CHAPTER 96. SUPERVISION AND REGULATION

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FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE C. SAVINGS BANKS

CHAPTER 96. SUPERVISION AND REGULATION

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 96.001. GENERAL DUTIES. The Department of Savings and

Mortgage Lending and the commissioner shall regulate savings

banks and subsidiaries of savings banks operating under this

subtitle.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.039, eff. September 1, 2007.

Sec. 96.002. ADOPTION OF RULES. (a) The finance commission may

adopt rules necessary to supervise and regulate savings banks and

to protect public investment in savings banks, including rules

relating to:

(1) the minimum amounts of capital required to incorporate and

operate as a savings bank, which may not be less than the amounts

required of corresponding national banks;

(2) the fees and procedures for processing, hearing, and

deciding applications filed with the commissioner or the

Department of Savings and Mortgage Lending under this subtitle;

(3) the books and records that a savings bank is required to

keep and the location at which the books and records are required

to be maintained;

(4) the accounting principles and practices that a savings bank

is required to observe;

(5) the conditions under which records may be copied or

reproduced for permanent storage before the originals are

destroyed;

(6) the form, content, and time of publication of statements of

condition;

(7) the form and content of annual reports and other reports

that a savings bank is required to prepare and publish or file;

(8) the manner in which assets, liabilities, and transactions in

general are to be described when entered in the books of a

savings bank, so that the entry accurately describes the subject

matter of the entry;

(9) the conditions under which the commissioner may require an

asset to be charged off or reserves established by transfer from

surplus or paid-in capital because of depreciation of or

overstated value of the asset;

(10) the change of control of a savings bank;

(11) the conduct, management, and operation of a savings bank;

(12) the withdrawable accounts, bonuses, plans, and contracts

for savings programs;

(13) the merger, consolidation, reorganization, conversion, and

liquidation of a savings bank;

(14) the establishment of an additional office or the change of

office location or name of a savings bank;

(15) the requirements for a savings bank's holding companies,

including those relating to:

(A) registration and periodic reporting of a holding company

with the commissioner; and

(B) transactions between a holding company, an affiliate of a

holding company, or a savings bank; and

(16) the powers of a savings bank to make loans and investments

that contain provisions reasonably necessary to ensure that a

loan made by a savings bank is consistent with sound lending

practices and that the savings bank's investment will promote the

purposes of this subtitle, including provisions governing:

(A) the type of loans and the conditions under which a savings

bank may originate, make, or sell loans;

(B) the conditions under which a savings bank may purchase or

participate in a loan made by another lender;

lender;

(D) the conditions under which a savings bank may lend money on

the security of a loan made by another person;

(E) the conditions under which a savings bank may pledge loans

held by it as collateral for borrowing by the savings bank;

(F) the conditions under which a savings bank may invest in

securities and debt instruments;

(G) the documentation that a savings bank must have in its files

at the time of funding or purchase of a loan, an investment, or a

participation in a loan;

(H) the form and content of statements of expenses and fees and

other charges that are paid by a borrower or that a borrower is

obligated to pay;

(I) the title information that must be maintained;

(J) the borrower's insurance coverage of property securing a

loan;

(K) an appraisal report;

(L) the financial statement of a borrower;

(M) the fees or other compensation that may be paid to a person

in connection with obtaining a loan for a savings bank, including

an officer, director, employee, affiliated person, consultant, or

third party;

(N) the conditions under which the savings bank may advance

money to pay a tax, assessment, insurance premium, or other

similar charge for the protection of the savings bank's interest

in property securing the savings bank's loans;

(O) the terms under which a savings bank may acquire and deal in

real property;

(P) the valuation on a savings bank's books of real property

held by the savings bank;

(Q) the terms governing the investment by a savings bank in a

subsidiary, the powers that may be exercised by a subsidiary, and

the activities that may be engaged in by a subsidiary; and

(R) any other matter considered necessary to administer each

type of transaction.

(b) A savings bank or its subsidiary may not engage in a

transaction in violation of a rule adopted under this subtitle.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2001, 77th Leg., ch. 867, Sec. 61, eff. Sept. 1,

2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.040, eff. September 1, 2007.

SUBCHAPTER B. EXAMINATIONS AND REPORTS

Sec. 96.051. ANNUAL AUDIT. (a) Not later than the 90th day

after the date its fiscal year closes, a savings bank shall

obtain an audit by an independent accounting firm that is a

member of the American Institute of Certified Public Accountants

or its successor.

(b) A copy of the audit and all correspondence reasonably

related to the audit shall be provided to the commissioner.

implement this section.

(d) An audit is not required if the savings bank:

(1) received at its most recent examination a composite rating

of 1 or 2 on the CAMEL financial institution rating scale; or

(2) had at the beginning of its current fiscal year consolidated

assets of $500 million or less.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2001, 77th Leg., ch. 867, Sec. 62, eff. Sept. 1,

2001.

