of property or a later date approved by the banking commissioner. A person who has paid rental or storage charges for a period extending beyond the date designated for removal of property has an unsecured claim against the bank for a refund of the unearned amount paid.
(b) If the property is not removed by the date the contract ceases, an officer of the bank shall inventory the property. In making the inventory the officer may open a safe, vault, or box, or any package, parcel, or receptacle, in the custody or possession of the bank. The inventory must be made in the presence of a notary public who is not an officer or employee of the bank and who is bonded in an amount and by sureties approved by the banking commissioner. The property shall be marked to identify, to the extent possible, its owner or the person who left it with the bank. After all property belonging to others that is in the bank´s custody and control has been inventoried, a master list certified by the bank officer and the notary public shall be furnished to the banking commissioner. The master list shall be kept in a place and dealt with in a manner the banking commissioner specifies pending delivery of the property to its owner or to the comptroller as unclaimed property.
Unless the banking commissioner directs or consents otherwise, the home office and all branch offices of a state bank initiating voluntary dissolution shall remain open for business during normal business hours until the last date specified in published notices for presentation of claims, withdrawal of accounts, and redemption of property.
(a) As soon after publication of the notice of dissolution as is practicable, the bank shall:
(1) terminate all fiduciary positions it holds;
(2) surrender all property held by it as a fiduciary; and
(3) settle its fiduciary accounts.
(b) Unless all fiduciary accounts are settled and transferred by the last date specified in published notices or by the banking commissioner and unless the banking commissioner directs otherwise, the bank shall mail a notice to each trustor and beneficiary of any remaining trust, escrow arrangement, or other fiduciary relationship. The notice must state:
(1) the location of an office open during normal business hours where administration of the remaining fiduciary accounts will continue until settled or transferred; and
(2) a telephone number at that office.
(a) After the bank has taken all of the actions specified by Sections 36.102, 36.105, and 36.107 paid all its debts and obligations, and transferred all property for which a legal claimant has been found after the time for presentation of claims has expired, the bank shall make a list from its books of the names of each depositor, creditor, owner of personal property in the bank´s possession or custody, or lessee of any safe, vault, or box, who has not claimed or has not received a deposit, debt, dividend, interest, balance, or other amount or property due to the person. The list must be sworn to or affirmed by a majority of the bank´s board.
(b) The bank shall:
(1) file the list and any necessary identifying information with the banking commissioner;
(2) pay any unclaimed money and deliver any unclaimed property to the comptroller as provided by Chapter 74, Property Code; and
(3) certify to the banking commissioner that the unclaimed money has been paid and unclaimed property has been delivered to the comptroller.
(c) After the banking commissioner has reviewed the list and has reconciled the unclaimed cash and property with the amounts of money and property reported and transferred to the comptroller, the banking commissioner shall allow the bank to distribute the bank´s remaining assets, if any, among its shareholders, as their ownership interests appear.
(d) After distribution of all remaining assets under Subsection (c), the bank shall file with the department:
(1) an affidavit and schedules, sworn to or affirmed by a majority of the bank´s board showing the distribution to each shareholder;
(2) all copies of reports of examination of the bank in its possession; and
(3) its original charter or an affidavit stating that the original charter is lost.
(e) After verifying the submitted information and documents, the banking commissioner shall issue a certificate canceling the charter of the bank.
A state bank in the process of voluntary dissolution and liquidation remains subject to this subtitle and Chapters 11 and 12, including provisions for examination by the banking commissioner, and the bank shall furnish reports required by the banking commissioner.
The banking commissioner may authorize a deviation from the procedures for voluntary dissolution in this subchapter if the banking commissioner determines that the interests of claimants are not jeopardized by the deviation.
The banking commissioner may close a state bank for involuntary dissolution and liquidation under this chapter if the banking commissioner determines that:
(1) the voluntary liquidation is:
(A) being conducted in an improper or illegal manner; or
(B) not in the best interests of the bank´s depositors and creditors; or
(2) the bank is insolvent or imminently insolvent.
After a state bank´s charter has been voluntarily surrendered and canceled, the bank may not resume business or reopen except on application for and approval of a new charter.
Subchapter C. Involuntary Dissolution and Liquidation
(a) The banking commissioner may close and liquidate a state bank on finding that:
(1) the interests of the bank´s depositors and creditors are jeopardized by the bank´s insolvency or imminent insolvency; and
(2) the best interests of depositors and creditors would be served by requiring that the bank be closed and its assets liquidated.
(b) A majority of the bank´s directors may voluntarily close the bank and place it with the banking commissioner for liquidation.
(a) After closing a state bank under Section 36.201, the banking commissioner shall place a sign at its main entrance stating that the bank has been closed and the findings on which the closing of the bank is based. A correspondent bank of the closed bank may not pay an item drawn on the account of the closed bank that is presented for payment after the correspondent has received actual notice of closing unless it previously certified the item for payment.
(b) As soon as practicable after posting the sign at the bank´s main entrance, the banking commissioner shall tender the bank to the Federal Deposit Insurance Corporation as provided by Section 36.003 or initiate a receivership proceeding by filing a copy of the notice contained on the sign in a district court in the county where the bank´s home office is located. The court in which the notice is filed shall docket it as a case styled, "In re liquidation of ____" (inserting the name of the bank). When this notice is filed, the court has constructive custody of all the bank´s assets and any action that seeks to directly or indirectly affect bank assets is considered an intervention in the receivership proceeding and is subject to this subchapter and Subchapter D.
(a) The court may not require a bond from the banking commissioner as receiver.
(b) A reference in this chapter to the receiver is a reference to the banking commissioner as receiver and to any successor in office, the Federal Deposit Insurance Corporation if acting as receiver as provided by Section 36.003 and federal law, or an independent receiver appointed at the request of the banking commissioner as provided by Section 36.004.
(c) The receiver has all the powers of the directors, officers, and shareholders of the bank as necessary to support an action taken on behalf of the bank.
(d) The receiver and all employees and agents acting on behalf of the receiver are acting in an official capacity and are protected by Section 12.106. An act of the receiver is an act of the bank in liquidation. This state or a political subdivision of this state is not liable and may not be held accountable for any debt or obligation of a state bank in receivership.
(e) Section 64.072, Civil Practice and Remedies Code, applies to the receivership of a bank except as provided by this subsection. A bank receivership shall be administered continuously for the length of time necessary to complete its purposes, and a period prescribed by other law limiting the time for the administration of a receivership or of corporate affairs generally, including Section 64.072(d), Civil Practice and Remedies Code, does not apply.
(a) A state bank, acting through a majority of its directors, may intervene in an action filed by the banking commissioner closing a state bank to challenge the banking commissioner´s closing of the bank and to enjoin the banking commissioner or other receiver from liquidating its assets. The bank must file the intervention not later than the second business day after the closing of the bank, excluding legal holidays. The court may issue an ex parte order restraining the receiver from liquidating bank assets pending a hearing on the injunction. The receiver shall comply with the restraining order but may petition the court for permission to liquidate an asset as necessary to prevent its loss or diminution pending the outcome of the injunction.
(b) The court shall hear an action as quickly as possible and shall give it priority over other business.
(c) The bank or receiver may appeal the court´s judgment as in other civil cases, except that the receiver shall retain all bank assets pending a final appellate court order even if the banking commissioner does not prevail in the trial court. If the banking commissioner prevails in the trial court, liquidation of the bank may proceed unless the trial court or appellate court orders otherwise. If liquidation is enjoined or stayed pending appeal, the trial court retains jurisdiction to permit liquidation of an asset as necessary to prevent its loss or diminution pending the outcome of the appeal.
(a) As soon as reasonably practicable after initiation of the receivership proceeding, the receiver shall publish notice in a newspaper of general circulation in each community where the bank´s home office or a branch is located. The notice must state that:
(1) the bank has been closed for liquidation;
(2) depositors and creditors must present their claims for payment on or before a specified date; and
(3) all safe deposit box holders and bailors of property left with the bank should remove their property not later than a specified date.
(b) A date that the receiver selects under Subsection (a):
(1) may not be earlier than the 121st day after the date of the notice; and
(2) must allow:
(A) the affairs of the bank to be wound up as quickly as feasible; and
(B) creditors, depositors, and owners of property adequate time for presentation of claims, withdrawal of accounts, and redemption of property.
(c) The receiver may adjust the dates under Subsection (a) with the approval of the court and with or without republication of notice if additional time appears needed for those activities.
(d) As soon as reasonably practicable given the state of bank records and the adequacy of staffing, the receiver shall mail to each of the bank´s known depositors, creditors, safe deposit box holders, and bailors of property left with the bank, at the mailing address shown on the bank´s records, an individual notice containing the information required in a notice under Subsection (a) and specific information pertinent to the account or property of the addressee.
(e) The receiver may determine the form and content of notices under this section.
As soon as reasonably practicable given the state of bank records and the adequacy of staffing, the receiver shall prepare a comprehensive inventory of the bank´s assets for filing with the court. The inventory is open to inspection.
(a) The receiver has the title to all the bank´s property, contracts, and rights of action, wherever located, beginning on the date the bank is closed for liquidation.
(b) The rights of the receiver have priority over a contractual lien or statutory landlord´s lien under Chapter 54, Property Code, judgment lien, attachment lien, or voluntary lien that arises after the date of the closing of the bank for liquidation.
(c) The filing or recording of a receivership order in a record office of this state gives the same notice that would be given by a deed, bill of sale, or other evidence of title filed or recorded by the bank in liquidation. The recording clerk shall index a recorded receivership order in the records to which the order relates.
The rights and liabilities of the bank in liquidation and of a depositor, creditor, officer, director, employee, shareholder, agent, or other person interested in the bank´s estate are fixed on the date of closing of the bank for liquidation except as otherwise directed by the court or as expressly provided otherwise by this subchapter or Subchapter D.
(a) The receiver may deposit money collected on behalf of the bank estate in:
(1) the Texas Treasury Safekeeping Trust Company in accordance with procedures established by the comptroller; or
(2) one or more state banks in this state, the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor, if the receiver, using sound financial judgment, determines that it would be advantageous to do so.
(b) If receivership money deposited in an account at a state bank exceeds the maximum insured amount, the receiver shall require the excess deposit to be adequately secured through a pledge of securities or otherwise, without approval of the court. The depository bank may secure the deposits of the bank in liquidation on behalf of the receiver, notwithstanding any other provision of Chapter 11 or 12 or this subtitle.
(a) A judgment or order of a court of this state or of another jurisdiction in an action pending by or against the bank, rendered after the date the bank was closed for liquidation, is not binding on the receiver unless the receiver was made a party to the suit.
(b) Before the first anniversary of the date the bank was closed for liquidation, the receiver may not be required to plead to any suit pending against the bank in a court in this state on the date the bank was closed for liquidation and in which the receiver is a proper plaintiff or defendant.
(c) Sections 64.052, 64.053, and 64.056, Civil Practice and Remedies Code, do not apply to a bank estate being administered under this subchapter and Subchapter D.
(a) Except as otherwise provided by this section, the court in which the receivership proceeding is pending under this subchapter has exclusive jurisdiction to hear and determine all actions or proceedings instituted by or against the bank or receiver after the receivership proceeding begins.
(b) The receiver may file in any jurisdiction an ancillary suit that may be helpful to obtain jurisdiction or venue over a person or property.
(c) Exclusive venue lies in Travis County for an action or proceeding instituted against the receiver or the receiver´s employee, including an employee of the department, that asserts personal liability on the part of the receiver or employee.
(a) Each bank affiliate, officer, director, shareholder, trustee, agent, servant, employee, attorney, attorney-in-fact, or correspondent shall immediately deliver to the receiver, without cost to the receiver, any record or other property of the bank or that relates to the business of the bank.
(b) If by contract or otherwise a record or other property that can be copied is the property of a person listed in Subsection (a), it shall be copied and the copy shall be delivered to the receiver. The owner shall retain the original until notification by the receiver that it is no longer required in the administration of the bank´s estate or until another time the court, after notice and hearing, directs. A copy is considered to be a record of the bank in liquidation under Section 36.225.
(a) On application by the receiver, the court with or without notice may issue an injunction:
(1) restraining a bank officer, director, shareholder, trustee, agent, servant, employee, attorney, attorney-in-fact, correspondent, or other person from transacting the bank´s business or wasting or disposing of its property; or
(2) requiring the delivery of the bank´s property or assets to the receiver subject to the further order of the court.
(b) At any time during a proceeding under this subchapter, the court may issue another injunction or order considered necessary or desirable to prevent:
(1) interference with the receiver or the proceeding;
(2) waste of the assets of the bank;
(3) the beginning or prosecution of an action;
(4) the obtaining of a preference, judgment, attachment, garnishment, or other lien; or
(5) the making of a levy against the bank or its assets.
(a) The receiver may request the court ex parte to issue a subpoena to compel the attendance and testimony of a witness before the receiver and the production of a record relating to the receivership estate. For this purpose the receiver or the receiver´s designated representative may administer an oath or affirmation, examine a witness, or receive evidence. The court has statewide subpoena power and may compel attendance and production of a record before the receiver at the bank, the office of the receiver, or another location.
(b) A person served with a subpoena under this section may file a motion with the court for a protective order as provided by Rule 166b, Texas Rules of Civil Procedure. In a case of disobedience of a subpoena or the contumacy of a witness appearing before the receiver or the receiver´s designated representative, the receiver may request and the court may issue an order requiring the person subpoenaed to obey the subpoena, give evidence, or produce a record relating to the matter in question.
(c) A witness who is required to appear before the receiver is entitled to receive:
(1) reimbursement for mileage, in the amount for travel by a state employee, for traveling to or returning from a proceeding that is more than 25 miles from the witness´s residence; and
(2) a fee for each day or part of a day the witness is necessarily present as a witness in an amount set by the receiver with the approval of the court of not less than $10 a day and not more than an amount equal to the per diem travel allowance of a state employee.
(d) A payment of fees under Subsection (c) is an administrative expense.
(e) The receiver may serve the subpoena or have it served by the receiver´s authorized agent, a sheriff, or a constable. The sheriff´s or constable´s fee for serving a subpoena must be the same as the fee paid the sheriff or constable for similar services.
(f) A subpoena issued under this section to a financial institution is not subject to Section 59.006.
(g) On certification by the receiver under official seal, a record produced or testimony taken as provided by this section and held by the receiver is admissible in evidence in any case without proof of its correctness or other proof, except the certificate of the receiver that the record or testimony was received from the person producing the record or testifying. The certified record or a certified copy of the record is prima facie evidence of the facts it contains. This section does not limit another provision of this subchapter, Subchapter D, or another law that provides for the admission of evidence or its evidentiary value.
(a) Not later than six months after the date the receivership proceeding begins, the receiver may terminate any executory contract to which the bank is a party or any obligation of the bank as a lessee. A lessor who receives notice of the receiver´s election to terminate the lease before the 60th day before the termination date is not entitled to rent or damages for termination, other than rent accrued to the date of termination.
(b) An agreement that tends to diminish or defeat the interest of the estate in a bank asset is not valid against the receiver unless the agreement:
(1) is in writing;
(2) was executed by the bank and any person claiming an adverse interest under the agreement, including the obligor, when the bank acquired the asset;
(3) was approved by the board of the bank or its loan committee, and the approval is reflected in the minutes of the board or committee; and
(4) has been continuously since its execution an official record of the bank.
(a) A transfer of or lien on the property or assets of a state bank is voidable by the receiver if the transfer or lien:
(1) was made or created less than:
(A) four months before the date the bank is closed for liquidation; or
(B) one year before the date the bank is closed for liquidation if the receiving creditor was at the time an affiliate, officer, director or principal shareholder of the bank or an affiliate of the bank;
(2) was made or created with the intent of giving to a creditor or depositor, or enabling a creditor or depositor to obtain, a greater percentage of the claimant´s debt than is given or obtained by another claimant of the same class; and
(3) is accepted by a creditor or depositor having reasonable cause to believe that a preference will occur.
(b) Each bank officer, director, shareholder, trustee, agent, servant, employee, attorney-in-fact, or correspondent, or other person acting on behalf of the bank, who has participated in implementing a voidable transfer or lien, and each person receiving property or the benefit of property of the bank as a result of the voidable transfer or lien, are personally liable for the property or benefit received and shall account to the receiver for the benefit of the depositors and creditors of the bank.
(c) The receiver may avoid a transfer of or lien on the property or assets of a bank that a depositor, creditor, or shareholder of the bank could have avoided and may recover the property transferred or its value from the person to whom it was transferred or from a person who has received it unless the transferee or recipient was a bona fide holder for value before the date the bank was closed for liquidation.
The receiver may employ agents, legal counsel, accountants, appraisers, consultants, and other personnel the receiver considers necessary to assist in the performance of the receiver´s duties. The receiver may use personnel of the department if the receiver considers the use to be advantageous or desirable. The expense of employing those persons is an administrative expense.
(a) In liquidating a bank, the receiver on order of the court entered with or without hearing may:
(1) sell all or part of the property of the bank;
(2) borrow money and pledge all or part of the assets of the bank to secure the debt created, except that the receiver may not be held personally liable to repay borrowed money;
(3) compromise or compound a doubtful or uncollectible debt or claim owed by or owing to the bank; and
(4) enter another agreement on behalf of the bank that the receiver considers necessary or proper to the management, conservation, or liquidation of its assets.
(b) If the amount of a debt or claim owed by or owing to the bank or the value of an item of property of the bank does not exceed $20,000, excluding interest, the receiver may compromise or compound the debt or claim or sell the property on terms the receiver considers to be in the best interests of the bank estate without obtaining the approval of the court.
(c) The receiver may with the approval of the court sell or offer or agree to sell an asset of the bank, other than a fiduciary asset, to a depositor or creditor of the bank. Payment may be in whole or part out of distributions payable to the purchasing depositor or creditor on account of an approved claim against the bank´s estate. On application by the receiver, the court may designate one or more representatives to act for certain depositors or creditors as a class in the purchase, holding, and management of assets purchased by the class under this section, and the receiver may with the approval of the court advance the expenses of the appointed representative against the security of the claims of the class.
If the court requires notice and hearing before entering an order, the court shall set the time and place of the hearing and prescribe whether the notice is to be given by service on specific parties, by publication, or by a combination of those methods. The court may not enter an order requested by a person other than the receiver without notice to the receiver and an opportunity for the receiver to be heard.
(a) The receiver shall file with the court:
(1) a quarterly report showing the operation, receipts, expenditures, and general condition of the bank in liquidation; and
(2) a final report regarding the liquidated bank showing all receipts and expenditures and giving a full explanation and a statement of the disposition of all assets of the bank.
(b) The receiver shall pay all administrative expenses out of money or other assets of the bank. Each quarter the receiver shall swear to and submit an itemized report of those expenses. The court shall approve the report unless an objection is filed before the 11th day after the date it is submitted. An objection may be made only by a party in interest and must specify each item objected to and the ground for the objection. The court shall set the objection for hearing and notify the parties of this action. The objecting party has the burden of proof to show that the item objected to is improper, unnecessary, or excessive.
(c) The court may prescribe whether the notice of the receiver´s report is to be given by service on specific parties, by publication, or by a combination of those methods.
The court may order an audit of the books and records of the receiver that relate to the receivership. A report of an audit ordered under this section shall be filed with the court. The receiver shall make the books and records relating to the receivership available to the auditor as required by the court order. The receiver shall pay the expenses of an audit ordered under this section as an administrative expense.
(a) A contract between the bank and another person for bailment, of deposit for hire, or for lease of a safe, vault, or box ceases on the date specified for removal of property in the notices that were published and mailed or a later date approved by the receiver or the court. A person who has paid rental or storage charges for a period extending beyond the date designated for removal of property has a claim against the bank estate for a refund of the unearned amount paid.
(b) If the property is not removed by the date the contract ceases, the receiver shall inventory the property. In making the inventory the receiver may open a safe, vault, or box, or any package, parcel, or receptacle, in the custody or possession of the receiver. The property shall be marked to identify, to the extent possible, its owner or the person who left it with the bank. After all property belonging to others that is in the receiver´s custody and control has been inventoried, the receiver shall compile a master list that is divided for each office of the bank that received property that remains unclaimed. The receiver shall publish, in a newspaper of general circulation in each community in which the bank had an office that received property that remains unclaimed, the list and the names of the owners of the property as shown in the bank´s records. The published notice must specify a procedure for claiming the property unless the court, on application of the receiver, approves an alternate procedure.
(a) As soon after beginning the receivership proceeding as is practicable, the receiver shall:
(1) terminate all fiduciary positions the bank holds;
(2) surrender all property held by the bank as a fiduciary; and
(3) settle the bank´s fiduciary accounts.
(b) The receiver shall release all segregated and identifiable fiduciary property held by the bank to successor fiduciaries.
(c) With the approval of the court, the receiver may sell the administration of all or substantially all remaining fiduciary accounts to one or more successor fiduciaries on terms that appear to be in the best interests of the bank´s estate and the persons interested in the fiduciary accounts.
(d) If commingled fiduciary money held by the bank as trustee is insufficient to satisfy all fiduciary claims to the commingled money, the receiver shall distribute commingled money pro rata to all fiduciary claimants of commingled money based on their proportionate interests after payment of administrative expenses related solely to the fiduciary claims. The fictional tracing rule does not apply. To the extent of any unsatisfied fiduciary claim to commingled money, a claimant to commingled trust money is entitled to the same priority as a depositor of the bank.
(e) Subject to Subsection (d), if the bank has lost fiduciary money or property through misappropriation or otherwise, a claimant to the missing fiduciary money or property is entitled to the same priority as a depositor of the bank.
(f) The receiver may require a fiduciary claimant to file a proof of claim if the records of the bank are insufficient to identify the claimant´s interest.
(a) On approval by the court, the receiver may dispose of records of the bank in liquidation that are obsolete and unnecessary to the continued administration of the receivership proceeding.
(b) The receiver may devise a method for the effective, efficient, and economical maintenance of the records of the bank and of the receiver´s office. The method may include maintaining those records on any medium approved by the records management division of the Texas State Library.
(c) To maintain the records of the liquidated bank after the closing of the receivership proceeding, the receiver may reserve assets of an estate, deposit them in an account, and use them for maintenance, storage, and disposal of records in closed receivership estates.
(d) Records of a liquidated bank are not government records for any purpose, including Chapter 552, Government Code, but shall be preserved and disposed of as if they were records of the department under Chapter 441, Government Code. Those records are confidential as provided by:
(1) Subchapter D, Chapter 31;
(2) Section 59.006; and
(3) rules adopted under this subtitle.
(a) A record of a bank in liquidation obtained by the receiver and held in the course of the receivership proceeding or a certified copy of the record under the official seal of the receiver is admissible in evidence in all cases without proof of correctness or other proof, except the certificate of the receiver that the record was received from the custody of the bank or found among its effects.
(b) The receiver may certify the correctness of a record of the receiver´s office, including a record described by Subsection (a), and may certify any fact contained in the record. The record shall be received in evidence in all cases in which the original would be evidence.
(c) The original record or a certified copy of the record is prima facie evidence of the facts it contains.
(d) A copy of an original record or another record that is maintained on a medium approved by the records management division of the Texas State Library, within the scope of this section, and produced by the receiver or the receiver´s authorized representative under this section:
(1) has the same effect as the original record; and
(2) may be used the same as the original record in a judicial or administrative proceeding in this state.
(a) A state bank closed under Section 36.201 may not be reopened without the approval of the banking commissioner unless a contest of liquidation under Section 36.204 is finally resolved adversely to the banking commissioner and the court authorizes the bank´s reopening.
(b) The banking commissioner may place temporary limits on the right of withdrawals by or payments to individual depositors and creditors of a bank reopened under this section. The limits:
(1) must apply equally to all unsecured depositors and creditors;
(2) may not defer a withdrawal by or payment to a secured depositor or creditor without the person´s written consent; and
(3) may not postpone the right of full withdrawal or payment of unsecured depositors or creditors for more than 18 months after the date that the bank reopens.
(c) As a depositor or creditor of a reopened bank, this state or a political subdivision of this state may agree to temporary limits that the banking commissioner places on payments or withdrawals.
(a) The banking commissioner shall report to the court discovery of an asset having value that:
(1) the banking commissioner discovers after the receivership was closed by final order of the court; and
(2) was abandoned as worthless or unknown during the receivership.
(b) The court may reopen the receivership proceeding for continued liquidation if the value of the asset justifies the reopening.
(c) If the banking commissioner suspects that the information may have been intentionally or fraudulently concealed, the banking commissioner shall notify appropriate civil and criminal authorities to determine any applicable penalties.
Subchapter D. Claims Against Receivership Estate
(a) This section applies only to a claim by a person, other than a shareholder acting in that capacity, who has a claim against a state bank in liquidation, including a claimant with a secured claim and a claimant under a fiduciary relationship who has been ordered by the receiver to file a proof of claim under Section 36.223.
(b) To receive payment of a claim, the person must present proof of the claim to the receiver:
(1) at a place specified by the receiver; and
(2) within the period specified by the receiver under Section 36.205.
(c) A claim that is not filed within the period specified by the receiver may not participate in a distribution of the assets by the receiver, except that, subject to court approval, the receiver may accept a claim filed not later than the 180th day after the date notice of the claimant´s right to file a proof of claim is mailed to the claimant.
(d) A claim accepted and approved under Subsection (c) is subordinate to an approved claim of a general creditor.
(e) Interest does not accrue on a claim after the date the bank is closed for liquidation.
(a) A proof of claim must be in writing, be signed by the claimant, and include:
(1) a statement of the claim;
(2) a description of the consideration for the claim;
(3) a statement of whether collateral is held or a security interest is asserted against the claim and, if so, a description of the collateral or security interest;
(4) a statement of any right of priority of payment for the claim or other specific right asserted by the claimant;
(5) a statement of whether a payment has been made on the claim and, if so, the amount and source of the payment, to the extent known by the claimant;
(6) a statement that the amount claimed is justly owed by the bank in liquidation to the claimant; and
(7) any other matter that is required by the court.
(b) The receiver may designate the form of the proof of claim. A proof of claim must be filed under oath unless the oath is waived by the receiver. A proof of claim filed with the receiver is considered filed in an official proceeding for purposes of Chapter 37, Penal Code.
(c) If a claim is founded on a written instrument, the original instrument, unless lost or destroyed, must be filed with the proof of claim. After the instrument is filed, the receiver may permit the claimant to substitute a copy of the instrument until the final disposition of the claim. If the instrument is lost or destroyed, a statement of that fact and of the circumstances of the loss or destruction must be filed under oath with the claim.
(a) A judgment entered against a state bank in liquidation before the date the bank was closed for liquidation may not be given higher priority than a claim of an unsecured creditor unless the judgment creditor in a proof of claim proves the allegations supporting the judgment to the receiver´s satisfaction.
(b) A judgment against the bank taken by default or by collusion before the date the bank was closed for liquidation may not be considered as conclusive evidence of the liability of the bank to the judgment creditor or of the amount of damages to which the judgment creditor is entitled.
(c) A judgment against the bank entered after the date the bank was closed for liquidation may not be considered as evidence of liability or of the amount of damages.
(a) The owner of a secured claim against a bank in liquidation may:
(1) surrender the security and file a claim as a general creditor; or
(2) apply the security to the claim and discharge the claim.
(b) If the owner applies the security and discharges the claim, any deficiency shall be treated as a claim against the general assets of the bank on the same basis as a claim of an unsecured creditor. The amount of the deficiency shall be determined as provided by Section 36.305, except that if the amount of the deficiency has been adjudicated by a court in a proceeding in which the receiver has had notice and an opportunity to be heard, the court´s decision is conclusive as to the amount.
(c) The value of security held by a secured creditor shall be determined under supervision of the court by:
(1) converting the security into money according to the terms of the agreement under which the security was delivered to the creditor; or
(2) agreement, arbitration, compromise, or litigation between the creditor and the receiver.
(a) A claim based on an unliquidated or undetermined demand shall be filed within the period provided by Subchapter C for the filing of a claim. The claim may not share in any distribution to claimants until the claim is definitely liquidated, determined, and allowed. After the claim is liquidated, determined, and allowed, the claim shares ratably with the claims of the same class in all subsequent distributions.
(b) For purposes of this section, a demand is considered unliquidated or undetermined if the right of action on the demand accrued while the bank was closed for liquidation and the liability on the demand has not been determined or the amount of the demand has not been liquidated.
(c) If the receiver in all other respects is in a position to close the receivership proceeding, the proposed closing is sufficient grounds for the rejection of any remaining claim based on an unliquidated or undetermined demand. The receiver shall notify the claimant of the intention to close the proceeding. If the demand is not liquidated or determined before the 61st day after the date of the notice, the receiver may reject the claim.
