Financial Modernization and technology allow financial service companies to offer new products and services. If the de novo charter application contemplates other activities, products or services not previously authorized, the processing time and/or capital requirements may increase because of the Department's investigation of the perceived risk factors. It is incumbent upon the applicant to provide full information on risk monitoring and control measures that will be implemented.
Delivery Systems
Bank applications should contain a complete description of delivery systems to be utilized. These may be as straight forward as traditional brick and mortar facilities, to shared automated teller machines (ATM's), loan production offices (LPO's), automated loan machines (ALM's), or full Internet banking.
Name
The only Texas statutory limit on names is contained in Section 32.002 of the Texas Finance Code, which empowers the Commissioner to deny a name if it is potentially misleading to the public. Banks must make the appropriate filings with the Texas Secretary of State if they wish to use a name other than their legal name. They are also expected to comply with the Interagency Policy Statement on Identification of Facilities.
Stucture
State banks may conduct their activities directly through the bank or through one or more subsidiaries. Virtually all activities of a state bank may be conducted through a separate operating subsidiary. See Legal Opinions for details.
Holding Companies
A de novo state bank may commence operations with a holding company as its sole shareholder. Holding company information may be accessed through the Dallas Federal Reserve web site. An out-of-state holding company may not charter a de novo institution in Texas. Out-of-state bank holding companies are limited to acquisitions of charters at least 5 years old. Texas places no additional restrictions on bank holding companies that elect financial holding company status; however, a copy of the election must be furnished to the Commissioner, Section 202.001 et seq. of the Texas Finance Code.
Subchapter S. Corporation Election
There are no special filing requirements with the Department should the bank wish to make a Subchapter S election; however, new banks are not allowed to declare cash dividends for the first three years of operation without the Commissioner’s approval. The Commissioner may restrict cash dividends at any time should regulatory concerns warrant such action. Proponents should consult their legal and tax accounting professionals in order to make a fully informed decision.
Restriction on Interstate Mergers
Banks less than 5 years old may not be acquired by an out-of-state holding company nor may they be merged into an out-of-state bank that does not already have a presence within this state. See §201.001, §202.003, §203.003, and §203.005 of the Texas Finance Code.