Sec. 96.053. REPORTS. (a) Before March 1 of each year, a

savings bank shall provide to the commissioner on a form to be

prescribed and furnished by the commissioner a written report of

its affairs and operations, including a complete statement of its

financial condition with a statement of income and expenses since

its last annual report under this section. The report must be

signed by the president, vice president, or secretary of the

savings bank.

(b) A savings bank shall make any other report the commissioner

may require. An additional report must be:

(1) signed in the same manner as the annual report;

(2) in the form the commissioner prescribes; and

(3) filed on the date the commissioner prescribes.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 5.19, eff. September 1, 2005.

Sec. 96.054. EXAMINATIONS. (a) The commissioner shall

periodically examine the affairs of each savings bank and its

subsidiaries and the transactions of any holding company that are

related to the savings bank subsidiaries of the holding company.

(b) An examination under this section may be performed in

conjunction with an examination by the Federal Deposit Insurance

Corporation or another federal depository institutions regulatory

agency having jurisdiction over a savings bank. The commissioner

may accept an examination made by an appropriate banking agency

as a substitute for an examination required by this section.

conducted under this section shall be furnished promptly to the

savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.055. ADDITIONAL EXAMINATIONS. (a) The commissioner at

the saving bank's cost may perform an additional examination or

audit or devote extraordinary attention to a savings bank's

affairs if the commissioner determines the conditions of the

savings bank justify the examination, audit, or attention.

(b) On completion of a report, a copy of an examination or audit

report conducted under this section shall be furnished promptly

to the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.056. ACCESS TO BOOKS AND RECORDS. The commissioner, a

deputy commissioner, or an examiner or auditor of the

commissioner shall be given free access to:

(1) the books and records of a savings bank or a subsidiary or

holding company of a savings bank; and

(2) the books and records relating to a savings bank's business

kept by an officer, agent, or employee of the savings bank or the

subsidiary or holding company of the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.057. SUBPOENA; ADMINISTRATION OF OATH OR AFFIRMATION.

(a) In an examination conducted under this subchapter, the

commissioner, the deputy commissioner, or an examiner or auditor

of the commissioner may:

(1) subpoena witnesses;

(2) administer an oath or affirmation to a person, including a

director, officer, agent, or employee of a savings bank or a

savings bank's subsidiary or holding company; or

(3) require and compel by subpoena the production of documents,

including records, books, papers, and contracts.

(b) The commissioner may apply to a district court in Travis

County for an order requiring a person to obey a subpoena or to

appear or answer questions in connection with the examination.

court finds good cause to issue the subpoena or to take

testimony.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER C. SUPERVISORY INTERVENTION

Sec. 96.101. INTERVENTION FOR VIOLATIONS AND UNSAFE AND UNSOUND

PRACTICES. (a) The commissioner may intervene in the affairs of

a savings bank if the savings bank or a person who participates

in the affairs of the savings bank or a subsidiary or holding

company of the savings bank:

(1) engages in or is about to engage in an unsafe and unsound

practice in conducting the affairs of the savings bank; or

(2) violates or is about to violate:

(A) the articles of incorporation or bylaws of the savings bank;

(B) a law or supervisory order applicable to the savings bank;

has imposed on the savings bank by written order, directive, or

agreement.

(b) The commissioner may intervene in the affairs of a savings

bank if a person who participates in the affairs of the savings

bank or a subsidiary or holding company of the savings bank

violates or is about to violate an order or instruction of the

commissioner or a conservator or supervisor in charge of the

savings bank's affairs.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.102. INTERVENTION FOR FILING INAPPROPRIATE INFORMATION.

The commissioner may intervene in the affairs of a savings bank

if the savings bank or a person who participates in the affairs

of the savings bank or a subsidiary or holding company of the

savings bank files materially false or misleading information in

a filing required by Subchapter L, Chapter 92.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.103. INTERVENTION FOR ACTIVITY RESULTING IN ACTUAL OR

POTENTIAL FINANCIAL LOSS. (a) The commissioner may intervene in

the affairs of a savings bank if a person who participates in the

affairs of the savings bank or a subsidiary or holding company of

the savings bank commits or is about to commit:

(1) a fraudulent or criminal act in conducting the affairs that

may cause the savings bank or a subsidiary of the savings bank to

become or be in danger of becoming insolvent;

(2) an act that threatens immediate or irreparable harm to the

public or the savings bank, a subsidiary of the savings bank, or

the deposit account holders or creditors of the savings bank; or

(3) a breach of fiduciary duty that results in actual or

probable substantial financial losses or other damages to the

savings bank or a subsidiary of the savings bank or that would

seriously prejudice the interest of the deposit account holders

or holders of other security issued by the savings bank.

