. . 

The Attorney General of Texas 

August 20, 1982 

MARK WHITE 

Attorney General 

Supreme Court Building 

P. 0. BOX 12546 

Austin. TX. 76711- 2546 

5121475-2501 

Telex 9101674-1367 

Telecopier 512/475-0266 

1607 Main St., Suite 1400 

Dallas. TX. 75201-4709 

2141742-6944 

4624 Alberta Ave.. Suite 160 

E, Paso, TX. 79905.2793 

9151533.3464 

1220 Dallas Ave., Suite 202 

tiouston, TX. 77002-6986 

7131650-0666 

606 6,oadw.w Suite 312 

Lubbock. TX. 79401.3479 

8061747-5238 

4309 N. Tenth, Suite 6 

bkA,len, TX. 78501-1665 

5121662-4647 

200 Main Plaza. Suite 400 

San Antonio, TX. 762052797 

512/225-4191 

An Equal opportunityi 

Affirmative Action Employer 

Honorable James A. Gray 

Burleson County Attorney 

Caldwell, Texas 77836 

Opinion No. ML'-505 

Re: Selection of county 

depository owned by holding 

company in which county judge 

owns stock 

Dear Mr. Gray: 

You ask whether a bank is disqualified from serving as a county 

depository where the county judge is an officer and director of the 

bank and owns less than 1% of the issued and outstanding shares of the 

bank's capital stock. You also ask if the same bank would be 

disqualified from serving as county depository where the county judge 

is an officer and director of the holding company which recently 

acquired the bank. The judge owns 17% of the capital stock of the 

holding company. 

Article 2529c, V.T.C.S., governs the issues raised by your 

opinion request,,and it provides, in pertinent part: 

A bank shall not be disqualified from bidding 

and becoming the depository for any agency or 

political subdivision of the state by reasm of 

having one or more officers, directors or 

stockholders of said bank who individually or 

collectively own or have a beneficial interest in 

not more than 10 percent of the bank's outstanding 

capital stock, and at the same time serves as a 

member of the board, commission, or other body 

charged by law with the duty of selecting the 

depository of such state agency or political 

subdivision; provided, however, that said bank 

must be selected as the depository by a majority 

vote of the members of the board, commission, or 

other body of such agency or political subdivision 

and no member thereof who is an officer, director 

or stockholder of the bank shall vote or 

participate in the proceedings. 

p. 1819 
I I 

Honorable James A. Gray - Page 2 (Mw-505) 

V.T.C.S. art. 2529c, 52. Attorney General Opinion H-596 (1975) is 

dispositive of your first inquiry. Therein, we determined that, in 

accordance with article 2529c, section 2, V.T.C.S., a bank could serve 

as county depository where the county judge owned stock in the bank 

and served on the board of directors if the members of the 

commissioners court did not collectively own more than 10% of the bank 

stock and interested members did not participate in the vote. YOU 

have not stated whether any other member of the commissioners court 

owns or has a beneficial interest in the stock of the bank in 

question. Assuming that the county judge is the only member of the 

commissioners court with an interest in the bank stock, his ownership 

of less than 1% of the outstanding capital stock clearly would not 

serve to disqualify the bank so long as the county judge does not 

participate in the selection process. If other members of the 

commissioners court also have an interest in the bank stock, the bank 

would not be disqualified unless the collective interest of the 

members exceeds 10%. 

Your inquiry regarding the county judge's ownership of 17% of the 

outstanding capital stock of the bank holding company is not 

susceptible to a definite answer. If the bank holding company is a 

one-bank holding company where the bank is the corporation's sole 

asset, the likelihood is that the county judge then has a "beneficial 

interest" in more than 10% of the bank's outstanding stock. In such a 

case, the bank would clearly be disqualified from serving as a county 

depository. If the bank holding company is a multi-bank holding 

company, the judge's beneficial interest would have to be determined 

on an individual basis. 

SUMMARY 

A bank is not disqualified from serving as a 

county depository where an officer, director, and 

1% shareholder of the bank is the county judge, so 

long as the county judge does not participate in 

the voting on the selection of the county 

depository and his interest in the bank stock 

combined with that of any other members of the 

commissioners court does not exceed 10%. The bank 

may be disqualified by virtue of the county 

judge's ownership of 17% of the outstanding 

capital stock of the bank holding company, 

depending upon the judge's resulting "beneficial 

interest" in the bank stock. 

MARK WHITE 

Attorney General of Texas 

p. 1820 
Honorable James A. Gray - Page 3 (MW-505) 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Catherine B. Fryer 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison. Chairman 

Jon Bible 

Catherine B. Fryer 

Rick Gilpin 

Patricia Hino-josa 

Jim Moellinger 

Bruce Youngblood 

P. 1821