(a) Mutual credits and mutual debts shall be set off and only the balance allowed or paid, except that a set-off may not be allowed in favor of a person if:
(1) the obligation of the bank to the person on the date the bank was closed for liquidation did not entitle the person to share as a claimant in the assets of the bank;
(2) the obligation of the bank to the person was purchased by or transferred to the person after the date the bank was closed for liquidation or for the purpose of increasing set-off rights; or
(3) the obligation of the person or the bank is as a trustee or fiduciary.
(b) On request, the receiver shall provide a person with an accounting statement identifying each debt that is due and payable. A person who owes the bank an amount that is due and payable against which the person asserts a set-off of mutual credits that may become due and payable from the bank in the future shall promptly pay to the receiver the amount due and payable. The receiver shall promptly refund, to the extent of the person´s prior payment, mutual credits that become due and payable to the person by the bank in liquidation.
(a) Not later than six months after the last day permitted for the filing of claims or a later date allowed by the court, the receiver shall accept or reject in whole or in part each filed claim against the bank in liquidation, except for an unliquidated or undetermined claim governed by Section 36.305. The receiver shall reject a claim if the receiver doubts its validity.
(b) The receiver shall mail written notice to each claimant specifying the disposition of the person´s claim. If a claim is rejected in whole or in part, the receiver in the notice shall specify the basis for rejection and advise the claimant of the procedures and deadline for appeal.
(c) The receiver shall send each claimant a summary schedule of approved and rejected claims by priority class and notify the claimant:
(1) that a copy of a schedule of claims disposition including only the name of the claimant, the amount of the claim allowed, and the amount of the claim rejected is available on request; and
(2) of the procedure and deadline for filing an objection to an approved claim.
(d) The receiver or an agent or employee of the receiver, including an employee of the department, is not liable, and a cause of action may not be brought against the person, for an action taken or not taken by the person relating to the adjustment, negotiation, or settlement of a claim.
The receiver with court approval shall set a date for objection to an approved claim. On or before that date a depositor, creditor, other claimant, or shareholder of the bank may file an objection to an approved claim. The objection shall be heard and determined by the court. If the objection is sustained, the court shall direct an appropriate modification of the schedule of claims.
(a) The receiver´s rejection of a claim may be appealed in the court in which the receivership proceeding is pending. The appeal must be brought within three months after the date of service of notice of the rejection.
(b) If the action is timely brought, review is de novo as if originally filed in the court and subject to the rules of procedure and appeal applicable to civil cases. This action is separate from the receivership proceeding and is not initiated by a claimant´s attempt to appeal the action of the receiver by intervening in the receivership proceeding.
(c) If the action is not timely brought, the action of the receiver is final and not subject to review.
(a) Except as expressly provided otherwise by this subchapter or Subchapter C, without the approval of the court the receiver may not make a payment on a claim, other than a claim for an obligation incurred by the receiver for administrative expenses.
(b) The receiver may periodically make partial distribution to the holders of approved claims if:
(1) all objections have been heard and decided as provided by Section 36.308;
(2) the time for filing appeals has expired as provided by Section 36.309; and
(3) a proper reserve is established for the pro rata payment of:
(A) rejected claims that have been appealed; and
(B) any claims based on unliquidated or undetermined demands governed by Section 36.305.
(c) As soon as practicable after the determination of all objections, appeals, and claims based on previously unliquidated or undetermined demands governed by Section 36.305, the receiver shall distribute the assets of the bank in satisfaction of approved claims other than claims asserted in a person´s capacity as a shareholder.
The distribution of assets from the estate of a bank the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor shall be made in the same order of priority as assets would be distributed on liquidation or purchase of assets and assumption of liabilities of a national bank under federal law.
(a) The priority of distribution of assets from the estate of a bank the deposits of which are not insured by the Federal Deposit Insurance Corporation or its successor shall be in accordance with the order of each class as provided by this section. Every claim in each class shall be paid in full, or adequate money shall be retained for that payment, before a member of the next class receives any payment. A subclass may not be established within a class, except for a preference or subordination within a class expressly created by contract or other instrument or in the certificate of formation.
(b) Assets shall be distributed in the following order of priority:
(1) administrative expenses;
(2) approved claims of secured creditors to the extent of the value of the security as provided by Section 36.304;
(3) approved claims of beneficiaries of insufficient commingled fiduciary money or missing fiduciary property and approved claims of depositors of the bank;
(4) other approved claims of general creditors not falling within a higher priority under this section, including unsecured claims for taxes and debts due the federal government or a state or local government;
(5) approved claims of a type described by Subdivisions (1)-(4) that were not filed within the period prescribed by this subchapter; and
(6) claims of capital note or debenture holders or holders of similar obligations and proprietary claims of shareholders or other owners according to the terms established by issue, class, or series.
(a) If bank assets remain after the receiver has provided for unclaimed distributions and all of the liabilities of the bank in liquidation, the receiver shall distribute the remaining assets to the shareholders of the bank.
(b) If the remaining assets are not liquid or if they otherwise require continuing administration, the receiver may call a meeting of the shareholders of the bank. The receiver shall give notice of the meeting:
(1) in a newspaper of general circulation in the county where the home office of the bank was located; and
(2) by written notice to the shareholders of record at their last known addresses.
(c) At the meeting, the shareholders shall appoint one or more agents to take over the affairs to continue the liquidation for the benefit of the shareholders. Voting privileges are governed by the bank´s bylaws and certificate of formation. If a quorum cannot be obtained at the meeting, the banking commissioner shall appoint an agent. An agent appointed under this subsection shall execute and file with the court a bond approved by the court, conditioned on the faithful performance of all the duties of the trust.
(d) Under order of the court the receiver shall transfer and deliver to the agent or agents for continued liquidation under the court´s supervision all assets of the bank remaining in the receiver´s hands. The court shall discharge the receiver from further liability to the bank and its depositors, creditors, and shareholders.
(e) The bank may not resume business and the charter of the bank is void on the date the court issues the order directing the receiver to transfer and deliver the remaining assets of the bank to the agent or agents.
After completion of the liquidation, any unclaimed property remaining in the hands of the receiver shall be tendered to the comptroller as provided by Chapter 74, Property Code.
In this chapter, "emergency" means a condition or occurrence that may interfere physically with the conduct of normal business at the offices of a bank1 or with the conduct of a particular bank operation, or that poses an imminent or existing threat to the safety or security of persons or property, including:
(1) fire, flood, earthquake, hurricane, tornado, or wind, rain, or snow storm;
(2) labor dispute or strike;
(3) power failure, transportation failure, or interruption of communication facilities;
(4) shortage of fuel, housing, food, transportation, or labor;
(5) robbery, burglary, or attempted robbery or burglary;
(6) epidemic or other catastrophe; or
(7) riot, civil commotion, enemy attack, or other actual or threatened act of lawlessness or violence.
(a) If the officers of a bank located in this state determine that an emergency that affects or may affect the bank´s offices or a particular bank operation exists or is impending, the officers may determine:
(1) not to open the bank´s offices or conduct the particular bank operation; or
(2) if the bank´s offices have opened or the particular bank operation has begun, to close the bank´s offices or suspend and close the particular bank operation during the emergency, regardless of whether the banking commissioner has issued a proclamation of emergency.
(b) Subject to Subsection (c), the office or operation closed may remain closed until the officers determine that the emergency has ended and for additional time reasonably required to reopen.
(c) An office or operation may not remain closed for more than three consecutive days, excluding days on which the bank is customarily closed, without the banking commissioner´s approval.
(d) A bank closing an office or operation under this section shall give notice of its action to the banking commissioner as promptly as possible and by any means available.
(a) If the banking commissioner determines that an emergency exists or is impending in all or part of this state, the banking commissioner by proclamation may authorize banks located in the affected area to close all or part of their offices or operations.
(b) If the banking commissioner determines that an emergency exists or is impending that affects or may affect one or more particular banks or a particular bank operation, but not banks located in the area generally, the banking commissioner may authorize the bank or banks affected to close their offices or a particular bank operation.
(c) A bank office or bank operation closed under this section may remain closed until the banking commissioner proclaims that the emergency has ended, or until an earlier time that the officers of the bank determine that the closed bank office or bank operation should reopen, except that the affected bank office or operation may remain closed for additional time reasonably required to reopen.
(a) A day on which a bank or one or more of its operations is closed during its normal banking hours as provided by this chapter is a legal holiday for all purposes with respect to any banking business affected by the closed bank or bank operation.
(b) A bank or a director, officer, or employee of a bank does not incur liability or loss of rights because of a closing authorized by this chapter.
(a) At the request of a state bank that is experiencing or threatened with unusual and excessive withdrawals because of financial conditions, panic, or crisis, the banking commissioner, to prevent unnecessary loss to or preference among the depositors and creditors of the bank and to preserve the financial structure of the bank and its usefulness to the community, may issue an order limiting the right of withdrawal by or payment to depositors, creditors, and other persons to whom the bank is liable.
(b) The order:
(1) must expire not later than the 10th day after the date it is issued;
(2) must be uniform in application to each class of liability; and
(3) is not subject to judicial review.
(a) The banking commissioner, with the approval of a majority of the finance commission and the governor, may proclaim a financial moratorium for, and invoke a uniform limitation on, withdrawal of deposits of every character from all banks within this state. A bank refusing to comply with a written proclamation of the banking commissioner under this section, signed by a majority of the members of the finance commission and the governor:
(1) forfeits its charter if it is a state bank; or
(2) may not act as reserve agent for a state bank or as depository of state, county, municipal, or other public money if it is a national bank.
(b) On order of the banking commissioner after refusal of a national bank to comply with the proclamation, a depositor of public money with the bank:
(1) shall immediately withdraw the public money from the bank; and
(2) may not redeposit public money in the bank without the banking commissioner´s prior written approval.
(a) If the banking commissioner determines that an emergency has affected and will continue to affect one or more particular bank offices for an extended period, either as a result of the emergency or subsequent recovery operations, the banking commissioner may authorize the bank or banks affected to open temporary branch offices or other facilities required for bank operations for the purpose of prompt restoration of access by the public to banking services.
(b) A temporary bank office opened under the authority of Subsection (a) may remain open only for the period specified in the banking commissioner's order, except that the banking commissioner may extend the period the office may remain open on a finding that the conditions requiring the temporary office continue to exist. The bank may convert a temporary branch office to a permanent bank location only by obtaining the prior written approval of the banking commissioner under Section 32.203.
(c) If requested by the state bank regulatory agency of another state that is experiencing an emergency and is contiguous to this state, the banking commissioner may authorize a bank or banks located in the state to open temporary offices in this state for the purpose of prompt restoration of banking services to the existing customers of the bank or banks, as the circumstances of such emergency may require. A temporary bank office opened under the authority of this subsection may remain open only for the period specified in the banking commissioner's order, except that the banking commissioner may extend the period the office may remain open on a finding that the conditions requiring the temporary office continue to exist. A bank may convert a temporary branch office to a permanent bank location if permitted by and subject to the conditions and requirements of Chapter 203.
(a) To ensure effective coordination among and between the department and other state and federal agencies and the banking industry, and to further rapid restoration of banking services after an emergency, the banking commissioner may:
(1) enter into cooperative, coordinating, or information-sharing agreements with other state or federal agencies or with or through organizations affiliated with or representing one or more state or federal agencies;
(2) enter into cooperative, coordinating, or information-sharing agreements with banks or banking trade associations or other organizations affiliated with or representing one or more banks; and
(3) issue interpretive statements or opinions to temporarily waive or suspend regulatory requirements that threaten to impede recovery and restoration of financial services.
(b) Disclosure of information by or to the banking commissioner under this section does not constitute a waiver of or otherwise affect or diminish an evidentiary privilege to which the information is otherwise subject, regardless of whether the disclosure is governed by a confidentiality agreement. Notwithstanding other law, a party to an agreement described by Subsection (a) may execute, honor, and comply with an agreement to maintain confidentiality and oppose disclosure of information obtained from the banking commissioner, and shall treat as confidential any information obtained from the banking commissioner that is entitled to confidential treatment under applicable state or federal law.
(c) The banking commissioner shall coordinate and cooperate with and assist the office of the governor in the performance of duties under this chapter and other state or federal law as required by Section 421.071, Government Code.
Subchapter A. General Provisions
In this subchapter:
(1) "Civil action" means a civil proceeding pending in a tribunal. The term does not include an examination or enforcement proceeding initiated by:
(A) a governmental agency with primary regulatory jurisdiction over a financial institution in possession of a compliance review document;
(B) the Federal Deposit Insurance Corporation or its successor; or
(C) the board of governors of the Federal Reserve System or its successor.
(2) "Claim against a customer" means a writ of attachment, writ of garnishment, notice of freeze, notice of levy, notice of child support lien, notice of seizure, notice of receivership, restraining order, injunction or other instrument served on or delivered to a financial institution and purporting to assert, establish, or perfect any interest in or claim against an account, extension of credit, or product of the financial institution held or established by the financial institution in the name of the customer or for the benefit of the customer, or in the name of the financial institution as the fiduciary, agent, or custodian or in another representative capacity for the customer. The term does not include citation or other process in a civil suit in which the financial institution is made a defendant and against which claims for affirmative relief are asserted, even though the subject matter of the suit is an account, extension of credit, or product of the financial institution held or established by the financial institution in the name of a customer or in the name of the financial institution as the fiduciary, agent, or custodian or in another representative capacity for the customer.
(3) "Compliance review document" means a document prepared by or for a compliance review committee acting pursuant to Section 59.009.
(4) "Customer" means a person who uses, purchases, or obtains an account, extension of credit, or product of a financial institution or for whom a financial institution acts as a fiduciary, agent, or custodian or in another representative capacity.
(5) "Financial institution" has the meaning assigned by Section 201.101, except that the term does not include a financial institution organized under the laws of another state or organized under federal law with its main office in another state that does not maintain a branch or other office in this state.
(6) "Out-of-state financial institution" means a financial institution, organized under the laws of another state or organized under federal law with its main office in another state, that has a branch or other office in this state.
(7) "Record" means financial or other information of a customer maintained by a financial institution.
(8) "Record request" means a valid and enforceable subpoena, request for production, or other instrument issued under authority of a tribunal that compels production of a customer record.
(9) "Texas financial institution" means a financial institution organized under the laws of this state or organized under federal law with its main office in this state.
(10) "Tribunal" means a court or other adjudicatory tribunal with jurisdiction to issue a request for records, including a government agency exercising adjudicatory functions and an alternative dispute resolution mechanism, voluntary or required, under which a party may compel the production of records.
(a) A person commits an offense if the person:
(1) knowingly makes, circulates, or transmits to another person an untrue statement that is derogatory to the financial condition of a bank located in this state; or
(2) with intent to injure a bank located in this state, counsels, aids, procures, or induces another person to knowingly make, circulate, or transmit to another person an untrue statement that is derogatory to the financial condition of any bank located in this state.
(b) An offense under this section is a state jail felony.
A notary public is not disqualified from taking an acknowledgment or proof of a written instrument as provided by Section 406.016, Government Code, solely because of the person´s ownership of stock or a participation interest in or employment by a financial institution that is an interested party to the underlying transaction.
(a) If, at the time of a merger, reorganization, conversion, sale of substantially all of its assets under Chapter 32 or other applicable law, or sale of substantially all of its trust accounts and related activities at a separate branch or other office, a reorganizing or selling financial institution is acting as trustee, guardian, executor, or administrator, or in another fiduciary capacity, a successor or purchasing financial institution with sufficient fiduciary authority may continue the office, trust, or fiduciary relationship:
(1) without the necessity of judicial action or action by the creator of the office, trust, or fiduciary relationship; and
(2) without regard to whether the successor or purchasing financial institution meets qualification requirements specified in an instrument creating the office, trust, or fiduciary relationship other than a requirement related to geographic locale of account administration, including requirements as to jurisdiction of incorporation, location of principal office, or type of financial institution.
(b) The successor or purchasing financial institution may perform all the duties and exercise all the powers connected with or incidental to the fiduciary relationship in the same manner as if the successor or purchasing financial institution had been originally designated as the fiduciary.
(a) A financial institution may receive deposits, renew time deposits, close loans, service loans, receive payments on loans and other obligations, and perform other services as an agent for another financial institution under a written agency agreement.
(b) A financial institution may not under an agency agreement:
(1) conduct an activity as agent that it would be prohibited from conducting as a principal under applicable state or federal law; or
(2) have an agent conduct an activity that the bank as principal would be prohibited from conducting under applicable state or federal law.
(c) The banking commissioner may order a state bank or another financial institution subject to the banking commissioner´s enforcement powers to cease acting as an agent or principal under an agency agreement in a manner that the banking commissioner finds to be inconsistent with safe and sound banking practices or governing law.
(d) Notwithstanding another law, a financial institution acting as an agent for another financial institution in accordance with this section is not considered to be a branch of the institution acting as principal.
(e) This section does not affect:
(1) authority under another law for a financial institution to act as an agent on behalf of another person or to act as a principal in employing another person as agent; or
(2) whether an agent´s activities on behalf of a financial institution under another law would cause the agent to be considered a branch of the financial institution.
(a) This section provides the exclusive method for compelled discovery of a record of a financial institution relating to one or more customers but does not create a right of privacy in a record. This section does not apply to and does not require or authorize a financial institution to give a customer notice of:
(1) a demand or inquiry from a state or federal government agency authorized by law to conduct an examination of the financial institution;
(2) a record request from a state or federal government agency or instrumentality under statutory or administrative authority that provides for, or is accompanied by, a specific mechanism for discovery and protection of a customer record of a financial institution, including a record request from a federal agency subject to the Right to Financial Privacy Act of 1978 (12 U.S.C. Section 3401 et seq.), as amended, or from the Internal Revenue Service under Section 1205, Internal Revenue Code of 1986;
(3) a record request from or report to a government agency arising out of:
(A) the investigation or prosecution of a criminal offense;
(B) the investigation of alleged abuse, neglect, or exploitation of an elderly or disabled person in accordance with Chapter 48, Human Resources Code; or
(C) the assessment for or provision of guardianship services under Subchapter E, Chapter 161, Human Resources Code;
(4) a record request in connection with a garnishment proceeding in which the financial institution is garnishee and the customer is debtor;
(5) a record request by a duly appointed receiver for the customer;
(6) an investigative demand or inquiry from a state legislative investigating committee;
(7) an investigative demand or inquiry from the attorney general of this state as authorized by law other than the procedural law governing discovery in civil cases;
(8) the voluntary use or disclosure of a record by a financial institution subject to other applicable state or federal law; or
(9) a record request in connection with an investigation conducted under Section 1054.151, 1054.152, or 1102.001, Estates Code.
(b) A financial institution shall produce a record in response to a record request only if:
(1) it is served with the record request not later than the 24th day before the date that compliance with the record request is required;
(2) before the financial institution complies with the record request the requesting party pays the financial institution´s reasonable costs of complying with the record request, including costs of reproduction, postage, research, delivery, and attorney´s fees, or posts a cost bond in an amount estimated by the financial institution to cover those costs; and
(3) if the customer is not a party to the proceeding in which the request was issued, the requesting party complies with Subsections (c) and (d) and:
(A) the financial institution receives the customer´s written consent to release the record after a request under Subsection (c)(3); or
(B) the tribunal takes further action based on action initiated by the requesting party under Subsection (d).
(b-1) If the requesting party has not paid a financial institution's costs or posted a cost bond as required by Subsection (b)(2), a court may not:
(1) order the financial institution to produce a record in response to the record request; or
(2) find the financial institution to be in contempt of court for failing to produce the record.
(c) If the affected customer is not a party to the proceeding in which the record request was issued, in addition to serving the financial institution with a record request, the requesting party shall:
(1) give notice stating the rights of the customer under Subsection (e) and a copy of the request to each affected customer in the manner and within the time provided by Rule 21a, Texas Rules of Civil Procedure;
(2) file a certificate of service indicating that the customer has been mailed or served with the notice and a copy of the record request as required by this subsection with the tribunal and the financial institution; and
(3) request the customer´s written consent authorizing the financial institution to comply with the request.
(d) If the customer that is not a party to the proceeding does not execute the written consent requested under Subsection (c)(3) on or before the date that compliance with the request is required, the requesting party may by written motion seek an in camera inspection of the requested record as its sole means of obtaining access to the requested record. In response to a motion for in camera inspection, the tribunal may inspect the requested record to determine its relevance to the matter before the tribunal. The tribunal may order redaction of portions of the records that the tribunal determines should not be produced and shall enter a protective order preventing the record that it orders produced from being:
(1) disclosed to a person who is not a party to the proceeding before the tribunal; and
(2) used by a person for any purpose other than resolving the dispute before the tribunal.
(e) A customer that is a party to the proceeding bears the burden of preventing or limiting the financial institution´s compliance with a record request subject to this section by seeking an appropriate remedy, including filing a motion to quash the record request or a motion for a protective order. Any motion filed shall be served on the financial institution and the requesting party before the date that compliance with the request is required. A financial institution is not liable to its customer or another person for disclosure of a record in compliance with this section.
(f) A financial institution may not be required to produce a record under this section before the later of:
(1) the 24th day after the date of receipt of the record request as provided by Subsection (b)(1);
(2) the 15th day after the date of receipt of a customer consent to disclose a record as provided by Subsection (b)(3); or
(3) the 15th day after the date a court orders production of a record after an in camera inspection of a requested record as provided by Subsection (d).
(g) An order to quash or for protection or other remedy entered or denied by the tribunal under Subsection (d) or (e) is not a final order and an interlocutory appeal may not be taken.
(a) An attachment, injunction, execution, or writ of garnishment may not be issued against or served on a financial institution that has its principal office or a branch in this state to collect a money judgment or secure a prospective money judgment against the financial institution before the judgment is final and all appeals have been foreclosed by law.
(b) An attachment, injunction, execution, or writ of garnishment issued to or served on a financial institution for the purpose of collecting a money judgment or securing a prospective money judgment against a customer of the financial institution is governed by Section 59.008 and not this section.
(a) A claim against a customer of a financial institution shall be delivered or served as otherwise required or permitted by law at the address designated as the address of the registered agent of the financial institution in a registration filed with the secretary of state pursuant to Section 201.102, with respect to an out-of-state financial institution, or Section 201.103, with respect to a Texas financial institution.
(b) If a financial institution files a registration statement with the secretary of state pursuant to Section 201.102, with respect to an out-of-state financial institution, or Section 201.103, with respect to a Texas financial institution, a claim against a customer of the financial institution is not effective as to the financial institution if the claim is served or delivered to an address other than that designated by the financial institution in the registration as the address of the financial institution´s registered agent.
(c) The customer bears the burden of preventing or limiting a financial institution´s compliance with or response to a claim subject to this section by seeking an appropriate remedy, including a restraining order, injunction, protective order, or other remedy, to prevent or suspend the financial institution´s response to a claim against the customer.
(d) A financial institution that does not file a registration with the secretary of state pursuant to Section 201.102, with respect to an out-of-state financial institution, or Section 201.103, with respect to a Texas financial institution, is subject to service or delivery of all claims against customers of the financial institution as otherwise provided by law.
(a) A financial institution or an affiliate of a financial institution, including its holding company, may establish a compliance review committee to test, review, or evaluate the financial institution´s conduct, transactions, or potential transactions for the purpose of monitoring and improving or enforcing compliance with:
(1) a statutory or regulatory requirement;
(2) financial reporting to a governmental agency;
(3) the policies and procedures of the financial institution or its affiliates; or
(4) safe, sound, and fair lending practices.
(b) Except as provided by Subsection (c):
(1) a compliance review document is confidential and is not discoverable or admissible in evidence in a civil action;
(2) an individual serving on a compliance review committee or acting under the direction of a compliance review committee may not be required to testify in a civil action as to:
(A) the contents or conclusions of a compliance review document; or
(B) an action taken or discussions conducted by or for a compliance review committee; and
(3) a compliance review document or an action taken or discussion conducted by or for a compliance review committee that is disclosed to a governmental agency remains confidential and is not discoverable or admissible in a civil action.
(c) Subsection (b)(2) does not apply to an individual who has management responsibility for the operations, records, employees, or activities being examined or evaluated by the compliance review committee.
(d) This section does not limit the discovery or admissibility in a civil action of a document that is not a compliance review document.
(a) Except to the extent disclosure is necessary to locate and produce responsive records, an administrative subpoena that meets the requirements of Subsection (b) and is served on a financial institution may provide that the financial institution to whom the subpoena is directed may not:
(1) disclose that the subpoena has been issued;
(2) identify or describe any records requested in the subpoena; or
(3) disclose whether records have been furnished in response to the subpoena.
(b) The government agency issuing the subpoena may prohibit the disclosure of information described in Subsection (a) only if the agency finds, and the subpoena states the agency´s finding that:
(1) the records relate to an ongoing criminal investigation by the agency; and
(2) the disclosure could significantly impede or jeopardize the investigation.
(c) For purposes of this section, "administrative subpoena" means a valid and enforceable subpoena requesting customer records, issued under the laws of this state by a government agency exercising investigatory or adjudicative functions with respect to a matter within the agency´s jurisdiction.
(a) For purposes of Chapter 27, Property Code, a federally insured financial institution regulated under this code is not a builder.
(b) A lender regulated by this code that forecloses on or otherwise acquires a home through the foreclosure process or other legal means when the loan is in default is not liable to a subsequent purchaser for any construction defects of which the lender had no knowledge that were created prior to the acquisition of the home by the lender.
(c) A builder hired by a lender to complete the construction of a foreclosed home is not liable for any construction defects of which the builder had no knowledge that existed prior to the acquisition of the home by the lender, but the builder is subject to Chapter 27, Property Code, for work performed for the lender subsequent to the acquisition of the home by the lender.
Financial institutions may consider making loans for developments that will use harvested rainwater as the sole source of water supply.
Subchapter B. Safe Deposit Boxes1
In this subchapter, "safe deposit company" means a person who maintains and rents safe deposit boxes.
Any person may be a safe deposit company.
In a safe deposit transaction the relationship of the safe deposit company and the renter is that of lessor and lessee and landlord and tenant, and the rights and liabilities of the safe deposit company are governed accordingly in the absence of a contract or statute to the contrary. The lessee is considered for all purposes to be in possession of the box and its contents.
A notice required by this subchapter to be given to a lessee of a safe deposit box must be in writing and personally delivered or sent by registered or certified mail, return receipt requested, to each lessee at the most recent address of the person according to the records of the safe deposit company.
This subchapter does not affect Chapter 151, Estates Code, or another statute of this state governing safe deposit boxes.
(a) If a safe deposit box is leased in the name of two or more persons jointly or if a person other than the lessee is designated in the lease agreement as having a right of access to the box, each of those persons is entitled to have access to the box and to remove its contents in the absence of a contract to the contrary. This right of access and removal is not affected by the death or incapacity of another person who is a lessee or otherwise entitled to have access to the box.
(b) A safe deposit company is not responsible for damage arising from access to a safe deposit box or removal of any of its contents by a person with a right of access to the box.
(a) A safe deposit company may not relocate a safe deposit box rented for a term of at least six months if the box rental is not delinquent or open a safe deposit box to relocate its contents to another safe deposit box or other location except:
(1) in the presence of the lessee;
(2) with the lessee´s written authorization; or
(3) as otherwise provided by this section or Section 59.108.
(b) A safe deposit box may not be relocated under this section unless the storage conditions at the new location are at least as secure as the conditions at the original box location.
(c) Not later than the 30th day before the scheduled date of a nonemergency relocation, the safe deposit company shall give notice of the relocation to each lessee of the safe deposit box. The notice must state the scheduled date and time of the relocation and whether the box will be opened during the relocation.
(d) A lessee may personally supervise the relocation or authorize the relocation in writing if notice is given to each lessee.
(e) If during the relocation the box is opened and a lessee does not personally supervise the relocation or has not authorized the relocation in writing, two employees, at least one of whom is an officer or manager of the safe deposit company and at least one of whom is a notary public, shall inventory the contents of the box in detail. The safe deposit company shall notify each lessee of the new box number or location not later than the 30th day after the date of the relocation and shall include a signed and notarized copy of the inventory report. The cost of a certified mailing other than the first notice sent in connection with each relocation may be treated as box rental due at the expiration of the rental term.
(f) This section does not apply to a relocation of a safe deposit box within the same building.
(a) A safe deposit company may relocate a safe deposit box or open the box to relocate its contents to another box or location without complying with Sections 59.107(a)-(d) if the security of the original box is threatened or destroyed by natural disaster, including tornado, flood, fire, or other unforeseeable circumstances beyond the control of the safe deposit company.
(b) The safe deposit company shall follow the procedure provided by Section 59.107(e), except that the notice of the new box number or location must be given not later than the 90th day after the date of a relocation under this section.
(c) This section does not apply to a relocation of a safe deposit box within the same building.
