FINANCE CODE TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES SUBTITLE F. TRUST COMPANIES CHAPTER 184. INVESTMENTS, LOANS, AND DEPOSITS

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1 FINANCE CODE TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES SUBTITLE F. TRUST COMPANIES CHAPTER 184. INVESTMENTS, LOANS, AND DEPOSITS SUBCHAPTER A. ACQUISITION AND OWNERSHIP OF TRUST COMPANY FACILITIES AND OTHER REAL PROPERTY Sec.A AADEFINITION. In this subchapter, "state trust company facility" means real property, including an improvement, that a state trust company owns leases, to the extent the lease the leasehold improvement is capitalized, f the purpose of: (1)AAproviding space f state trust company employees to perfm their duties f state trust company employees customers to park; (2)AAconducting trust business, including meeting the reasonable needs convenience of the public the state trust company s clients, computer operations, document other item processing, maintenance, recd retention stage; (3)AAholding, improving, occupying as an incident to future expansion of the state trust company s facilities; (4)AAconducting another activity authized by rules adopted under this subtitle. Sec.A AAINVESTMENT IN STATE TRUST COMPANY FACILITIES. (a)aawithout the pri written approval of the banking commissioner, a state trust company may not directly indirectly invest an amount in excess of the company s restricted capital in state trust company facilities, furniture, fixtures, equipment.aaexcept as otherwise provided by rules adopted under this subtitle, in computing the limitation provided by this subsection a state trust company: (1)AAshall include: (A)AAits direct investment in state trust company facilities; 1

2 (B)AAan investment in equity investment securities of a company holding title to a facility used by the state trust company f the purposes specified by Section ; (C)AAa loan made by the state trust company to on the security of equity investment securities issued by a company holding title to a facility used by the state trust company; (D)AAany indebtedness incurred on state trust company facilities by a company: (i)aathat holds title to the facility; (ii)aathat is an affiliate of the state trust company; (iii)aain which the state trust company is invested in the manner described by Paragraph (B) (C); (2)AAmay exclude an amount included under Subdivisions (1)(B)-(D) to the extent any lease of a facility from the company holding title to the facility is capitalized on the books of the state trust company. (b)aareal property described by Subsection (3) not improved occupied by the state trust company ceases to be a state trust company facility on the third anniversary of the date of its acquisition unless the banking commissioner on application grants written approval to further delay in the improvement occupation of the property by the state trust company. (c)aaa state trust company shall dispose of any real property subject to Subsection (a) not later than the fifth anniversary of the date the real property: (1)AAwas acquired, except as otherwise provided by rules adopted under this subtitle; (2)AAceases to be used as a state trust company facility; (3)AAceases to be aaastate trust company facility as provided by Subsection (b). Amended by: Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 14, eff. 2

3 June 14, Sec.A AAOTHER REAL PROPERTY. (a) A state trust company may not invest its restricted capital in real property except: (1)AAas permitted by this subtitle rules adopted under this subtitle; (2)AAas necessary to avoid minimize a loss on a loan investment previously made in good faith. (b)aawith the pri written approval of the banking commissioner, a state trust company may: (1)AAexchange real property f other real property personal property; (2)AAinvest additional money in improve real property acquired under this subsection Subsection (a); (3)AAacquire additional real property to avoid minimize loss on real property acquired as permitted by Subsection (a). (c)aaa state trust company shall dispose of any real property subject to Subsection (a) not later than: (1)AAthe fifth anniversary of the date the real property: (A)AAwas acquired, except as otherwise provided by rules adopted under this subtitle; (B)AAceases to be used as a state trust company facility; (2)AAthe second anniversary of the date the real property ceases to be a state trust company facility as provided by Section (b). (d)aathe banking commissioner on application may grant one me extensions of time f disposing of real property under Subsection (c) if the banking commissioner determines that: (1)AAthe state trust company has made a good faith efft to dispose of the real property; (2)AAdisposal of the real property would be detrimental to the state trust company. (e)aasubject to the exercise of prudent judgment, a state 3

