The Banking Department's mission is to ensure Texas has a safe and sound financial services system. We believe that open lines of communication between agency representatives and regulated entities are vital to the success of our mission. In order to ensure accessibility and responsiveness to the needs of state banks, the Department adopted a Compact With Texans.
Article XVI, Section 16(c) of the Constitution of The State of Texas provides that Texas chartered state banks have the same rights and privileges that are or may be
granted to national banks of the United States domiciled in this State.
In July of 1999, then Governor Bush signed a bill into law which formally opened Texas to interstate bank branching. The bill also makes a Texas bank charter one of the most attractive in the nation to conduct banking business.
Of particular interest is a "super parity" provision which provides a framework for a state bank chartered in Texas, upon application, to conduct any of the activities allowed by any other insured state or federal financial institution in the nation. Not only does this increase the value of existing state charters, but it also dramatically increases Texas’ appeal as a central location from which to conduct nationwide banking activities. There is no "super parity" provision available to national banks. (Section 32.010 of the Texas Finance Code).
Expanded Powers
A Texas State Bank Charter allows expanded powers including the possibility of a higher legal lending limit. A state bank can sell insurance in a town with a population over 5,000, either directly or through an operating subsidiary. National banks can sell insurance in a town with a population over 5,000 only through a financial subsidiary. State banks are granted parity with national banks through the Texas Constitution and the Texas Finance Code. Parity is an advantage not available to national banks. States have traditionally led the way in new innovations for banks. Some examples include checking accounts, ATM's, and limited liability banks.
New Initiatives
The Department has been a leader in the development of new processes in bank supervision and regulation in order to provide for the most efficient use of resources and to keep costs low. In the past, the Department initiated a new off-site monitoring system, expedited application filing procedures, and loan stress-testing. The Department's web site has all examination procedures and policies available for review and downloading. New initiatives include electronic payment of assessments, and asset pledge requirements for foreign bank agencies.
Modern Corporate Governance
Texas has some of the most modern corporate governance statutes thus providing increased flexibility. This flexibility is most evident in the organization requirements (Section 32.001 of the Texas Finance Code), merger authority (Section 32.301 of the Texas Finance Code), subsidiary authority (Section 34.103 of the Texas Finance Code), treasury stock (Title 7 of Texas Administrative Code §15.121) and reverse stock split (7 TAC §15.122) regulations.
Lower Costs
Primarily because of efficient operations and lower overhead, the assessments charged to state banks are less than that charged national banks of comparable size.