(a) A safe deposit company may not terminate an agreement for the rental of a safe deposit box unless:
(1) the safe deposit company has delivered or sent to the lessee a notice not later than the 90th day before the date of the termination and has provided the lessee an opportunity to retrieve the contents during normal business hours throughout the duration of the notice period; or
(2) the payment for the rental of a safe deposit box is delinquent for at least six months, and the lessee fails to pay the rent due following notice provided under Subsection (a-1).
(a-1) If the payment for the rental of a safe deposit box is delinquent for at least six months, or if the rental agreement is otherwise terminated, the safe deposit company shall send notice to each lessee that the company will remove the contents of the box if the rent is not paid or, if the rental agreement is otherwise terminated, the contents are not retrieved before the date specified in the notice, which may not be earlier than the 60th day after the date the notice is delivered or sent.
(a-2) If the delinquent rent is not paid or, if the rental agreement is otherwise terminated, the contents are not retrieved before the date specified in the notice, the safe deposit company may open the box in the presence of two employees, at least one of whom is an officer or manager of the safe deposit company and at least one of whom is a notary public. The safe deposit company shall inventory the contents of the box in detail as provided by the comptroller´s reporting instructions and place the contents of the box in a sealed envelope or container bearing the name of the lessee.
(b) The safe deposit company has a lien on the contents of the box for an amount equal to the rental owed for the box and the cost of opening the box. The safe deposit company may retain possession of the contents not later than two years from the date of the opening of the box plus a reasonable period to dispose of the contents of the box. If the rental and the cost of opening the box are not paid before the second anniversary of the date the box was opened, or if the rental agreement is being terminated for a reason other than delinquent payment, and the lessee has failed to retrieve the contents in a reasonable period after notice of the termination has been sent or delivered, the safe deposit company may sell all or part of the contents at public auction in the manner and with the notice prescribed by Section 51.002, Property Code, for the sale of real property under a deed of trust. Any unsold contents of the box and any excess proceeds from a sale of contents shall be remitted to the comptroller as provided by Chapters 72-75, Property Code.
(a) A depository institution that rents or permits access to a safe deposit box shall imprint the depository institution´s routing number on each key to the box or on a tag attached to the key.
(b) If a depository institution believes that the routing number imprinted on a key, or on a tag attached to a key, used to open a safe deposit box has been altered or defaced so that the correct routing number is illegible, the depository institution shall notify the Department of Public Safety of the State of Texas, on a form designed by the banking commissioner, not later than the 10th day after the date the key is used to open the box.
(c) This section does not require a depository institution to inspect the routing number imprinted on a key or an attached tag to determine whether the number has been altered or defaced. A depository institution that has imprinted a key to a safe deposit box or a tag attached to the key as provided by this section and that follows applicable law and the depository institution´s established security procedures in permitting access to the box is not liable for any damage arising because of access to or removal of the contents of the box.
(d) Subsection (a) does not apply to a key issued under a lease in effect on September 1, 1992, until the date the term of that lease expires, without regard to any extension of the lease term.
Subchapter C. Electronic Terminals
(a) A person may install, maintain, and operate one or more electronic terminals at any location for the convenience of customers of financial institutions.
(b) Financial institutions may agree in writing to share in the use of an electronic terminal on a reasonable, nondiscriminatory basis and on the condition that a financial institution using an electronic terminal may be required to meet necessary and reasonable technical standards and to pay charges for the use of the electronic terminal. The standards or charges imposed must be reasonable, fair, equitable, and nondiscriminatory among the financial institutions. Any charges imposed:
(1) may not exceed an equitable proportion of the cost of establishing the electronic terminal, including provisions for amortization of development costs and capital expenditures over a reasonable period, and the cost of operation and maintenance of the electronic terminal, plus a reasonable return on those costs; and
(2) must be related to the services provided to the financial institution or its customers.
(c) This section does not apply to:2
(1) an electronic terminal located at the domicile or home office or a branch of a financial institution; or
(2) the use by a person of an electronic terminal, regardless of location, solely to withdraw cash, make account balance inquiries, or make transfers between the person´s accounts in the same financial institution.
(d) In this section, the term "financial institution" has the meaning assigned by Section 201.101.
(a) The owner of an electronic terminal that is located in this state and that is connected to a shared network may impose a fee for the use of that terminal if imposition of the fee is disclosed at a time and in a manner that allows a user to avoid the transaction without incurring the transaction fee.
(b) An agreement to share an electronic terminal may not:
(1) limit the right of the owner of an electronic terminal to charge a fee described by Subsection (a) as allowed by the law of this state or the United States;
(2) require the owner to limit or waive its rights or obligations under this section; or
(3) otherwise discriminate in any manner against the owner as a result of the owner´s charging of a fee authorized under this section.
(c) In this section:
(1) "Electronic fund transfer" means any transfer of money, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal and orders, instructs, or authorizes a financial institution to debit or credit an account. The term includes a point-of-sale transfer, an unmanned teller machine transaction, and a cash dispensing machine transaction.
(2) "Electronic terminal" means an electronic device, other than a telephone, through which a consumer may initiate an electronic fund transfer. The term includes a point-of-sale terminal, an unmanned teller machine, and a cash dispensing machine.
(3) "Financial institution" has the meaning assigned by Section 201.101.
(4) "Shared network" means an electronic information communication and processing facility used by two or more owners of electronic terminals to receive, transmit, or retransmit electronic impulses or other electronic indicia of transactions, originating at electronic terminals, to financial institutions or to other transmission facilities for the purpose of:
(A) the withdrawal by a customer of money from the customer´s account, including a withdrawal under a line of credit previously authorized by a financial institution for the customer;
(B) the deposit of money by a customer in the customer´s account with a financial institution;
(C) the transfer of money by a customer between one or more accounts maintained by the customer with a financial institution, including the application of money against an indebtedness of the customer to the financial institution; or
(D) a request for information by a customer concerning the balance of the customer´s account with a financial institution.
Subchapter D. Safety at Unmanned Teller Machines3
In this subchapter:
(1) "Access area" means a paved walkway or sidewalk that is within 50 feet of an unmanned teller machine. The term does not include a public right-of-way or any structure, sidewalk, facility, or appurtenance incidental to the right-of-way.
(2) "Access device" has the meaning assigned by Regulation E (12 C.F.R. Section 205.2), as amended, adopted under the Electronic Fund Transfer Act (15 U.S.C. Section 1693 et seq.), as amended.
(3) "Candlefoot power" means the light intensity of candles on a horizontal plane at 36 inches above ground level and five feet in front of the area to be measured.
(4) "Control" means the authority to determine how, when, and by whom an access area or defined parking area may be used, maintained, lighted, and landscaped.
(5) "Customer" means an individual to whom an access device is issued for personal, family, or household use.
(6) "Defined parking area" means the portion of a parking area open for unmanned teller machine customer parking that is contiguous to an access area, is regularly, principally, and lawfully used during the period beginning 30 minutes after sunset and ending 30 minutes before sunrise for parking by customers using the machine, and is owned or leased by the owner or operator of the machine or owned or controlled by a person leasing the machine site to the owner or operator of the machine. The term does not include:
(A) a parking area that is physically closed or on which one or more conspicuous signs indicate that the area is closed; or
(B) a level of a multiple-level parking area other than the level considered by the operator of the unmanned teller machine to be the most directly accessible to a customer.
(7) "Financial institution" has the meaning assigned by Section 201.101.
(8) "Operator" means the person primarily responsible for the operation of an unmanned teller machine.
(9) "Owner" means a person having the right to determine which financial institutions are permitted to use or participate in the use of an unmanned teller machine.
(10) "Unmanned teller machine" means a machine, other than a telephone, capable of being operated solely by a customer to communicate to a financial institution:
(A) a request to withdraw money from the customer´s account directly or under a line of credit previously authorized by the financial institution for the customer;
(B) an instruction to deposit money in the customer´s account with the financial institution;
(C) an instruction to transfer money between one or more accounts maintained by the customer with the financial institution;
(D) an instruction to apply money against an indebtedness of the customer to the financial institution; or
(E) a request for information concerning the balance of the account of the customer with the financial institution.
This subchapter does not apply to an unmanned teller machine:
(1) by which:
(A) a customer of a financial institution can authorize and effect the electronic transfer of money from the customer´s account at the financial institution to a merchant´s account at a financial institution in the county or municipality in which the terminal is located to obtain cash or to purchase, rent, or pay for goods or services; and
(B) the merchant can ascertain that the transaction has been completed and the money has been or will be transferred to the merchant´s account at the merchant´s financial institution in the county or municipality in which the terminal is located; or
(2) located:
(A) inside a building:
(i) unless the building is a freestanding installation existing solely to provide an enclosure for the machine; or
(ii) except to the extent a transaction can be conducted from outside the building; or
(B) in an area not controlled by the owner or operator of the machine.
(a) A person is not an owner or operator solely because the person´s primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data.
(b) A person whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data and who is not an owner or operator is not liable to a customer or user of an unmanned teller machine for a claim arising out of or in connection with a use or attempted use of the machine.
(a) This subchapter does not require the relocation or modification of an unmanned teller machine on the occurrence of a particular event or circumstance.
(b) A violation of this subchapter or a rule adopted under this subchapter is not negligence per se. Substantial compliance with this subchapter and each rule adopted under this subchapter is prima facie evidence that a person has provided adequate safety protection measures relating to an unmanned teller machine under this subchapter.
During the period beginning 30 minutes after sunset and ending 30 minutes before sunrise, lighting shall be provided for:
(1) an unmanned teller machine;
(2) the machine´s access area and defined parking area; and
(3) the exterior of the machine´s enclosure, if the machine is located in an enclosure.
(a) Except as provided by Subsection (b), the owner or operator shall provide the lighting required by this subchapter.
(b) A person who leases the site where an unmanned teller machine is located shall provide the lighting required by this subchapter if the person controls the access area or defined parking area for the machine and the owner or operator does not control the access area or defined parking area.
The lighting must be at least:
(1) 10 candlefoot power at the face of the unmanned teller machine and extending in an unobstructed direction outward five feet;
(2) two candlefoot power within 50 feet from any unobstructed direction from the face of the machine, except as provided by Subdivision (3);
(3) if the machine is located within 10 feet of the corner of a building and is generally accessible from the adjacent side, two candlefoot power along the first 40 unobstructed feet of the adjacent side of the building; and
(4) two candlefoot power in the part of the defined parking area within 60 feet of the unmanned teller machine.
(a) An owner or operator shall in good faith evaluate the safety of each unmanned teller machine that the person owns or operates.
(b) In making the evaluation, the owner or operator shall consider:
(1) the extent to which the lighting for the machine complies with Section 59.307;
(2) the presence of obstructions, including landscaping and vegetation, in the area of the machine and the access area and defined parking area for the machine; and
(3) the incidence of violent crimes in the immediate neighborhood of the machine as shown by local law enforcement records and of which the owner or operator has actual knowledge.
(a) An issuer of an access device shall give the customer a notice of basic safety precautions that the customer should follow while using an unmanned teller machine.
(b) The issuer shall personally deliver or mail the notice to each customer whose mailing address is in this state according to records for the account to which the access device relates. If the issuer furnishes an access device to more than one customer on the same account, the issuer is required to furnish a notice to only one of the customers.
(c) The issuer may furnish information under this section with other disclosures related to the access device, including an initial or periodic disclosure statement furnished under the Electronic Fund Transfer Act (15 U.S.C. Section 1693 et seq.).
(a) The finance commission and the Credit Union Commission shall enforce this subchapter and adopt rules to implement this subchapter.4
(b) The rules must establish security requirements to be implemented by a financial institution for the operation of an unmanned teller machine. The rules may require the financial institution to install and maintain security devices in addition to those required by this subchapter to be operated in conjunction with the machine for the protection of customers using the machine, including:
(1) video surveillance equipment that is maintained in working order and operated continuously during the hours of operation of the machine; and
(2) adequate lighting around the premises that contain the machine.
(b-1) The rules may provide for a system that enhances customer security, taking into account emerging technologies, the availability of networks to exchange information, and the potential compliance costs for financial institutions and other unmanned teller machine service providers.
(c) A financial institution that violates a rule adopted under this section is subject to a civil penalty of not less than $50 or more than $1,000 for each day of violation and each act of violation.
Subchapter E. Prohibition of Surcharge. [Transferred to Title 12, Business & Commerce Code, Acts 2015, 84th Leg.]
§59.401. [Transferred]1
§59.402. [Transferred].1
SUBTITLE E. OTHER FINANCIAL BUSINESSES
Subchapter A. General Provisions
This chapter may be cited as the Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009.
In this chapter:
(1) "Clerical or support duties," following the receipt of an application from a consumer, includes:
(A) the receipt, collection, distribution, and analysis of information related to the processing or underwriting of a residential mortgage loan; and
(B) communication with a consumer to obtain information necessary to process or underwrite a loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling the consumer about residential mortgage loan rates or terms.
(2) "Credit union" means a state or federal credit union operating in this state.
(3) "Credit union subsidiary organization" means an agency, association, or company wholly or partly owned by a credit union that is designed primarily to serve or otherwise assist credit union operations. The term includes a credit union service organization authorized by:
(A) Section 124.351(a)(1);
(B) Credit Union Commission rule; or
(C) Part 712 of the National Credit Union Administration's Rules and Regulations.
(4) "Depository institution" has the meaning assigned by Section 3, Federal Deposit Insurance Act (12 U.S.C. Section 1813). The term includes a credit union but does not include a credit union subsidiary organization.
(5) "Dwelling" has the meaning assigned by Section 103(w) of the Truth in Lending Act (15 U.S.C. Section 1602(w)).
(6) "Federal banking agency" means:
(A) the Board of Governors of the Federal Reserve System;
(B) the Office of the Comptroller of the Currency;
(C) the Office of Thrift Supervision;
(D) the National Credit Union Administration;
(E) the Federal Deposit Insurance Corporation; or
(F) the successor of any of those agencies.
(7) "Finance commission" means the Finance Commission of Texas.
(8) "Immediate family member" means the spouse, child, sibling, parent, grandparent, or grandchild of an individual. The term includes a stepparent, stepchild, and stepsibling and a relationship established by adoption.
(9) "Individual" means a natural person.
(10) "License" means a license issued under the laws of this state to an individual acting as or engaged in the business of a residential mortgage loan originator.
(11) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of an individual licensed as a residential mortgage loan originator or exempt from licensure under Section 180.003.
(12) "Nationwide Mortgage Licensing System and Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of state residential mortgage loan originators.
(13) "Nontraditional mortgage product" means a mortgage product other than a 30-year fixed rate mortgage.
(14) "Person" means an individual, corporation, company, limited liability company, partnership, or association.
(15) "Real estate brokerage activity" means an activity that involves offering or providing real estate brokerage services to the public, including:
(A) acting as a real estate broker or salesperson for a buyer, seller, lessor, or lessee of real property;
(B) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;
(C) negotiating, on a party's behalf, any provision of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than a negotiation conducted in connection with providing financing with respect to such a transaction;
(D) engaging in an activity for which a person is required to be registered or licensed by the state as a real estate broker or salesperson; and
(E) offering to engage in an activity described by Paragraphs (A) through (D) or to act in the same capacity as a person described by Paragraphs (A) through (D).
(16) "Registered mortgage loan originator" means an individual who:
(A) is a residential mortgage loan originator and is an employee of:
(i) a depository institution;
(ii) a subsidiary that is:
(a) owned and controlled by a depository institution; and
(b) regulated by a federal banking agency; or
(iii) an institution regulated by the Farm Credit Administration; and
(B) is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(17) "Regulatory official" means:
(A) with respect to Subtitles A, F, and G of this title, the banking commissioner of Texas;
(B) with respect to Chapters 156 and 157, the savings and mortgage lending commissioner; and
(C) with respect to Chapters 342, 347, 348, and 351, the consumer credit commissioner.
(18) "Residential mortgage loan" means a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real estate.
(19) "Residential mortgage loan originator":
(A) means an individual who for compensation or gain or in the expectation of compensation or gain:
(i) takes a residential mortgage loan application; or
(ii) offers or negotiates the terms of a residential mortgage loan; and
(B) does not include:
(i) an individual who performs solely administrative or clerical tasks on behalf of an individual licensed as a residential mortgage loan originator or exempt from licensure under Section 180.003, except as otherwise provided by Section 180.051;
(ii) an individual who performs only real estate brokerage activities and is licensed or registered by the state as a real estate broker or salesperson, unless the individual is compensated by:
(a) a lender, mortgage broker, or other residential mortgage loan originator; or
(b) an agent of a lender, mortgage broker, or other residential mortgage loan originator;
(iii) an individual licensed under Chapter 1201, Occupations Code, unless the individual is directly compensated for arranging financing for activities regulated under that chapter by:
(a) a lender, mortgage broker, or other residential mortgage loan originator; or
(b) an agent of a lender, mortgage broker, or other residential mortgage loan originator;
(iv) an individual who receives the same benefits from a financed transaction as the individual would receive if the transaction were a cash transaction; or
(v) an individual who is involved solely in providing extensions of credit relating to timeshare plans, as defined by 11 U.S.C. Section 101(53D).
(20) "Residential real estate" means real property located in this state on which a dwelling is constructed or intended to be constructed.
(21) "Rulemaking authority" means the finance commission.
(22) "S.A.F.E. Mortgage Licensing Act" means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).
(23) "Unique identifier" means a number or other identifier assigned by protocols established by the Nationwide Mortgage Licensing System and Registry.
(a) The following persons are exempt from this chapter:
(1) a registered mortgage loan originator when acting for an entity described by Section 180.002(16)(A)(i), (ii), or (iii);
(2) an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual;
(3) a licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney:
(A) takes a residential mortgage loan application; and
(B) offers or negotiates the terms of a residential mortgage loan;
(4) an individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual's residence;
(5) subject to Subsection (d), an owner of residential real estate who in any 12-consecutive-month period makes no more than three residential mortgage loans to purchasers of the property for all or part of the purchase price of the residential real estate against which the mortgage is secured; and
(6) subject to Subsection (d), an owner of a dwelling who in any 12-consecutive-month period makes no more than three residential mortgage loans to purchasers of the property for all or part of the purchase price of the dwelling against which the mortgage or security interest is secured.
(b) An individual is exempt from this chapter, other than Section 180.171, if the individual:
(1) in any 12-consecutive-month period originates five or fewer closed residential mortgage loans exclusively for a single federally chartered depository institution and the loans are closed within that period;
(2) is contractually prohibited from soliciting, processing, negotiating, or placing a residential mortgage loan with a person other than the depository institution described by Subdivision (1); and
(3) is sponsored by a life insurance company, or an affiliate of the company, authorized to engage in business in this state.
(c) The finance commission may grant an exemption from the licensing requirements of this chapter to a municipality, county, community development corporation, or public or private grant administrator to the extent the entity is administering the Texas HOME Investment Partnerships program if the commission determines that granting the exemption is not inconsistent with the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).
(d) In determining eligibility for an exemption under Subsection (a)(5) or (6), two or more owners of residential real estate are considered a single owner for the purpose of computing the number of mortgage loans made within the period specified by that subdivision if any of the owners are an entity or an affiliate of an entity, including a general partnership, limited partnership, limited liability company, or corporation, as defined by Section 1.002, Business Organizations Code.
(a) A regulatory official has broad authority to administer, interpret, and enforce this chapter.
(b) The finance commission may implement rules necessary to comply with this chapter and as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).
(c) This chapter does not limit the authority of a regulatory official to take disciplinary action against a license holder for a violation of this chapter or the rules adopted by the regulatory official under this chapter. A regulatory official has broad authority to investigate, revoke a license, and inform the proper authority when fraudulent conduct or a violation of this chapter occurs.
The provisions of this chapter or applications of those provisions are severable as provided by Section 311.032(c), Government Code.
Subchapter B. Licensing and Registration Requirements
(a) Unless exempted by Section 180.003 or acting under the temporary authority described under Section 180.0511, an individual may not engage in business as a residential mortgage loan originator with respect to a dwelling located in this state unless the individual:
(1) is licensed to engage in that business under Chapter 156, 157, 342, 347, 348, or 351; and
(2) complies with the requirements of this chapter.
(b) Unless exempted by Section 180.003, a loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless the independent contractor loan processor or underwriter obtains and maintains the appropriate residential mortgage loan originator license and complies with the requirements of this chapter.
(c) The individual must renew the license annually to be considered licensed for purposes of this section.
(d) Notwithstanding any provision of law listed in Subsection (a)(1), the regulatory official shall provide for annual renewal of licenses for individuals seeking to engage in residential mortgage loan origination activities.
(a) A registered mortgage loan originator who does not hold a license issued under a chapter listed in Section 180.051(a)(1) is considered to have temporary authority to act as a residential mortgage loan originator for a period not to exceed 120 days as provided by Subsection (d) if the individual:
(1) becomes employed by an entity that is licensed or registered by this state to engage in the business of residential mortgage loan origination in this state;
(2) has not had:
(A) an application for a residential mortgage loan originator license or other loan originator license required by another jurisdiction to engage in business as a residential mortgage loan originator denied; or
(B) a residential mortgage loan originator license or other loan originator license required by another jurisdiction to engage in business as a residential mortgage loan originator revoked or suspended in any governmental jurisdiction;
(3) has not been subject to or served with a cease and desist order:
(A) in any governmental jurisdiction; or
(B) under 12 U.S.C. Section 5113(c);
(4) has not been convicted of a misdemeanor or felony that would preclude licensure to engage in business as a residential mortgage loan originator in this state under the chapters listed in Section 180.051(a)(1);
(5) has submitted to the appropriate regulatory official the application form prescribed by the regulatory official under Section 180.053 and the information required under Section 180.054; and
(6) was registered in the Nationwide Mortgage Licensing System and Registry as a loan originator during the one-year period preceding the date on which the individual submitted to the appropriate regulatory official the application form and information required by Subdivision (5).
(b) An individual licensed by another state or governmental jurisdiction to engage in mortgage loan origination in that other state or governmental jurisdiction is considered to have temporary authority to act as a residential mortgage loan originator in this state for a period not to exceed 120 days as provided by Subsection (d) if the individual:
(1) is employed by an entity that is licensed or registered by this state to engage in the business of residential mortgage loan origination in this state;
(2) meets the eligibility requirements provided by Subsections (a)(2), (3), (4), and (5); and
(3) held the license issued by another state or governmental jurisdiction to engage in mortgage loan origination during the 30-day period preceding the date on which the individual submitted to the appropriate regulatory official the application form required under Section 180.053 and the information required under Section 180.054.
(c) A residential mortgage loan originator licensed by a regulatory official to engage in business as a mortgage loan originator in this state under a chapter listed in Section 180.051(a)(1) is considered to have temporary authority to act as a residential mortgage loan originator under a different chapter listed in Section 180.051(a)(1) for a period not to exceed 120 days as provided by Subsection (d) if the individual:
(1) is employed by an entity that is licensed or registered by this state to engage in the business of residential mortgage loan origination in this state;
(2) meets the eligibility requirements provided by Subsections (a)(2), (3), (4), and (5); and
(3) held the license issued by the regulatory official to engage in business as a residential mortgage loan originator during the 30-day period preceding the date on which the individual submitted to the appropriate regulatory official the application form required under Section 180.053 and the information required under Section 180.054.
(d) The 120-day period of temporary authority described under this section begins on the date on which the individual submits to the appropriate regulatory official the application form required under Section 180.053 and the information required under Section 180.054 and ends on the earliest of:
(1) the date on which the individual withdraws the application;
(2) the date on which the regulatory official denies or issues a notice of intent to deny the application;
(3) the date on which the regulatory official issues the individual a license; or
(4) the 120th day after the date on which the individual submitted the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.
(e) A person employing an individual who is considered to have temporary authority to act as a residential mortgage loan originator in this state under this section is subject to the requirements of applicable federal and state laws and to applicable rules and regulations to the same extent as if that individual was a residential mortgage loan originator licensed by this state.
(f) An individual who is considered to have temporary authority to act as a residential mortgage loan originator in this state under this section and who engages in residential mortgage loan origination activities is subject to the requirements of applicable federal and state laws and to applicable rules and regulations to the same extent as if that individual was a residential mortgage loan originator licensed by this state.
a) A licensed residential mortgage loan originator must enroll with and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.
(b) A non-federally insured credit union that employs loan originators, as defined by the S.A.F.E. Mortgage Licensing Act, shall register those employees with the Nationwide Mortgage Licensing System and Registry by furnishing the information relating to the employees' identity set forth in Section 1507(a)(2) of the S.A.F.E. Mortgage Licensing Act.
(c) Each independent contractor loan processor or underwriter licensed as a residential mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.
(d) The regulatory official who administers the law under which a residential mortgage loan originator is licensed shall require the residential mortgage loan originator to be enrolled with the Nationwide Mortgage Licensing System and Registry.
(e) For purposes of implementing Subsection (d), the regulatory official may participate in the Nationwide Mortgage Licensing System and Registry.
(a) A regulatory official shall prescribe application forms for a license as a residential mortgage loan originator.
(b) A regulatory official may change or update an application form as necessary to carry out the purposes of this chapter.
(a) In connection with an application for a license as a residential mortgage loan originator, the applicant shall, at a minimum, furnish in the form and manner prescribed by the regulatory official and acceptable to the Nationwide Mortgage Licensing System and Registry information concerning the applicant's identity, including:
(1) fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive the information to conduct a state, national, and international criminal background check; and
(2) personal history and experience information in a form prescribed by the Nationwide Mortgage Licensing System and Registry, including the submission of authorization for the Nationwide Mortgage Licensing System and Registry and the appropriate regulatory official to obtain:
(A) an independent credit report obtained from a consumer reporting agency described by Section 603(p), Fair Credit Reporting Act (15 U.S.C. Section 1681a(p)); and
(B) information related to any administrative, civil, or criminal findings by a governmental jurisdiction.
(b) For purposes of this section and to reduce the points of contact that the Federal Bureau of Investigation may have to maintain for purposes of Subsection (a)(1), a regulatory official may use the Nationwide Mortgage Licensing System and Registry as a channeling agent for requesting information from and distributing information to the United States Department of Justice, any governmental agency, or any source at the regulatory official's direction.
(c) For purposes of this section and to reduce the points of contact that a regulatory official may have to maintain for purposes of Subsection (a) or (b), the regulatory official may use the Nationwide Mortgage Licensing System and Registry as a channeling agent for requesting information from and distributing information to and from any source as directed by the regulatory official.
a) The regulatory official may not issue a residential mortgage loan originator license to an individual unless the regulatory official determines, at a minimum, that the applicant:
(1) has not had a residential mortgage loan originator license revoked in any governmental jurisdiction;
(2) has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:
(A) during the seven-year period preceding the date of application; or
(B) at any time preceding the date of application, if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering;
(3) demonstrates financial responsibility, character, and general fitness so as to command the confidence of the community and to warrant a determination that the individual will operate honestly, fairly, and efficiently as a residential mortgage loan originator within the purposes of this chapter and any other appropriate regulatory law of this state;
(4) provides satisfactory evidence that the applicant has completed prelicensing education courses described by Section 180.056;
(5) provides satisfactory evidence of having passed a written test that meets the requirements of Section 180.057; and
(6) has paid a recovery fund fee or obtained a surety bond as required under the appropriate state regulatory law.
(b) A revocation that has been formally vacated may not be considered a license revocation for purposes of Subsection (a)(1).
(c) A conviction for which a full pardon has been granted may not be considered a conviction for purposes of Subsection (a)(2).
(d) For purposes of Subsection (a)(3), an individual is considered not to be financially responsible if the individual has shown a lack of regard in managing the individual's own financial affairs or condition. A determination that an individual has not shown financial responsibility may not be based on the individual's default on a student loan but may include:
(1) an outstanding judgment against the individual, other than a judgment imposed solely as a result of medical expenses;
(2) an outstanding tax lien or other governmental liens and filings;
(3) a foreclosure during the three-year period preceding the date of the license application; and
(4) a pattern of seriously delinquent accounts, other than student loan accounts, during the three-year period preceding the date of the application.
(a) An applicant for a residential mortgage loan originator license must complete education courses that include at least the minimum number of hours and type of courses required by the S.A.F.E. Mortgage Licensing Act and the minimum number of hours of training related to lending standards for the nontraditional mortgage product marketplace required by that Act and any additional requirements established by the regulatory official and adopted by rule of the rulemaking authority.
(b) Education courses required under this section must be reviewed and approved by the Nationwide Mortgage Licensing System and Registry in accordance with the S.A.F.E. Mortgage Licensing Act.
(c) Nothing in this section precludes any education course approved in accordance with the S.A.F.E. Mortgage Licensing Act from being provided by:
(1) an applicant's employer;
(2) an entity affiliated with the applicant by an agency contract; or
(3) a subsidiary or affiliate of the employer or entity.