(b) The commissioner may intervene in the affairs of a savings

bank if the savings bank:

(1) is insolvent;

(2) is in imminent danger of insolvency; or

(3) makes or is about to make:

(A) a loan the value of the security for which is materially

overstated; or

(B) an investment the market value of which is materially

overstated.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.104. INTERVENTION RELATING TO EXAMINATION OF AFFAIRS.

(a) The commissioner may intervene in the affairs of a savings

bank if a person who participates in the affairs of the savings

bank or a subsidiary or holding company of the savings bank:

(1) refuses or is about to refuse to submit to interrogation

under oath by the commissioner or the commissioner's agent with

respect to the savings bank's affairs; or

(2) materially alters, conceals, removes, or falsifies or is

about to materially alter, conceal, remove, or falsify a book or

record of the savings bank or a subsidiary or holding company of

the savings bank.

(b) The commissioner may intervene in the affairs of a savings

bank if the savings bank:

(1) fails to maintain books and records from which the true

financial condition of the savings bank or the state of the

savings bank's affairs can be determined; or

(2) refuses to direct a person having possession of the books,

papers, records, or accounts of the savings bank or the savings

bank's subsidiary to permit the commissioner or the

commissioner's representative to examine those documents or

accounts.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.105. TEMPORARY SUPERVISORY ORDER. (a) If the

commissioner has reasonable cause to believe that one or more

grounds for intervention under Sections 96.101-96.104 exist or

are imminent, the commissioner may issue without notice and

hearing one or more of the following types of temporary

supervisory orders to correct and eliminate the grounds for

supervisory action:

(1) an order to cease and desist from continuing a particular

action, an order to take affirmative action, or both;

(2) an order suspending or prohibiting a person who participates

in the affairs of the savings bank from further participating in

the affairs of the savings bank or another savings bank;

(3) an order requiring divestiture of control of a savings bank

obtained under Subchapter L, Chapter 92;

(4) an order requiring a person who participates in the affairs

of the savings bank or another savings bank to forfeit and pay an

administrative penalty in an amount of not more than $25,000; or

(5) an order placing the affairs of the savings bank under the

control of a conservator designated in the order, who may take

possession and control of the books, records, assets,

liabilities, and business of the savings bank and manage the

savings bank under the direction of the commissioner.

(b) An order under this section:

(1) must contain a reasonably detailed statement of the facts on

which the order is based; and

(2) takes effect when issued.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.106. SERVICE OF TEMPORARY SUPERVISORY ORDER. (a) A

temporary supervisory order may be served by personal delivery by

an agent of the commissioner or by certified or registered mail.

(b) Service is complete when an officer or director of the

savings bank receives the order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.107. HEARING ON TEMPORARY SUPERVISORY ORDER; FINAL

ORDER. (a) A temporary supervisory order issued under Section

96.105 becomes final and unappealable on the 15th day after the

date on which it is issued unless before that day the savings

bank or a person affected by the order requests a hearing before

the commissioner to determine whether the order should be

vacated, made permanent, or modified.

(b) The commissioner shall set the hearing to be held not

earlier than the 10th day or later than the 30th day after the

date of the request. The hearing must be held at the offices of

the Department of Savings and Mortgage Lending.

that vacates the temporary order or makes the temporary order

permanent in its original or a modified form that is consistent

with the facts found by the commissioner.

(d) The commissioner shall enter the final order not later than

the 15th day after the date on which the hearing is completed.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.041, eff. September 1, 2007.

Sec. 96.108. PLAN OF OPERATION OF SAVINGS BANK AFTER ORDER OF

TEMPORARY CONSERVATORSHIP. (a) Before or during a hearing under

Section 96.107 on a temporary supervisory order placing a savings

bank under the control of a conservator, the board of the savings

bank may present to the commissioner a plan to continue the

operation of the savings bank in a manner that will correct or

eliminate the grounds for the order.

(b) If the commissioner approves the plan or a modification of

the plan, the commissioner shall vacate the order and place the

savings bank under conservatorship, conditioned on the

implementation and diligent prosecution of the plan.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.109. ENFORCEMENT OF SUPERVISORY ORDER. (a) The

commissioner, after giving notice, may assess against a savings

bank or another person designated in a final supervisory order

who violates the order, or both, an administrative penalty of not

more than $1,000 each for each day of the violation. The savings

bank may not reimburse or indemnify a person for any part of the

penalty.

(b) In addition to any other remedy provided by law, the

commissioner may institute in a district court in Travis County:

(1) a suit for injunctive relief to stop or prevent a violation

of a supervisory order; or

(2) a suit for injunctive relief and to collect the

administrative penalty.

injunctive relief granted under this section.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.110. STAY OF SUPERVISORY ORDER. (a) A temporary

supervisory order may not be stayed pending a hearing unless the

commissioner orders a stay.

