The Legislature is considering a bill that would require banks to use the same method of taxing interest and dividend income as all other franchise taxpayers. This approach would restore a portion of the anticipated decline in franchise tax revenue from banks. Mergers and failures have rippled through the Texas banking industry for more than 15 years. The number of banks in Texas fell from more than 1,900 in 1985 to about 800 in 1998. The banking industry believes mergers are one solution to keeping costs down.
New technology is expensive and a burden to small banks.
But while banks are consolidating, community banks are surviving, filling a role once played by small home-town banks in years past. These institutions are attracting customers who prefer personal service. Most have a limited number of locations and are not members of bank holding companies. In Houston, Texas First National Bank's employees, for example, are fluent in numerous Asian languages and dialects. Eagle National Bank in Dallas concentrates on construction lending for commercial and residential projects.