(d) Education courses required under this section may be offered in a classroom, online, or by any other means approved by the Nationwide Mortgage Licensing System and Registry
(e) An individual who has successfully completed prelicensing education requirements approved by the Nationwide Mortgage Licensing System and Registry for another state shall be given credit toward completion of the prelicensing education requirements of this section.
(f) An applicant who has previously held a residential mortgage loan originator license that meets the requirements of this chapter and other appropriate regulatory law, before being issued a new original license, must demonstrate to the appropriate regulatory official that the applicant has completed all continuing education requirements for the calendar year in which the license was last held by the applicant.
(g) If the appropriate federal regulators and the Nationwide Mortgage Licensing System and Registry establish additional educational requirements for licensed residential mortgage loan originators, the rulemaking authority shall adopt necessary rules to implement the changes to the educational requirements of this section.
(h) An individual who fails to maintain a residential mortgage loan originator license for the period of time established by rule of the rulemaking authority must retake the prelicensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act.
(a) An applicant for a residential mortgage loan originator license must pass a qualified, written test that:
(1) meets the standards and requirements established by the S.A.F.E. Mortgage Licensing Act;
(2) is developed by the Nationwide Mortgage Licensing System and Registry; and
(3) is administered by a test provider in accordance with the S.A.F.E. Mortgage Licensing Act.
(b) An individual may retake the test the number of times and within the period prescribed by the S.A.F.E. Mortgage Licensing Act.
(c) An individual who fails to maintain a residential mortgage loan originator license for at least five consecutive years must retake the test.
(d) This section does not prohibit a test provider approved in accordance with the S.A.F.E. Mortgage Licensing Act from providing a test at the location of:
(1) the license applicant's employer;
(2) a subsidiary or affiliate of the applicant's employer; or
(3) an entity with which the applicant holds an exclusive arrangement to conduct the business of a residential mortgage loan originator.
(a) A regulatory official may not issue a residential mortgage loan originator license unless the official determines that the applicant meets the surety bond requirement or has paid a recovery fund fee, as applicable, in accordance with the requirements of the S.A.F.E. Mortgage Licensing Act.
(b) Each regulatory official shall adopt rules requiring an individual licensed as a residential mortgage loan originator to obtain a surety bond or pay a recovery fund fee as the official determines appropriate to comply with the S.A.F.E. Mortgage Licensing Act.
A license to act as a residential mortgage loan originator may be renewed on or before its expiration date if the license holder:
(1) continues to meet the minimum requirements for license issuance;
(2) pays all required fees for the renewal of the license; and
(3) provides satisfactory evidence that the license holder has completed the continuing education requirements of Section 180.060.
(a) To renew a residential mortgage loan originator license, a license holder must annually complete the minimum number of hours and type of continuing education courses required by the S.A.F.E. Mortgage Licensing Act, the minimum requirements established by the Nationwide Mortgage Licensing System and Registry, and any additional requirements established by the regulatory official.
(b) Continuing education courses, including the course provider, must be reviewed and approved by the Nationwide Mortgage Licensing System and Registry as required by the S.A.F.E. Mortgage Licensing Act. Course credit must be granted in accordance with that Act.
(c) Nothing in this section precludes any continuing education course approved in accordance with the S.A.F.E. Mortgage Licensing Act from being provided by:
(1) the employer of the license holder;
(2) an entity affiliated with the license holder by an agency contract; or
(3) a subsidiary or affiliate of the employer or entity.
(d) A person who successfully completes continuing education requirements approved by the Nationwide Mortgage Licensing System and Registry for another state shall be given credit toward completion of the continuing education requirements of this section.
A rulemaking authority may adopt rules establishing requirements as necessary for:
(1) conducting background checks by obtaining:
(A) criminal history information through fingerprint or other databases;
(B) civil administrative records;
(C) credit history information; or
(D) any other information considered necessary by the Nationwide Mortgage Licensing System and Registry;
(2) payment of fees to apply for or renew licenses through the Nationwide Mortgage Licensing System and Registry;
(3) setting or resetting, as necessary, license renewal dates or reporting periods;
(4) amending or surrendering a license or any other activity a regulatory official considers necessary for participation in the Nationwide Mortgage Licensing System and Registry; and
(5) investigation and examination authority for purposes of investigating a violation or complaint arising under this chapter or for purposes of examining, reviewing, or investigating any license holder or individual subject to this chapter.
(a) Except as otherwise provided by this section, a requirement under federal or state law regarding the privacy or confidentiality of information or material provided to the Nationwide Mortgage Licensing System and Registry, and a privilege arising under federal or state law, or under the rules of a federal or state court, continue to apply to the information or material after the disclosure of the information or material to the Nationwide Mortgage Licensing System and Registry. The information and material may be shared with federal and state regulatory officials with mortgage industry oversight authority without the loss of any privilege or confidentiality protections afforded by federal or state laws.
(b) Information or material subject to a privilege or confidential under Subsection (a) may not be subject to:
(1) disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or this state; or
(2) subpoena, discovery, or admission into evidence in a private civil action or administrative proceeding.
(c) A person who is the subject of information or material in the Nationwide Mortgage Licensing System and Registry may waive, wholly or partly, any privilege held by the Nationwide Mortgage Licensing System and Registry with respect to the information or material.
(d) A regulatory official may enter into an agreement or sharing arrangement with another governmental agency, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, or other associations representing appropriate governmental agencies as established by rule of the rulemaking authority or order issued by the regulatory official. A protection provided by Subsection (a) also applies to information and material shared under an agreement or sharing arrangement entered into under this subsection.
(e) To the extent of a conflict between Subsection (a) and Chapter 552, Government Code, or another state law relating to the disclosure of confidential information or information or material described by Subsection (a), Subsection (a) controls to the extent Chapter 552, Government Code, or the other law provides less confidentiality or a weaker privilege than is provided by Subsection (a).
(f) This section does not apply to information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, a residential mortgage loan originator that is included in the Nationwide Mortgage Licensing System and Registry for access by the public.
Subchapter C. Reporting and Other Requirements Regarding Nationwide Mortgage Licensing System and Registry.
Each licensed residential mortgage loan originator shall submit to the Nationwide Mortgage Licensing System and Registry a report of condition that is in the form and contains the information required by the Nationwide Mortgage Licensing System and Registry.
Subject to the confidentiality provisions of this chapter, a regulatory official shall report to the Nationwide Mortgage Licensing System and Registry on a regular basis regarding violations of, enforcement actions under, or information relevant to this chapter or the S.A.F.E. Mortgage Licensing Act under the regulatory official's licensure, regulation, or examination of a licensed residential mortgage loan originator or person registered under the S.A.F.E. Mortgage Licensing Act.
The applicable rulemaking authority by rule shall establish a process by which licensed residential mortgage loan originators may dispute information submitted by the regulatory official to the Nationwide Mortgage Licensing System and Registry.
Subchapter D. Business Practices; Prohibited Acts.
The unique identifier of a person originating a residential mortgage loan must be clearly shown on each residential mortgage loan application form, solicitation, or advertisement, including business cards and websites, and any other document required by rule of the rulemaking authority.
An individual who is engaged exclusively in loan processor or underwriter activities may not represent to the public, through the use of advertising, business cards, stationery, brochures, signs, rate lists, or other means, that the individual can or will perform any of the activities of a residential mortgage loan originator unless the individual is licensed as a residential mortgage loan originator.
An individual or other person subject to regulation under this chapter may not:
(1) employ, directly or indirectly, a scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud a person;
(2) engage in an unfair or deceptive practice toward a person;
(3) obtain property by fraud or misrepresentation;
(4) solicit or enter into a contract with a borrower that provides in substance that the individual or other person subject to this chapter may earn a fee or commission through "best efforts" to obtain a loan even though no loan was actually obtained for the borrower;
(5) solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;
(6) conduct any business regulated by this chapter without holding a license as required by this chapter;
(7) assist, aid, or abet an individual in the conduct of business without a license required by this chapter;
(8) fail to make disclosures as required by this chapter and any other applicable state or federal law, including rules or regulations under applicable state or federal law;
(9) fail to comply with this chapter or rules adopted under this chapter;
(10) fail to comply with any other state or federal law, including rules or regulations adopted under that law, applicable to a business or activity regulated by this chapter;
(11) make, in any manner, a false or deceptive statement or representation;
(12) negligently make a false statement or knowingly or wilfully make an omission of material fact in connection with:
(A) information or a report filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry; or
(B) an investigation conducted by the regulatory official or another governmental agency;
(13) make a payment, threat, or promise, directly or indirectly, to a person for purposes of influencing the person's independent judgment in connection with a residential mortgage loan, or make a payment, threat, or promise, directly or indirectly, to an appraiser of property, for purposes of influencing the appraiser's independent judgment with respect to the property's value;
(14) collect, charge, attempt to collect or charge, or use or propose an agreement purporting to collect or charge a fee prohibited by this chapter;
(15) cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer; or
(16) fail to truthfully account for money belonging to a party to a residential mortgage loan transaction.
Subchapter E. Enforcement Provisions
To ensure the effective supervision and enforcement of this chapter, a regulatory official may:
(1) deny, suspend, revoke, condition, or decline to renew a license for a violation of this chapter, a rule adopted under this chapter, or an order or directive issued under this chapter;
(2) deny, suspend, revoke, condition, or decline to renew a license if an applicant or license holder:
(A) fails to meet the requirements of Subchapter B; or
(B) withholds information or makes a material misstatement in an application for a license or renewal of a license;
(3) order restitution against a person subject to regulation under this chapter for a violation of this chapter;
(4) impose an administrative penalty on a person subject to regulation under this chapter, subject to Section 180.202; or
(5) issue orders or directives as provided by Section 180.203.
(a) A regulatory official may impose an administrative penalty on a residential mortgage loan originator or other person subject to regulation under this chapter, if the official, after notice and opportunity for hearing, determines that the residential mortgage loan originator or other person subject to regulation under this chapter has violated or failed to comply with:
(1) this chapter;
(2) a rule adopted under this chapter; or
(3) an order issued under this chapter.
(b) The penalty may not exceed $25,000 for each violation.
(c) The amount of the penalty shall be based on:
(1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the violation;
(2) the economic harm to property caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
A regulatory official may:
(1) order or direct a person subject to regulation under this chapter to cease and desist from conducting business, including issuing an immediate temporary order to cease and desist from conducting business;
(2) order or direct a person subject to regulation under this chapter to cease a violation of this chapter or a harmful activity in violation of this chapter, including issuing an immediate temporary order to cease and desist;
(3) enter immediate temporary orders against a person subject to regulation under this chapter to cease engaging in business under a license if the regulatory official determines that the license was erroneously granted or the license holder is in violation of this chapter; and
(4) order or direct other affirmative action as the regulatory official considers necessary.
Subchapter F. Duties of Regulatory Officials
(a) The savings and mortgage lending commissioner shall administer and enforce this chapter with respect to individuals licensed under Chapter 157.
(b) [ Repealed effective September 1, 2013.]
(c) The consumer credit commissioner shall administer and enforce this chapter with respect to individuals licensed under Chapter 342, 347, 348, or 351.
(d) To the extent permitted or required by this chapter and as reasonably necessary for the implementation and enforcement of the S.A.F.E. Mortgage Licensing Act, the banking commissioner of Texas may administer and enforce this chapter with respect to a person otherwise under the commissioner's jurisdiction under Subtitle A, F, or G of this title.
To fulfill the purposes of this chapter, a regulatory official may establish a relationship with or contract with the Nationwide Mortgage Licensing System and Registry or an entity designated by the Nationwide Mortgage Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensed residential mortgage loan originators or other persons subject to regulation under this chapter.
SUBTITLE G. BANK HOLDING COMPANIES; INTERSTATE BANK OPERATIONS
Subchapter A. General Provisions
(a) This subtitle:
(1) sets forth the conditions under which a company may acquire a Texas bank or a Texas bank holding company, pursuant to the provisions of Chapter 202;
(2) permits interstate branching under the Interstate Banking and Branching Efficiency Act pursuant to the provisions of Chapter 203; and
(3) provides for state regulation of the participation by foreign banks in the financial markets of this state, pursuant to the provisions of Chapter 204.
(b) This subtitle is not intended to discriminate against out-of-state banks and bank holding companies in a manner that would violate the Interstate Banking and Branching Efficiency Act.
(a) Unless the context requires otherwise, in this subtitle:
(1) "Acquire" means an act that results in direct or indirect control by a company of a bank holding company or a bank, including an act that causes:
(A) the company to merge with a bank holding company or a bank;
(B) the company to assume direct or indirect ownership or control of:
(i) more than 25 percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was not a bank holding company before the acquisition;
(ii) more than five percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was a bank holding company before the acquisition; or
(iii) all or substantially all of the assets of a bank holding company or a bank; or
(C) an application relating to control of a bank holding company or bank to be filed with a federal bank supervisory agency.
(2) "Affiliate" has the meaning assigned by Section 2(k), Bank Holding Company Act (12 U.S.C. Section 1841(k)).
(3) "Agency" when used in reference to an office of a foreign bank, has the meaning assigned by Section 1(b)(1), International Banking Act (12 U.S.C. Section 3101(1)).
(4) "Bank":
(A) for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202, has the meaning assigned by Section 2(c), Bank Holding Company Act (12 U.S.C. Section 1841(c));
(B) for purposes of Chapter 203 and the laws of this state as they relate to Chapter 203, has the meaning assigned to the term "insured bank" by Section 3(h), Federal Deposit Insurance Act (12 U.S.C. Section 1813(h)), except that the term does not include a foreign bank unless it is organized under the laws of a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands and its deposits are insured by the Federal Deposit Insurance Corporation; and
(C) for purposes of Chapter 204 and the laws of this state as they relate to Chapter 204, has the meaning assigned by Section 2(c), Bank Holding Company Act (12 U.S.C. Section 1841(c)), or Section 3(a)(1), Federal Deposit Insurance Act (12 U.S.C. Section 1813(a)(1)), except that the term does not include a foreign bank or a branch or agency of a foreign bank.
(5) "Bank holding company" has the meaning assigned by Section 2(a), Bank Holding Company Act (12 U.S.C. Section 1841(a)), and includes a financial holding company.
(6) "Bank Holding Company Act" means the federal Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as amended.
(7) "Bank supervisory agency" means any of the following:
(A) an agency of another state with primary responsibility for chartering and supervising banks;
(B) the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, or the Bureau of Consumer Financial Protection and any successor to these agencies; or
(C) an agency of a country, including a colony, dependency, possession, or political subdivision of a country, other than the United States with primary responsibility for chartering and supervising banks.
(8) "Branch" has the meaning assigned by Section 31.002(a), except that for purposes of Chapter 204 and the laws of this state as they relate to Chapter 204 the term:
(A) with respect to an office of a foreign bank, has the meaning assigned by Section 1(b)(3), International Banking Act (12 U.S.C. Section 3101(3)); and
(B) with respect to an office of a bank as defined by this section for the purposes of Chapter 204, has the meaning assigned to the term "domestic branch" by Section 3(o), Federal Deposit Insurance Act (12 U.S.C. Section 1813(o)).
(9) "Commissioner" has the meaning assigned to the term "banking commissioner" by Section 31.002(a), except that for purposes of Chapter 203 and the laws of this state as they relate to Chapter 203, with respect to a state savings bank, the term means the savings and mortgage lending commissioner of Texas.
(10) "Company" has the meaning assigned by Section 2(b), Bank Holding Company Act (12 U.S.C. Section 1841(b)), and includes a bank holding company.
(11) "Control" shall be construed consistently with Section 2(a)(2), Bank Holding Company Act (12 U.S.C. Section 1841(a)(2)), and regulations and interpretive rulings of the Board of Governors of the Federal Reserve System.
(12) "De novo branch" means a branch of a bank located in a host state that:
(A) is originally established by the bank as a branch; and
(B) does not become a branch of the bank as a result of:
(i) the acquisition of another bank or a branch of another bank; or
(ii) the merger or conversion involving the bank or branch.
(13) "Deposit" has the meaning assigned by Section 3(l), Federal Deposit Insurance Act (12 U.S.C. Section 1813(l)).
(14) "Depository institution" means an institution included for any purpose within the definitions of "insured depository institution" as assigned by Sections 3(c)(2) and 3(c)(3), Federal Deposit Insurance Act (12 U.S.C. Sections 1813(c)(2) and 1813(c)(3)).
(15) "Federal agency" means an agency of a foreign bank that is licensed by the Comptroller of the Currency pursuant to Section 4, International Banking Act (12 U.S.C. Section 3102).
(16) "Federal branch" means a branch of a foreign bank that is licensed by the Comptroller of the Currency pursuant to Section 4, International Banking Act (12 U.S.C. Section 3102).
(17) "Federal Deposit Insurance Act" means the Federal Deposit Insurance Act (12 U.S.C. Section 1811 et seq.), as amended.
(18) "Foreign bank" has the meaning assigned by Section 1(b)(7), International Banking Act (12 U.S.C. Section 3101(7)).
(19) "Foreign bank holding company" means a bank holding company that is organized under the laws of a country other than the United States or a territory or possession of the United States, and includes a foreign financial holding company.
(20) "Foreign person" means a natural or juridical person who is a citizen or national of one or more countries, including any colonies, dependencies, or possessions of the countries, other than the United States.
(21) "Home state" means:
(A) with respect to a national bank, the state in which the main office of the bank is located;
(B) with respect to a state bank, the state by which the bank is chartered;
(C) with respect to a foreign bank, the state determined to be the home state of the foreign bank under Section 5(c), International Banking Act (12 U.S.C. Section 3103(c)); and
(D) with respect to a bank holding company, the state in which the total deposits of all bank subsidiaries of the company are the largest on the later of July 1, 1966, or the date on which the company became a bank holding company.
(22) "Home state regulator" means:
(A) with respect to an out-of-state bank holding company, the bank supervisory agency of the home state of the bank holding company; and
(B) with respect to an out-of-state state bank, the bank supervisory agency of the state in which the bank is chartered.
(23) "Host state" means:
(A) with respect to a bank, a state other than the home state of the bank in which the bank maintains or seeks to establish and maintain a branch; and
(B) with respect to a bank holding company, a state other than the home state of the company in which the company controls or seeks to control a bank subsidiary.
(24) "International Banking Act" means the federal International Banking Act of 1978 (12 U.S.C. Section 3101 et seq.), as amended.
(25) "Interstate Banking and Branching Efficiency Act" means the federal Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, Public Law No. 103-328, codified at various sections of Title 12, United States Code.
(26) "Interstate branch" means a branch of a bank or a branch of a foreign bank, as the context requires, established, acquired, or retained pursuant to the Interstate Banking and Branching Efficiency Act, outside the home state of the bank or foreign bank. The term does not include, with respect to a foreign bank, a limited branch as that term is defined by this section.
(27) "Interstate merger transaction" means:
(A) the merger of banks with different home states and the conversion of branches of a bank involved in the merger into branches of the resulting bank; or
(B) the purchase of all or substantially all of the assets, including all or substantially all of the branches, of a bank whose home state is different from the home state of the acquiring bank.
(28) "Limited branch" means a branch of a foreign bank that accepts only the deposits that would be permissible for a corporation organized under Section 25A, Federal Reserve Act (12 U.S.C. Section 611 et seq.), in accordance with Section 5(a)(7), International Banking Act (12 U.S.C. Section 3103(a)(7)).
(29) "Out-of-state bank" means a bank whose home state is another state.
(30) "Out-of-state bank holding company" means a bank holding company whose home state is another state, and includes an out-of-state financial holding company.
(31) "Out-of-state foreign bank" means a foreign bank whose home state is another state.
(32) "Out-of-state state bank" means a bank chartered under the laws of another state.
(33) "Representative office" has the meaning assigned by Section 1(a)(15), International Banking Act (12 U.S.C. Section 3101(15)).
(34) "Resulting bank" means a bank that results from an interstate merger transaction.
(35) "State" means a state of the United States, the District of Columbia, a territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or the Northern Mariana Islands, except that for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202 the term means a state, territory, or other possession of the United States, including the District of Columbia.
(36) "State bank" means a Texas state bank or an out-of-state state bank, including an out-of-state state savings bank.
(37) "State savings bank" has the meaning assigned to the term "savings bank" by Section 3(g), Federal Deposit Insurance Act (12 U.S.C. Section 1813(g)), and includes a savings bank organized under Subtitle C or under similar laws of another state.
(38) "Subsidiary" has the meaning assigned by Section 2(d), Bank Holding Company Act (12 U.S.C. Section 1841(d)).
(39) "Texas bank" means a bank whose home state is this state, except that for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202 the term means a Texas state bank or a national bank organized under federal law with its main office in this state.
(40) "Texas bank holding company" means a bank holding company whose home state is this state and that is not controlled by a bank holding company other than a Texas bank holding company, and includes a Texas financial holding company.
(41) "Texas representative office" means a representative office that is located in this state and registered pursuant to Subchapter C, Chapter 204.
(42) "Texas state agency," means, when used in reference to an office of a foreign bank, an agency of a foreign bank that is located in this state and licensed pursuant to Subchapter B, Chapter 204.
(43) "Texas state bank" means a bank that is organized under Subtitle A.
(44) "Texas state branch," means, when used in reference to an office of a foreign bank, a branch of a foreign bank that is located in this state and licensed pursuant to Subchapter B, Chapter 204.
(45) "United States" means:
(A) when used in a geographical sense, the several states, the District of Columbia, Puerto Rico, Guam, American Samoa, the American Virgin Islands, the Trust Territory of the Pacific Islands, and other territories of the United States; and
(B) when used in a political sense, the federal government of the United States.
(46) "Financial holding company" means a bank holding company that has elected to be treated as a financial holding company under 12 U.S.C. Section 1843(1).
(47) "Functional regulatory agency" means a department or agency of this state, another state, the United States, or a foreign government with whom the United States currently maintains diplomatic relations that regulates and charters, licenses, or registers persons engaged in financial activities or activities incidental or complementary to financial activities, including activities related to banking, insurance, or securities.
(b) The definitions provided by Section 31.002 apply to this subtitle to the extent not inconsistent with this section and as the context requires.
(c) The definitions shall be liberally construed to accomplish the purposes of this subtitle.
(d) The finance commission by rule may adopt other definitions to accomplish the purposes of this subtitle.
(a) The finance commission may adopt rules to accomplish the purposes of this subtitle, including rules necessary or reasonable to:
(1) implement and clarify this subtitle in a manner consistent with and to the extent permitted by applicable federal law;
(2) preserve or protect the safety and soundness of banking in this state;
(3) grant at least the same rights and privileges to Texas state banks that are or may be granted to other depository institutions;
(4) recover the cost of maintaining and operating the department and the cost of enforcing this subtitle by imposing and collecting ratable and equitable fees for supervision and regulation, including fees for notices, applications, and examinations; and
(5) facilitate the fair hearing and adjudication of matters before the commissioner and the finance commission.
(b) In adopting rules, the finance commission shall consider the need to:
(1) coordinate with applicable federal law;
(2) promote a stable banking environment;
(3) provide the public with convenient, safe, and competitive banking services;
(4) preserve and promote the competitive position of Texas state banks with regard to other depository institutions consistent with the safety and soundness of Texas state banks and the Texas state bank system; and
(5) allow for economic development in this state.
(c) The presence or absence in this subtitle of a specific reference to rules regarding a particular subject does not enlarge or diminish the rulemaking authority provided by this section.
(a) The laws of this state, including laws regarding community reinvestment, consumer protection, fair lending, and establishment of intrastate branches, apply to an interstate branch located in this state to the same extent the laws of this state would apply if the branch in this state were a branch of an out-of-state national bank in this state, except to the extent otherwise provided under federal law. An out-of-state state bank that establishes an interstate branch in this state under this subtitle may conduct any activity at the branch in this state that is permissible under the laws of the bank's home state, to the extent the activity is permissible for a Texas state bank or for a branch of an out-of-state national bank in this state.
(b) To the extent provided by Section 4.102(c), Business & Commerce Code, the laws of this state govern a deposit contract between a bank and a consumer account holder if the branch or separate office of the bank that accepts the deposit contract is located in this state.
(c) Without limiting Subsection (a), for purposes of the laws of this state relating to authority to act as a fiduciary, depository of public funds, or custodian of securities pledged to secure public funds, or authority to engage in repurchase transactions with public entities, a legally operating interstate branch in this state is considered to be in, within, located in, authorized to do business in, domiciled in, and chartered in this state.
(d) This subtitle does not limit or affect the authority of:
(1) the home state regulator of a bank's home state to enforce any law applicable to a branch of an out-of-state state bank;
(2) a law enforcement officer, a regulatory supervisor, other than the commissioner, or another official of this state to enforce the laws of this state applicable to a branch of an out-of-state state bank; or
(3) this state to adopt, apply, or administer any tax or method of taxation to a bank, bank holding company, or foreign bank, or any affiliate of a bank, bank holding company, or foreign bank, to the extent that the tax or tax method is otherwise permissible by or under the United States Constitution or other federal law.
(a) To carry out the purposes of this subtitle, to the extent permitted by federal law, the commissioner may:
(1) enter into cooperative, coordinating, or information sharing agreements with another bank supervisory agency, a functional regulatory agency, or an organization affiliated with or representing one or more bank supervisory agencies;
(2) with respect to periodic examination or other supervision or investigation, accept reports of examination or investigation by, and reports submitted to, another bank supervisory agency or functional regulatory agency in lieu of conducting examinations or investigations or receiving reports as might otherwise be required or permissible under this subtitle;
(3) enter into contracts with another bank supervisory agency or functional regulatory agency having concurrent regulatory or supervisory jurisdiction to engage the services of the agency for reasonable compensation to assist in connection with the commissioner´s performance of official duties under this subtitle or other law, or to provide services to the agency for reasonable compensation in connection with the agency´s performance of official duties under law, except that Chapter 2254, Government Code, does not apply to the contracts;
(4) enter into joint examinations or joint enforcement actions with another bank supervisory agency or functional regulatory agency having concurrent regulatory or supervisory jurisdiction, except that the commissioner may independently take action under Section 201.009 if the commissioner determines that the action is necessary to carry out the commissioner´s responsibilities under this subtitle or to enforce compliance with the laws of this state; and
(5) assess supervisory and examination fees to be paid by a state bank, state savings bank, bank holding company, or foreign bank in connection with the commissioner´s performance of duties under this subtitle.1
(b) Supervisory or examination fees assessed by the commissioner in accordance with this subtitle may be shared with another bank supervisory agency, a functional regulatory agency, or an organization affiliated with or representing one or more bank supervisory agencies in accordance with an agreement between the commissioner and the agency or organization. The commissioner may also receive a portion of supervisory or examination fees assessed by another bank supervisory agency or functional regulatory agency in accordance with an agreement between the commissioner and the agency.
(c) A cooperative agreement entered into by the commissioner under this section does not limit the authority of a law enforcement officer, regulatory supervisor, or other official of this state who is not a party to the agreement to enforce the laws of this state applicable to a branch of an out-of-state state bank located in this state.
(a) To encourage the effective coordination and implementation of home state laws and host state laws with respect to interstate branching, the commissioner, directly or through a deputy commissioner or department attorney, may:
(1) issue interpretive statements containing matters of general policy to guide the public and banks and bank holding companies subject to this subtitle;
(2) amend or repeal a published interpretive statement by issuing an amended statement or notice of repeal of a statement and publishing the statement or notice;
(3) issue, in response to specific requests from the public or the banking industry, opinions interpreting this subtitle or determining the applicability of laws of this state to the operation of interstate branches or other offices in this state by out-of-state banks or in other states by Texas banks; and
(4) amend or repeal an opinion by issuing an amended opinion or notice of repeal of an opinion, except that the requesting party may rely on the original opinion if:
(A) all material facts were originally disclosed to the commissioner;
(B) the safety and soundness of the affected bank or bank holding company will not be affected by further reliance on the original opinion; and
(C) the text and interpretation of relevant, governing provisions of applicable home state, host state, and federal law have not been changed by legislative or judicial action.
(b) An interpretive statement or opinion may be disseminated by newsletter, via electronic medium such as the internet, in a volume of statutes or related materials published by the commissioner or others, or by other means reasonably calculated to notify persons affected by the interpretive statement or opinion. An opinion may be disseminated to the public if the commissioner determines that the opinion is useful for the general guidance and convenience of the public or banks or bank holding companies. A published opinion must be redacted to preserve the confidentiality of the requesting party unless the requesting party consents to be identified in the published opinion. Notice of an amended or withdrawn statement or opinion must be disseminated in a substantially similar manner as the affected statement or opinion was originally disseminated.
(c) An interpretive statement or opinion issued under this subtitle does not have the force of law and is not a rule for the purposes of Chapter 2001, Government Code, unless adopted by the finance commission as provided by Chapter 2001, Government Code. An interpretive statement or opinion is an administrative construction of this subtitle entitled to great weight if the construction is reasonable and does not conflict with this subtitle.
