CHAPTER 31. GENERAL PROVISIONS
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE A. BANKS
CHAPTER 31. GENERAL PROVISIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 31.001. SHORT TITLE. This subtitle may be cited as the
Texas Banking Act.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.002. DEFINITIONS. (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 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 by Acts 2007, 80th Leg., R.S., Ch. 110, Sec. 14,
eff. September 1, 2007.
(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 152;
(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), (27) Repealed by Acts 1999, 76th Leg., ch. 344, Sec.
9.002(1), eff. May 29, 1999.
(28) Repealed by Acts 2007, 80th Leg., R.S., Ch. 237, Sec. 80,
eff. September 1, 2007.
(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 by Acts 2007, 80th Leg., R.S., Ch. 237, Sec. 80,
eff. September 1, 2007.
(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 by Acts 2007, 80th Leg., R.S., Ch. 237, Sec. 80,
eff. September 1, 2007.
(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.
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.002, 9.002, eff.
Sept. 1, 1999; Acts 2001, 77th Leg., ch. 528, Sec. 1, eff. Sept.
1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
110, Sec. 14, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
217, Sec. 1, eff. May 25, 2007.
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 2, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 80, eff. September 1, 2007.
Sec. 31.003. BANKING RULES. (a) The finance commission may
adopt rules to accomplish the purposes of this subtitle and
Chapters 11, 12, and 13, 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.
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 528, Sec. 2, eff. Sept. 1,
2001.
Sec. 31.004. UNAUTHORIZED BANKING. (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).
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.005. IMPLYING THAT PERSON IS BANK. (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 depository institution or
other entity 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.003, eff. Sept.
1, 1999.
Sec. 31.006. LIABILITY OF DEPOSITORY INSTITUTION DIRECTORS AND
PERSONNEL. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 3, eff. September 1, 2007.
Sec. 31.007. EXEMPTION OF BANK DIRECTORS AND PERSONNEL FROM
SECURITIES LAW. (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
(Article 581-1 et seq., Vernon's Texas Civil Statutes) 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.004, eff. Sept.
1, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 4, eff. September 1, 2007.
SUBCHAPTER B. REGULATION OF BANKING BY BANKING COMMISSIONER
Sec. 31.101. GENERAL DUTIES OF 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.50, eff. Sept. 1,
1999; Acts 2001, 77th Leg., ch. 412, Sec. 2.01, eff. Sept. 1,
2001.
Sec. 31.102. ISSUANCE OF INTERPRETIVE STATEMENTS. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.005, eff. Sept.
1, 1999.
Sec. 31.103. ISSUANCE OF OPINION. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.005, eff. Sept.
1, 1999; Acts 2001, 77th Leg., ch. 412, Sec. 2.02, eff. Sept. 1,
2001.
Sec. 31.104. EFFECT OF INTERPRETIVE STATEMENT OR OPINION. 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.105. EXAMINATION REQUIRED. (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 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.
(d) Disclosure of information to the banking commissioner
pursuant to an examination request 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.03, eff. Sept.
1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
110, Sec. 2, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 5, eff. September 1, 2007.
Reenacted by Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 10.002, eff. September 1, 2009.
Sec. 31.106. COST OF REGULATION. Each state bank shall pay,
through the imposition and collection of fees established by the
finance commission under Section 31.003(a)(4):
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.107. REGULATION AND EXAMINATION OF RELATED ENTITIES.
(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 performance of data processing, electronic fund
transfers, or other bank services on behalf of a state bank by a
third-party contractor, other than a national bank.
(b) The banking commissioner may collect a fee from an examined
contractor 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 contractor.
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.108. CALL REPORT; PENALTY. (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:
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER C. ADMINISTRATIVE PROCEDURE
Sec. 31.201. BANKING COMMISSIONER HEARING. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.04, eff. Sept.
1, 2001.
Sec. 31.202. APPEAL OF BANKING COMMISSIONER DECISION OR ORDER.
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 hearing
directly to the District Court of Travis County as provided by
Section 31.204 or, at the option of the appellant, to the finance
commission for review.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.203. APPEAL TO FINANCE COMMISSION. (a) In an appeal to
the finance commission, the finance commission shall consider the
questions raised by the application for review and may also
consider additional matters pertinent to the appeal.
(b) An order of the banking commissioner continues in effect
pending review unless the order is stayed by the finance
commission. The finance commission may impose any condition
before granting a stay of the appealed order. The finance
commission may not be required to accept additional evidence or
hold an evidentiary hearing if a hearing was held and a record
made before the banking commissioner. The finance commission
shall remand the proceeding to the banking commissioner for the
purpose of receiving any additional evidence the finance
commission chooses to consider. A matter made confidential by law
must be considered by the finance commission in a closed hearing.
(c) A hearing before the finance commission may be conducted by
a hearing officer on behalf of the finance commission.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.204. DIRECT APPEAL TO COURT OR APPEAL OF FINANCE
COMMISSION ORDER. A person affected by a final order of the
banking commissioner who elects to appeal directly to district
court, or a person affected by a final order of the finance
commission under this chapter, may appeal the final order by
filing a petition for judicial review in the District Court of
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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER D. CONFIDENTIALITY OF INFORMATION
Sec. 31.301. DISCLOSURE BY DEPARTMENT PROHIBITED. (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 or a present, former, or
prospective shareholder, officer, director, affiliate, or service
provider of a financial institution, 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.05, eff. Sept.
1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 6, eff. September 1, 2007.
Sec. 31.302. DISCLOSURE TO FINANCE COMMISSION. 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.303. DISCLOSURE TO OTHER AGENCIES. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 528, Sec. 3, eff. Sept. 1,
2001.
Sec. 31.304. OTHER DISCLOSURE PROHIBITED; PENALTY. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.305. CIVIL DISCOVERY. 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.06, eff. Sept.
1, 2001.
Sec. 31.306. INVESTIGATIVE INFORMATION. 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.307. EMPLOYMENT INFORMATION. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 31.308. SHAREHOLDER INSPECTION RIGHTS. (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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 7, eff. September 1, 2007.