1. (a) Forms. A state bank that desires to establish and operate a branch office must complete and file a branch application on forms prescribed by the department. Eligible banks may file an expedited application pursuant to §15.3 of this title (relating to Expedited Filing).
2. (b) Filing. The banking commissioner shall issue a written notice as required by §15.4 of this title (relating to Required Information and Abandoned Filings) informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required.

3. (c) Public Notice.

   1. (1) Within 14 days of the initial submission of its application, the applicant shall publish notice of the application as required by §15.5 of this title (relating to Public Notice). Notice shall be published in the community of the proposed branch.
   2. (2) The notice must comply with the content requirement of §15.5(b) of this title (relating to Public Notice) and shall also include the proposed location of the branch or service area.
4. (d) Public Comment and Protest. For a period of 14 days after publication of notice or such longer period as the banking commissioner may allow for good cause shown, the public may submit written comments or protests regarding the application. Persons submitting comments will not be charged any fees or costs, but are not entitled to further notice of or participation in the branch application proceedings. Each protesting party has the rights and responsibilities set forth in subsections (f) and (g) of this section.

5. (e) Criteria for branch approval: "Significant supervisory or regulatory concerns."

   1. (1) In concluding whether the banking commissioner should have significant supervisory concerns regarding a proposed branch, the banking commissioner will consider the financial condition of the applicant, the financial effect of the branch on the applicant, the management abilities of the applicant, and the history and prospects of the applicant and its affiliates regarding fulfillment of responsibilities to regulatory agencies and to the public, including, but not limited to, the responsibility of the applicant to meet the credit needs of its entire community pursuant to the Community Reinvestment Act (CRA), 12 United States Code, §2901 et seq. An application will ordinarily be denied if the applicant is in less than satisfactory financial condition as of its most recent examination or has a less than satisfactory rating regarding compliance with CRA.
   2. (2) In concluding whether the banking commissioner should have significant regulatory concerns regarding a proposed branch, the banking commissioner will consider the need to maintain a sound banking system. The banking commissioner will follow the principles that the marketplace normally is the best regulator of economic activity, and that healthy competition promotes a sound and more efficient banking system that serves customers well. Accordingly, absent significant supervisory concerns, the general policy of the banking commissioner is to approve applications to establish and operate branches, provided that approval would not otherwise violate the provisions of federal or state law (including any requirements for federal banking agency approval).

   3. (3) In evaluating whether the banking commissioner should have significant supervisory or regulatory concerns as set forth in paragraphs (1) and (2) of this subsection, the banking commissioner will consider written material in the record, including the application, comments on file, protests on file, and any replies of the applicant, the department's files as they relate to the current financial condition of the applicant, and any data that the banking commissioner may properly officially notice. Specifically, the banking commissioner shall approve a branch if the following considerations are met:

      1. (A) the department's files do not indicate significant regulatory concerns as they relate to the current financial condition of the applicant, including but not limited to its capital, asset quality, management, earnings and liquidity (these files are confidential pursuant to the Finance Code, Chapter 31, Subchapter D, and such rules and regulations adopted pursuant to the Finance Code, are not open or available to either the applicant or a protesting party or to the public);
      2. (B) the costs of establishing the proposed branch office, including costs of purchasing or leasing the branch site, necessary furnishings, staffing and equipment and the effect of these costs do not significantly affect the operations of the applicant as a whole;
      3. (C) the projected earnings appear reasonable and sufficient to support expenses attributable to the branch without jeopardizing the safety and soundness of the applicant;
      4. (D) the depth and quality of management of the applicant and the proposed branch is sufficient to justify a belief that the bank will operate in compliance with the Finance Code;
      5. (E) the bank has demonstrated compliance with CRA as determined by the rating assigned in the applicant's most recent CRA evaluation;
      6. (F) the applicant has demonstrated a responsiveness to recommendations made in past state and federal bank examination reports and the applicant has generally been operated in substantial compliance with all applicable state and federal laws; and
      7. (G) there are no areas of general supervisory concern as determined by the banking commissioner in the exercise of discretion.
   4. (4) The banking commissioner will direct the department to assemble, evaluate, and make a recommendation regarding all relevant documentation and data as set forth in this subsection within 30 days after the later of the date the application is complete and accepted for filing, or expiration of the period for filing a comment, protest, response or reply, whichever is the last to occur; provided, however, that if a hearing is granted pursuant to subsection (g) of this section, the banking commissioner will request the administrative law judge for the Finance Commission of Texas (administrative law judge) to discharge this function through the hearings process. Portions of the record so assembled that are confidential pursuant to the Finance Code, Chapter 31, Subchapter D, must be segregated and clearly marked as confidential.
   5. (5) The banking commissioner shall either approve, conditionally approve or deny the application on or before the 30th day after receipt of the department's recommendation in the event no hearing is to be held.