Except as expressly provided otherwise in this subtitle, confidentiality of information obtained by the commissioner under this subtitle is governed by Subchapter D, Chapter 31,2 or, with respect to a state savings bank, Subtitle C, and may not be disclosed by the commissioner or an employee of the commissioner´s department except as provided by Subchapter D, Chapter 31, or, with respect to a state savings bank, Subtitle C.
Each out-of-state state bank that has established and maintains an interstate branch in this state pursuant to this subtitle shall give written notice to the commissioner, at least 30 days before the effective date of the event, or in the case of an emergency transaction, within a shorter period consistent with applicable state or federal law, of a merger or other transaction that would cause a change of control with respect to the bank or a bank holding company that controls the bank, with the result that an application would be required to be filed with the bank´s home state regulator or a federal bank supervisory agency, including an application filed pursuant to the Change in Bank Control Act of 1978 (12 U.S.C. Section 1817(j)), as amended, or the Bank Holding Company Act (12 U.S.C. Section 1841 et seq.).
(a) If the commissioner determines that a bank holding company or a foreign bank has violated this subtitle or other applicable law of this state, the commissioner may take any enforcement action the commissioner would be empowered to take if the bank holding company or foreign bank were a Texas state bank,3 except that the commissioner shall promptly give notice to the home state regulator of each enforcement action taken against an out-of-state bank holding company or foreign bank and, to the extent practicable, shall consult and cooperate with the home state regulator in pursuing and resolving the enforcement action. A bank holding company or foreign bank may appeal a final order or other decision of the commissioner under this subtitle as provided by Sections 31.202 and 31.204.
(b) If the commissioner determines that an interstate branch maintained by an out-of-state state bank in this state is being operated in violation of a law of this state that is applicable to the branch under Section 24(j), Federal Deposit Insurance Act (12 U.S.C. Section 1831a(j)), including a law that governs community reinvestment, fair lending, or consumer protection, the commissioner, with written notice to the home state regulator and subject to the terms of any applicable cooperative agreement with the home state regulator, may take any enforcement action the commissioner would be empowered to take if the branch were a Texas state bank or state savings bank, as the case may be. An out-of-state state bank may appeal a final order or other decision of the commissioner under this subtitle as provided by Sections 31.202 and 31.204, or as provided under Subtitle C with respect to a state savings bank.
(c) Repealed by Acts 2013, 83rd Leg., R.S., Ch. __ (HB 1664), § 26, eff. June 14, 2013.
A bank subject to this subtitle is subject to the franchise tax to the extent provided by Chapter 171, Tax Code.
The provisions of this subtitle or the applications of those provisions are severable as provided by Section 311.032(c), Government Code.
Subchapter B. Registration of Financial Institutions
In this subchapter:
(1) "Financial institution" means:
(A) a bank as defined for any purpose by Section 201.002(a)(4), whether chartered under the laws of this state, another state, the United States, or another country, including a state savings bank;
(B) a savings and loan association chartered under Chapter 62 or similar laws of another state;
(C) a federal savings and loan association, federal savings bank, or federal credit union;
(D) a credit union chartered under Chapter 122 or similar laws of another state; or
(E) a trust company chartered under the laws of this state or another state.
(2) "Out-of-state financial institution" means a financial institution that:
(A) is not chartered under the laws of this state; and
(B) has its main or principal office in another state or country.
(3) "Texas financial institution" means a financial institution that:
(A) is chartered under the laws of this state or under federal law; and
(B) has its main or principal office in this state.
An out-of-state financial institution must file an application for registration with the secretary of state, before operating a branch or other office in this state, by complying with the law of this state relating to foreign corporations doing business in this state, notwithstanding a provision in that law that purports to limit or prohibit its applicability to financial institutions.6
(a) A Texas financial institution may file in the office of the secretary of state a statement appointing an agent authorized to receive service of process.
(b) A statement appointing an agent must set forth:
(1) the name of the Texas financial institution;
(2) the federal tax identification number of the Texas financial institution;
(3) the address, including the street address, of the principal office of the Texas financial institution; and
(4) the name of the agent in this state authorized to receive service of process and the agent´s address, including the street address, in this state.
(c) The agent named under Subsection (b) must be:
(1) an individual resident of this state;
(2) a domestic corporation, limited partnership, partnership, limited liability company, professional association, cooperative, or real estate investment trust; or
(3) a foreign entity registered with the secretary of state to transact business in this state.
(d) A statement appointing an agent must be signed by an officer of the Texas financial institution. The statement must also be signed by the person appointed agent, who by signing accepts the appointment. The appointed agent may resign by filing a resignation in the office of the secretary of state and giving notice to the Texas financial institution.
(e) The secretary of state shall collect for the use of the state:
(1) a fee of $25 for indexing and filing the original statement appointing an agent; and
(2) a fee of $15 for filing an amendment to or cancellation of a statement appointing an agent.
(f) An amendment to a statement appointing an agent to receive service of process must meet the requirements for execution of an original statement.
(g) A statement appointing an agent may be canceled by filing with the secretary of state a written notice of cancellation executed by an officer of the Texas financial institution. A notice of cancellation must contain:
(1) the name of the Texas financial institution;
(2) the federal tax identification number of the Texas financial institution;
(3) the date of filing of the statement appointing the agent; and
(4) the current street address of the principal office of the Texas financial institution.
(h) Service of process on a registered agent appointed under this section is an alternate method of service in addition to other methods provided by law unless other law specifically requires service to be made on the registered agent. A resignation or notice of cancellation is effective immediately on acknowledgement of filing by the secretary of state, and after the acknowledgement the financial institution is subject to service of process as otherwise provided by law.
(i) The secretary of state may adopt forms and procedural rules for filing of documents under this section.
[Includes §§202.001 - 202.006.]
(a) This section applies to a company intending to acquire a Texas bank holding company or a Texas bank. For purposes of this section, a Texas bank holding company does not include a bank holding company of which the only subsidiaries are state savings banks.
(a-1) A company described by Subsection (a) shall submit to the commissioner a copy of the application for approval or notice submitted to the Board of Governors of the Federal Reserve System under Section 3, Bank Holding Company Act (12 U.S.C. Section 1842). The copy must be:
(1) submitted to the commissioner when the application is submitted to the board of governors;
(2) accompanied by any additional information required under Subsection (b); and
(3) accompanied by any filing fee required by law.1
(b) An applicant or notificant that is an out-of-state bank holding company shall provide satisfactory evidence to the commissioner of compliance with or inapplicability of:
(1) the requirements of Section 202.003; and
(2) if the applicant or notificant is not incorporated under the laws of this state, the laws of this state relating to registration of foreign corporations to do business in this state.
(c) On receipt of the notice prescribed by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)), the commissioner shall state in writing within the period prescribed by that subsection the commissioner´s:
(1) views and recommendations concerning the proposed transaction;
(2) opinion regarding whether the proposed transaction complies with this chapter and the Interstate Banking and Branching Efficiency Act; and
(3) opinion regarding whether the proposed transaction complies with the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et seq.), as amended.
(d) The commissioner is not required to disapprove the application or notice solely because of the opinion stated under Subsection (c)(3).
(e) If the commissioner´s response disapproves an application for or notice of an acquisition of a Texas state bank or a Texas bank holding company controlling a Texas state bank, the commissioner may:
(1) appear at the hearing held as provided by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)); and
(2) present evidence at the hearing regarding the reasons the application or notice should be denied.
(f) If the commissioner´s response disapproves an application for or notice of an acquisition other than as described by Subsection (e), the commissioner may request that a hearing be held as provided by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)). If the board of governors grants the request, the commissioner shall appear and present evidence at the hearing regarding the reasons the application or notice should be denied.
(g) If the board of governors approves an application or notice that the commissioner disapproved, the commissioner may accept the decision or attempt to overturn the decision on appeal as provided by Section 9, Bank Holding Company Act (12 U.S.C. Section 1848).
(a) The commissioner may not approve an acquisition if, on consummation of the transaction, the applicant, including all depository institution affiliates of the applicant, would control 20 percent or more of the total amount of deposits in this state held by depository institutions in this state.
(b) The commissioner may request and the applicant shall provide supplemental information to the 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.
(a) An out-of-state bank holding company may not make an acquisition under this chapter if the Texas bank to be acquired, or any Texas bank subsidiary of the bank holding company to be acquired, has not been in existence and in continuous operation for at least five years as of the effective date of acquisition.
(b) For purposes of this section:
(1) a bank that is the successor as a result of merger or acquisition of all or substantially all of the assets of a prior bank is considered to have been in existence and continuously operated during the period of its existence and continuous operation as a bank and during the period of existence and continuous operation of the prior bank; and
(2) a bank effecting a purchase and assumption, merger, or similar transaction with or supervised by the Federal Deposit Insurance Corporation or its successor is considered to have been in existence and continuously operated during the existence and continuous operation of the bank with respect to which the transaction was consummated.
(a) A bank holding company doing business in this state that submits an application, election, or notice to the Board of Governors of the Federal Reserve System under Section 4, Bank Holding Company Act (12 U.S.C. Section 1843), that involves or will involve an office location in this state shall submit to the commissioner a copy of the application, election, or notice when the application, election, or notice is submitted to the board of governors, including a notice or application to acquire a nonbanking institution, an election to be treated as a financial holding company, or a request, proposal, or application to engage in an activity that is or may be a financial activity or an activity incidental or complementary to a financial activity. The bank holding company shall submit other information reasonably requested by the commissioner to determine the manner in which the acquisition, election, or activity will directly or indirectly affect residents of this state.2
(b) To assist in determining whether to disapprove the proposed acquisition, election, or activity, the commissioner may hold a public hearing as provided by Section 31.201, regardless of whether requested to do so by a person, regarding the proposed acquisition, election, or activity and its effect on this state. The commissioner shall convene a hearing if the bank holding company requests a hearing in writing when it submits the application, election, or notice to the commissioner.3
(c) The commissioner shall disapprove the proposed acquisition, election, or activity if the commissioner determines that the acquisition, election, or activity would be detrimental to the public interest as a result of probable adverse effects, including undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices.
(d) If the commissioner determines to disapprove the proposed acquisition, election, or activity, the commissioner may prepare and file a response to the application, election, or notice with the board of governors and may request that a hearing be held. If the board of governors grants the request, the commissioner shall appear and present evidence at the hearing regarding the reasons the proposed acquisition, election, or activity should be denied.
(e) If the board of governors approves a proposed acquisition, election, or activity that the commissioner disapproved, the commissioner may accept the decision or seek to overturn the decision on appeal as provided by Section 9, Bank Holding Company Act (12 U.S.C. Section 1848).
(a) The commissioner may:
(1) examine a bank holding company that controls a Texas bank to the same extent as if the bank holding company were a Texas state bank;4 and
(2) bring an enforcement proceeding under Chapter 35 against a bank holding company or other person that violates or participates in a violation of Subtitle A, an agreement filed with the commissioner under this chapter, or a rule adopted by the finance commission or order issued by the commissioner under Subtitle A, as if the bank holding company were a Texas state bank.
(a-1) The grounds, procedures, and effects of an enforcement proceeding brought under this section apply to a bank holding company, an officer, director, or employee of a bank holding company, or a controlling shareholder or other person participating in the affairs of a bank holding company in the same manner as the grounds, procedures, and effects apply to a state bank, an officer, director, or employee of a state bank, or a controlling shareholder or other person participating in the affairs of a state bank.
(b) A Texas bank that is controlled by a bank holding company that is not a Texas bank holding company shall be subject to all laws of this state that are applicable to Texas banks that are controlled by Texas bank holding companies.
(a) A financial holding company may engage in a financial activity or an activity incidental or complementary to a financial activity if the activity has been authorized by:
(1) the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 1843(k); or
(2) a rule adopted by the finance commission under Subsection (b).
(b) The finance commission by rule may determine that an activity not otherwise approved or authorized under this chapter, federal law, or other law is:
(1) a financial activity;
(2) incidental to a financial activity; or
(3) complementary to a financial activity.
(c) In adopting a rule under Subsection (b), 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 financial holding companies 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 financial holding company 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; and
(5) if otherwise determined to be permissible, whether the conduct of the activity by a financial holding company 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 holding company´s subsidiary banks and the financial system generally.
(d) A determination by the board of governors under federal law or by a rule of 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.
[Includes §§203.001 - 203.007.]
(a) With the prior approval of the commissioner, a Texas state bank may establish and maintain a de novo branch or acquire a branch in a state other than Texas pursuant to Section 32.203.1
(b) With the prior approval of the commissioner, a Texas state bank may establish, maintain, and operate one or more branches in another state pursuant to an interstate merger transaction in which the Texas state bank is the resulting bank. Not later than the date on which the required application for the interstate merger transaction is filed with the responsible federal bank supervisory agency, the applicant Texas state bank shall file an application on a form prescribed by the commissioner and pay the fee prescribed by law. The applicant shall also comply with the applicable provisions of Sections 32.301-32.303. The commissioner shall approve the interstate merger transaction and the operation of branches outside of this state by the Texas state bank if the commissioner makes the findings required by Section 32.302(b). An interstate merger transaction may be consummated only after the applicant has received the commissioner´s written approval.2
(a) An out-of-state bank may establish a de novo branch in this state if:
(1) the out-of-state bank confirms in writing to the commissioner that as long as it maintains a branch in this state, it will comply with all applicable laws of this state;
(2) the applicant provides satisfactory evidence to the commissioner of compliance with the applicable requirements of Section 201.102; and
(3) the commissioner, acting on or before the 30th day after the date the commissioner receives notice of an application under Subsection (b), certifies to the responsible federal bank supervisory agency that the requirements of this subchapter have been met.
(b) An out-of-state bank desiring to establish and maintain a de novo branch shall provide written notice of the proposed transaction to the commissioner not later than the date on which the bank applies to the responsible federal bank supervisory agency for approval to establish the branch. The filing of the notice must be accompanied by the filing fee, if any, prescribed by the commissioner.
(c) A de novo branch may be established in this state through the acquisition of a branch of an existing Texas bank if the acquiring out-of-state bank complies with this section.3
(d) A depository institution may not establish or maintain a branch in this state on the premises or property of an affiliate if the affiliate engages in commercial activities, except as provided by Section 92.063(d).
(a) Subject to Section 203.004, one or more Texas banks may enter into an interstate merger transaction with one or more out-of-state banks under this chapter, and an out-of-state bank resulting from the transaction may maintain and operate the branches in this state of a Texas bank that participated in the transaction. An out-of-state bank that will be the resulting bank in the interstate merger transaction shall comply with Section 201.102.
(b) An out-of-state bank that will be the resulting bank pursuant to an interstate merger transaction involving a Texas state bank shall notify the commissioner of the proposed merger not later than the date on which it files an application for an interstate merger transaction with the responsible federal bank supervisory agency, and shall submit a copy of that application to the commissioner and pay the filing fee, if any, required by the commissioner. A Texas state bank that is a party to the interstate merger transaction shall comply with Chapter 32 and with other applicable state and federal laws.4 An out-of-state bank that will be the resulting bank in the interstate merger transaction shall provide satisfactory evidence to the commissioner of compliance with Section 201.102.
(c) Repealed by Acts 2013, 83rd Leg., R.S., Ch. __ (HB 1664), § 26, eff. June 14, 2013.
(a) An interstate merger transaction is not permitted if, on consummation of the transaction, the resulting bank, including all depository institution affiliates of the resulting bank, would control 20 percent or more of the total amount of deposits in this state held by all depository institutions in this state.
(b) The commissioner may request and the applicant shall provide supplemental information to the 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.
An out-of-state bank that has established or acquired a branch in this state under this chapter may establish or acquire additional branches in this state to the same extent that a Texas state bank may establish or acquire a branch in this state under applicable state and federal law.
(a) With respect to an interstate branch maintained by an out-of-state state bank in this state, the banking commissioner:
(1) with written notice to the home state regulator and subject to the terms of any applicable cooperative agreement with the home state regulator, may examine the branch for the purpose of determining whether the branch is in compliance with the laws of this state that are applicable under Section 24(j), Federal Deposit Insurance Act (12 U.S.C. Section 1831a(j)), including laws governing community reinvestment, fair lending, and consumer protection; and
(2) if expressly permitted under and subject to the terms of any cooperative agreement with the home state regulator, or if the bank has been determined to be in a troubled condition by the home state regulator or the bank's appropriate federal banking agency, may participate in the examination of the bank by the home state regulator to ascertain whether the activities of the branch in this state are being conducted in an unsafe or unsound manner.
(b) For purposes of this section, a bank is considered to be in a troubled condition if the bank:
(1) has a composite rating, as determined in the bank's most recent report of examination, of four or five under the Uniform Financial Institutions Ratings System;
(2) is subject to a proceeding initiated by the Federal Deposit Insurance Corporation for termination or suspension of deposit insurance; or
(3) is subject to a proceeding initiated by the home state regulator to:
(A) vacate, revoke, or terminate the bank's charter;
(B) liquidate the bank; or
(C) appoint a receiver for the bank.
Subchapter A. General Provisions
(a) A foreign bank may not transact business in this state except to the extent permitted by this chapter.
(b) Subsection (a) does not prohibit a foreign bank:
(1) from transacting business at a licensed federal branch or agency in this state in accordance with federal law;
(2) that does not maintain a branch or agency in this state or conduct business from an office or location in this state from making unsecured loans in this state or loans secured by liens on real or personal property located in this state, enforcing those loans in this state, or transacting trust business in this state, to the extent permitted by other law; or
(3) organized under the laws of a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands, the deposits of which are insured by the Federal Deposit Insurance Corporation, from establishing and operating an interstate branch in this state in its capacity as a state bank pursuant to Chapter 203.
(c) For purposes of Subsection (a), a foreign bank is not considered to be transacting business in this state merely because a subsidiary or affiliate transacts business in this state, including business that a depository institution subsidiary or affiliate may lawfully conduct in this state as an agent for the foreign bank to the extent authorized by the laws of this state.
Each Texas state branch, agency, or representative office shall maintain and make available appropriate books, accounts, and records reflecting:
(1) all transactions effected by or on behalf of the office; and
(2) all other actions taken in this state by employees of the foreign bank located in this state to effect transactions on behalf of an office of the foreign bank located outside this state.1
(a) The commissioner may make examinations of a Texas state branch, agency, or representative office as the commissioner considers necessary to determine whether the office is being operated in compliance with the laws of this state and in accordance with safe and sound banking practices. Sections 31.105-31.107 apply to the examinations.
(b) A foreign bank that maintains a Texas state branch, agency, or representative office shall pay fees to the commissioner in accordance with Section 201.005 or rules adopted under this subtitle.2
(a) A foreign bank doing business in this state through a Texas state branch, agency, or representative office shall make written reports to the commissioner that:
(1) are in English;
(2) are submitted at the times and in the form specified by the commissioner or by rules adopted under this subtitle;3
(3) are under oath of one of the foreign bank´s officers, managers, or agents transacting business in this state;
(4) show the amount of the foreign bank´s assets and liabilities, expressed in United States currency;
(5) with respect to a Texas state branch or agency, show the amount of the branch or agency´s assets and liabilities, expressed in United States currency; and
(6) contain other information that the commissioner requires.
(b) A license or registration of a foreign bank under this chapter may be revoked or the foreign bank may be subject to an enforcement action under Chapter 35 if the foreign bank fails to make a report required under Subsection (a) or makes a material false or misleading statement in the report.
A foreign bank licensed to establish and maintain a Texas state branch or agency pursuant to Subchapter B, or which has registered a Texas representative office pursuant to Subchapter C, shall file with the commissioner a notice of change of control, in the form and containing the information the commissioner requires, not later than the 14th day after the date of a merger or other transaction that results or will result in a change of control.
(a) Except as provided in Subsection (b):
(1) the laws of this state governing the acquisition or ownership of interests in Texas banks or out-of-state banks seeking to establish and maintain interstate branches in this state do not prohibit ownership of those institutions by, or otherwise discriminate against, foreign banks or other foreign persons; and
(2) the laws of this state governing the powers and activities of Texas banks and out-of-state banks maintaining interstate branches in this state do not discriminate among those banks on the basis of their ownership or control by foreign banks or other foreign persons.
(b) Notwithstanding Subsection (a), the commissioner may apply the laws of this state governing the ownership, control, or operations of Texas banks, even if applicable specifically or exclusively to foreign banks or other foreign persons, to the extent those laws are determined by the commissioner to be:
(1) substantially equivalent to or consistent with the standards or requirements governing the ownership, control, or operations of Texas banks by foreign banks or other foreign persons under applicable federal law; or
(2) otherwise consistent with the laws and policies of the United States, including its international agreements governing financial services.
(a) An out-of-state foreign bank may establish an interstate Texas state branch in the same manner as, and subject to the same criteria, standards, conditions, requirements, and procedures applicable to, the establishment of an interstate branch in this state by an out-of-state bank having the same home state in the United States, including by acquisition of or merger with a Texas bank, or establishment of a de novo branch in the manner provided by Section 203.002, notwithstanding another law of this state to the contrary other than Subsection (b).
(b) With respect to establishment of an initial interstate Texas state branch and subsequent intrastate branches of an out-of-state foreign bank, the commissioner:
(1) shall apply the same criteria, standards, conditions, requirements, and procedures applicable under Subchapter B to the establishment of an initial Texas state branch and subsequent intrastate branches in this state;
(2) may apply other criteria, standards, conditions, requirements, or provisions of the laws of this state that are determined by the commissioner to be substantially equivalent to or consistent with federal law generally applicable to the establishment of a branch in the United States by a foreign bank or specifically applicable to the establishment of a branch in the United States by the applicant foreign bank; and
(3) may allow an out-of-state foreign bank to:
(A) acquire or merge with another foreign bank maintaining a Texas branch or agency and after the acquisition or merger continue the operations as its own;
(B) acquire or establish an interstate Texas branch through another means not inconsistent with Section 5, International Banking Act (12 U.S.C. Section 3103); or
(C) convert a state agency to a state branch as provided by Section 204.008.
(a) For purposes of this section, foreign bank offices in this state are divided into classes and ranked in ascending order as:
(1) representative office;
(2) Texas state agency; and
(3) Texas state branch.
(b) A foreign bank may change a lower class office into a higher class office by applying for the higher class office pursuant to Section 204.101. On approval of the application to establish the higher class office and after all conditions to the approval have been fulfilled, the foreign bank may change the lower class office into the higher class office and the commissioner shall issue a license authorizing the bank to maintain the higher class office. The foreign bank shall promptly surrender any license or registration previously issued by the commissioner in connection with the lower class office.
(c) A foreign bank may change a higher class office into a lower class office by applying for approval to close the higher class office pursuant to Section 204.115. On approval of the application to close the higher class office and after conditions precedent to the closing have been fulfilled, the foreign bank may change the higher class office into the lower class office, and the commissioner shall issue a license or registration authorizing the bank to maintain the lower class office.
Subchapter B. Direct Branch and Agency Offices of Foreign Banks
(a) A foreign bank that desires to establish and maintain a Texas state branch or agency shall submit an application to the commissioner. The application must:4
(1) be accompanied by all application fees and deposits required by applicable rules;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of the foreign bank;
(4) have attached:
(A) a complete copy of the foreign bank´s application to the Board of Governors of the Federal Reserve System under Section 7(d), International Banking Act (12 U.S.C. Section 3105(d));
(B) an authenticated copy of the foreign bank´s certificate of formation and bylaws or other constitutive documents and, if the copy is in a language other than English, an English translation of the document, under the oath of the translator; and
(C) evidence of compliance with Section 201.102;
(5) be submitted when the federal application is submitted to the board of governors; and
(6) include on its face or in accompanying documents:
(A) the name of the foreign bank;
(B) the street address where the principal office of the Texas state branch or agency is to be located and, if different, the Texas state branch or agency´s mailing address;
(C) the name and qualifications of each officer and director of the foreign bank who will have control of all or part of the business and affairs of the Texas state branch or agency;
(D) a detailed statement of the foreign bank´s financial condition as of a date not more than 360 days before the date of the application; and
(E) other information that:
(i) is necessary to enable the commissioner to make the findings listed in Section 204.103;
(ii) is required by rules adopted under this subtitle; or
(iii) the commissioner reasonably requests.
(b) The finance commission may adopt rules prescribing abbreviated application procedures and standards applicable to applications by foreign banks that have already established an initial Texas state branch or agency to establish additional intrastate branches or agencies.
(a) After the application is complete and accepted for filing and all required fees and deposits have been paid, the commissioner shall determine from the application and the initial investigation whether the conditions set forth by Section 204.103 have been established. The commissioner shall approve the application or set the application for hearing.
(b) If the commissioner sets the application for hearing:
(1) the commissioner shall notify the Board of Governors of the Federal Reserve System that the application has been set for hearing as provided by federal regulations;
(2) the department shall participate as the opposing party; and
(3) the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable law.5
(c) Information relating to the financial condition and business affairs of the foreign bank and financial information relating to its management and shareholders, except for previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or an employee of the department except as provided by Subchapter D, Chapter 31.6
(d) The commissioner shall make a finding from the record of the hearing on each condition listed in Section 204.103 and enter an order granting or denying the license. If the license is denied, the commissioner shall inform the Board of Governors of the Federal Reserve System of the order and the reasons the federal application should be denied.
(e) The commissioner may make approval of an application conditional. The commissioner shall include any conditions in the order granting the license but may not issue the license until the Texas state branch or agency has received the approval of the Board of Governors of the Federal Reserve System. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant.
(a) The commissioner shall issue a license to a foreign bank to establish and maintain a Texas state branch or agency if the commissioner finds after reasonable inquiry that:
(1) all members of the management of the Texas state branch or agency have sufficient banking experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the agency will operate in compliance with state law;
(2) the foreign bank has sufficient standing to justify a belief that the Texas state branch or agency will be free from improper or unlawful influence or interference with respect to the office´s operation in compliance with state law; and
(3) the foreign bank is acting in good faith and the application does not contain a material misrepresentation.
(b) Each Texas state branch or agency shall post its license in a conspicuous place at its office. A license issued under this subchapter is not transferable or assignable.
(a) A foreign bank licensed under this subchapter to establish and maintain a Texas state branch or agency may not concurrently maintain a federal branch or federal agency in this state.
(b) A foreign bank which maintains a federal branch or federal agency in this state may not concurrently be licensed under this subchapter to maintain a Texas state branch or agency.
(a) A Texas state branch or agency is subject to this subtitle and other laws of this state applicable to banks as if the Texas state branch or agency were a Texas state bank unless:
(1) this chapter or a rule adopted under this subtitle provides otherwise; or
(2) the context of a provision or other information indicates that a provision applies only to a bank organized under the laws of a state or the United States.
(b) Among other exceptions to Subsection (a) that may be required or authorized by the commissioner provided by this subchapter or by rules adopted under this subtitle:
(1) a Texas state branch may not accept deposits of less than an amount equal to the standard maximum deposit insurance amount from citizens or residents of the United States, other than credit balances that are incidental to or arise out of its exercise of other lawful banking powers, unless the Federal Deposit Insurance Corporation determines that specific deposit taking activities in lesser amounts do not constitute domestic retail deposit activities requiring deposit insurance protection within the meaning of Section 6, International Banking Act (12 U.S.C. Section 3104);
(2) a Texas state agency may not accept deposits from citizens or residents of the United States, other than credit balances that are incidental to or arise out of its exercise of other lawful banking powers, but may accept deposits from persons who are neither citizens nor residents of the United States; and
(3) a limitation or restriction based on the capital and surplus of a Texas state bank is considered to refer, as applied to a Texas state branch or agency, to the dollar equivalent of the capital and surplus of the foreign bank, and if the foreign bank has more than one Texas state branch or agency in this state, the business transacted by all the branches and agencies must be aggregated in determining compliance with the limitation.
(c) Subject to Subsections (a) and (b), a foreign bank licensed to transact business in this state through a Texas state branch or agency may:
(1) borrow and lend money with or without property as security;
(2) purchase, sell, and make loans regardless of whether the loans are secured by bonds or mortgages on real property;
(3) engage in a foreign exchange transaction;
(4) issue, advise, confirm, and otherwise deal with a letter of credit and pay, accept, or negotiate a draft drawn under a letter of credit;
(5) accept a bill of exchange or draft;
(6) buy or acquire and sell or dispose of a bill of exchange, draft, note, acceptance, or other obligation for the payment of money;
(7) maintain a credit balance of money received at the Texas state branch or agency incidental to or arising out of the exercise of its authorized activities in this state if the money is not intended to be a deposit and does not remain in the Texas state branch or agency after the completion of all transactions to which it relates;
(8) accept deposits to the extent permitted by Subsection (b);
(9) receive money for transmission and transmit the money from its authorized place of business in this state to any other place;
(10) act as an indenture trustee or as a registrar, paying agent, or transfer agent, on behalf of the issuer, for equity or investment securities; and
(11) perform other activities that:
(A) are authorized by rules adopted to accomplish the purposes of this subtitle; or
(B) the commissioner determines are analogous or incidental to specific activities authorized by this section for a Texas state branch or agency.