(b) A final supervisory order may not be stayed pending judicial

review unless the reviewing court orders a stay for good cause.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.111. DISCLOSURE OF INFORMATION IN SUPERVISORY ORDER;

CONFIDENTIALITY. (a) The commissioner shall report promptly to

the finance commission when a supervisory order is issued under

this chapter. The commissioner shall furnish information about a

savings bank or person as the finance commission may require in a

closed meeting. All information discussed in the closed meeting

is confidential.

(b) Except as provided by Subsection (c) or (d), information

contained in a temporary or final supervisory order or a notice,

correspondence, or other record relating to the order is

confidential.

commissioner, may disclose the information described by

Subsection (b) in a hearing or judicial proceeding under Section

96.107, 96.109, or 96.110 or in a proceeding to assert a defense

under Section 96.403.

(d) The commissioner may disclose the information described by

Subsection (b) to a department, agency, or instrumentality of

this or another state or the United States if the commissioner

determines that disclosure is necessary or proper to enforce the

laws of this or another state or the United States.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER D. CONSERVATORSHIP

Sec. 96.151. PLACEMENT OF SAVINGS BANK UNDER CONSERVATORSHIP.

If the commissioner does not approve a plan to continue the

operation of a savings bank under Section 96.108, the conservator

shall continue to manage the affairs of the savings bank unless

the temporary conservatorship order is modified or vacated:

(1) by order of the commissioner; or

(2) as a result of judicial review.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.152. DUTIES OF CONSERVATOR. (a) The conservator and

any deputy or assistant conservator appointed by the

commissioner, under the direction and supervision of the

commissioner, shall:

(1) take possession and control of the books, records, property,

assets, liabilities, and business of the savings bank; and

(2) conduct the business and affairs of the savings bank.

(b) The conservator shall:

(1) remove the causes and conditions that made the

conservatorship necessary; and

(2) report to the commissioner as required by the commissioner.

assets or property of the savings bank, including a claim or

cause of action that belongs to or may be asserted by the savings

bank. The conservator may deal with that property in the capacity

of conservator.

(d) The conservator may file, prosecute, or defend a suit

brought by or against the savings bank if the conservator

considers it necessary to protect the interested party or

property affected by the suit.

(e) A suit filed by the conservator under Subsection (c) must be

brought in Travis County.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.153. TERM OF CONSERVATOR. The conservator shall serve

until the purposes of the conservatorship are accomplished.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.154. TRANSFER OF MANAGEMENT OF REHABILITATED SAVINGS

BANK. If the savings bank is rehabilitated to the satisfaction

of the commissioner, the conservator shall return the management

of the savings bank to the savings bank's board under terms that

are reasonable and necessary to prevent a recurrence of the

conditions that created the need for conservatorship.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.155. SCOPE OF AUTHORITY OF OTHER PERSONS DURING

CONSERVATORSHIP. During the conservatorship, a person who

participates in the affairs of the savings bank shall act

according to the conservator's instructions and may exercise only

the authority that the conservator expressly grants.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.156. LIMITING ORDER DURING CONSERVATORSHIP. (a) During

a conservatorship, the commissioner by order may impose

limitations on withdrawals from deposit accounts if the

commissioner determines that the interests of deposit account

holders and creditors of the savings bank are best protected by

the limitations.

(b) An order under this section:

(1) must detail the limitations imposed;

(2) must contain a reasonably detailed statement of the facts on

which the order is based; and

(3) becomes effective when served on the conservator.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.157. SERVICE OF LIMITING ORDER. (a) A limiting order

may be served by personal delivery by an agent of the

commissioner or by certified or registered mail.

(b) Service is complete when the conservator receives the order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.158. EFFECT OF LIMITING ORDER. (a) Immediately after

receiving a limiting order, the conservator shall post a copy of

the order at the main entrance of the savings bank.

(b) A deposit account withdrawal that violates a limiting order

may not be permitted after the conservator posts the order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.159. HEARING ON LIMITING ORDER; FINAL ORDER. (a) The

limiting order becomes final and unappealable on the 15th day

after the date on which the order is posted as provided by

Section 96.158 unless before that day at least 20 percent of the

total number of deposit account holders affected by the order

request a hearing before the commissioner to determine whether

the order should be vacated, made permanent, or modified.

(b) The commissioner shall set the hearing to be held not

earlier than the 10th day or later than the 30th day after the

date of the request. The hearing must be held at the offices of

the Department of Savings and Mortgage Lending.

that vacates the limiting order or makes the limiting order

permanent in its original or a modified form consistent with the

facts found by the commissioner.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.042, eff. September 1, 2007.

Sec. 96.160. STAY OF LIMITING ORDER. (a) A limiting order may

not be stayed pending a hearing unless the commissioner orders a

stay.

(b) A final order may not be stayed pending judicial review

unless the reviewing court orders a stay for good cause.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.161. COST OF CONSERVATORSHIP. (a) The commissioner

shall determine the cost of the conservatorship.

