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 Honorable Lse Brady, Commissioner
 State Department of Banking
 Austin, Texas

  Dear Mr. Brady:                        Opinion No. 0 2691
                                         Rs: Corporate power of Del Rio
                                             Bank and Trust Caapany to
                                             aoquire certain property
                                             as a banking house.

         We have your request of August 33th, 1940, asking for an opinion of
 this department with respeot to the corporate power of the Dal Rio Bank and
 Trust Company of Del Rio, Texas to aoquire certain property as a bsnking
 house.

         Article    512 of the Revised Civil Statutes pertinent to your inquiry
  is as follows:

 "No State bank or bank and trust company shall inrest mars than fifty
 per oent of theapita   stock and permanent surplus in its banking house,
 nor more than fifteen per oent of its capital stock and permanent sur-
 plus in the furniture and fixtures to be used in its said banking house,
 unless said oorporation shall have first applied to the State Banking
 Board and reoeivsd written permission to make a larger investment than
 is allowad hereunder, which written permission shall b+ entered upon the
 minutes of a regular meeting of said banking corporation."

          It will be seen the only limitation of the statute upon the amount
  to be invested by a Stats bank in its banking house shall not be"mors than
  fifty per oent of its capital stock and permanent surplus" of the bank. Ws
  understand fromyo  r letter that the proposed purchase does not exceed this
  amount.

          Of course a bank may not speculate in real estate. It is no part
  of its corporate purpose. It may acquire directly such real estate as may
  be reasonably necessary in oonduoting its banking affairs, but no mars.
  It may acquire real estate, however, not at all necessary in the transao-
  tion of its business, when such acquisition is made in the process of ool-
  letting debts due to it or in other words irhensuch acquisition is inciden-
  talmerely to a transaotion of its major oorporate business -- that of
  banking. (See Articel 415, Revised Civil Statutes.)

          Suoh an institution, however, is expressly, or at least by necessary
  implication, authorized to acquire real estate for its banking house purposes.
                    ,.




Honorable Lee Brady, page 2 (C-2691)



           If the propetiy is being purohared by the bank for the good faith
purpose of a banking house, the law isnot oonoeraed with the oharaoter of'the
build,ng, its structural peouliaritles, the nmber of stories, the nmnber of
separate rocm or offioeo, and the like? thsse are matters for the sound bus-
iness discretion of the Board of Direatora. It would be difficult to find a
building which had not been built to speoifioations for a bank that would in
all respeats be exactly fitted to the demands of a bank purchasing the sams.
Indeed, it might be difficult to construot a building to specifioations suited
only tothe present needs but to the future needs of a bank undertaking to
oonstruat its own banking house. In the present ease, surplus rocaas,stories,
offioes and the like, it appears, may be profitably rented by the bank. Ype
cannot close our eyer to the faot that in many instances -- perhaps in most
instancea -- our better banks ooeupy their own buildings oonsisting of several,
sanetimes many stories, and muoh, if not most of the floor space is not actually
used by the bank in oonduoting it.6banking business but is rented out. There
oanbe no valid objection tothis if the major good faith purpose of the ao-
quirition or oonstruation of the building be to provide a banking house for the
institution.

           Under the facts detailed   by the bank in its letter which accompan-
Ion your request, it Is the opinion   of this department that the bank does have
the corporate power to purchare the   building as it proposes ta &without via-
lating in any manner Artiole 612 of   our statutes or any other statute or de-
cision regulating suohmatterr.

           It would be advisable however for the Banking Casmiasion to
approve the,oontraot under Artiole 512 of the Statutea.

                                              Yours very truly


                                            A~RNEYGEiNIWLClTEXAS


                                             "/I/   ocir ??peer

                                                     &is 'Sp&
                                                       Assistant



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