OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

QROVER SELLERS 

ATTORNEY QENERAL 

Eonorable H. 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 condition whioh the Banking Board 'might be disposed to speoify, provided such 

oondition bears a direct relationship to any one or all 

of the five specifio faotors which the Board is required 

to determine in the affirmative if it approves any application for ohartero 

. 
. - 

Honorable II. A. Jamison, wge 2 

, 

We should like for your opinion to advise 

speoifically as to whether or not the State Banking Board may require applicants under any given 

charter to increase their capital structure in 

whatever amount as may be deemed adequate by the 

Banking Board, and whether or not the Banking Board 

might speoify as a condition that the proposed bank 

be admitted as a member of the Federal Deposit Insurance Corporation as a oondition preoedent to 

engaging in the banking business? 

"Furt,her ws should like advice as to whether 

or not such a condition or conditions, if imposed 

by the Banking Board might be rescinded by it on 

its own motion if it should be determined that oomplianoe with suoh condition or conditions was wholly 

beyond the control of the incorporators*" 

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

43rd Legislature reads as follows: 

,, 

"~' 

K' .~ 

_..~ 

'. : 

: ~~wApplicantshall file with the Commissioner 

an application for charter on suoh form and inolude 

therein suoh information as may be prescribed by the 

Commissioner, and the proposed articles of assooiation; shall pay an investigation fee as prescribed 

under Artiole 3921, Revised Statutes of Texas, 1925, 

and deposit with the Commissioner oharter fees as 

prescribed by law. The Commissioner shall thereupon 

make a thorough investigation and report his findings 

to the State Banking Board., 

"In uonsidering any such application, the State 

Banking Board shall, after hearing, determine whether 

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 established is 

such as to indicate profitable operation of the 

proposed bank. . . 
. . 

Honorable H. A. Jamison, page 3 

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

have sufficient banking experience, ability and 

standing to render success of the proposed bank 

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 application and the Commissioner she&l, when the capital ‘has been paid in in 

oash and.the franchise tax paid, deliver to the inoorporators a 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 Commissioner shall not deliver the certified 

oopy of the articles of association until such condition has been met, after which the Commissioner 

shall in writing inform the State Banking Board as 

to compliance with suoh condition and delivery of 

the articles of association." 

It is clear.from the foregoing that the Banking Board 

may make its approval conditional, but we think the condition imposed would have to be germane to one or more of the rive factors 

set out in the foregoing article. The Board oould require the 

applioants to increase the capital structure, since tht would 

be germane,to the second raotor mentioned in the law. The Board.. 

oould refuse to grant the charter if it deemed the oapitalin8ufficient, and hence could impose a condition requiring applicants 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 authority to reject 

sn application if 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 advised that 

the Board, In its discretion, may resoind any oondition imposed 

w it when it determines that compliance therewith, is wholLy 

beyond the control of the incorporators. 

Yours very truly . 

. 

ATl’ORNBY GE- Oi !PEXA!3