OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
QROVER SELLERS
ATTORNEY QENERAL
Eonorable H. A. 3amison
Commissioner of Banking
We have your lette
ciation until such
, after which the Coa-
ting inform the State
oonsiderationof this section of the
law it has been our thought that the same might well
be Invoked in respect to any condition whioh the Bank-
ing Board 'mightbe disposed to speoify, provided such
oondition bears a direct relationshipto any one or all
of the five specifio faotors which the Board is required
to determine in the affirmativeif it approves any ap-
plication for ohartero
.
. -
Honorable II.A. Jamison, wge 2
,
We should like for your opinion to advise
speoificallyas to whether or not the State Bank-
ing Board may require applicants under any given
charter to increase their capital structure in
whatever amount as may be deemed adequate by the
Banking Board, and whether or not the Banking Board
might speoify as a conditionthat the proposed bank
be admitted as a member of the Federal Deposit In-
surance Corporationas a oondition preoedent to
engaging in the banking business?
"Furt,herws should like advice as to whether
or not such a condition or conditions, if imposed
by the Banking Board might be rescinded by it on
its own motion if it should be determinedthat oom-
plianoe with suoh conditionor conditions was wholly
beyond the control of the incorporators*"
+zd ‘~’Subsection ti1, Article 5
43rd Legislaturereads as follows:
of Chapter 9i;'AotS of
,,
"~'
K' .~ _..~
: '.
: ~~wApplicants shall file with the Commissioner
an applicationfor charter on suoh form and inolude
therein suoh informationas may be prescribed by the
Commissioner,and the proposed articles of assooia-
tion; shall pay an investigationfee as prescribed
under Artiole 3921, Revised Statutes of Texas, 1925,
and deposit with the Commissioneroharter fees as
prescribedby law. The Commissionershall thereupon
make a thorough investigationand report his findings
to the State Banking Board.,
"In uonsideringany such application,the State
Banking Board shall, after hearing, determine whether
or not:
"1. A pub110 neoessitg exists for the'pro- ~
posed bank. 1
.
'2. The proposed capital structure is adequate.
?3. The volume of business in the 'oomunity~
where suoh proposed bank is to be establishedis
such as to indicate profitable operation of the
proposed bank. ..
. .
Honorable H. A. Jamison, page 3
,.~, . *4. The proposed officers and directors
have sufficientbanking experience, ability and
standing to render success of the proposed bank
probable*
"5. The applioants are acting in good faith.
. *Should the State Banking Board determine
sng,of the above issue8 adversely to the applicants,
it shall reject the application, Otherwise such
Board shall approve the application and the Commis-
sioner she&l, when the capital‘has been paid in in
oash and.the franchise tax paid, deliver to the in-
oorporatorsa certified copy of the articles of as-
eooiation, and the bank shall come into corporate
existence. Provided, however, that the State Bank-
ing Board may make its approval of any application
oonditional,and in such event shall set out such
condition in a resolution granting the oharter, and
the Commissionershall not deliver the certified
oopy of the articles of association until such con-
dition has been met, after which the Commissioner
shall in writing inform the State Banking Board as
to compliancewith suoh condition and delivery of
the articles of association."
It is clear.from the foregoing that the Banking Board
may make its approval conditional,but we think the condition im-
posed would have to be germane to one or more of the rive factors
set out in the foregoing article. The Board oould require the
applioantsto increase the capital structure,since tht would
be germane,tothe second raotor mentioned in the law. The Board..
oould refuse to grant the charter if it deemed the oapitalin8uffi-
cient, and hence could impose a condition requiring applicants to
inorease same, if the Board deemed the capital in8ufficient, But
.,.thatwould not be true with respect to a condition that the pro-,
Dosed bank be admitted as a member of the Federal Deposit Insur-
anoe Corporation. The Board would not have authority to reject
sn application if the applicants should refuse to apply for member-
HonorableB. A. Jamison,Page 4
ship therein, and, therefore, oould pot impose suoh a oondition
upon the applicantsfor a charter.
In answer to your lest question you are advisedthat
the Board, In its discretion, may resoind any oondition imposed
w it when it determinesthat compliancetherewith,
is wholLy
beyond the controlof the incorporators.
Yours
. very truly .
ATl’ORNBY GE- Oi !PEXA!3