. .
The Attorney General of Texas
August 20, 1982
MARK WHITE
Attorney General
Honorable James A. Gray Opinion No. ML'-505
Supreme Court Building
Burleson County Attorney
P. 0. BOX 12546
Caldwell, Texas 77836 Re: Selection of county
Austin. TX. 76711- 2546
5121475-2501 depository owned by holding
Telex 9101674-1367 company in which county judge
Telecopier 512/475-0266 owns stock
Dear Mr. Gray:
1607 Main St., Suite 1400
Dallas. TX. 75201-4709
2141742-6944 You ask whether a bank is disqualified from serving as a county
depository where the county judge is an officer and director of the
bank and owns less than 1% of the issued and outstanding shares of the
4624 Alberta Ave.. Suite 160
E, Paso, TX. 79905.2793
bank's capital stock. You also ask if the same bank would be
9151533.3464 disqualified from serving as county depository where the county judge
is an officer and director of the holding company which recently
acquired the bank. The judge owns 17% of the capital stock of the
1220 Dallas Ave., Suite 202
holding company.
tiouston, TX. 77002-6986
7131650-0666
Article 2529c, V.T.C.S., governs the issues raised by your
opinion request,,and it provides, in pertinent part:
606 6,oadw.w Suite 312
Lubbock. TX. 79401.3479
A bank shall not be disqualified from bidding
8061747-5238
and becoming the depository for any agency or
political subdivision of the state by reasm of
4309 N. Tenth, Suite 6 having one or more officers, directors or
bkA,len, TX. 78501-1665 stockholders of said bank who individually or
5121662-4647
collectively own or have a beneficial interest in
not more than 10 percent of the bank's outstanding
200 Main Plaza. Suite 400 capital stock, and at the same time serves as a
San Antonio, TX. 762052797 member of the board, commission, or other body
512/225-4191 charged by law with the duty of selecting the
depository of such state agency or political
An Equal opportunityi
subdivision; provided, however, that said bank
Affirmative Action Employer must be selected as the depository by a majority
vote of the members of the board, commission, or
other body of such agency or political subdivision
and no member thereof who is an officer, director
or stockholder of the bank shall vote or
participate in the proceedings.
p. 1819
I I
Honorable James A. Gray - Page 2 (Mw-505)
V.T.C.S. art. 2529c, 52. Attorney General Opinion H-596 (1975) is
dispositive of your first inquiry. Therein, we determined that, in
accordance with article 2529c, section 2, V.T.C.S., a bank could serve
as county depository where the county judge owned stock in the bank
and served on the board of directors if the members of the
commissioners court did not collectively own more than 10% of the bank
stock and interested members did not participate in the vote. YOU
have not stated whether any other member of the commissioners court
owns or has a beneficial interest in the stock of the bank in
question. Assuming that the county judge is the only member of the
commissioners court with an interest in the bank stock, his ownership
of less than 1% of the outstanding capital stock clearly would not
serve to disqualify the bank so long as the county judge does not
participate in the selection process. If other members of the
commissioners court also have an interest in the bank stock, the bank
would not be disqualified unless the collective interest of the
members exceeds 10%.
Your inquiry regarding the county judge's ownership of 17% of the
outstanding capital stock of the bank holding company is not
susceptible to a definite answer. If the bank holding company is a
one-bank holding company where the bank is the corporation's sole
asset, the likelihood is that the county judge then has a "beneficial
interest" in more than 10% of the bank's outstanding stock. In such a
case, the bank would clearly be disqualified from serving as a county
depository. If the bank holding company is a multi-bank holding
company, the judge's beneficial interest would have to be determined
on an individual basis.
SUMMARY
A bank is not disqualified from serving as a
county depository where an officer, director, and
1% shareholder of the bank is the county judge, so
long as the county judge does not participate in
the voting on the selection of the county
depository and his interest in the bank stock
combined with that of any other members of the
commissioners court does not exceed 10%. The bank
may be disqualified by virtue of the county
judge's ownership of 17% of the outstanding
capital stock of the bank holding company,
depending upon the judge's resulting "beneficial
interest" in the bank stock.
MARK WHITE
Attorney General of Texas
p. 1820
Honorable James A. Gray - Page 3 (MW-505)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Catherine B. Fryer
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison. Chairman
Jon Bible
Catherine B. Fryer
Rick Gilpin
Patricia Hino-josa
Jim Moellinger
Bruce Youngblood
P. 1821