87R11032 SRA-F     By: West S.B. No. 1714       A BILL TO BE ENTITLED   AN ACT   relating to the Texas Community Reinvestment Act; authorizing a   fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle Z, Title 3, Finance Code, is amended by   adding Chapter 282 to read as follows:   CHAPTER 282. TEXAS COMMUNITY REINVESTMENT ACT   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 282.001.  SHORT TITLE. This chapter may be cited as the   Texas Community Reinvestment Act.          Sec. 282.002.  DEFINITIONS. In this chapter:                (1)  "Banking commissioner" means the banking   commissioner of Texas.                (2)  "Covered financial institution" means:                      (A)  a bank, savings bank, or credit union   chartered under the laws of this state;                      (B)  an entity licensed in this state to make or   originate residential mortgage loans that lent or originated 50 or   more residential mortgage loans in the previous calendar year; and                      (C)  any other financial institution under the   jurisdiction of the department as designated by rule by the banking   commissioner.                (3)  "Department" means the Texas Department of   Banking.          Sec. 282.003.  APPLICABILITY OF CHAPTER. This chapter does   not apply to a bank, savings bank, savings and loan association, or   credit union chartered under the laws of the United States.          Sec. 282.004.  CONFLICT WITH OTHER LAW. To the extent this   chapter conflicts with other law, this chapter prevails.          Sec. 282.005.  RULES. (a) The banking commissioner may   adopt rules necessary and appropriate to implement and enforce this   chapter, including rules that:                (1)  promote access for all communities in this state   to appropriate financial services from covered financial   institutions;                (2)  define fair lending practices in connection with   the activities of covered financial institutions;                (3)  define the terms used in this chapter and   interpret the provisions of this chapter; and                (4)  create a public comments process.          (b)  To implement this chapter, the banking commissioner   shall adopt rules incorporating the regulations applicable to   covered financial institutions under federal law. The banking   commissioner may make adjustments and exceptions to the rules as   necessary.   SUBCHAPTER B. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS'   SERVICE TO LOCAL COMMUNITIES          Sec. 282.051.  OBLIGATIONS OF COVERED FINANCIAL   INSTITUTIONS. (a) Each covered financial institution has a   continuing and affirmative obligation to meet the financial   services needs of the communities in which the institution's   offices, branches, and other facilities are maintained that is:                (1)  consistent with the safe and sound operation of   the financial institution; and                (2)  for a credit union, consistent with the credit   union's common bond.          (b)  Each covered financial institution that provides all or   a majority of the institution's products and services through   mobile and other digital channels has a continuing and affirmative   obligation to help meet the financial services needs of   deposit-based assessment areas, including areas contiguous to   those areas, low-income and moderate-income neighborhoods, and   areas where there is a lack of access to safe and affordable banking   and lending services, that is:                (1)  consistent with the safe and sound operation of   the financial institution; and                (2)  for a credit union, consistent with a credit   union's common bond.          Sec. 282.052.  ASSESSMENT OF COVERED FINANCIAL   INSTITUTIONS. (a) The banking commissioner shall assess the   record of each covered financial institution in satisfying the   financial institution's obligations under Section 282.051.          (b)  The banking commissioner by rule shall provide for an   assessment of the following factors relating to whether covered   financial institutions are meeting the financial services needs of   local communities:                (1)  activities to ascertain the financial services   needs of the community, including communication with community   members regarding financial services provided;                (2)  extent of marketing activities to make members of   the community aware of the financial services offered;                (3)  origination of mortgage loans, including home   improvement and rehabilitation loans, and other efforts to assist   existing low-income and moderate-income residents to be able to   remain in affordable housing in the their neighborhoods;                (4)  for small business lenders, the origination of   loans to businesses with gross annual revenues of $1,000,000 or   less, particularly those in low-income and moderate-income   neighborhoods;                (5)  participation, including investments, in   community development and redevelopment programs, small business   technical assistance programs, minority-owned depository   institutions, community development financial institutions, and   mutually-owned financial institutions;                (6)  efforts working with delinquent customers to   facilitate a resolution of the delinquency;                (7)  origination of loans that show an undue   concentration and a systematic pattern of lending resulting in the   loss of affordable housing units;                (8)  evidence of discriminatory and prohibited   practices; and                (9)  other factors that reasonably bear on the extent   to which a covered financial institution is meeting the financial   services needs of the institution's entire community, including   responsiveness to community needs as reflected by public comments.          Sec. 282.053.  EXAMINATIONS; FEES. (a) The banking   commissioner, in consultation with state and federal agencies with   appropriate regulatory authority, may examine each covered   financial institution for compliance with this chapter and other   applicable state and federal fair lending laws, including:                (1)  the Texas Fair Housing Act (Chapter 301, Property   Code);                (2)  the Equal Credit Opportunity Act (15 U.S.C.   