Texas Finance Code - Section 31.002. Definitions
Legal Research Home >
Texas Lawyer > Finance Code > Texas Finance Code - Section 31.002. Definitions
§ 31.002. DEFINITIONS. (a) In this subtitle:
(1) "Affiliate" means a company that directly or
indirectly controls, is controlled by, or is under common control
with a bank or other company.
(2) "Bank" means a state or national bank. If the
context requires, the term includes a bank as defined by Section
201.002(a)(4) that is organized under the laws of another state or
country.
(3) "Bank holding company" has the meaning assigned by
the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
seq.) or a successor to that Act.
(4) "Banking" means the performance of the exclusive
depository institution functions of accepting deposits and
discounting loans and the performance of related activities that
are not exclusive to banks or other depository institutions,
including paying drafts or checks, lending money, and providing
related financial services authorized by this subtitle.
(5) "Banking association" means a state bank that is
organized under this subtitle as a corporation, authorized to issue
shares of stock, and controlled by its shareholders.
(6) "Banking commissioner" means the banking
commissioner of Texas or a person designated by the banking
commissioner and acting under the banking commissioner's direction
and authority.
(7) "Board" means the board of directors, managers, or
managing participants of, or a person or group of persons acting in
a comparable capacity for, a state bank or other entity.
(8) "Branch" means a location of a bank, other than the
bank's home office, at which the bank engages the public in the
business of banking. The term does not include:
(A) a drive-in facility located not more than
2,000 feet from the nearest wall of the home office or an approved
branch office of the bank;
(B) a night depository;
(C) an electronic terminal;
(D) a loan production office as described by
Section 32.204;
(E) a state or federally licensed armored car
service or other courier service transporting items for deposit or
payment, unless:
(i) the risk of loss of items in the custody
of the service is borne by the employing bank; or
(ii) the items in the custody of the service
are considered to be in customer accounts at the employing bank or
federally insured through the employing bank;
(F) a location at which the bank offers
exclusively nondepository financial products or services to the
public, including financial, investment, or economic advisory
services;
(G) a location that combines permissible
non-branch functions or facilities; or
(H) another office or facility as provided by
this subtitle or a rule adopted under this subtitle.
(9) "Capital" means:
(A) the sum of:
(i) the par value of all shares or
participation shares of the state bank having a par value that have
been issued;
(ii) the consideration set by the board in
the manner provided by the Texas Business Corporation Act for all
shares or participation shares of the state bank without par value
that have been issued, except a part of that consideration that:
(a) has been actually received;
(b) is less than all of that
consideration; and
(c) the board, by resolution adopted
not later than the 60th day after the date of issuance of those
shares, has allocated to surplus with the prior approval of the
banking commissioner; and
(iii) an amount not included in
Subparagraphs (i) and (ii) that has been transferred to capital of
the state bank, on the payment of a share dividend or on adoption by
the board of a resolution directing that all or part of surplus be
transferred to capital, minus each reduction made as permitted by
law; less
(B) all amounts otherwise included in Paragraphs
(A)(i) and (ii) that are attributable to the issuance of securities
by the state bank and that the banking commissioner determines,
after notice and an opportunity for hearing, should be classified
as debt rather than equity securities.
(10) "Certified surplus" means the part of surplus
designated by a vote of the board of a state bank under Section
33.105(b) and recorded in the board minutes as certified.
(11) "Company" includes a bank, trust company,
corporation, partnership, association, business trust, or another
trust.
(12) "Conservator" means the banking commissioner or
an agent of the banking commissioner exercising the powers and
duties provided by Subchapter B, Chapter 35.
(13) "Control" means:
(A) the ownership of or ability or power to vote,
directly, acting through one or more other persons, or otherwise
indirectly, 25 percent or more of the outstanding shares of a class
of voting securities of a bank or other company;
(B) the ability to control the election of a
majority of the board of a bank or other company;
(C) the power to exercise, directly or
indirectly, a controlling influence over the management or policies
of the bank or other company as determined by the banking
commissioner after notice and an opportunity for hearing; or
(D) the conditioning of the transfer of 25
percent or more of the outstanding shares or participation shares
of a class of voting securities of a bank or other company on the
transfer of 25 percent or more of the outstanding shares of a class
of voting securities of another bank or other company.
(14) "Department" means the Texas Department of
Banking.
(15) "Deposit" means the establishment of a
debtor-creditor relationship represented by the agreement of the
deposit debtor to act as a holding, paying, or disbursing agent for
the deposit creditor. The term:
(A) includes:
(i) an unpaid balance of money that is
received by the deposit debtor in the usual course of business in
exchange for conditional or unconditional credit to a commercial,
checking, savings, or time account of the deposit creditor or the
creditor's designee, or that is evidenced by a certificate of
deposit or similar instrument, a certified check or draft drawn
against a deposit account, or a letter of credit or traveler's check
on which the deposit debtor is primarily liable, but excluding an
obligation arising under Chapter 152;
(ii) money or credit given for money
received by the deposit debtor in the usual course of business for a
special purpose, including money:
(a) held as escrow money, as security
for an obligation due to the deposit debtor or another person, or as
security for a loan;
(b) left with a deposit debtor by a
deposit creditor to meet maturing obligations that are not yet due;
and
(c) held by the deposit debtor to meet
an acceptance or letter of credit;
(iii) an outstanding draft, cashier's
check, money order, or other officer's check issued by the deposit
debtor in the usual course of business for any purpose, including
payment for services, dividends, or purchases; and
(iv) an obligation that the finance
commission by rule defines as a deposit liability, except that the
term may not include money received for immediate application to
reduction of an indebtedness; and
(B) does not include an obligation that this
subtitle or finance commission rule determines not to be a deposit
liability.