(d) A foreign bank licensed to transact business in this state through a Texas state branch or agency may share the premises of the Texas state branch or agency with another authorized office of the foreign bank or a direct or indirect subsidiary of the foreign bank if the books and records of the Texas state branch or agency are kept separately from the books and records of the other office.
(e) For purposes of this section:
(1) "Resident of the United States" means:
(A) an individual residing in the United States;
(B) a corporation, partnership, association, or other entity organized in the United States; or
(C) a branch or office located in the United States of an entity that is not organized in the United States.
(2) "Standard maximum deposit insurance amount" means the amount of the maximum amount of deposit insurance as determined under the Federal Deposit Insurance Act (12 U.S.C. Section 1821).
(a) Except as provided by Section 204.105(c)(10), a foreign bank may not act as a fiduciary at a Texas state branch or agency except by obtaining a fiduciary license as provided by this section. A foreign bank that intends to act as a fiduciary at a Texas state branch or agency shall submit an application to the commissioner. The application must:
(1) be accompanied by all application fees and deposits required by applicable rules;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of the foreign bank;
(4) describe in detail:
(A) the proposed fiduciary activities;
(B) the names and relevant expertise of its officers and employees that will conduct the fiduciary activities; and
(C) the manner in which the fiduciary activities will be captured in the books and records of the Texas state branch or agency with due regard for separation of beneficial and legal interests; and
(5) contain other information that:
(A) is necessary to enable the commissioner to make the findings required by Subsection (c);
(B) is required by rules adopted under this subtitle; or
(C) the commissioner reasonably requests.
(b) On or before the 60th day after the date the application is complete and accepted for filing and all required fees and deposits have been paid, the commissioner shall approve the application or set the application for hearing. If the commissioner sets the application for hearing, the department shall participate as the opposing party and the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable law.
(c) The commissioner may issue a license permitting the foreign bank to engage in fiduciary activities if the commissioner finds that the foreign bank will exercise its fiduciary powers in accordance with the laws of this state and has sufficient fiduciary and accounting expertise and controls to protect beneficial interests under its control. The commissioner may make approval of an application conditional by including conditions and limitations in the order granting the license. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant.
(d) A foreign bank that obtains the approval of the commissioner under this section may engage in fiduciary activities at its Texas state branch or agency to the same extent and in the same manner as a Texas state bank could do so at the same location, subject to any conditions or limitations applicable to the license.
(e) The commissioner may initiate an enforcement action under Chapter 35 or may suspend or revoke the authority of a foreign bank to engage in fiduciary activities in this state in the same manner as a revocation of license under Section 204.118 if the commissioner finds in writing that:
(1) conditions exist related to the fiduciary activities of the foreign bank in this state which would authorize the commissioner to revoke or suspend its license pursuant to Section 204.117; or
(2) a fact or condition exists which, if it had existed at the time of the foreign bank´s original notice to engage in fiduciary activities, would have resulted in the commissioner denying authority to engage in fiduciary activities.
If the certificate of formation of a foreign bank licensed to maintain a Texas state branch or agency is amended, the foreign bank shall promptly file with the commissioner a copy of the amendment, duly authenticated by the proper officer of the country of the foreign bank´s organization. The filing does not enlarge or alter the business the foreign bank is authorized to pursue in this state, authorize the foreign bank to transact business in this state under a name other than the name set forth in its license, or extend the duration of its corporate existence.
(a) A foreign bank licensed to establish and maintain a Texas state branch or agency shall apply to the commissioner for an amended license if it changes its corporate name, changes the duration of its corporate existence, or desires to pursue in this state other or additional purposes than those set forth in its prior application for the foreign bank´s license or amended license then in effect.
(b) The requirements with respect to the form and contents of an application under Subsection (a), the manner of its execution, the issuance of an amended license, and the effect of the amended license are the same as in the case of an initial application for a license to establish and maintain a Texas state branch or agency.
(a) With the prior written approval of the commissioner, a foreign bank licensed to establish and maintain a Texas state branch or agency may relocate the branch or agency office. A foreign bank that intends to relocate a Texas state branch or agency office shall submit a letter to the commissioner describing the address of the proposed location, the reasons for relocation, and the manner of notifying its customers of the relocation.
(b) On or before the 30th day after the date the foreign bank´s letter has been accepted for filing and any required fee has been paid, the commissioner shall approve or deny the relocation. The commissioner may not permit the foreign bank to relocate its Texas state branch or agency office if the commissioner finds that the proposed location and the manner of relocation and notification will be deceptive or that the relocation will impede or tend to impede the foreign bank´s depositors and creditors in this state.
(a) Each foreign bank licensed to establish and maintain a Texas state branch or agency in this state shall keep the assets of its business in this state separate and apart from the assets of its business outside this state.
(b) The depositors and creditors of a foreign bank arising out of transactions with, and recorded on the books of, its Texas state branch or agency are entitled to absolute preference and priority over the depositors and creditors of the foreign bank´s offices located outside this state with respect to the assets of the foreign bank in this state.
Each foreign bank licensed to establish and maintain a Texas state branch or agency shall give notice that deposits and credit balances in the office are not insured by the Federal Deposit Insurance Corporation.
A foreign bank licensed to establish and maintain a Texas state branch or agency is subject to the same limitations with respect to the payment of interest on deposits as a state bank that is a member of the Federal Reserve System.
(a) In accordance with rules adopted under this subtitle, a foreign bank licensed to establish and maintain a Texas state branch or agency may be required to keep on deposit, with unaffiliated banks in this state that the foreign bank designates and the commissioner approves, money and securities pledged to the commissioner in an aggregate amount to be determined by the commissioner, valued at the lower of principal amount or market value, consisting of:
(1) dollar deposits;
(2) bonds, notes, debentures, or other legally created, general obligations of a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States;
(3) securities that this state, an agency or political subdivision of this state, the United States, or an instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee;
(4) securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Agricultural Mortgage Corporation, or the Federal Farm Credit Banks Funding Corporation;
(5) obligations of or issued or guaranteed by the International Bank for Reconstruction and Development, the African Development Bank, the Asian Development Bank, the InterAmerican Development Bank, or the North American Development Bank; or
(6) other assets as may be permitted by rule.
(b) The assets deposited and the amount of the assets to be maintained under Subsection (a) are subject to the conditions and limitations the commissioner considers necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors, and the public interest in this state, and the support of public confidence in the business of the Texas state branch or agency. The commissioner may give credit to reserves required to be maintained with a federal reserve bank in or outside this state pursuant to federal law, in accordance with rules adopted under this subtitle.
(c) While a foreign bank continues business in the ordinary course, the foreign bank may collect interest on the money and securities deposited under this section and from time to time exchange, examine, and verify the securities.
(a) In accordance with rules adopted under this subtitle, a foreign bank licensed to establish and maintain a Texas state branch or agency shall at all times satisfy the ratio of branch or agency assets to liabilities determined by the commissioner, in the commissioner´s sole discretion, to be necessary or desirable with respect to the foreign bank. The type of assets to be held in this state are specified by Subsection (b) and the type of liabilities to be included in the ratio are specified by Subsection (c).
(b) Assets to be held in this state for the purpose of satisfying the ratio of assets to liabilities:
(1) include:
(A) currency, bonds, notes, debentures, drafts, bills of exchange, or other evidences of indebtedness, including loan participation agreements or certificates;
(B) other obligations payable in the United States or in United States funds or, with the prior approval of the commissioner, in funds freely convertible into United States funds; and
(C) other assets the commissioner permits or as may be specified by rule; and
(2) exclude obligations of a person for money borrowed to the extent that the total of the obligations of the person exceeds 10 percent of total assets considered for purposes of this section.
(c) Liabilities included for purposes of calculating the ratio of assets to liabilities:
(1) include all liabilities of the foreign bank appearing in the books, accounts, or records of its Texas state branch or agency, including acceptances; and
(2) exclude amounts due and other liabilities to other offices, agencies, branches, and wholly owned subsidiaries of the foreign bank, and other liabilities the commissioner determines. The existence of a nominal number of directors´ shares outstanding does not cause a subsidiary to be considered less than wholly owned.
(d) Subject to rules adopted under this subtitle, the commissioner, in the commissioner´s sole discretion, may vary the ratio of assets to liabilities required by this section for a foreign bank as may be necessary or desirable to reflect differences among Texas branches or Texas agencies because of:
(1) the financial condition of Texas branch or agency offices of the foreign bank;
(2) the financial condition of branch or agency offices of the foreign bank located in other states;
(3) the general economic conditions prevalent in the home country of the foreign bank; or
(4) the financial condition of the foreign bank itself, including:
(A) the financial condition of its branches and agencies located in other countries;
(B) the financial condition of its affiliated bank and nonbank subsidiaries in the United States; and
(C) the financial condition of the foreign bank on a worldwide consolidated basis or in its home country.
(e) For purposes of this section, assets must be valued at the lower of principal amount or market value. The commissioner may determine the value of a non-marketable security, loan, or other asset or obligation held or owed to the foreign bank or its Texas state branch or agency in this state. If the commissioner cannot determine the value of an non-marketable asset, the asset must be excluded from the ratio computation.
(f) The commissioner may require a foreign bank to deposit the assets required to be held in this state pursuant to this section with specific banks in this state designated by the commissioner if, because of the existence or the potential occurrence of unusual and extraordinary circumstances, the commissioner considers it necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors, and the public interest in this state, and the maintenance of public confidence in the business of a Texas state branch or agency.
(a) A foreign bank licensed to establish and maintain a Texas state branch or agency may not close the office without filing an application with, and obtaining the prior approval of, the commissioner. An application by a foreign bank under this section must be in the form and include the information the commissioner requires.
(b) The commissioner shall approve the application if the commissioner finds that the closing of the office will not be substantially detrimental to the foreign bank´s depositors and creditors in this state. An application may be approved subject to conditions imposed by the commissioner for the continued protection of the foreign bank´s depositors and creditors in this state, including a condition that the foreign bank pledge assets in the manner specified by Section 204.113 for a specified period of time.
(c) When an application by a foreign bank under this section has been approved and all conditions precedent to the closing have been fulfilled, the foreign bank may close the office and an officer, manager, or agent of the foreign bank shall deliver to the commissioner:
(1) all copies of examination reports or other property of the department;
(2) a statement under oath by an authorized officer, manager, or agent of the foreign bank that all deposit and other liabilities of the Texas state branch or agency to depositors and creditors in this state have been properly discharged by payment or pledge or otherwise assumed or retained by a financial institution;
(3) the license issued by the commissioner;
(4) an appropriate board resolution closing the Texas state branch or agency; and
(5) a statement of the location where the records of the Texas state branch or agency will be kept after the closing.
The commissioner may initiate an enforcement action under Chapter 35 or a proceeding to revoke the license of a Texas state branch or agency if the commissioner by examination or other credible evidence finds that the foreign bank:
(1) does not currently meet the criteria established by this chapter for the original issuance of a license;
(2) has refused to permit the commissioner to examine its books, papers, accounts, records, or affairs in accordance with Sections 204.002 and 204.003;
(3) has failed to make a report required under this chapter or made a material false or misleading statement in the report;
(4) has violated this subtitle, another law or rule applicable to a foreign bank or a Texas state branch or agency, or a final and enforceable order of the commissioner or the finance commission;
(5) has misrepresented or concealed a material fact in the original application for license;
(6) has violated a condition of its license or an agreement between the foreign bank and the commissioner or the department; or
(7) conducts business in an unsafe and unsound manner.
(a) Notice of a revocation proceeding must:
(1) be in the form of a proposed order;
(2) be served on the foreign bank by personal delivery or registered or certified mail, return receipt requested, to a director, officer, manager, or employee of the foreign bank at a Texas state branch or agency location, or to the registered agent of the foreign bank;
(3) state the effective date of the proposed order, which may not be before the 21st day after the date the proposed order is mailed or delivered except as otherwise provided in Section 204.118; and
(4) state the grounds for the proposed revocation with reasonable certainty.
(b) Unless the foreign bank requests a hearing in writing on or before the effective date of the proposed order, the order takes effect as proposed and is final and nonappealable.
(c) A hearing requested on a proposed order shall be held not later than the 30th day after the date the written request for hearing is received by the department unless the parties agree to a later hearing date. The department shall participate as the opposing party, and the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable statutes and rules.7 The foreign bank may not accept new business during the pendency of the hearing unless the commissioner gives prior written approval, except that it shall comply with any stricter requirements imposed by Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)).
(d) Information relating to the financial condition and business affairs of the foreign bank, except previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or an employee of the department except as provided by Subchapter D, Chapter 31.8
(e) Based on the record, the commissioner shall issue or refuse to issue the proposed order. An issued order may contain modifications indicated by the record to be necessary or desirable, including modifications to impose penalties available under Chapter 35 in lieu of license revocation.
(a) If the commissioner finds that any of the factors set forth in Section 204.116 are true with respect to a foreign bank licensed to maintain a Texas state branch or agency and that it is necessary for the protection of the interests of creditors of the foreign bank´s business in this state or for the protection of the public interest that the commissioner immediately suspend or revoke the license of the foreign bank, the commissioner may issue, without notice and hearing, an order suspending or revoking the license of the foreign bank for a period of up to 90 days, pending investigation or hearing under Section 204.117.
(b) An order issued under this section shall be served on the foreign bank in the manner required by Section 204.117(a)(2).
Unless stayed by the district court that has jurisdiction over an appeal, a final order of the commissioner revoking a license is effective immediately and the foreign bank shall immediately cease all activity in this state requiring a license. Subject to Section 204.120, all functions requiring a license must be immediately transferred to a branch, affiliate, or agency of the foreign bank that is located outside of this state and that has the power to perform those functions under governing law. Continued activity in this state of an unlicensed foreign bank is subject to Subchapter C, Chapter 35.
(a) If the commissioner finds that any of the factors set forth in Section 204.116 are true with respect to a foreign bank licensed to establish and maintain a Texas state branch or agency, the commissioner may by order immediately take possession of the property and business of the foreign bank in this state if that action is necessary or desirable for the protection of the interests of the depositors and creditors of the foreign bank´s business in this state or for the protection of the public. The commissioner shall retain possession until the foreign bank resumes business in this state or is finally liquidated, except that the commissioner may permit the foreign bank to resume business in this state on conditions the commissioner requires. An order issued under this section shall be served on the foreign bank in the manner required by Section 204.117(a)(2).
(b) As soon as practicable after taking possession of the property and business of a foreign bank pursuant to Subsection (a), the commissioner shall initiate a receivership proceeding by filing a copy of the order issued under this section in a district court in Travis County to be governed by Chapter 36 as if the foreign bank were a Texas state bank, except as otherwise provided by this section. Notwithstanding the priorities established by Chapter 36, the depositors and creditors of the Texas state branch or agency, arising out of transactions with and recorded on the books of the Texas state branch or agency, have an absolute preference and priority over the creditors of the foreign bank´s offices located outside this state.
(c) An action initiated that seeks to directly or indirectly affect the assets of the Texas state branch or agency is considered to be an intervention in the receivership proceeding. Venue for an action instituted to effect, contest, or otherwise intervene in the liquidation of a Texas state branch or agency is in Travis County, except that on motion filed and served concurrently with or before the filing of the answer, the court may, on a finding of good cause, transfer the action to the county of the Texas state branch or agency location.
(d) The foreign bank may contest the commissioner´s actions as provided by this subsection. On or before the 10th day after the date the commissioner has taken possession of the property and business of a foreign bank pursuant to Subsection (a), the foreign bank, acting through a majority of its directors, may intervene in the action filed by the banking commissioner to challenge the commissioner´s closing of the foreign bank´s Texas state branch or agency and to enjoin the commissioner or other receiver from liquidating its assets. The court may issue an ex parte order restraining the commissioner or other receiver from liquidating the foreign bank´s assets pending a hearing on the injunction. The commissioner or other receiver shall comply with the restraining order but may petition the court for permission to liquidate an asset as necessary to prevent its loss or diminution pending the outcome of the injunction. The commissioner or other receiver may not be required to post bond. The court shall hear this action as quickly as possible and shall give it priority over other business. The foreign bank or the commissioner or other receiver may appeal the court´s judgment as in other civil cases, except that the commissioner or other receiver shall retain all seized foreign bank assets pending a final appellate court order even if the commissioner does not prevail in the trial court. If the commissioner prevails in the trial court, liquidation of the state trust company may proceed unless the trial court or appellate court orders otherwise. If liquidation is enjoined or stayed pending appeal, the trial court retains jurisdiction to permit liquidation of an asset as necessary to prevent its loss or diminution pending the outcome of the appeal.
(e) After the commissioner or other receiver has completed the liquidation of the property and business of a foreign bank, the commissioner or other receiver shall transfer any remaining assets to the foreign bank in accordance with the court´s orders, except that:
(1) if the foreign bank has an office in another state of the United States that is in liquidation and the assets of the office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner or other receiver to transfer to the liquidator of that office the amount of the remaining assets that appears to be necessary to cover the insufficiency; or
(2) if the foreign bank has two or more such offices in liquidation and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to the offices, the court shall order the commissioner or other receiver to distribute the remaining assets among the liquidators of the offices in the manner the court finds equitable.
(a) If a foreign bank licensed to maintain a Texas state branch or agency in this state is dissolved, has its authority or existence terminated or canceled in the jurisdiction of its incorporation, or has its authority to maintain a branch or agency in this state terminated by the Board of Governors of the Federal Reserve System under Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)), an officer, manager, or agent of the foreign bank shall deliver to the commissioner:
(1) a certified copy of:
(A) a certificate of the official responsible for records of banking corporations of the foreign bank´s jurisdiction of incorporation attesting to the occurrence of dissolution or of termination or cancellation of authority or existence;
(B) an order or decree of a court directing the dissolution of the foreign bank or the termination or cancellation of its authority or existence; or
(C) an order of the Board of Governors of the Federal Reserve System terminating its authority under Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)); and
(2) the documents and information required by Section 204.115(c).
(b) The filing of the certificate, order, or decree has the same effect provided by Section 204.119 as if the license issued under this subchapter were revoked by the commissioner as of the effective date of termination or cancellation specified in the certificate, order, or decree unless the commissioner orders an earlier effective date, subject to the procedural protections of Section 204.117 or 204.118.
Subchapter C. Representative Offices of Foreign Bank
(a) A foreign bank may establish a Texas representative office if the foreign bank files with the commissioner a verified statement of registration.9 A statement of registration must:
(1) be accompanied by all registration fees and deposits required by rule;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of the foreign bank;
(4) contain as an exhibit or attachment:
(A) a copy of the foreign bank´s notice or application submitted to the Board of Governors of the Federal Reserve System under Section 10, International Banking Act (12 U.S.C. Section 3107), and, when issued, the order or notification from the board of governors indicating that the representative office has been approved;
(B) an authenticated copy of the foreign bank´s certificate of formation and bylaws or other constitutive documents and, if the copy is in a language other than English, an English translation of the document, under the oath of the translator; and
(C) evidence of compliance with Section 201.102;
(5) be submitted when the federal notice or application is submitted to the board of governors; and
(6) directly or in exhibits or attachments contain:
(A) the name of the foreign bank;
(B) the street address and post office address where each Texas representative office is to be located in this state;
(C) the name and qualifications of each officer and director of the foreign bank who will have charge of any aspect of the business and affairs of the Texas representative office;
(D) a complete and detailed statement of the financial condition of the foreign bank as of a date not more than 360 days before the date of the filing; and
(E) other information the commissioner requires.
(b) The finance commission may adopt rules prescribing abbreviated registration procedures and standards for foreign banks that have already established an initial Texas representative office to establish additional Texas representative offices.
(c) A foreign bank that maintains a Texas state or federal branch or agency in this state is not prohibited from establishing or maintaining one or more Texas representative offices.
A Texas representative office may engage in the business authorized by this subchapter at each place of business registered with the commissioner. A Texas representative office may change its location in this state by filing a notice with the commissioner containing the street address and post office address of the new location.
(a) A registered Texas representative office of a foreign bank may engage in:
(1) representational and administrative functions in connection with the banking activities of the foreign bank that:
(A) may include soliciting new business for the foreign bank, conducting research, acting as liaison between the foreign bank's head office and customers in the United States, performing preliminary and servicing steps in connection with lending, or performing back-office functions; and
(B) do not include contracting for any deposit or deposit-like liability, lending money, or engaging in any other banking activity for the foreign bank;
(2) making credit decisions if:
(A) the foreign bank also operates one or more branches or agencies in the United States;
(B) the loans approved at the representative office are made by a United States office of the bank; and
(C) the loan proceeds are not disbursed in the representative office; and
(3) other functions for or on behalf of the foreign bank or its affiliates, including operating as a regional administrative office of the foreign bank, but only to the extent that the functions are not banking activities and are not prohibited by applicable federal or state law.
(b) [Repealed by 85th Legislature, Regular Session, S.B. 1400 effective September 1, 2017.]
(c) [Repealed by 85th Legislature, Regular Session, S.B. 1400 effective September 1, 2017.]
(d) [Repealed by 85th Legislature, Regular Session, S.B. 1400 effective September 1, 2017.]
The commissioner may initiate an enforcement action under Chapter 35 or a proceeding to revoke the registration of a representative office if the commissioner by examination or other credible evidence finds that the foreign bank:
(1) has refused to permit the commissioner to examine the books, papers, accounts, records, or affairs of a Texas representative office in accordance with Sections 204.002 and 204.003;
(2) has violated this subtitle, another law or rule applicable to a foreign bank or a Texas representative office, or a final and enforceable order of the commissioner or the finance commission;
(3) has misrepresented or concealed a material fact in the original registration;
(4) has violated a condition of an agreement between the foreign bank and the commissioner, a bank supervisory agency, or another state regulatory agency; or
(5) conducts business in an unsafe and unsound manner.
(a) Notice of a revocation proceeding must:
(1) be in the form of a proposed order;
(2) be served on the foreign bank by personal delivery or registered or certified mail, return receipt requested, to a director, officer, or employee of the foreign bank at a Texas representative office location, or to the registered agent of the foreign bank;
(3) state the effective date of the proposed order, which may not be before the 21st day after the date the proposed order is mailed or delivered; and
(4) state the grounds for the proposed revocation with reasonable certainty.
(b) Unless the foreign bank requests a hearing in writing on or before the effective date of the proposed order, the order takes effect as proposed and is final and nonappealable.
(c) A hearing requested on a proposed order shall be held not later than the 30th day after the date the written request for hearing is received by the commissioner unless the parties agree to a later hearing date. The department shall participate as the opposing party, and the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable statutes and rules. During the pendency of the hearing and unless the commissioner gives prior written approval, the foreign bank may not accept new business from this state.10
(d) Information relating to the financial condition and business affairs of the foreign bank, except previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or an employee of the department except as provided by Subchapter D, Chapter 31.11
(e) Based on the record, the commissioner shall issue or refuse to issue the proposed order. An issued order may contain modifications indicated by the record to be necessary or desirable, including modifications to impose penalties available under Chapter 35 in lieu of revocation of registration.
A foreign bank that has had its registration under this subchapter revoked shall cease all activities in this state. Continued activity in this state of an unregistered foreign bank is subject to Subchapter C, Chapter 35.
(a) If a foreign bank with a registered Texas representative office is dissolved, has its authority or existence terminated or canceled in the jurisdiction of its incorporation, or has its authority to maintain its Texas representative office terminated by the Board of Governors of the Federal Reserve System under Section 10(b), International Banking Act (12 U.S.C. Section 3107(b)), an officer, manager, or agent of the foreign bank shall deliver to the commissioner a certified copy of:
(1) a certificate of the official responsible for records of banking corporations of the foreign bank´s jurisdiction of incorporation attesting to the occurrence of dissolution or of termination or cancellation of authority or existence;
(2) an order or decree of a court directing the dissolution of the foreign bank or the termination or cancellation of its authority or existence; or
(3) an order of the Board of Governors of the Federal Reserve System terminating its authority under Section 10(b), International Banking Act (12 U.S.C. Section 3107(b)).
(b) The filing of the certificate, order, or decree has the same effect under Section 204.206 as if the registration made under this subchapter were revoked by the commissioner.
SUBTITLE Z. MISCELLANEOUS PROVISIONS RELATING TO FINANCIAL INSTITUTIONS AND BUSINESSES
[Includes §§271.001 - 271.006.]
(a) A financial institution in this state that is required to file a report under the Currency and Foreign Transactions Reporting Act (31 U.S.C. Section 5311 et seq.), 31 C.F.R. Part 103, or 12 C.F.R. Section 21.11, and their subsequent amendments, shall file a copy of the report with the attorney general.
(b) A financial institution that timely files the report described by Subsection (a) with the appropriate federal agency as required by federal law complies with that subsection unless the attorney general:
(1) notifies the financial institution that the report is not of a type that is regularly and comprehensively transmitted by the federal agency to the attorney general following the attorney general´s request to that agency;
(2) requests that the financial institution provide the attorney general with a copy of the report; and
(3) reimburses the financial institution for the actual cost of duplicating and delivering the report or 25 cents for each page, whichever is less.
(c) In this section, "financial institution" has the meaning assigned by 31 U.S.C. Section 5312 and its subsequent amendments.
(a) A person engaged in a trade or business who, in the course of the trade or business, receives more than $10,000 in one transaction or in two or more related transactions and who is required to file a return under Section 6050I, Internal Revenue Code of 1986 (26 U.S.C. Section 6050I), or 26 C.F.R. Section 1.6050I-1, and their subsequent amendments, shall file a copy of the return with the attorney general.
(b) A person who timely files the return described by Subsection (a) with the appropriate federal agency as required by federal law complies with that subsection unless the attorney general:
(1) notifies the person that the return is not of a type that is regularly and comprehensively transmitted by the federal agency to the attorney general; and
(2) requests that the person provide the attorney general with a copy of the return.
The attorney general may report a possible violation indicated by analysis of a report or return described by this chapter or information obtained under this chapter to an appropriate law enforcement agency for use in the proper discharge of the agency´s official duties.
(a) A person commits an offense if the person:
(1) is requested by the attorney general to submit information required by Section 271.001 or 271.002 to the attorney general; and
(2) knowingly fails to provide the requested information to the attorney general before the 30th day after the date of the request.
(b) An offense under this section is a Class A misdemeanor.
(a) A person commits an offense if the person knowingly suppresses physical evidence connected with information contained in a report or return required by this chapter through concealment, alteration, or destruction.
(b) An offense under this section is a Class A misdemeanor.
(a) A person commits an offense if the person:
(1) is required to submit a report or return under this chapter; and
(2) knowingly notifies an individual who is the target of a criminal investigation involving an offense under Chapter 34, Penal Code, that:
(A) the attorney general has requested the person to provide information required by this chapter related to the targeted individual; or
(B) the individual may be subject to impending criminal prosecution.
(b) An offense under this section is a Class A misdemeanor.
Subchapter A. General Provisions
In this chapter:
(1) "Bank" has the meaning assigned by Section 31.002 (a)(2), excluding a bank that does not have its main office or a branch located in this state.
(2) "Bank holding company" has the meaning assigned by Section 2(a), Bank Holding Company Act of 1956 (12 U.S.C. Section 1841(a)), as amended.
(3) "Commissioner" means the banking commissioner of Texas.
(4) "Fiduciary" means an entity responsible for managing a fiduciary account.
(5) "Fiduciary account" means an account involving the exercise of a corporate purpose specified by Section 182.001(b).
A bank is affiliated with a subsidiary trust company if more than 50 percent of the bank´s voting stock is directly or indirectly owned by a bank holding company that owns more than 50 percent of the voting stock of the subsidiary trust company.
An entity is a subsidiary trust company of a bank holding company if:
(1) the entity is a:
(A) trust company organized under Subchapter A, Chapter 182; or
(B) bank that is organized to conduct a trust business and any incidental business or to exercise trust powers; and
(2) more than 50 percent of the voting stock of the entity is directly or indirectly owned by the bank holding company.
Subchapter B. Subsidiary Trust Companies as Substitute or Successor Fiduciaries
(a) A subsidiary trust company may enter into an agreement with an affiliated bank of the company to substitute the company as fiduciary for the bank in each fiduciary account listed in the agreement, provided the situs of account administration is not moved outside of this state without the express written consent of all persons entitled to notice under Sections 274.103(a) and 274.103(c).
(b) The agreement must include:
(1) a list of each fiduciary account for which substitution is requested;
(2) a statement of whether the substitution will cause a change in the situs of administration of each fiduciary account; and
(3) the effective date of the substitution, which may not be before the 91st day after the date of the agreement.