(b) The cost of the conservatorship shall be paid from the

savings bank's assets as the commissioner directs.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.162. VENUE. A suit filed against a savings bank or its

conservator while a conservatorship order is in effect must be

brought in Travis County.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. VOLUNTARY SUPERVISORY CONTROL

Sec. 96.201. PLACEMENT OF SAVINGS BANK UNDER VOLUNTARY

SUPERVISORY CONTROL. (a) A savings bank's board may consent to

the commissioner's placement of the savings bank under

supervisory control.

(b) The commissioner may appoint the supervisor and one or more

deputy supervisors.

the supervisory control was imposed are corrected.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.202. POWERS OF SUPERVISORS. A supervisor or deputy

supervisor has the powers of a conservator under Subchapter D and

any other power established by agreement between the commissioner

and the savings bank's board of directors.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.203. COST OF SUPERVISORY CONTROL. The cost of the

supervisory control of a savings bank shall be set by the

commissioner and paid by the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER F. CLOSING

Sec. 96.251. CLOSING OF SAVINGS BANK BY BOARD RESOLUTION. A

savings bank's board, by resolution and with the commissioner's

consent, may close the savings bank and tender to the

commissioner for disposition as provided by this subchapter the

assets and all the affairs of the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.252. CLOSING OF SAVINGS BANK BY COMMISSIONER'S ORDER.

The commissioner or the commissioner's representative may close a

savings bank if the commissioner determines after an examination

that:

(1) the interests of the deposit account holders and creditors

of the savings bank are jeopardized because of:

(A) the savings bank's insolvency or imminent insolvency; or

(B) a substantial dissipation of the savings bank's assets or

earnings because of a violation of a law or an unsafe or unsound

practice; and

(2) it is in the best interests of the deposit account holders

and creditors to close the savings bank and liquidate the savings

bank's assets.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.253. EFFECT OF CLOSING. (a) On closing a savings bank

under this subchapter, the commissioner may:

(1) liquidate the savings bank as provided by Subchapter G; or

(2) tender the savings bank's assets and all the savings bank's

affairs to the Federal Deposit Insurance Corporation and appoint

the Federal Deposit Insurance Corporation as receiver or

liquidating agent to act in accordance with this chapter or

federal law.

(b) The Federal Deposit Insurance Corporation, on accepting the

tender and appointment prescribed by Subsection (a)(2), may:

(1) act without bond or other security as to the appointment;

and

(2) without court supervision, exercise any right, power, or

privilege provided by the laws of this state to a receiver or

liquidating agent, as applicable, and any applicable right,

power, or privilege available under federal law.

(a)(2), possession of and title to all the assets, business, and

property of the savings bank pass to the Federal Deposit

Insurance Corporation without the execution of any instrument

transferring title or right of use.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.254. HEARING ON COMMISSIONER'S ORDER. (a) Not later

than the second day, excluding legal holidays, after the date on

which the commissioner closes a savings bank under Section

96.252, the savings bank, by resolution of its board, may sue in

a district court of Travis County to prohibit the commissioner

from taking further action under this subchapter.

(b) The court may restrain the commissioner from taking further

action until a hearing on the suit is held. If the court

restrains the commissioner, the court shall instruct the

commissioner to hold the assets and affairs of the savings bank

in the commissioner's possession until disposition of the suit.

On receipt of this instruction, the commissioner shall refrain

from taking further action, other than a necessary or proper

action approved by the court to prevent loss or depreciation in

the value of the assets.

enter a judgment prohibiting or refusing to prohibit the

commissioner from proceeding under this subchapter.

(d) The commissioner, regardless of the judgment entered by the

court or any supersedeas bond filed, retains possession of the

savings bank's assets until final disposition of any appeal of

the judgment.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER G. LIQUIDATION

Sec. 96.301. LIQUIDATION OF SAVINGS BANK. (a) If the

commissioner doubts that a savings bank subject to a

conservatorship order can be rehabilitated, the commissioner may

close the savings bank as provided by Subchapter F or set a

hearing to determine whether the savings bank should be

liquidated. Not later than the 10th day before the hearing date,

notice of the hearing shall be given by certified mail to the

officers and directors of the savings bank and by publication in

a newspaper of general circulation in the county in which the

principal office of the savings bank is located.

(b) If the commissioner closes a savings bank or finds after a

hearing under Subsection (a) that the savings bank cannot be

rehabilitated and that it is in the public interest and the best

interests of the deposit account holders and creditors of the

savings bank that the bank be closed and its assets liquidated,

the commissioner by liquidation order may appoint a liquidating

agent and dissolve the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.302. REMOVAL OR REPLACEMENT OF LIQUIDATING AGENT. (a)

The commissioner, with or without cause, may remove a liquidating

agent and appoint another agent.