(16) "Depository institution" means an entity with the
power to accept deposits under applicable law.
(17) "Discount" means the retention by a lender of
advance interest from loan proceeds. The term does not include the
purchase of a promissory note or similar instrument at less than its
face value unless the party selling the note is liable on the note
as a maker, endorser, or guarantor.
(18) "Drive-in facility" means a facility offering one
or more banking services other than originating or establishing a
lending or deposit relationship solely to persons who remain
outside the facility.
(19) "Electronic terminal" means an electronic
device, other than a telephone or modem operated by a customer of a
depository institution, through which a person may initiate an
electronic fund transfer, as defined by 15 U.S.C. Section 1693a(6).
The term includes a point-of-sale terminal, automated teller
machine, or cash dispensing machine.
(20) "Equity capital" means the amount by which the
total assets of a state bank exceed the total liabilities of the
bank.
(21) "Equity security" means:
(A) stock, other than adjustable rate preferred
stock and money market (auction rate) preferred stock;
(B) a certificate of interest or participation in
a profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share or
participation share, investment contract, voting-trust
certificate, or partnership interest;
(C) a security immediately convertible at the
option of the holder without payment of substantial additional
consideration into a security described by this subdivision;
(D) a security carrying a warrant or right to
subscribe to or purchase a security described by this subdivision;
and
(E) a certificate of interest or participation
in, temporary or interim certificate for, or receipt for a security
described by this subdivision that evidences an existing or
contingent equity ownership interest.
(22) "Federal savings association" means a savings and
loan association organized under federal law.
(23) "Federal savings bank" means a savings bank
organized under federal law.
(24) "Finance commission" means the Finance
Commission of Texas.
(25) "Financial institution" means a bank, savings
association, or savings bank maintaining an office, branch, or
agency office in this state.
(26), (27) Repealed by Acts 1999, 76th Leg., ch. 344, §
9.002(1), eff. May 29, 1999.
(28) "Full liability participant" means a participant
who agrees under the terms of a participation agreement to be liable
under a judgment, decree, or order of court for all debts,
obligations, or liabilities of a limited banking association.
(29) "Hazardous condition" means:
(A) a refusal by a state bank to permit
examination of its books, papers, accounts, records, or affairs by
the banking commissioner;
(B) a circumstance or condition in which an
unreasonable risk of substantial loss is threatened to the
depositors, creditors, shareholders, or participants of a state
bank, including a circumstance or condition in which a state bank:
(i) has inadequate equity capital, or the
adequacy of its equity capital is threatened;
(ii) has concentrated an excessive or
unreasonable portion of its assets in a type or character of loan or
investment;
(iii) violates or refuses to comply with
this subtitle, another statute or rule applicable to state banks,
or a final and enforceable order of the banking commissioner;
(iv) is in a condition that renders the
continuation of a particular business practice hazardous to the
public or to its depositors and creditors;
(v) conducts business in an unsafe and
unsound manner; or
(vi) is insolvent; or
(C) a violation by a state bank of a condition of
its chartering or an agreement entered into between the bank and the
banking commissioner or the department.
(30) "Home office" means a location registered with
the banking commissioner as the bank's home office at which:
(A) the bank does business with the public;
(B) the bank keeps its corporate books and
records; and
(C) at least one officer of the bank maintains an
office.
(31) "Insolvent" means a circumstance or condition in
which a state bank:
(A) is unable or lacks the means to meet its
current obligations as they come due in the regular and ordinary
course of business, even if the value of its assets exceeds its
liabilities;
(B) has equity capital equal to two percent or
less of its assets, as determined under regulatory accounting
principles;
(C) fails to maintain deposit insurance with the
Federal Deposit Insurance Corporation or its successor if the
banking commissioner determines that deposit insurance is
necessary for the safe and sound operation of the bank;
(D) sells or attempts to sell substantially all
of its assets or merges or attempts to merge substantially all of
its assets or business with another entity other than as provided by
Chapter 32; or
(E) attempts to dissolve or liquidate other than
as provided by Chapter 36.
(32) "Investment security" means a marketable
obligation evidencing indebtedness of a person in the form of a
bond, note, debenture, or commonly known as an investment security,
subject to further definition by rule adopted under this subtitle.
(33) "Limited banking association" means a state bank
that is organized under this subtitle as a limited liability
company, authorized to issue participation shares, and controlled
by its participants.