4 trust company may invest its secondary capital in real property. The facts to be considered by a state trust company in exercise of prudent judgment include the facts contained in Section (f). SUBCHAPTER B. INVESTMENTS Sec.A AASECURITIES. (a) A state trust company may invest its restricted capital in any type character of equity investment securities under the limitations provided by this section. (b)aaunless the banking commissioner in writing approves maintenance of a lesser amount, a state trust company must invest maintain an amount equal to at least 50 percent of the state trust company s restricted capital under Section in investment securities that are readily marketable can be converted to cash within four business days. (c)aasubject to Subsection (d), the total investment of its restricted capital in equity investment securities of any one issuer, oblig, maker, the total investment of its restricted capital in mutual funds, held by the state trust company f its own account, may not exceed an amount equal to 15 percent of the state trust company s restricted capital. The banking commissioner may authize investments in excess of this limitation on written application if the banking commissioner determines that: (1)AAthe excess investment is not prohibited by other applicable law; (2)AAthe safety soundness of the requesting state trust company is not adversely affected. (d)aanotwithsting Subsection (c), a state trust company may invest its restricted capital, without limit subject to the exercise of prudent judgment, in: (1)AAbonds other legally created general obligations of a state, an agency political subdivision of a state, the United States, an agency instrumentality of the 4

5 United States; (2)AAobligations that this state, an agency political subdivision of this state, the United States, an agency instrumentality of the United States has unconditionally agreed to purchase, insure, guarantee; (3)AAsecurities that are offered sold under 15 U.S.C. Section 77d(5); (4)AAmtgage related securities small business related securities, as those terms are defined by 15 U.S.C. Section 78c(a); (5)AAmtgages, obligations, other securities that are ever have been sold by the Federal Home Loan Mtgage Cpation under Section , Federal Home Loan Mtgage Cpation Act (12 U.S.C. Sections ); (6)AAobligations, participations, other instruments of issued by the Federal National Mtgage Association the Government National Mtgage Association; (7)AAobligations issued by the Federal Agricultural Mtgage Cpation, the Federal Farm Credit Banks Funding Cpation, a Federal Home Loan Bank; (8)AAobligations of the Federal Financing Bank the Environmental Financing Authity; (9)AAobligations other instruments securities of the Student Loan Marketing Association; (10)AAqualified Canadian government obligations, as defined by 12 U.S.C. Section 24. (e)aain the exercise of prudent judgment, a state trust company shall, at a minimum: (1)AAexercise care caution to make implement investment management decisions f the entire investment ptfolio, taking into consideration the safety soundness of the state trust company; (2)AApursue an overall investment strategy to enable management to make appropriate present future decisions; (3)AAconsider, to the extent relevant to the decision action: (A)AAthe size, diversification, liquidity of 5

6 its cpate assets; (B)AAthe general economic conditions; (C)AAthe possible effect of inflation deflation; (D)AAthe expected tax consequences of the investment decisions strategies; (E)AAthe role that each investment course of action plays within the investment ptfolio; (F)AAthe expected total return of the ptfolio. (f)aaa state trust company may invest its secondary capital in any type character of equity investment securities subject to the exercise of prudent judgment accding to the stards provided by Subsection (f). (g)aathe finance commission may adopt rules to administer carry out this section, including rules to: (1)AAestablish limits, requirements, exemptions other than those specified by this section f particular classes categies of investment; (2)AAlimit exp investment authity f state trust companies f particular classes categies of securities other property. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 23, eff. Sept. 1, Amended by: Acts 2015, 84th Leg., R.S., Ch. 250 (S.B. 875), Sec. 10, eff. September 1, Sec.A AATRANSACTIONS IN STATE TRUST COMPANY SHARES OR PARTICIPATION SHARES. Except with the pri written approval of the banking commissioner: (1)AAa state trust company may not acquire its own shares participation shares unless the amount of its undivided profits is sufficient to fully absb the acquisition of the shares participation shares under regulaty accounting principles; (2)AAa state trust company may not acquire a lien on its 6