(c) The agreement must be filed with the commissioner before the date the substitution takes effect.
(d) A fiduciary account may be removed from the operation of the agreement by the filing of an amendment to the agreement with the commissioner before the effective date stated in the agreement.
The situs of administration of a fiduciary account is the county in this state in which the fiduciary maintains the office that is primarily responsible for dealing with the parties involved in the account.
(a) Not later than the 91st day before the effective date of a substitution under Section 274.101, the parties to the substitution agreement shall send notice of the substitution to:
(1) any other fiduciary;
(2) each surviving settlor of a trust relating to the fiduciary account;
(3) each issuer of a security for which the affiliated bank administers the fiduciary account;
(4) the plan sponsor of each employee benefit plan relating to the fiduciary account;
(5) the principal of each agency account; and
(6) the guardian of the person of each ward that has the fiduciary account resulting from a guardianship.
(b) If the substitution does not cause a change in the situs of administration of a fiduciary account, the parties to the substitution agreement shall also send notice of the substitution to each person who is readily ascertainable as a beneficiary of the account because the person has received account statements or because a parent, conservator, or guardian of a minor beneficiary has received account statements on the minor´s behalf.
(c) If the substitution causes a change in the situs of administration of a fiduciary account, the parties to the substitution agreement shall also send notice of the substitution to:
(1) each adult beneficiary of a trust relating to the account;
(2) each parent, conservator, or guardian of a minor beneficiary receiving or entitled to receive current distributions of income or principal from the account; and
(3) each person who individually or jointly has the power to remove the fiduciary being substituted.
(d) The notice must be sent by United States mail to the person´s current address as shown on the fiduciary´s records. The fiduciary shall make a reasonable attempt to ascertain the address of a person who does not have an address shown on the fiduciary´s records.
The notice required under Section
(1) the effect the substitution of fiduciary will have on the situs of administration of the fiduciary account;
(2) the person´s rights with respect to objecting to the substitution; and
(3) the liability of the existing fiduciary and the substitute fiduciary for their actions.
(a) If the parties to a substitution agreement under Section 274.101 intentionally fail to send the required notice under Section 274.103, the substitution of the fiduciary is ineffective.
(b) If the parties unintentionally fail to send the required notice, the substitution of the fiduciary is not impaired.
(c) If a substitution of a fiduciary is ineffective because of a defect in the required notice, any action taken by a subsidiary trust company before the substitution is determined to be ineffective is valid if the action would have been valid if performed by the affiliated bank.
(a) The substitution takes effect on the effective date stated in the substitution agreement unless, not later than the 16th day before the effective date:
(1) each party entitled to receive notice of the substitution under Sections 274.103(a) and (c) provides the affiliated bank with a written objection to the substitution; or
(2) a party entitled to receive notice of the substitution under Section 274.103 files a written petition in a court seeking to have the substitution denied under Section 274.107 and provides the affiliated bank with a copy of the petition.
(b) A substitution that is objected to under Subsection (a)(1) takes effect when:
(1) one of the parties objecting to the substitution removes the party´s objection in writing; or
(2) the bank obtains a final court order approving the substitution.
(c) A substitution that is objected to under Subsection (a)(2) takes effect when:
(1) the petition is withdrawn or dismissed; or
(2) the court enters a final order denying the relief sought.
(a) A court may deny the substitution if the court, after notice and hearing, determines:
(1) if the substitution will not cause a change in the situs of administration of a fiduciary account, that the substitution is materially detrimental to the account or to its beneficiaries; or
(2) if the substitution will cause a change in the situs of administration of a fiduciary account, that the substitution is not in the best interests of the account or its beneficiaries.
(b) The court shall allow a substitution that will cause the situs of administration of a fiduciary account to change if the court, after notice and hearing, determines that the substitution is in the best interests of the account and its beneficiaries.
(c) In a proceeding under this section, the court may award costs and reasonable and necessary attorney´s fees as the court considers equitable and just.
On the effective date of the substitution as prescribed by Section 274.106, the subsidiary trust company:
(1) without the necessity of an instrument of transfer or conveyance, succeeds to all interest in property the affiliated bank holds for the fiduciary account being substituted; and
(2) without the necessity of judicial action or action by the creator of the fiduciary account, becomes fiduciary of the account and shall perform the duties and exercise the powers of a fiduciary in the same manner as if the company had originally been designated fiduciary.
(a) If the fiduciary of a fiduciary account has changed as a result of a substitution agreement under Section 274.101, the substitute fiduciary shall send notice of a change in the situs of administration of the account after the substitution to each person entitled to notice under Sections 274.103(a) and (c) not later than the 91st day before the effective date of the change.
(b) The notice must be sent by United States mail to the person´s current address as shown on the fiduciary´s records. The fiduciary shall make a reasonable attempt to ascertain the address of a person who does not have an address shown on the fiduciary´s records.
(c) The notice must disclose:
(1) the effect that the change will have on the situs of administration of the account;
(2) the effective date of the change; and
(3) the person´s rights with respect to objecting to the change.
(a) If the substitute fiduciary of a fiduciary account intentionally fails to send the required notice under Section 274.109, the change in the situs of administration is ineffective.
(b) If the substitute fiduciary unintentionally fails to send the required notice, the change in the situs of administration is not impaired.
(a) A change in the situs of administration takes effect on the effective date stated in the notice under Section 274.109 unless, not later than the 16th day before the effective date:
(1) each party entitled to receive notice for the fiduciary account provides the subsidiary trust company with a written objection to the change; or
(2) a party entitled to receive notice files a written petition in a court seeking to have the change denied under Section 274.112 and provides the subsidiary trust company with a copy of the petition.
(b) A change that is objected to under Subsection (a)(1) takes effect when:
(1) one of the parties objecting to the change removes the party´s objection in writing; or
(2) the subsidiary trust company obtains a final court order approving the change.
(c) A change that is objected to under Subsection (a)(2) takes effect when:
(1) the petition is withdrawn or dismissed; or
(2) the court enters a final order denying the relief sought.
(a) A court may allow the change in the situs of administration if the court, after notice and hearing, determines that the change is in the best interests of the fiduciary account and its beneficiaries. The court may deny the change if the court, after notice and hearing, determines that the change is not in the best interests of the account or its beneficiaries.
(b) In a proceeding under this section, the court may award costs and reasonable and necessary attorney´s fees as the court considers equitable and just.
(a) An action under this subchapter for a fiduciary account resulting from a decedent´s estate or guardianship must be brought in the county provided for by the Estates Code with respect to the probate of a will, issuance of letters testamentary or of administration, administration of a decedent´s estate, appointment of a guardian, and administration of a guardianship.
(b) Except as provided by Subsection (c), an action under this subchapter regarding any other fiduciary account must be brought in the county of the situs of administration of the account, notwithstanding a statute that would set venue in the location of the fiduciary´s principal office.
(c) A beneficiary of a fiduciary account described by Subsection (b) may elect to bring the action in the county in which the principal office of the first affiliated bank that transferred the account under this subchapter is located.
For purposes of qualifying as successor fiduciary under a document creating a fiduciary account or a statute of this state relating to fiduciary accounts, a subsidiary trust company:
(1) is considered to have capital and surplus in an amount equal to the total of its capital and surplus and the capital and surplus of the bank holding company that owns the company; and
(2) is treated as a national bank unless it:
(A) is not a national bank under federal law; and
(B) has not entered into a substitution agreement with an affiliated bank of the company that is a national bank under federal law.
If an affiliated bank of a subsidiary trust company has given bond to secure performance of its duties and the company qualifies as successor fiduciary, the company shall give bond to secure performance of its duties in the same manner as the bank.
The bank holding company that owns a subsidiary trust company shall file with the commissioner an irrevocable undertaking to be fully responsible for the fiduciary acts and omissions of the subsidiary trust company.
Subchapter C. Banks Affiliated with Subsidiary Trust Companies
The prospective designation in a will or other instrument of an affiliated bank of a subsidiary trust company as fiduciary is also considered a designation of the company as fiduciary and confers on the company any discretionary power granted in the instrument unless:
(1) the bank and company agree in writing to have the designation of the bank as fiduciary be binding; or
(2) the creator of the fiduciary account, by appropriate language in the document creating the account, provides that the account is not eligible for substitution under this chapter.
After a substitution of a subsidiary trust company as fiduciary for an affiliated bank of the company, the bank remains liable for any action taken by the bank as a fiduciary.
(a) A subsidiary trust company may deposit with an affiliated bank of the company fiduciary money that is being held pending an investment, distribution, or payment of a debt if:
(1) the company maintains under its control as security for the deposit a separate fund of securities legal for trust investments pledged by the bank;
(2) the total market value of the securities is at all times at least equal to the amount of the deposit; and
(3) the fund of securities is designated as a separate fund.
(b) The bank may make periodic withdrawals from or additions to the fund of securities required by this section only if the required value is maintained.
(c) Income from securities in the fund belongs to the bank.
(d) Security for a deposit under this section is not required to the extent the deposit is insured or otherwise secured under law.
Subchapter A. General Provisions
This chapter may be cited as the Texas Mutual Trust Investment Company Act.
In this chapter:
(1) "Fiduciary institution" means a:
(A) state bank with trust powers;
(B) national bank with trust powers; or
(C) trust company.
(2) "Stock" means a unit of participation in the net asset value of one or more of the investment funds of a mutual trust investment company.
Except as provided by this chapter, a mutual trust investment company must be incorporated under and is subject to the general corporation laws of this state.
A mutual trust investment company may invest its assets only in investments in which a trustee may invest under the laws of this state.
Subchapter B. Creation of Mutual Trust Investment Company
(a) One or more fiduciary institutions may incorporate a mutual trust investment company as provided by this chapter to be a medium for the common investment of trust funds held in a fiduciary capacity for fiduciary purposes, by those entities alone or with one or more cofiduciaries.
(b) A mutual trust investment company must be an open-end investment company as defined by, and must be subject to, the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.).
(a) To incorporate, a mutual trust investment company must have five or more persons subscribe and acknowledge the company´s articles of incorporation.
(b) A person subscribing and acknowledging the articles of incorporation of a mutual trust investment company must be an officer or director of a fiduciary institution causing the mutual trust investment company to be incorporated.
In addition to the information required by the general corporation laws, the articles of incorporation shall state:
(1) the name of each fiduciary institution causing the corporation to be incorporated; and
(2) the amount of stock originally subscribed for by each fiduciary institution.
Subchapter C. Administrative Provisions
(a) Except as provided by Subsection (b), a mutual trust investment company must have at least five directors, each of whom is not required to be a stockholder but must be an officer or director of a bank or trust company that is located in this state.
(b) An officer or director of a bank or trust company not located in this state may serve as a director of a mutual trust investment company only if that officer´s or director´s bank or trust company owns stock in a fiduciary capacity in the mutual trust investment company.
(a) At least once each year, a mutual trust investment company shall cause an adequate audit to be made of the company by auditors responsible only to the board of directors of the company.
(b) A mutual trust investment company shall furnish annually a copy of the company´s audited financial statement to each corporate fiduciary owning stock in the company.
(c) The mutual trust investment company shall pay the:
(1) reasonable expenses of an audit required by this section made by an independent public accountant or certified public accountant; and
(2) costs of preparing and distributing a report required by this section.
Subchapter D. Mutual Trust Investment Company Stock
The stock of a mutual trust investment company may be owned only by fiduciary institutions acting as fiduciaries and any of their cofiduciaries.
The stock of a mutual trust investment company may be registered in the name of one or more nominees of the owner of the stock.
The stock of a mutual trust investment company may not be transferred except to:
(1) the mutual trust investment company; or
(2) a fiduciary or cofiduciary that becomes successor to a stockholder and that is a bank or trust company qualified to hold the stock under this chapter.
A mutual trust investment company may acquire its own stock and shall bind itself, by contract or its bylaws, to acquire its own stock, but may not vote on shares of its own stock.
Subchapter E. Investment in Mutual Trust Investment Company
A fiduciary institution, alone or with one or more cofiduciaries, acting as a fiduciary for fiduciary purposes with the consent of any cofiduciaries, may invest and reinvest funds held in a fiduciary capacity, exercising the care of a prudent investor, in the shares of stock of a mutual trust investment company unless a will, trust indenture, or other instrument under which the fiduciary is acting prohibits that investment.
(a) A mutual trust investment company is not:
(1) required to determine the investment powers of a fiduciary that purchases its stock; or
(2) liable for accepting funds from a fiduciary in violation of the restrictions of a will, trust indenture, or other instrument under which the fiduciary is acting in the absence of actual knowledge of the violation.
(b) A mutual trust investment company is:
(1) accountable only to a fiduciary who is an owner of its stock; and
(2) permitted to rely on the written statement of any bank or trust company purchasing its stock that the purchase complies with Section 275.201.
[Includes §§276.001.]
(a) A financial institution may not open an account in the name of a candidate without obtaining that candidate´s consent and signature. This subsection does not require that the candidate be a signatory to the account.
(b) In this section:
(1) "Candidate" has the meaning assigned by Section 251.001, Election Code.
(2) "Financial institution" means a bank, savings and loan association, savings bank, or credit union.
[Includes §§277.001 - 277.003.]
In this chapter:
(1) "Business" means a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit.
(2) "Business checking account" means an account at a financial institution from which withdrawals may be made by a business by check or draft. The term includes a money market account, a negotiable order of withdrawal account, or other account at a financial institution in which the account holder has check writing privileges.
(3) "Financial institution" means a state or national bank, state or federal savings and loan association, state or federal savings bank, or state or federal credit union doing business in this state.
(a) A financial institution shall require, as a condition of opening or maintaining a business checking account, that the applicant or account holder provide:
(1) if the business is a sole proprietorship:
(A) the name of the business owner;
(B) the physical address of the business;
(C) the home address of the business owner; and
(D) the driver´s license number of the business owner or the personal identification card number issued to the business owner by the Department of Public Safety; or
(2) if the business is a corporation or other legal entity, a copy of the business´ certificate of incorporation or a comparable document and an assumed name certificate, if any.
(b) The financial institution shall request that the account holder inform the institution at least annually of any changes in the information the institution is required to obtain under Subsection (a).
(a) A financial institution may not unreasonably withhold the information described by Section 277.002 in response to a written request for the information that:
(1) is made by a person to whom the financial institution has returned a dishonored check or draft that was issued to the person by a business that maintains a business checking account; and
(2) includes a photocopy of the dishonored check or draft.
(b) A financial institution that assesses a reasonable research fee in the regular course of business may assess the fee on a person who requests information under this section.
(c) A financial institution is not liable to an account holder or other person for the disclosure of information under this section.
Subchapter A. General Provisions
In this chapter:
(1) "Credit union" means a state or federal credit union.
(2) "Finance commission" means the Finance Commission of Texas.
(3) "Financial institution" means a state or national bank, a state or federal savings bank, or a state or federal savings and loan association.(4) "Local government" means a municipality or county.
Subchapter B. Banking Development Districts
The finance commission shall administer and monitor a banking development district program under this chapter to encourage the establishment of branches of a financial institution in geographic areas where there is a demonstrated need for banking services.
(a) Subject to Subsection (b), the finance commission shall adopt rules to implement this subchapter and Subchapter D with respect to financial institutions in banking development districts.
(b) The finance commission, in consultation with the Texas Economic Development and Tourism Office, shall adopt rules regarding the criteria for the designation of banking development districts under this subchapter. The rules must require the finance commission to consider:
(1) the location, number, and proximity of sites where banking services are available in the proposed banking development district;
(2) consumer needs for banking services in the proposed district;
(3) the economic viability and local credit needs of the community in the proposed district;
(4) the existing commercial development in the proposed district; and
(5) the impact additional banking services would have on potential economic development in the proposed district.
A local government, in conjunction with a financial institution, may submit an application to the finance commission for the designation of a banking development district.
A financial institution may apply to open a branch in the proposed banking development district at the time the local government submits an application in conjunction with the institution under Section 279.053.
(a) Not later than the 120th day after the date an application for the designation of a banking development district is submitted under §279.053, the finance commission shall make a determination regarding whether to approve the application.
(b) If the finance commission approves the application, the finance commission shall notify the:
(1) local government;
(2) financial institution;
(3) comptroller;
(4) Texas Economic Development and Tourism Office;
(5) lieutenant governor; and
(6) speaker of the house of representatives.
SUBCHAPTER C. Credit Union Development Districts
SUBCHAPTER D. Deposit of Public Funds in District Depository
(a) The governing body of a local government in which a banking development district has been designated under Subchapter B may by resolution designate a financial institution located in the district as a banking district depository for purposes of this subchapter.
(b) The governing body of a local government in which a credit union development district has been designated under Subchapter C may by resolution designate a credit union located in the district as a credit union district depository for purposes of this subchapter.
(c) A resolution adopted under Subsection (a) or (b) must specify the maximum amount that may be kept on deposit with the banking district or credit union district depository, as appropriate.
(d) In calculating the yield under Section 2256.006, Government Code, of public funds deposited in a banking district or credit union district depository, the governing body of a local government may consider the benefit to this state of stimulating economic development.
(a) A local government may deposit public funds with a financial institution designated as a banking district depository or a credit union designated as a credit union district depository under Section 279.151 regardless of whether the financial institution or credit union is designated by the comptroller as a state depository under Subchapter C, Chapter 404, Government Code.
(b) Subject to an agreement between the governing body and the banking district or credit union district depository, public funds deposited in the district depository may earn a fixed interest rate that is at or below the financial institution's or credit union's posted two-year certificate of deposit rate, as appropriate. The terms of the agreement must be specified in the applicable resolution adopted under Section 279.151.
(a) If the comptroller designates the financial institution as a state depository under Subchapter C, Chapter 404, Government Code, the comptroller may deposit public funds with a financial institution designated as a banking district depository under Section 279.151(a).
(b) If the comptroller designates the credit union as a state depository under Subchapter C, Chapter 404, Government Code, the comptroller may deposit public funds with a credit union designated as a credit union district depository under Section 279.151(b).
(c) For purposes of Subsections (a) and (b), a financial institution or credit union is subject to the collateral requirements of Section 404.031, Government Code.
(d) Subject to an agreement between the comptroller and the banking district or credit union district depository, public funds deposited in the district depository may earn a fixed interest rate that is at or below the financial institution's or credit union's posted two-year certificate of deposit rate, as appropriate.
(e) In calculating the yield under Section 2256.006, Government Code, of public funds deposited in a banking district or credit union district depository, the comptroller may consider the benefit to this state of stimulating economic development.
TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS
SUBTITLE B. LOANS AND FINANCED TRANSACTIONS
This chapter may be cited as the Texas Savings Promotion Act.
In this chapter:
(1) "Credit union" means:
(A) a credit union as defined by Section 121.002; or
(B) a federal credit union doing business in this state.
(2) "Deposit," with respect to a financial institution, has the meaning assigned by Section 31.002.
(3) "Finance commission" means the Finance Commission of Texas.
(4) "Financial institution" has the meaning assigned by Section 31.002.
(5) "Savings promotion raffle" means a raffle conducted by a credit union or financial institution in which the sole action required for a chance of winning a designated prize is the deposit of at least a specified amount of money in a savings account or other savings program offered by the credit union or financial institution.
(a) A credit union may conduct a savings promotion raffle if:
(1) each ticket or token representing an entry in the raffle has an equal probability of being drawn; and
(2) the raffle is conducted in a manner that:
(A) does not jeopardize the ability of the credit union to operate in a safe and sound manner; and
(B) does not mislead the credit union's members.
(b) A credit union may not require consideration for participation in a savings promotion raffle. A deposit of an amount of money in a savings account or other savings program that results in an entry in a savings promotion raffle is not consideration.
(c) A credit union may not require a person to pay a premium or fee for opening or using a savings account or other savings program that is subject to a savings promotion raffle, unless the premium or fee is commensurate with the premium or fee that the credit union charges for opening or using comparable savings accounts or savings programs that are not subject to a savings promotion raffle.
(d) A credit union may not limit the withdrawal of money from a savings account or other savings program that is subject to a savings promotion raffle, unless the withdrawal limits are commensurate with the withdrawal limits that the credit union imposes on comparable savings accounts or savings programs that are not subject to a savings promotion raffle. This subsection does not prohibit a credit union from requiring a deposit of an amount of money to remain in a savings account or other savings program for a certain period of time in order for the deposit to represent an entry in a savings promotion raffle.
(e) A credit union shall pay interest or dividends on a savings account or other savings program that is subject to a savings promotion raffle at a rate that is commensurate with the interest or dividend rate that the credit union pays on comparable savings accounts or savings programs that are not subject to a savings promotion raffle.
(f) A credit union that conducts a savings promotion raffle under this section shall maintain all records that the Credit Union Commission determines are necessary for the Credit Union Department to examine the raffle.
(g) The provisions of this section applicable to a credit union apply to an organization composed exclusively of credit unions.
(h) The Credit Union Commission shall adopt rules and procedures for the administration of this section.
(a) A financial institution may conduct a savings promotion raffle if:
(1) each ticket or token representing an entry in the raffle has an equal probability of being drawn; and
(2) the raffle is conducted in a manner that:
(A) does not jeopardize the ability of the financial institution to operate in a safe and sound manner; and
(B) does not mislead the institution's depositors.
(b) A financial institution may not require consideration for participation in a savings promotion raffle. A deposit of an amount of money in a savings account or other savings program that results in an entry in a savings promotion raffle is not consideration.
(c) A financial institution may not require a person to pay a premium or fee for opening or using a savings account or other savings program that is subject to a savings promotion raffle, unless the premium or fee is commensurate with the premium or fee that the financial institution charges for opening or using comparable savings accounts or savings programs that are not subject to a savings promotion raffle.
(d) A financial institution may not limit the withdrawal of money from a savings account or other savings program that is subject to a savings promotion raffle, unless the withdrawal limits are commensurate with the withdrawal limits that the financial institution imposes on comparable savings accounts or savings programs that are not subject to a savings promotion raffle. This subsection does not prohibit a financial institution from requiring a deposit of an amount of money to remain in a savings account or other savings program for a certain period of time in order for the deposit to represent an entry in a savings promotion raffle.
(e) A financial institution shall pay interest or dividends on a savings account or other savings program that is subject to a savings promotion raffle at a rate that is commensurate with the interest or dividend rate that the financial institution pays on comparable savings accounts or savings programs that are not subject to a savings promotion raffle.
(f) A financial institution that conducts a savings promotion raffle under this section shall maintain all records that the finance commission determines are necessary for the financial regulatory agency of this state having regulatory jurisdiction over that financial institution to examine the raffle.
(g) The provisions of this section applicable to a financial institution apply to an organization composed exclusively of financial institutions.
(h) The finance commission shall adopt rules and procedures for the administration of this section.
For purposes of Chapter 47, Penal Code, or other state law, opening or making a deposit in an account is not considered a purchase, payment, or provision of a thing of value for participation in a savings promotion raffle and is not considered to require a substantial expenditure of time, effort, or inconvenience.
In this chapter:
(1) "Department" means the Department of Family and Protective Services.
(2) "Exploitation" means the act of forcing, compelling, or exerting undue influence over a person causing the person to act in a way that is inconsistent with the person's relevant past behavior or causing the person to perform services for the benefit of another person.
(3) "Financial exploitation" means:
(A) the wrongful or unauthorized taking, withholding, appropriation, or use of the money, assets, or other property or the identifying information of a person; or
(B) an act or omission by a person, including through the use of a power of attorney on behalf of, or as the conservator or guardian of, another person, to:
(i) obtain control, through deception, intimidation, fraud, or undue influence, over the other person's money, assets, or other property to deprive the other person of the ownership, use, benefit, or possession of the property; or
(ii) convert the money, assets, or other property of the other person to deprive the other person of the ownership, use, benefit, or possession of the property.
(4) "Financial institution" has the meaning assigned by Section 277.001.
(5) "Vulnerable adult" means:
(A) an elderly person as that term is defined by Section 48.002, Human Resources Code; or
(B) a person with a disability as that term is defined by Section 48.002, Human Resources Code.
(a) If an employee of a financial institution has cause to believe that financial exploitation of a vulnerable adult who is an account holder with the financial institution has occurred, is occurring, or has been attempted, the employee shall notify the financial institution of the suspected financial exploitation.
(b) If a financial institution is notified of suspected financial exploitation under Subsection (a) or otherwise has cause to believe that financial exploitation of a vulnerable adult who is an account holder with the financial institution has occurred, is occurring, or has been attempted, the financial institution shall assess the suspected financial exploitation and submit a report to the department in the same manner as and containing the same information required to be included in a report under Section 48.051, Human Resources Code. The financial institution shall submit the report required by this subsection not later than the earlier of:
(1) the date the financial institution completes the financial institution's assessment of the suspected financial exploitation; or
(2) the fifth business day after the date the financial institution is notified of the suspected financial exploitation under Subsection (a) or otherwise has cause to believe that the suspected financial exploitation has occurred, is occurring, or has been attempted.
(c) A financial institution that submits a report to the department of suspected financial exploitation of a vulnerable adult under Subsection (b) is not required to make an additional report of suspected abuse, neglect, or exploitation under Section 48.051, Human Resources Code, for the same conduct constituting the reported suspected financial exploitation.
(d) Each financial institution shall adopt internal policies, programs, plans, or procedures for:
(1) the employees of the financial institution to make the notification required under Subsection (a); and
(2) the financial institution to conduct the assessment and submit the report required under Subsection (b).
(e) The policies, programs, plans, or procedures adopted under Subsection (d) may authorize the financial institution to report the suspected financial exploitation to other appropriate agencies and entities in addition to the department, including the attorney general, the Federal Trade Commission, and the appropriate law enforcement agency.
If a financial institution submits a report of suspected financial exploitation of a vulnerable adult to the department under Section 281.002(b), the financial institution may at the time the financial institution submits the report also notify a third party reasonably associated with the vulnerable adult of the suspected financial exploitation, unless the financial institution suspects the third party of financial exploitation of the vulnerable adult.
(a) Notwithstanding any other law, a financial institution:
(1) may place a hold on any transaction that involves an account of a vulnerable adult if the financial institution:
(A) submits a report of suspected financial exploitation of the vulnerable adult to the department under Section 281.002(b); and
(B) has cause to believe the transaction is related to the suspected financial exploitation alleged in the report; and
(2) must place a hold on any transaction involving an account of a vulnerable adult if the hold is requested by the department or a law enforcement agency.
(b) Subject to Subsection (c), a hold placed on any transaction under Subsection (a) expires on the 10th business day after the date the hold is placed.
(c) The financial institution may extend a hold placed on any transaction under Subsection (a) for a period not to exceed 30 business days after the expiration of the period prescribed by Subsection (b) if requested by a state or federal agency or a law enforcement agency investigating the suspected financial exploitation. The financial institution may also petition a court to extend a hold placed on any transaction under Subsection (a) beyond the period prescribed by Subsection (b). A court may enter an order extending or shortening a hold or providing other relief.
(d) Each financial institution shall adopt internal policies, programs, plans, or procedures for placing a hold on a transaction involving an account of a vulnerable adult under this section.
(a) An employee of a financial institution who makes a notification under Section 281.002(a), a financial institution that submits a report under Section 281.002(b) or makes a notification to a third party under Section 281.003, or an employee who or financial institution that testifies or otherwise participates in a judicial proceeding arising from a notification or report is immune from any civil or criminal liability arising from the notification, report, testimony, or participation in the judicial proceeding, unless the employee or financial institution acted in bad faith or with a malicious purpose.
(b) A financial institution that in good faith and with the exercise of reasonable care places or does not place a hold on any transaction under Section 281.004(a)(1) is immune from any civil or criminal liability or disciplinary action resulting from that action or failure to act.
To the extent permitted by state or federal law, a financial institution shall provide, on request, access to or copies of records relevant to the suspected financial exploitation of a vulnerable adult to the department, the commissioner, a law enforcement agency, or a prosecuting attorney's office, either as part of a report to the department, commissioner, law enforcement agency, or prosecuting attorney's office or at the request of the department, commissioner, law enforcement agency, or prosecuting attorney's office in accordance with an investigation.
Subchapter A. General Provisions
In this chapter:
(1) "Bridge loan" means temporary or short-tem financing requiring payment of only interest until the entire unpaid balance is due.
(2) "Home loan" means a loan that is:
(A) made to one or more individuals for personal, family, or household purposes; and
(B) secured in whole or part by:
(i) a manufactured home, as defined by Section 347.002, used or to be used as the borrower's principal residence; or
(ii) real property improved by a dwelling designed for occupancy by four or fewer families and used or to be used as the borrower's principal residence.
(3) "Restructure" means a change in the payment schedule or other terms of a home loan as a result of the borrower's default.