(34) "Loans and extensions of credit" means direct or
indirect advances of money by a state bank to a person that are
conditioned on the obligation of the person to repay the money or
that are repayable from specific property pledged by or on behalf of
the person. The term includes a contractual liability of a state
bank to advance money to or on behalf of a person, indebtedness
evidenced by a lease financing transaction in which the bank is
lessor, an overdraft funded by the bank on behalf of a person except
for an intraday or daylight overdraft, or another indebtedness not
otherwise classified as an investment security. The term does not
include accrued and unpaid interest or discounted interest.
(35) "Manager" means a person elected to the board of a
limited banking association.
(36) "Managing participant" means a participant in a
limited banking association in which management has been retained
by the participants.
(37) "National bank" means a banking association
organized under 12 U.S.C. Section 21.
(38) "Officer" means the presiding officer of the
board, the principal executive officer, or another officer
appointed by the board of a state bank or other company, or a person
or group of persons acting in a comparable capacity for the state
bank or other company.
(39) "Operating subsidiary" means a company for which
a state bank has the ownership, ability, or power to vote, directly,
acting through one or more other persons, or otherwise indirectly,
more than 50 percent of the outstanding shares of each class of
voting securities or its equivalent of the company.
(40) "Participant" means an owner of a participation
share in a limited banking association.
(41) "Participant-transferee" means a transferee of a
participation share who has not received the consent of all
participants to be a participant, or who becomes a
participant-transferee under Subchapter C, Chapter 33.
(42) "Participation agreement" means the instrument
stating the agreement among the participants of a limited banking
association relating to the rights and duties of the participants
and participant-transferees, including:
(A) allocations of income, loss, deduction,
credit, distributions, liquidation rights, redemption rights,
liabilities of participants, priority rights of
participant-transferees to transfer participation shares, and
rights of participants to purchase participation shares of
participant-transferees;
(B) procedures for elections and voting by
participants; and
(C) any other matter not prohibited by or
inconsistent with this subtitle.
(43) "Participation shares" means the units into which
the proprietary interests of a limited banking association are
divided or subdivided by means of classes, series, relative rights,
or preferences.
(44) "Principal shareholder" means a person who owns
or has the ability or power to vote, directly, acting through one or
more other persons, or otherwise indirectly, 10 percent or more of
the outstanding shares or participation shares of any class of
voting securities of a bank or other company.
(45) "Regulatory accounting principles" means
generally accepted accounting principles as modified by rules
adopted under:
(A) this subtitle; or
(B) an applicable federal statute or regulation.
(46) "Savings association" means a state or federal
savings association.
(47) "Savings bank" means a state or federal savings
bank.
(48) "Shareholder" means an owner of a share in a
banking association.
(49) "Shares" means the units into which the
proprietary interests of a banking association are divided or
subdivided by means of classes, series, relative rights, or
preferences.
(50) "State bank" means a banking association or
limited banking association organized or reorganized under this
subtitle, including an association organized under the laws of this
state before September 1, 1995, with the express power to receive
and accept deposits and possessing other rights and powers granted
by this subtitle expressly or by implication. The term does not
include a savings association, savings bank, or credit union. If
the context requires, the term includes a bank as defined by Section
201.002(a)(4) that is organized under the laws of another state or
country.
(51) "State savings association" means a savings and
loan association organized under the laws of this state.
(52) "State savings bank" means a savings bank
organized under or subject to Subtitle C. If the context requires,
the term includes a savings bank organized under the laws of another
state.
(53) "Subsidiary" means a bank or company that is
controlled by another person. The term includes a subsidiary of a
subsidiary.
(54) "Supervisor" means the banking commissioner or an
agent of the banking commissioner exercising the powers and duties
specified in Subchapter B, Chapter 35.
(55) "Surplus" means the amount by which the assets of
a state bank exceed its liabilities, capital, and undivided
profits.
(56) "Unauthorized activity" means an act or practice
in this state by a person without a charter, license, permit,
registration, or other authority issued or granted by the banking
commissioner or other appropriate regulatory authority for which
such a charter, license, permit, registration, or other authority
is required.
(57) "Undivided profits" means the part of equity
capital of a state bank equal to the balance of its net profits,
income, gains, and losses since the date of its formation, minus
subsequent distributions to shareholders or participants and
transfers to surplus or capital under share dividends or
appropriate board resolutions. The term includes amounts allocated
to undivided profits as a result of a merger.
(58) "Voting security" means a share, participation
share, or other evidence of proprietary interest in a state bank or
other company that has as an attribute the right to vote or
participate in the election of the board of the state bank or other
company, regardless of whether the right is limited to the election
of fewer than all of the board members. The term includes a
security that is convertible or exchangeable into a voting security
and a nonvoting participation share of a managing participant.
(b) The definitions shall be liberally construed to
accomplish the purposes of this subtitle.
(c) The finance commission by rule may adopt other
definitions to accomplish the purposes of this subtitle.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.002, 9.002, eff. Sept. 1,
1999; Acts 2001, 77th Leg., ch. 528, § 1, eff. Sept. 1, 2001.
Section: 15.410 15.411 15.412 15.413 15.414 15.415 31.001 31.002 31.003 31.004 31.005 31.006 31.007 31.101 31.102
Last modified: August 10, 2007
|
