We have your lette

ciation until such , after which the Coa- ting 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 Bank- ing 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 ap- plication for ohartero *2 -

Honorable II. A. Jamison, wge 2

,

We should like for your opinion to advise speoifically as 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 condition that the proposed bank be admitted as a member of the Federal Deposit In- surance 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ws should like advice as to whether or not such a condition or conditions, if imposed by the Banking Board might be rescinded by it on its own motion if it should be determined that oom- plianoe with suoh condition or conditions was wholly beyond the control of the incorporators*" +zd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' .~ '. : : ~~wApplicants shall 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 assooia- tion; 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 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'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 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 Commis- sioner she&l, when the capital ‘has been paid in in oash and.the franchise tax paid, deliver to the in- oorporators a 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 Commissioner shall 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 Banking Board as 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 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 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 oapitalin8uffi- cient, 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 Insur- anoe Corporation. The Board would not have authority to reject sn application if the applicants should refuse to apply for member- *4 Honorable B. A. Jamison, Page 4

ship therein, and, therefore, oould pot impose suoh a oondition upon 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