(b) If a liquidating agent resigns, dies, or otherwise becomes

unable to serve, the commissioner shall promptly appoint another

agent.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.303. DUTIES OF LIQUIDATING AGENT. (a) Under the

commissioner's supervision, the liquidating agent shall:

(1) receive and take possession of the books, records, assets,

and property of the savings bank;

(2) sell, enforce collection of, and liquidate the assets and

property of the savings bank;

(3) sue in the name of the liquidating agent or the savings

bank;

(4) defend an action brought against the liquidating agent or

the savings bank;

(5) receive, examine, and pass on a claim brought against the

savings bank, including a claim of a depositor;

(6) make distributions to and pay creditors, deposit account

holders, shareholders, and members of the savings bank as their

interests appear;

(7) from time to time make a ratable liquidation dividend on

claims that have been proved to the satisfaction of the

liquidating agent or that have been adjusted by a court;

(8) after the savings bank's assets have been liquidated, make

further liquidation dividends on claims previously proved or

adjusted; and

(9) execute documents and perform any other action that the

liquidating agent considers necessary or desirable for the

liquidation.

(b) For purposes of making a further liquidation dividend under

Subsections (a)(7) and (8), the liquidating agent may accept the

statement of an amount due a claimant as shown on the savings

bank's books and records instead of a formal proof of claim on

the claimant's behalf.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.304. NOTICE. (a) Under the commissioner's supervision,

the liquidating agent shall give notice to creditors and deposit

account holders directing them to present and prove their claims

and requiring them to file a written proof of claim at the

address designated in the notice.

(b) The notice shall be published once a week for three

successive weeks in a newspaper of general circulation in each

county in which the savings bank maintained an office or branch

to transact business on the date the savings bank ceased

unrestricted operations.

notice is first published, the liquidating agent shall mail a

similar notice to each depositor and creditor named in the books

of the savings bank at the address shown in those books.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.305. PRESENTATION OF CLAIM. (a) To be entitled to

priority, each person asserting a claim against a savings bank

being liquidated under this subchapter must present the claim in

writing to the commissioner or the liquidating agent, at the

address designated in the notice under Section 96.304 on or

before the last day of the 18th month after the date the notice

is first published.

(b) The claim must:

(1) contain a statement of the facts supporting the claim;

(2) set out any right of payment priority or other specific

right asserted by the claimant; and

(3) be signed and sworn to by the claimant.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.306. PRIORITY OF CLAIMS. When a savings bank is

liquidated, claims for payment have the same priority that

similar claims have when a federal savings bank is liquidated

under federal law.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.307. ACTION ON CLAIM. (a) Within three months after

the date of receipt of a claim against a savings bank being

liquidated, the liquidating agent shall approve or reject the

claim in whole or in part unless that period is extended by

written agreement with the claimant.

(b) A liquidating agent who approves the claim or a part of the

claim shall classify the claim and enter the claim and the action

taken in a claim register.

part, or who denies a right of payment priority or any other

right asserted by the claimant, shall notify the claimant of the

action by registered mail.

(d) An approved claim presented after the declaration and

payment of any dividend and on or before the last day of the 18th

month after the date on which notice is first published under

Section 96.304 qualifies to participate in dividends previously

paid before an additional dividend is declared. A claim that is

presented after that period does not qualify to participate in a

dividend or distribution of assets until all approved claims

presented during the period are fully paid.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.308. HEARING ON CLAIM; APPEAL OF ADVERSE DETERMINATION

OF CLAIM. (a) A claimant may appeal an adverse determination of

a claim by filing suit on the claim in a district court of Travis

County within three months after the date on which notice is

mailed under Section 96.307.

(b) The determination on a claim becomes final on the expiration

of the period prescribed by Subsection (a) if suit is not filed

in accordance with that subsection.

de novo.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.309. PAYMENT OF FINAL DIVIDEND. (a) The liquidating

agent may not pay a final dividend before the first day of the

19th month after the date notice is first published under Section

96.304.

(b) The liquidating agent shall declare and pay a final dividend

after:

(1) the prohibitory period prescribed by Subsection (a) expires;

and

(2) the liquidating agent liquidates each asset of the savings

bank capable of being liquidated or receives sufficient money

from the liquidation to:

(A) pay the costs of liquidation;

(B) pay all claims that have been presented and approved; and

holders and creditors of the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.310. DEPOSIT OF MONEY BY LIQUIDATING AGENT. The

liquidating agent shall deposit all unclaimed dividends and all

money available for nonclaiming deposit account holders and

creditors in one or more state-chartered financial institutions

for the benefit of the deposit account holders and creditors

entitled to the dividends or money.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.311. PAYMENT OF NONCLAIMING DEPOSIT ACCOUNT HOLDERS AND

CREDITORS. (a) Except as provided by Subsection (b), the

liquidating agent, on demand, shall pay a deposit account holder

or creditor of the savings bank who does not make a claim under

Section 96.305 any amount held by the liquidating agent for the

benefit of the deposit account holder or creditor.

