           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 Coa-
                                         ting inform the State




                    oonsiderationof this section of the
      law it has been our thought that the same might well
      be Invoked in respect to any condition whioh the Bank-
      ing Board 'mightbe disposed to speoify, provided such
      oondition bears a direct relationshipto any one or all
      of the five specifio faotors which the Board is required
      to determine in the affirmativeif it approves any ap-
      plication for ohartero


                                                                  .
.   -


        Honorable II.A. Jamison, wge     2



                                                ,


                   We should like for your opinion to advise
             speoificallyas to whether or not the State Bank-
             ing 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 conditionthat the proposed bank
             be admitted as a member of the Federal Deposit In-
             surance Corporationas a oondition preoedent to
             engaging in the banking business?
                      "Furt,herws 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                by the Banking Board might be rescinded by it on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 determinedthat oom-
                plianoe with suoh conditionor conditions was wholly
                beyond the control of the incorporators*"


        +zd     ‘~’Subsection ti1, Article 5
        43rd Legislaturereads as follows:
                                                    of Chapter 9i;'AotS of
                                        ,,
                                                                  "~'
                      K' .~          _..~
        :                                               '.
               :  ~~wApplicants shall file with the Commissioner
             an applicationfor charter on suoh form and inolude
             therein suoh informationas may be prescribed by the
             Commissioner,and the proposed articles of assooia-
             tion; shall pay an investigationfee as prescribed
             under Artiole 3921, Revised Statutes  of Texas, 1925,
             and deposit with the Commissioneroharter fees as
             prescribedby law. The Commissionershall thereupon
             make a thorough  investigationand report his findings
             to the State  Banking Board.,
                   "In uonsideringany such application,the State
             Banking Board shall, after hearing, determine whether
             or not:
                      "1. A pub110 neoessitg exists for the'pro-        ~
                posed 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 indicate profitable operation of the
             proposed bank.               ..
                    .   .

         Honorable H. A. Jamison, page 3




,.~, .              *4. The proposed officers and directors
              have sufficientbanking 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 Commis-
             sioner she&l, when the capital‘has been paid in in
             oash and.the franchise tax paid, deliver to the in-
             oorporatorsa certified copy of the articles of as-
             eooiation, and the bank shall come into corporate
             existence. Provided, however, that the State Bank-
             ing 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 association until such con-
             dition has been met, after which the Commissioner
             shall in writing inform the State Banking Board as
             to compliancewith 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 im-
      posed 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 oapitalin8uffi-
      cient, and hence could impose a condition requiring applicants to
      inorease same, if the Board deemed the capital in8ufficient, But
    .,.thatwould not be true with respect to a condition that the pro-,
      Dosed bank be admitted as a member of the Federal Deposit Insur-
      anoe Corporation. The Board would not have authority to reject
      sn application if the applicants should refuse to apply for member-
HonorableB. A. Jamison,Page 4


ship therein, and, therefore, oould pot impose suoh a oondition
upon the applicantsfor 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 determinesthat compliancetherewith,
                                               is wholLy
beyond the controlof the incorporators.


                                    Yours
                                    .     very truly   .
                                ATl’ORNBY GE-   Oi !PEXA!3