7 own shares participation shares unless the amount of indebtedness secured is less than the amount of the state trust company s undivided profits. Sec.A AASTATE TRUST COMPANY SUBSIDIARIES. (a) Except as otherwise provided by this subtitle rules adopted under this subtitle, subject to the exercise of prudent judgment, a state trust company may invest its secondary capital to acquire establish one me subsidiaries to conduct any activity that may lawfully be conducted through the fm of ganization chosen f the subsidiary. The facts to be considered by a state trust company in exercise of prudent judgment include the facts contained in Section (e). (b)aaa state trust company that intends to acquire, establish, perfm new activities through a subsidiary shall submit a letter to the banking commissioner describing in detail the proposed activities of the subsidiary. (c)aathe state trust company may acquire establish a subsidiary begin perfming new activities in an existing subsidiary on the 31st day after the date the banking commissioner receives the state trust company s letter, unless the banking commissioner specifies an earlier later date. The banking commissioner may extend the 30-day period on a determination that the state trust company s letter raises issues that require additional infmation additional time f analysis. If the period is extended, the state trust company may acquire establish the subsidiary, perfm new activities in an existing subsidiary, only on pri written approval of the banking commissioner. (d)aaa subsidiary of a state trust company is subject to regulation by the banking commissioner to the extent provided by this subtitle rules adopted under this section. In the absence of limiting rules, the banking commissioner may regulate a subsidiary as if it were a state trust company. 7

8 Amended by Acts 2001, 77th Leg., ch. 528, Sec. 24, eff. Sept. 1, Sec.A AAOTHER INVESTMENT PROVISIONS. (a) Without the pri written approval of the banking commissioner, a state trust company may not make any investment of its secondary capital in any investment that incurs may incur, under regulaty accounting principles, a liability contingent liability f the state trust company. (b)aathe banking commissioner may, on a case-by-case basis, require a state trust company to dispose of any investment of its secondary capital, if the banking commissioner finds that the divestiture of the asset is necessary to protect the safety soundness of the state trust company. The banking commissioner in the exercise of discretion under this subsection shall consider safety soundness facts, including those contained in Section (b). The proposed effective date of an der requiring a state trust company to dispose of an asset must be stated in the der must be on after the 21st day after the date the proposed der is mailed delivered. Unless the state trust company requests a hearing befe the banking commissioner in writing befe the effective date of the proposed der, the der becomes effective is final nonappealable. (c)aasubject to Subsections (a) (b), to Section , to the exercise of prudent judgment, a state trust company may invest its secondary capital in any type character of investment f the purpose of generating income profit. The facts to be considered by a state trust company in exercise of prudent judgment include the facts contained in Section (e). Amended by Acts 2001, 77th Leg., ch. 528, Sec. 25, eff. Sept. 1, Sec.A AAENGAGING IN COMMERCE PROHIBITED. (a) Except as otherwise provided by this subtitle rules adopted under this subtitle, a state trust company may not invest its funds in trade commerce by buying, selling, otherwise dealing goods by 8

9 owning operating a business not part of the state trust business, except as necessary to fulfill a fiduciary obligation to a client. (b)aaunder this section, engaging in an approved financial activity an activity incidental complementary to a financial activity, whether as principal agent, is not considered to be engaging in commerce. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 26, eff. Sept. 1, SUBCHAPTER C. LOANS Sec.A AALENDING LIMITS. (a) A state trust company s total outsting loans extensions of credit to a person other than an insider may not exceed an amount equal to 15 percent of the state trust company s restricted capital. (b)aathe aggregate loans extensions of credit outsting at any time to insiders of the state trust company may not exceed an amount equal to 15 percent of the state trust company s restricted capital. All covered transactions between an insider a state trust company must be engaged in only on terms under circumstances, including credit stards, that are substantially the same as those f comparable transactions with a person other than an insider. (c)aathe finance commission may adopt rules to administer this section, including rules to: (1)AAestablish limits, requirements, exemptions other than those specified by this section f particular classes categies of loans extensions of credit; (2)AAestablish collective lending investment limits. (d)aathe banking commissioner may determine whether a loan extension of credit putatively made to a person will be attributed to another person f purposes of this section. (e)aaa state trust company may not lend trust deposits, except that a trustee may make a loan to a beneficiary of the trust if the loan is expressly authized directed by the instrument 9