(b) If the liquidating agent has a doubt about the identity of a

claimant or the claimant's right to the money, the liquidating

agent shall reject the claim and notify the claimant by

registered mail.

if the claimant does not file suit against the liquidating agent

to recover money in a district court of Travis County within

three months after the date on which the notice is mailed.

(d) A suit under Subsection (c) is an action in rem. Judgment is

binding on all persons interested in the money.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.312. COST OF LIQUIDATION. (a) The commissioner shall

determine the cost of the liquidation.

(b) The cost of liquidation shall be paid from the savings

bank's assets as the commissioner directs.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.313. FINAL REPORT. After paying a final dividend as

provided by Section 96.309 and performing any necessary or proper

action in liquidating the savings bank's assets for the benefit

of the deposit account holders and creditors of the savings bank,

the liquidating agent shall file with the commissioner a final

report of the liquidation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.314. CONTINUED EXISTENCE OF SAVINGS BANK FOLLOWING

LIQUIDATION. For the purpose of adjusting and settling claims

not disposed of during the liquidation, the savings bank

continues to exist until the third anniversary of the date on

which the liquidation order is issued.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.315. SPECIAL LIQUIDATING AGENT. At the completion of

the liquidation, the commissioner may appoint a special

liquidating agent if necessary to adjust and settle undisposed

claims.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.316. CLOSING OF LIQUIDATION; ORDER AND LIABILITY. (a)

The liquidating agent shall certify the completion of the

liquidation to the commissioner, who shall then issue an order

closing the liquidation.

(b) After the closing order, the commissioner and the

liquidating agent are discharged from any further duty or

liability in connection with the administration of the savings

bank's affairs.

suit, or action against the commissioner or the liquidating

agent, individually or in an official capacity, except a suit to

recover an unclaimed deposit as provided by this subchapter.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.317. ADMINISTRATIVE PROCEDURE. The procedures for a

contested case hearing under Chapter 2001, Government Code, apply

to a hearing set by the commissioner under this subchapter.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER H. CONFIDENTIALITY

Sec. 96.351. DISCLOSURE BY DEPARTMENT PROHIBITED. Except as

otherwise provided by this subtitle or a rule adopted under this

subtitle, the following are confidential and may not be disclosed

by the commissioner or an examiner, supervisor, conservator,

liquidator, inspector, deputy, or assistant clerk or other

employee of the Department of Savings and Mortgage Lending who is

appointed or acting under this subtitle:

(1) information, regardless of the circumstances under which the

information is obtained, regarding a financial institution or a

shareholder, participant, officer, director, manager, affiliate,

or service provider of a financial institution, other than

information in a public statement or the public portion of a call

report or profit and loss statement; and

(2) all related files and records of the department.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.043, eff. September 1, 2007.

Sec. 96.352. DISCLOSURE TO OTHER AGENCIES. This subchapter does

not prevent the proper exchange of information relating to

savings banks with a representative of a regulatory authority of

another state or any other department, agency, or instrumentality

of this or another state or the United States if the commissioner

determines the disclosure of the information is necessary or

proper to enforce the laws of this or another state or the United

States.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.353. OTHER DISCLOSURE PROHIBITED. (a) Confidential

information that is provided to a financial institution or an

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 of Savings and Mortgage

Lending.

(b) 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 a rule adopted under

this subchapter or by the commissioner's written approval.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.044, eff. September 1, 2007.

Sec. 96.354. CIVIL DISCOVERY. Discovery of confidential

information from a person subject to this subchapter under

subpoena or other legal process must comply with rules adopted

under this subtitle. 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 the 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.

Sec. 96.355. INVESTIGATIVE INFORMATION. (a) Notwithstanding

any other law, the commissioner may refuse to release information

or records in the custody of the Department of Savings and

Mortgage Lending if the commissioner believes release of the

information or records might jeopardize an investigation of

possibly unlawful activities.

(b) Unless this subtitle provides otherwise, this subchapter

does not apply to any information or to a report of an

investigation obtained or made by the commissioner or the

commissioner's staff in connection with an application for

charter or with a hearing held by the commissioner under this

subtitle. The fact, information, or report may be included in the

record of the appropriate hearing.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.045, eff. September 1, 2007.

Sec. 96.356. EXAMINATION REPORT. Unless the commissioner

determines that a good reason exists to make the report public, a

report of an examination made to the commissioner is

confidential.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.357. REMOVAL FOR VIOLATION. A person who violates this

subchapter or who wilfully makes a false official report on the

condition of a financial institution shall be removed from office

or further employment with the Department of Savings and Mortgage

Lending.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.046, eff. September 1, 2007.