6. (f) Protest.

   1. (1) A protest may be initiated by notifying the department in writing of the intent to protest the application within the time period allowed by subsection (d) of this section, accompanied by the filing fee as set forth in §15.2(c) of this title (relating to Filing Fees and Cost Deposits). If the protest is untimely, the filing fee will be returned to the protesting party. If the protest is timely, the department will notify the applicant of the protest and mail or deliver a complete copy of the non-confidential sections of the application to the protesting party on or before the 14th day after receipt of the protest or the application, whichever occurs later.
   2. (2) The protesting party shall file a detailed protest responding to each substantive statement contained in the non-confidential sections of the application within 20 days after receipt of the application. The protesting party's response must indicate with regard to each such statement whether it is admitted or denied. The applicant shall file a written reply to the detailed response on or before the tenth day after the response is filed. Both the detailed response and the reply thereto must be verified by affidavit and must contain a certificate of service on the opposing party. When applicable, statements in the response and in the reply may be supported by references to data available in sources of which official notice may properly be taken. Comments received by the department and any replies of the applicant to such comments will also be made available to the protesting party.
   3. (3) The banking commissioner may extend any time period set forth in this subsection for good cause shown. Good cause includes, but is not limited to, failure of the department to furnish required documentation, forms or information within a reasonable time to permit its effective use by the recipient, or failure of a party to timely serve a filed document on an opposing party. The filing date is the date the document is actually received by the department and not the date of mailing. Failure to timely file a required document is considered an abandonment of the application or protest, as applicable. Rule 21a, Texas Rules of Civil Procedure, shall govern methods and manner of authorized service and the computation of time periods under this subsection.

7. (g) Hearing.

   1. (1) Pursuant to the Finance Code, §32.203, the banking commissioner may not be compelled to hold a hearing prior to granting or denying approval to establish a branch.
   2. (2) In the exercise of discretion, the banking commissioner may consider granting a hearing on a branch application at the request of either the applicant or a protesting party. The banking commissioner may order a hearing even if no hearing has been requested by the parties. A party requesting a hearing must indicate with specificity what issues are involved that cannot be determined on the basis of the record compiled pursuant to subsection (e) of this section and why the issues cannot be so determined. The request for hearing and the banking commissioner's decision with regard to granting a hearing will be made a part of the record.
   3. (3) If a hearing is not requested or if a request for hearing is denied, the banking commissioner will consider the application in the manner set forth in and solely on the basis of the written record established pursuant to subsection (e) of this section.
   4. (4) If a hearing is granted, the administrative law judge shall enter appropriate order(s) and conduct the hearing within 30 days after the date the hearing was granted, or as soon thereafter as is reasonably possible, under Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings) and the Administrative Procedure Act (Texas Government Code, Chapter 2001). Issues will be limited to those on which testimony is absolutely necessary, and the administrative law judge may require testimony to be submitted in written form and prefiled. No evidence will be received on matters that are not in dispute. No issues or evidence will be considered that are not relevant to the standards set forth in subsection (e) of this section or that are not supported by the application, response, or reply.
   5. (5) A proposal for decision, exceptions and replies to such proposal for decision, the final decision of the banking commissioner, and motions for rehearing are governed by Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings).
8. (h) Beginning Operations. Any activity approved pursuant to this section must commence within 18 months from the date of approval unless the banking commissioner extends that date in writing. Approval will automatically expire 18 months from the date of approval if no extension is granted.
9. (i) Emergency Branches. The procedures set forth in subsections (c), (d), (f), and (g) of this section do not apply to branch applications made as a part of a transaction for the purpose of assuming all or a portion of the assets and liabilities of any financial institution deemed by the banking commissioner to be in hazardous condition. The banking commissioner may authorize banks to establish temporary branch locations in the event of an emergency as defined by the Finance Code, §37.001. The procedures set forth in subsections (c), (d), (f) and (g) of this section do not apply to situations in which the banking commissioner has authorized a temporary branch location because of an emergency.
10. (j) Branch Relocation. A bank may, with prior written approval of the banking commissioner, relocate an approved branch. The bank shall file an application to relocate a branch accompanied by the required application fee pursuant to §15.2 of this title (relating to Filing Fees and Cost Deposits). The bank shall also publish notice pursuant to §15.5 of this title (relating to Public Notice). Notice shall be published in the community, of the current branch and of the proposed branch.
11. (k) Closing a Branch. Before closing an approved branch, a bank shall comply with the notice requirements of federal law, and shall provide the department with a copy of the branch closing notice filed with the appropriate federal banking regulator simultaneously with its filing. Once the branch has been closed, the bank cannot thereafter reopen the branch except upon application for a new branch in compliance with this section.

Source Note:The provisions of this §15.42 adopted to be effective January 5, 1996, 20 TexReg 10999.