OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN
**QROVER SELLERS**  **ATTORNEY QENERAL**  EonorableH. A. 3amison Commissioner of Banking

We have your lette

ciation until such

, after which the Coating inform the State

oonsideration

of this section of the law it has been our thought that the same might well be Invoked in respect to any conditionwhioh the Banking Board 'might

be disposed to speoify,provided such oonditionbears a direct relationship to any one or all of the five specifio faotorswhich the Board is required to determine in the affirmativeif it approves any application for ohartero

.. - HonorableII. A. Jamison, wge 2

, We should like for your opinion to advise speoifically

as to whether or not the State Banking Board may require applicantsunder any given charter to increasetheir capital structure in whatever amount as may be deemed adequateby the Banking Board, and whether or not the Banking Board might speoify as a conditionthat the proposed bank be admitted as a member of the FederalDeposit Insurance Corporationas a oonditionpreoedentto engaging in the banking business? "Furt,her

ws should like advice as to whether or not such a conditionor conditions,if imposed by the Banking Board might be rescindedby it on its own motion if it should be determinedthat oomplianoewith suoh conditionor conditionswas wholly beyond the control of the incorporators*" 

## +zd ‘~’Subsection ti1, Article 5 of Chapter 9i;'AotS of 43rd Legislature

reads as follows:

,, "~' K' .~ _..~ '. : : ~~wApplicants hall file with the Commissioner an applicationfor charter on suoh form and inolude therein suoh information as may be prescribedby the Commissioner,

and the proposed articlesof assooia

### tion; shall pay an investigation fee as prescribed under Artiole 3921, Revised Statutes of Texas, 1925, and depositwith the Commissioneroharter fees as prescribedby law. The Commissionershall thereupon make a thorough investigation and report his findings to the State Banking Board.,
"In uonsideringany such application,the State Banking Board shall, after hearing, determinewhether or not: "1. A pub110 neoessitg exists for the'proposed bank. 1 ~

. '2. The proposed capital structure is adequate. ?3. The volume of business in the 

### 'oomunity~ where suoh proposed bank is to be establishedis such as to indicateprofitableoperationof the proposedbank. . .. .

HonorableH. A. Jamison, page 3

,.~, . *4. The proposed officers and directors

have sufficient

banking experience,ability and standing to render success of the proposedbank probable* "5. The applioants are acting in good faith.

. *Should the State Banking Board determine sng,of the above issue8 adversely to the applicants, it shall reject the application, Otherwise such Board shall approve the applicationand the Commissioner she&l,when the capital ‘hasbeen paid in in oash and.the franchise tax paid, deliver to the inoorporatorsa certified copy of the articles of aseooiation,and the bank shall come into corporate existence. Provided,however, that the State Banking Board may make its approval of any application oonditional,

and in such event shall set out such condition in a resolution granting the oharter,and the Commissionershall not deliver the certified oopy of the articles of associationuntil such condition has been met, after which the Commissioner shall in writing inform the State Banking Board as to compliancewith suoh conditionand delivery of the articles of association."

It is clear.fromthe foregoing that the Banking Board may make its approval conditional, but we think the conditionimposed would have to be germane to one or more of the rive factors set out in the foregoing article. The Board oould require the applioantsto increase the capital structure,since tht would be germane,tothe second raotor mentioned in the law. The Board.. oould refuse to grant the charter if it deemed the oapitalin8ufficient, and hence could impose a conditionrequiringapplicants to inorease same, if the Board deemed the capital in8ufficient, But

., .that would not be true with respect to a condition that the pro-, Dosed bank be admitted as a member of the Federal Deposit Insuranoe Corporation. The Board would not have authorityto reject sn applicationif the applicants should refuse to apply for member-

### Honorable B. A. Jamison,

Page 4

ship therein, and, therefore, oould pot impose suoh a oondition 

### upon the 

### applicants for a charter. 

### In answer to 

### your lest question 

### you are advisedthat the Board, In its discretion, may resoind any oondition imposed 

### w it when it determines that compliance

therewith,

is wholLy beyond 

### the controlof the incorporators.

Yours very truly

.
. ATl’ORNBY GE- Oi !PEXA!3