SUBCHAPTER I. MISCELLANEOUS PROVISIONS

Sec. 96.401. DERIVATIVE SUIT. (a) The commissioner may bring a

derivative suit on behalf of a savings bank on an unpursued cause

of action if:

(1) the commissioner determines that the suit should be brought

to protect the public interest or the interest of the savings

bank or the shareholders, members, or creditors of the savings

bank; and

(2) the savings bank has not brought suit on the action before

the 30th day after the date on which the commissioner gives

notice to the savings bank that suit should be brought.

(b) Except as provided by another statute that provides for

mandatory venue, venue is in a district court of Travis County.

prosecute a derivative suit. The commissioner may:

(1) pay counsel from funds appropriated for the operation of the

Department of Savings and Mortgage Lending; or

(2) require the savings bank for which the suit is brought to

pay the counsel directly or to reimburse the Department of

Savings and Mortgage Lending for the payment.

(d) The savings bank shall be paid an amount equal to the amount

of the proceeds of a judgment on a suit brought under this

section less unreimbursed costs and expenses, including

attorney's fees incurred by the Department of Savings and

Mortgage Lending in prosecuting the suit.

(e) In this section, "unpursued cause of action" means an

existing claim belonging to a savings bank on which a suit or

other effective action has not been filed or taken by or on

behalf of the savings bank on or before the last day of the sixth

month after the date on which the cause of action arose,

involving:

(1) a claim for monetary damages or recovery of property;

(2) a claim for equitable relief;

(3) a cause of action for breach of contract or for enforcement

of a contract; or

(4) a claim on a fidelity bond.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.047, eff. September 1, 2007.

Sec. 96.402. PAYMENT OF INSURED DEPOSIT LIABILITIES BY FDIC. If

the Federal Deposit Insurance Corporation pays the insured

deposit liabilities of a savings bank that has been closed or is

being liquidated under this chapter, regardless of whether the

Federal Deposit Insurance Corporation has become receiver or

liquidating agent, the Federal Deposit Insurance Corporation is

subrogated, to the extent of the payment, to all rights that the

owners of the deposit accounts have against the savings bank.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.403. ENFORCEABILITY OF LOAN PROMISE OR AGREEMENT MADE BY

SAVINGS BANK BEFORE CONSERVATORSHIP OR SUPERVISORY CONTROL. If a

promise or agreement to lend money is not otherwise unenforceable

under Chapter 26, Business & Commerce Code, and if the

promise or agreement is made by the savings bank before the

savings bank is placed under conservatorship or supervisory

control, the promise or agreement or a memorandum of the promise

or agreement is enforceable against the savings bank only if the

promise or agreement or memorandum:

(1) is in writing and states the material terms of the loan and

the loan's repayment;

(2) is signed by an authorized officer or employee of the

savings bank and the person to whom the promise or agreement was

made; and

(3) is approved by the savings bank's board of directors.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 96.404. INTEREST IN SAVINGS BANK PROHIBITED FOR DEPARTMENT.

(a) A savings bank or a director, officer, employee, or

representative of a savings bank may not give a loan or gratuity,

directly or indirectly, to the commissioner, an employee of the

Department of Savings and Mortgage Lending, or a spouse of the

commissioner or employee.

(b) The commissioner or an employee of the Department of Savings

and Mortgage Lending may not:

(1) hold an office or position in a domestic savings bank or

exercise a right to vote on a domestic savings bank matter

because the person is a member of or shareholder in the savings

bank;

(2) hold an interest, directly or indirectly, in a domestic

savings bank; or

(3) undertake an indebtedness as a borrower, directly or

indirectly, or endorser, surety, or guarantor or sell or

otherwise dispose of a loan or investment to a domestic savings

bank.

Savings and Mortgage Lending has a prohibited, direct or indirect

right or interest in a domestic savings bank at the time of

appointment or employment, the commissioner or employee shall

dispose of the right or interest not later than the 60th day

after the date of appointment or employment.

(d) If the commissioner or an employee of the Department of

Savings and Mortgage Lending is indebted as a borrower, directly

or indirectly, or is an endorser, surety, or guarantor on a note

to a domestic savings bank at the time of appointment or

employment, the commissioner or employee may continue in that

capacity until that debt is paid.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.048, eff. September 1, 2007.

Sec. 96.405. PERMITTED TRANSACTIONS FOR DEPARTMENT RELATING TO

SAVINGS BANK. (a) The commissioner or an employee of the

Department of Savings and Mortgage Lending may hold a deposit

account at a savings bank and receive earnings on the account.

(b) If a loan or other note of the commissioner or an employee

of the Department of Savings and Mortgage Lending is acquired by

a savings bank, the commissioner or employee may continue as a

borrower, endorser, surety, or guarantor of the loan or note

until the loan or note is paid.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.049, eff. September 1, 2007.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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