(a) This chapter applies to a loan under this chapter that is extended to a person who is located in this state at the time the loan is made.
(b) This chapter does not apply to:
(1) a reverse mortgage; or
(2) an open-end account, as defined by Section 301.002.
If this chapter conflicts with another provision of this title, this chapter controls.
Subchapter B. Provisions Relating to Home Loans in General
(a) For purposes of this section, a low-rate home loan is a home loan that at its inception carries an interest rate two percentage points or more below the yield on treasury securities having comparable periods of maturity to the loan maturity, except that if the loan's interest rate is a discounted introductory rate or a rate that automatically steps up over time, the fully indexed rate or the fully stepped-up rate, as appropriate, shall be used instead of the rate at the loan's inception to determine whether the loan is a low-rate loan.
(b) A lender may not replace or consolidate a low-rate home loan directly made by a government or nonprofit lender before the seventh anniversary of the date of the loan unless the new or consolidated loan has a lower interest rate and requires payment of a lesser amount of points and fees than the original loan or is a restructure to avoid foreclosure.
(a) In this section:
(1) "Estate" has the meaning assigned by Section 22.012, Estates Code.
(2) "Heir" has the meaning assigned by Section 22.015, Estates Code.
(3) "Mortgage servicer" and "mortgagor" have the meanings assigned by Section 51.0001, Property Code.
(b) Not later than the 30th day after a mortgage servicer of a home loan receives a request for the information from the surviving spouse of a mortgagor of the home loan, accompanied by the proof required under Subsection (c), the mortgage servicer shall provide the surviving spouse with information that the mortgagor would have received in a standard monthly statement, including:
(1) the current balance information, including the due dates and the amount of any installments;
(2) whether the loan is current and any amounts that are delinquent;
(3) any loan number; and
(4) the amount of any escrow deposit for taxes and insurance purposes.
(c) A surviving spouse must prove the person's status by providing:
(1) a death certificate of the mortgagor;
(2) an affidavit of disinterested witnesses that is in the form referenced in Section 203.002, Estates Code, including language stating that the surviving spouse was married to the mortgagor at the time of the mortgagor's death; and
(3) an affidavit signed by the surviving spouse stating that the surviving spouse is currently residing in the underlying mortgaged property as the primary residence.
(d) The request from the surviving spouse must also include a notice to the mortgage servicer that states in bold-faced, capital, or underlined letters: "THIS REQUEST IS MADE PURSUANT TO TEXAS FINANCE CODE SECTION 343.103. SUBSEQUENT DISCLOSURE OF INFORMATION IS NOT IN CONFLICT WITH THE GRAMM-LEACH-BLILEY ACT UNDER 15 U.S.C. SECTION 6802(e)(8)."
(e) A mortgage servicer that provides the information as required under this section is not liable to the estate of the mortgagor or any heir or beneficiary of the mortgagor as a result of providing this information to the surviving spouse.
A lender may not offer any individual or group credit life, disability, or unemployment insurance on a prepaid single premium basis in conjunction with a home loan unless the following notice is provided to each applicant for the loan by hand delivery or mail to the applicant not later than the third business day after the date the applicant's application for a home loan is received:
INSURANCE NOTICE TO APPLICANT
You may elect to purchase credit life, disability, or involuntary unemployment insurance in conjunction with this mortgage loan. If you elect to purchase this insurance coverage, you may pay for it either on a monthly premium basis or with a single premium payment at the time the lender closes this loan. If you choose the single premium payment, the cost of the premium will be financed at the interest rate provided for in the mortgage loan.
This insurance is NOT required as a condition of closing the mortgage loan and will be included with the loan only at your request.
You have the right to cancel this credit insurance once purchased. If you cancel it within 30 days of the date of your loan, you will receive either a full refund or a credit against your loan account. If you cancel this insurance at any other time, you will receive either a refund or credit against your loan account of any unearned premium. YOU MUST CANCEL WITHIN 30 DAYS OF THE DATE OF THE LOAN TO RECEIVE A FULL REFUND OR CREDIT.
To assist you in making an informed choice, the following estimates of premiums are being provided along with an example of the cost of financing. The examples assume that the term of the insurance product is ____ years and that the interest rate is ______ percent (a rate that has recently been available for the type of loan you are seeking). PLEASE NOTE THAT THE ACTUAL LOAN TERMS YOU QUALIFY FOR MAY VARY FROM THIS EXAMPLE. "Total amount paid" is the amount that would be paid if you financed only the total insurance premium for a ___ year period and is equal to the amount you would have paid if you made all scheduled payments. This is NOT the total of payments on your loan.
CREDIT LIFE INSURANCE: Estimated premium of $_______
DISABILITY INSURANCE: Estimated premium of $_______
INVOLUNTARY UNEMPLOYMENT INSURANCE: Estimated premium of $________
TOTAL INSURANCE PREMIUMS: $_______
TOTAL AMOUNT PAID: $_______
(a) A lender, mortgage banker, or licensed mortage broker shall provide to each applicant for a home loan a written notice at closing.
(b) The notice must:
(1) be provided on separate document;
(2) be in at least 14-point type; and
(3) have the following or substantially similar language:
"Warning: Intentionally or knowingly making a materially false or misleading written statement to obtain property or credit, including a mortgage loan, is a violation of Section 32.32, Texas Penal Code, and, depending on the amount of the loan or value of the property, is punishable by imprisonment for a term of 2 years to 99 years and a fine not to exceed $10,000.
"I/we, the undersigned home loan applicant(s), represent that I/we have received, read, and understand this notice of penalties for making a materially false or misleading written statement to obtain a home loan.
"I/we represent that all statements and representations contained in my/our written home loan application, including statements or representations regarding my/our identity, employment, annual income, and intent to occupy the residential real property secured by the home loan, are true and correct as of the date of loan closing."
(c) On receipt of the notice, the loan applicant shall verify the information and execute the notice.
(d) The failure of a lender, mortgage banker, or licensed mortgage broker to provide a notice complying with this section to each applicant for a home loan does not affect the validity or enforceability of the home loan by any holder of the loan.
(a) In this section, "mortgagee," "mortgage servicer," and "mortgagor" have the meanings assigned by Section 51.0001, Property Code.
(b) The finance commission shall adopt rules governing requests by title insurance companies for payoff information from mortgage servicers related to home loans and the provision of that information, including rules prescribing a standard payoff statement form that must be used by mortgage servicers to provide those payoff statements.
(c) In adopting rules under Subsection (b), the finance commission shall require a mortgage servicer who receives a request for a payoff statement with respect to a home loan from a title insurance company to deliver the requested payoff statement on the prescribed form within a time specified by finance commission rule, which must allow the mortgage servicer at least seven business days after the date the request is received to deliver the payoff statement.
(d) The standard payoff statement form prescribed by the finance commission under Subsection (b) must require that a completed form:
(1) state the proposed closing date for the sale and conveyance of the real property securing the home loan or for any other transaction that would involve the payoff of the home loan, as specified by the title insurance company's request; and
(2) provide a payoff amount that is valid through that date.
(e) Except as provided by Subsection (f) or (g), if the mortgage servicer provides a completed payoff statement form that meets the requirements of this section and rules adopted under this section in response to a request for a payoff statement, the mortgage servicer or mortgagee may not, on or before the proposed closing date, demand that a mortgagor pay an amount in excess of the payoff amount specified in the payoff statement.
(f) If a mortgage servicer or mortgagee discovers that a payoff statement is incorrect, the mortgage servicer or mortgagee may correct and deliver the statement on or before the second business day before the specified proposed closing date. The corrected payoff statement must be delivered to the requestor by:
(1) certified mail with return receipt requested; and
(2) electronic means, if the requestor provides the mortgage servicer with a means to deliver the corrected statement electronically.
(g) If a mortgage servicer submits an incorrect payoff statement to a title insurance company that results in the mortgage servicer requesting an amount that is less than the correct payoff amount, the mortgage servicer or mortgagee does not deliver a corrected payoff statement in accordance with Subsection (f), and the mortgage servicer receives payment in the amount specified in the payoff statement, the difference between the amount included in the payoff statement and the correct payoff amount:
(1) remains a liability of the former mortgagor owed to the mortgagee; and
(2) if the payoff statement is in connection with:
(A) the sale of the real property:
(i) the deed of trust or other contract lien securing an interest in the property is released;
(ii) within a reasonable time after receipt of payment by the mortgagee or mortgage servicer, the mortgagee or mortgage servicer, as applicable, shall deliver to the title company a release of the deed of trust or other contract lien securing an interest in the property; and
(iii) any proceeds disbursed at closing to or for the benefit of the mortgagor, excluding closing costs related to the transaction, are subject to a constructive trust for the benefit of the mortgagee to the extent of the underpayment; or
(B) a refinance by the mortgagor of the existing home loan:
(i) the lien securing the existing home loan becomes subordinate to the lien securing the new home loan; and
(ii) any proceeds disbursed at closing to or for the benefit of the mortgagor, excluding closing costs related to the transaction, are subject to a constructive trust for the benefit of the mortgagee to the extent of the underpayment.
(a) In this section:
(1) "Mortgage servicer," "mortgagee," and "mortgagor" have the meanings assigned by Section 51.0001, Property Code.
(2) "Release of lien" means a release of a deed of trust or other lien securing a home loan.
(b) Except as provided by Subsection (c), not later than the 60th day after the date a mortgage servicer or mortgagee, as applicable, receives the correct payoff amount for a home loan from a mortgagor, the mortgage servicer or mortgagee shall:
(1) deliver to the mortgagor a release of lien for the home loan; or
(2) file the release of lien with the appropriate county clerk's office for recording in the real property records of the county.
(c) If, on or before the 20th day after the date of the payoff of the home loan, the mortgagor delivers a written request to the mortgagee or mortgage servicer for the release of lien to be delivered to the mortgagor or filed with the county clerk, the mortgagee or mortgage servicer shall deliver or file the release of lien not later than the 30th day after the date the mortgagee or mortgage servicer receives the written request from the mortgagor.
(d) Chapter 349 does not apply to this section.
(e) A mortgage servicer is required to comply with this section only if the mortgage servicer has the authority to deliver or file a release of lien for the home loan.
Subchapter C. High-Cost Home Loans
In this subchapter:
(1) "High-cost home loan" means a loan that:
(A) is made to one or more individuals for personal , family, or household purposes;
(B) is secured in whole or part by:
(i) a manufactured home, as defined by Section 347.002, used or to be used as the borrower's principal residence; or
(ii) real property improved by a dwelling designed for occupancy by four or fewer families and used or to be used as the borrower's principal residence;
(C) has a principal amount equal to or less than one-half of the maximum conventional loan amount for first mortgages as established and adjusted by the Federal National Mortgage Association;
(D) is not:
(i) a reverse mortgage; or
(ii) an open-end account, as defined by Section 301.002; and
(E) is a credit transaction described by 12 C.F.R. Section 1026.32, as amended, except that the term includes a residential mortgage transaction, as defined by 12 C.F.R. Section 1026.2, as amended, if the total loan amount is $20,000 or more and:
(i) the annual percentage rate exceeds the rate indicated in 12 C.F.R. Section 1026.32(a)(1)(i), as amended; or
(ii) the total points and fees payable by the consumer at or before loan closing will exceed the amount indicated in 12 C.F.R. Section 1026.32(a)(1)(ii), as amended.
(2) "Points and fees" has the meaning assigned by 12 C.F.R. Section 1026.32(b), as amended.
A high-cost home loan may not contain a provision for a scheduled payment that is more than twice as large as the average of earlier scheduled monthly payments, unless the balloon payment becomes due not less than 60 months after the date of the loan. This prohibition does not apply if the payment schedule is adjusted to account for the seasonal or otherwise irregular income of the borrower or if the loan is a bridge loan in connection with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling.
A high-cost home loan may not provide for a payment schedule with regular periodic payments that cause the principal balance to increase, except that this section does not prohibit negative amortization as a consequence of a temporary forbearance, bridge loan, or restructure sought by the borrower.
(a) In this section, "obligor" means a person obligated to pay a loan, including a borrower, cosigner, or guarantor. If more than one person is obligated to pay a loan, the term refers to those persons collectively.
(b) A lender may not engage in a pattern or practice of extending credit to consumers under high-cost home loans based on the consumers' collateral without regard to the obligor's repayment ability, including the obligor's current and expected income, current obligations, employment status, and other financial resources, other than the obligor's equity in the dwelling that secures repayment of the loan.
A lender may not make a high-cost home loan containing a provision for a prepayment penalty.
A lender, in connection with a high-cost home loan, may not charge a borrower an amount for a service or product if the borrower does not receive the service or product.
TITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICES
[Includes §§391.001 - 391.002.]
In this chapter, "credit reporting bureau" means a person who engages in the practice of assembling or reporting credit information about individuals for the purpose of furnishing the information to a third party.
(a) A person commits an offense if the person knowingly furnishes false information about another person´s creditworthiness, credit standing, or credit capacity to a credit reporting bureau.
(b) A credit reporting bureau commits an offense if the credit reporting bureau knowingly furnishes false information about a person´s creditworthiness, credit standing, or credit capacity to a third party.
(c) An offense under this section is a misdemeanor punishable by a fine of not more than $200.
Subchapter A. General Provisions
In this chapter:
(1) "Consumer" means an individual who has a consumer debt.
(2) "Consumer debt" means an obligation, or an alleged obligation, primarily for personal, family, or household purposes and arising from a transaction or alleged transaction.
(3) "Creditor" means a party, other than a consumer, to a transaction or alleged transaction involving one or more consumers.
(4) "Credit bureau" means a person who, for compensation, gathers, records, and disseminates information relating to the creditworthiness, financial responsibility, and paying habits of, and similar information regarding, a person for the purpose of furnishing that information to another person.
(5) "Debt collection" means an action, conduct, or practice in collecting, or in soliciting for collection, consumer debts that are due or alleged to be due a creditor.
(6) "Debt collector" means a person who directly or indirectly engages in debt collection and includes a person who sells or offers to sell forms represented to be a collection system, device, or scheme intended to be used to collect consumer debts.
(7) "Third-party debt collector" means a debt collector, as defined by 15 U.S.C. Section 1692a(6), but does not include an attorney collecting a debt as an attorney on behalf of and in the name of a client unless the attorney has nonattorney employees who:
(A) are regularly engaged to solicit debts for collection; or
(B) regularly make contact with debtors for the purpose of collection or adjustment of debts.
Subchapter B. Surety Bond
(a) A third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by this section. A copy of the bond must be filed with the secretary of state.
(b) The bond must be in favor of:
(1) any person who is damaged by a violation of this chapter; and
(2) this state for the benefit of any person who is damaged by a violation of this chapter.
(c) The bond must be in the amount of $10,000.
A person who claims against a bond for a violation of this chapter may maintain an action against the third-party debt collector or credit bureau and against the surety. The aggregate liability of the surety to all persons damaged by a violation of this chapter may not exceed the amount of the bond.
Subchapter C. Information in Files of Credit Bureau or Debt Collector
Not later than the 45th day after the date of the request, a credit bureau shall provide to a person in its registry a copy of all information contained in its files concerning that person.
(a) An individual who disputes the accuracy of an item that is in a third-party debt collector´s or credit bureau´s file on the individual and that relates to a debt being collected by the third-party debt collector may notify in writing the third-party debt collector of the inaccuracy. The third-party debt collector shall make a written record of the dispute. If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall cease collection efforts until an investigation of the dispute described by Subsections (b)-(e) determines the accurate amount of the debt, if any. If the third-party debt collector reports information related to the dispute to a credit bureau, the reporting third-party debt collector shall initiate an investigation of the dispute described by Subsections (b)-(e) and shall cease collection efforts until the investigation determines the accurate amount of the debt, if any. This section does not affect the application of Chapter 20, Business & Commerce Code, to a third-party debt collector subject to that chapter.
(b) Not later than the 30th day after the date a notice of inaccuracy is received, a third-party debt collector who initiates an investigation shall send a written statement to the individual:
(1) denying the inaccuracy;
(2) admitting the inaccuracy; or
(3) stating that the third-party debt collector has not had sufficient time to complete an investigation of the inaccuracy.
(c) If the third-party debt collector admits that the item is inaccurate under Subsection (b), the third-party debt collector shall:
(1) not later than the fifth business day after the date of the admission, correct the item in the relevant file; and
(2) immediately cease collection efforts related to the portion of the debt that was found to be inaccurate and on correction of the item send, to each person who has previously received a report from the third-party debt collector containing the inaccurate information, notice of the inaccuracy and a copy of an accurate report.
(d) If the third-party debt collector states that there has not been sufficient time to complete an investigation, the third-party debt collector shall immediately:
(1) change the item in the relevant file as requested by the individual;
(2) send to each person who previously received the report containing the information a notice that is equivalent to a notice under Subsection (c) and a copy of the changed report; and
(3) cease collection efforts.
(e) On completion by the third-party debt collector of the investigation, the third-party debt collector shall inform the individual of the determination of whether the item is accurate or inaccurate. If the third-party debt collector determines that the information was accurate, the third-party debt collector may again report that information and resume collection efforts.
Subchapter D. Prohibited Debt Collection Methods
(a) In debt collection, a debt collector may not use threats, coercion, or attempts to coerce that employ any of the following practices:
(1) using or threatening to use violence or other criminal means to cause harm to a person or property of a person;
(2) accusing falsely or threatening to accuse falsely a person of fraud or any other crime;
(3) representing or threatening to represent to any person other than the consumer that a consumer is wilfully refusing to pay a nondisputed consumer debt when the debt is in dispute and the consumer has notified in writing the debt collector of the dispute;
(4) threatening to sell or assign to another the obligation of the consumer and falsely representing that the result of the sale or assignment would be that the consumer would lose a defense to the consumer debt or would be subject to illegal collection attempts;
(5) threatening that the debtor will be arrested for nonpayment of a consumer debt without proper court proceedings;
(6) threatening to file a charge, complaint, or criminal action against a debtor when the debtor has not violated a criminal law;
(7) threatening that nonpayment of a consumer debt will result in the seizure, repossession, or sale of the person´s property without proper court proceedings; or
(8) threatening to take an action prohibited by law.
(b) Subsection (a) does not prevent a debt collector from:
(1) informing a debtor that the debtor may be arrested after proper court proceedings if the debtor has violated a criminal law of this state;
(2) threatening to institute civil lawsuits or other judicial proceedings to collect a consumer debt; or
(3) exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings.
In debt collection, a debt collector may not oppress, harass, or abuse a person by:
(1) using profane or obscene language or language intended to abuse unreasonably the hearer or reader;
(2) placing telephone calls without disclosing the name of the individual making the call and with the intent to annoy, harass, or threaten a person at the called number;
(3) causing a person to incur a long distance telephone toll, telegram fee, or other charge by a medium of communication without first disclosing the name of the person making the communication; or
(4) causing a telephone to ring repeatedly or continuously, or making repeated or continuous telephone calls, with the intent to harass a person at the called number.
(a) In debt collection, a debt collector may not use unfair or unconscionable means that employ the following practices:
(1) seeking or obtaining a written statement or acknowledgment in any form that specifies that a consumer's obligation is one incurred for necessaries of life if the obligation was not incurred for those necessaries;
(2) collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer; or
(3) collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment, if:
(A) the check or draft was dishonored or the debit payment or credit card payment was refused because the check or draft was not drawn or the payment was not made by a person authorized to use the applicable account;
(B) the debt collector has received written notice from a person authorized to use the account that the check, draft, or payment was unauthorized; and
(C) the person authorized to use the account has filed a report concerning the unauthorized check, draft, or payment with a law enforcement agency, as defined by Article 59.01, Code of Criminal Procedure, and has provided the debt collector with a copy of the report.
(b) Notwithstanding Subsection (a)(2), a creditor may charge a reasonable reinstatement fee as consideration for renewal of a real property loan or contract of sale, after default, if the additional fee is included in a written contract executed at the time of renewal.
(c) Subsection (a)(3) does not prohibit a debt collector from collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment if the debt collector has credible evidence, including a document, video recording, or witness statement, that the report filed with a law enforcement agency, as required by Subsection (a)(3)(C), is fraudulent and that the check, draft, or payment was authorized.
(a) Except as otherwise provided by this section, in debt collection or obtaining information concerning a consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation that employs the following practices:
(1) using a name other than the:
(A) true business or professional name or the true personal or legal name of the debt collector while engaged in debt collection; or
(B) name appearing on the face of the credit card while engaged in the collection of a credit card debt;
(2) failing to maintain a list of all business or professional names known to be used or formerly used by persons collecting consumer debts or attempting to collect consumer debts for the debt collector;
(3) representing falsely that the debt collector has information or something of value for the consumer in order to solicit or discover information about the consumer;
(4) failing to disclose clearly in any communication with the debtor the name of the person to whom the debt has been assigned or is owed when making a demand for money;
(5) failing to disclose, except in a formal pleading made in connection with a legal action:
(A) that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, if the communication is the initial written or oral communication with the debtor; or
(B) that the communication is from a debt collector, if the communication is a subsequent written or oral communication with the debtor;
(6) using a written communication that fails to indicate clearly the name of the debt collector and the debt collector´s street address or post office box and telephone number if the written notice refers to a delinquent consumer debt;
(7) using a written communication that demands a response to a place other than the debt collector´s or creditor´s street address or post office box;
(8) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt´s status in a judicial or governmental proceeding;
(9) representing falsely that a debt collector is vouched for, bonded by, or affiliated with, or is an instrumentality, agent, or official of, this state or an agency of federal, state, or local government;
(10) using, distributing, or selling a written communication that simulates or is represented falsely to be a document authorized, issued, or approved by a court, an official, a governmental agency, or any other governmental authority or that creates a false impression about the communication´s source, authorization, or approval;
(11) using a seal, insignia, or design that simulates that of a governmental agency;
(12) representing that a consumer debt may be increased by the addition of attorney´s fees, investigation fees, service fees, or other charges if a written contract or statute does not authorize the additional fees or charges;
(13) representing that a consumer debt will definitely be increased by the addition of attorney´s fees, investigation fees, service fees, or other charges if the award of the fees or charges is subject to judicial discretion;
(14) representing falsely the status or nature of the services rendered by the debt collector or the debt collector´s business;
(15) using a written communication that violates the United States postal laws and regulations;
(16) using a communication that purports to be from an attorney or law firm if it is not;
(17) representing that a consumer debt is being collected by an attorney if it is not; or
(18) representing that a consumer debt is being collected by an independent, bona fide organization engaged in the business of collecting past due accounts when the debt is being collected by a subterfuge organization under the control and direction of the person who is owed the debt.
(b) Subsection (a)(4) does not apply to a person servicing or collecting real property first lien mortgage loans or credit card debts.
(c) Subsection (a)(6) does not require a debt collector to disclose the names and addresses of employees of the debt collector.
(d) Subsection (a)(7) does not require a response to the address of an employee of a debt collector.
(e) Subsection (a)(18) does not prohibit a creditor from owning or operating a bona fide debt collection agency.
A creditor may not use an independent debt collector if the creditor has actual knowledge that the independent debt collector repeatedly or continuously engages in acts or practices that are prohibited by this chapter.
(a) In this section:
(1) "Charged-off debt" means a consumer debt that a creditor has determined to be a loss or expense to the creditor instead of an asset.
(2) "Debt buyer" means a person who purchases or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt, regardless of whether the person collects the consumer debt, hires a third party to collect the consumer debt, or hires an attorney to pursue collection litigation in connection with the consumer debt. The term does not include:
(A) a person who acquires in-default or charged-off debt that is incidental to the purchase of a portfolio that predominantly consists of consumer debt that has not been charged off; or
(B) a check services company that acquires the right to collect on a paper or electronic negotiable instrument, including an Automated Clearing House (ACH) authorization to debit an account that has not been processed.
(b) Unless otherwise expressly provided, this section prevails to the extent of any conflict between this section and any other law of this state.
(c) A debt buyer may not, directly or indirectly, commence an action against or initiate arbitration with a consumer to collect a consumer debt after the expiration of the applicable limitations period provided by Section 16.004, Civil Practice and Remedies Code, or Section 3.118, Business & Commerce Code.
(d) If an action to collect a consumer debt is barred under Subsection (c), the cause of action is not revived by a payment of the consumer debt, an oral or written reaffirmation of the consumer debt, or any other activity on the consumer debt.
(e) If a debt buyer is engaged in debt collection for a consumer debt for which an action to collect the debt is barred under Subsection (c), the debt buyer, or a debt collector acting on behalf of the debt buyer, shall provide the following notice in the initial written communication with the consumer relating to the debt collection:
(1) if the reporting period for including the consumer debt in a consumer report prepared by a consumer reporting agency has not expired under Section 605, Fair Credit Reporting Act (15 U.S.C. Section 1681c), and the debt buyer furnishes to a consumer reporting agency information regarding the consumer debt, "THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW.";
(2) if the reporting period for including the consumer debt in a consumer report prepared by a consumer reporting agency has not expired under Section 605, Fair Credit Reporting Act (15 U.S.C. Section 1681c), but the debt buyer does not furnish to a consumer reporting agency information regarding the consumer debt, "THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS REQUIRED BY LAW."; or
(3) if the reporting period for including the consumer debt in a consumer report prepared by a consumer reporting agency has expired under Section 605, Fair Credit Reporting Act (15 U.S.C. Section 1681c), "THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS REQUIRED BY LAW."
(f) A notice required under Subsection (e) must be in at least 12-point type that is boldfaced, capitalized, or underlined or otherwise conspicuously set out from the surrounding written material.
Subchapter E. Defense, Criminal Penalty, and Civil Remedies
A person does not violate this chapter if the action complained of resulted from a bona fide error that occurred notwithstanding the use of reasonable procedures adopted to avoid the error.
(a) Except as provided by Subsection (d), a person commits an offense if the person violates this chapter.
(b) An offense under this section is a misdemeanor punishable by a fine of not less than $100 or more than $500 for each violation.
(c) A misdemeanor charge under this section must be filed not later than the first anniversary of the date of the alleged violation.
(d) This section does not apply to a violation of Section 392.307.
(a) A person may sue for:
(1) injunctive relief to prevent or restrain a violation of this chapter; and
(2) actual damages sustained as a result of a violation of this chapter.
(b) A person who successfully maintains an action under Subsection (a) is entitled to attorney´s fees reasonably related to the amount of work performed and costs.
(c) On a finding by a court that an action under this section was brought in bad faith or for purposes of harassment, the court shall award the defendant attorney´s fees reasonably related to the work performed and costs.
(d) If the attorney general reasonably believes that a person is violating or is about to violate this chapter, the attorney general may bring an action in the name of this state against the person to restrain or enjoin the person from violating this chapter.
(e) A person who successfully maintains an action under this section for violation of Section 392.101, 392.202, or 392.301(a)(3) is entitled to not less than $100 for each violation of this chapter.
(a) A violation of this chapter is a deceptive trade practice under Subchapter E, Chapter 17, Business & Commerce Code, and is actionable under that subchapter.
(b) This chapter does not affect or alter a remedy at law or in equity otherwise available to a debtor, creditor, governmental entity, or other legal entity.
Subchapter A. Composition and Operation
The community reinvestment work group is composed of:
(1) a representative of the comptroller´s office, appointed by the comptroller;
(2) a representative of the Texas Department of Housing and Community Affairs, appointed by the executive director of that department;
(3) a representative of the Texas Department of Economic Development, appointed by the executive director of that department;
(4) a representative of the Texas Department of Banking, appointed by the banking commissioner of Texas; and
(5) a representative of the Texas Department of Insurance, appointed by the commissioner of insurance.
The representative of the comptroller´s office serves as presiding officer of the work group. The members of the work group may elect other necessary officers.
The work group shall meet quarterly and may meet more often at the call of the presiding officer.
A member of the work group serves a two-year term and may be removed for any reason by the appointing authority.
The appointing authority is responsible for the expenses of a member´s service on the work group. A member of the work group receives no additional compensation for serving on the work group.
Subchapter B. Duties
The work group shall work in conjunction with the banking community in this state to:
(1) develop statewide community reinvestment strategies using existing investment pools and other investment vehicles to leverage private capital from banks, insurance companies, and other entities for community development in the state;
(2) consult and coordinate with representatives from appropriate federal regulatory agencies, including the Office of the Comptroller of the Currency, the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision; and
(3) monitor and evaluate the strategies developed under this section.
In developing the strategies required by Section 395.101, the work group shall:
(1) explore innovative qualified investment strategies;
(2) ensure to the extent possible that the strategies encourage financial institutions in this state to lend money to low-income and moderate-income families and individuals in the state;
(3) coordinate its efforts to attract private capital through investments that meet the requirements of the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et seq.); and
(4) ensure to the extent possible that the strategies augment existing Community Reinvestment Act of 1977 programs in the state, including the operation of local community development corporations.