10 transaction establishing the trust. Sec.A AAVIOLATION OF LENDING LIMIT. (a) An officer, direct, manager, managing participant, employee of a state trust company who approves participates in the approval of a loan with actual knowledge that the loan violates Section is jointly severally liable to the state trust company f the lesser of the amount by which the loan exceeded applicable lending limits the state trust company s actual loss. The person remains liable f that amount until the loan all pri indebtedness of the brower to the state trust company have been fully repaid. (b)aathe state trust company may initiate a proceeding to collect an amount due under this section at any time befe the date the brower defaults on the subject loan any pri indebtedness befe the fourth anniversary of that date. (c)aaa person who is liable f pays amounts to the state trust company under this section is entitled to an assignment of the state trust company s claim against the brower to the extent of the payments. (d)aaf purposes of this section, an officer, direct, manager, managing participant, employee of a state trust company is presumed to know the amount of the state trust company s lending limit under Section the amount of the brower s aggregate outsting indebtedness to the state trust company immediately befe a new loan extension of credit to that brower. Sec.A AALEASE FINANCING TRANSACTION. (a) Subject to rules adopted under this subtitle, a state trust company may become the owner less of tangible personal property f lease financing transactions on a net lease basis on the specific request f the use of a client. Without the written approval of the banking commissioner to continue holding property acquired f 10

11 leasing purposes under this subsection, the state trust company may not hold the property me than six months after the date of expiration of the iginal any extended renewed lease period agreed to by the client f whom the property was acquired by a subsequent lessee. (b)aaa rental payment received by the state trust company in a lease financing transaction under this section is considered to be rent not interest compensation f the use, fbearance, detention of money. However, a lease financing transaction is considered to be a loan extension of credit f purposes of Sections Sec.A AAGENERAL BANKING PRIVILEGES NOT CONFERRED. This subchapter does not confer general banking privileges on a state trust company. SUBCHAPTER D. TRUST DEPOSITS Sec.A AATRUST DEPOSITS. (a) A state trust company may deposit trust funds with itself as an investment if: (1)AAthe deposit is authized by the settl beneficiary; (2)AAthe state trust company maintains as security f the deposit a separate fund of securities, legal f trust investments, under control of a federal reserve bank a clearing cpation, as defined by Section 8.102, Business & Commerce Code, within outside this state; (3)AAthe total market value of the security is at all times at least equal to the amount of the deposit; (4)AAthe separate fund is designated as a separate fund. (b)aaa state trust company may make periodic withdrawals from additions to a securities fund required by Subsection (a) as long 11

12 as the required value is maintained. Income from the securities in the fund belongs to the state trust company. (c)aasecurity f a deposit under this section is not required f a deposit under Subsection (a) to the extent the deposit is insured by the Federal Deposit Insurance Cpation its success. Sec.A AAGENERAL BANKING PRIVILEGES NOT CONFERRED. This subchapter does not confer general banking privileges on a state trust company. SUBCHAPTER E. LIABILITIES AND PLEDGE OF ASSETS Sec.A AABORROWING LIMIT. Except with the pri written approval of the banking commissioner, a state trust company may not have outsting liabilities, excluding trust deposit liabilities arising under Section , that exceed an amount equal to five times its restricted capital. Sec.A AAPLEDGE OF ASSETS. (a) A state trust company may not pledge create a lien on any of its assets except to secure: (1)AAthe repayment of money browed; (2)AAtrust deposits as specifically authized required by: (A)AASection ; (B)AATitle 9, Property Code; (C)AArules adopted under this chapter; (3)AAdeposits made by: (A)AAthe United States; (B)AAa state, county, municipality; 12

13 (C)AAan agency of the United States a state, county, municipality. (b)aaan act, deed, conveyance, pledge, contract in violation of this section is void. 13

NATURAL RESOURCES CODE TITLE 7. RESOURCES PROGRAMS SUBCHAPTER A. GENERAL PROVISIONS. Sec.A AADEFINITIONS. (a) In this chapter:

NATURAL RESOURCES CODE TITLE 7. RESOURCES PROGRAMS CHAPTER 162. VETERANS HOUSING ASSISTANCE PROGRAM SUBCHAPTER A. GENERAL PROVISIONS Sec.A162.001.AADEFINITIONS. (a) In this chapter: (1)AA"Board" means