Section 1691 et seq.); and                 (3)  the Home Mortgage Disclosure Act of 1975 (12   U.S.C. Section 2801 et seq.).          (b)  The banking commissioner may adopt rules with respect to   the frequency and manner of examination, including the imposition   of examination fees.           (c)  The banking commissioner shall appoint a suitable   person to perform the examination. The banking commissioner or the   commissioner's appointees may:                (1)  examine the books, records, documents, and   operations of each covered financial institution or the   institution's parent company, subsidiaries, affiliates, or agents;   and                (2)  examine under oath any officers, directors,   employees, and agents of the covered financial institution or the   institution's parent company, subsidiaries, affiliates, or agents.           (d)  Any document or record prepared or obtained in   connection with or relating to the examination, and any record   prepared or obtained by the banking commissioner, to the extent   that the record summarizes or contains information derived from any   document or record described by this section, is not public   information subject to disclosure under Chapter 552, Government   Code, unless otherwise provided by this chapter.          Sec. 282.054.  WRITTEN EVALUATION. (a) On completion of an   examination of a covered financial institution under Section   282.053, the banking commissioner shall prepare a written   evaluation of the covered financial institution's record of   performance under this chapter.          (b)  Each evaluation must have:                (1)  a public section that includes, at a minimum, the   information that would be disclosed in a written evaluation under   the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et   seq.); and                (2)  a confidential section.          (c)  After the banking commissioner gives the covered   financial institution an opportunity to comment on the evaluation,   the banking commissioner shall make the public section of the   evaluation open to public inspection on request.          (d)  The written evaluation must include:                (1)  the assessment factors used to determine the   covered financial institution's descriptive rating;                (2)  the banking commissioner's conclusions with   respect to each assessment factor;                (3)  a discussion of the facts supporting those   conclusions;                (4)  the covered financial institution's descriptive   rating and the basis for the rating; and                (5)  a summary of public comments.          Sec. 282.055.  RATINGS FOR RECORD OF PERFORMANCE. (a) Based   on an examination under Section 282.053, the banking commissioner   shall assign a covered financial institution one of the following   ratings in regard to the institution's record of performance in   meeting the institution's community financial service needs:                (1)  outstanding;                (2)  satisfactory;                (3)  needs to improve; or                (4)  substantial noncompliance.          (b)  Notwithstanding the provisions of this chapter, the   banking commissioner may establish an alternative examination   procedure for any covered financial institution that, as of its   most recent examination, has been assigned a rating of outstanding   or satisfactory for the institution's record of performance in   meeting the institution's community financial services needs.          Sec. 282.056.  PUBLIC NOTICE. Each covered financial   institution shall provide, in the public lobby in each of the   institution's offices and on the institution's Internet website, a   public notice that is substantially similar to the following:   "STATE OF TEXAS   COMMUNITY REINVESTMENT NOTICE          The Texas Department of Banking (department) evaluates our   performance in meeting the financial services needs of this   community, including the needs of low-income to moderate-income   households. The department takes this evaluation into account when   deciding on certain applications submitted by us for approval by   the department. Your involvement is encouraged. You may obtain a   copy of our evaluation. You may also submit signed, written   comments about our performance in meeting community financial   services needs to the department."           Sec. 282.058.  CORPORATE ACTIVITIES AND RENEWAL   APPLICATIONS. (a) The banking commissioner shall consider the   record of performance of the covered financial institution and the   institution's parent company, including subsidiaries, relative to   this chapter in considering an application for:                (1)  the establishment of a branch office or other   facility;                (2)  the relocation of a main office, branch office, or   other facility;                (3)  a license renewal;                (4)  a change in control of a covered financial   institution; or                (5)  a merger or consolidation with, the acquisition of   assets of, or the assumption of liabilities of:                      (A)  a covered financial institution;                      (B)  an out-of-state bank, credit union, or   residential mortgage licensee;                       (C)  a national bank or credit union; or                      (D)  a foreign financial institution.           (b)  The record of performance of the covered financial   institution may be the basis for the denial of an application   described by Subsection (a).    SUBCHAPTER C. COOPERATIVE AGREEMENTS          Sec. 282.101.  COOPERATIVE AGREEMENTS. (a) For purposes of   this chapter, the banking commissioner may:                (1)  conduct any examinations under this chapter with   state, other state, or federal regulators;                (2)  enter into cooperative agreements regarding:                      (A)  the coordination of or joint participation in   the examinations;                      (B)  the amount and assessment of examination   fees; or                      (C)  enforcement actions related to the   examinations; and                (3)  accept reports of examinations by other regulators   under those agreements.          (b)  Any coordination or joint participation under this   section:                (1)  may seek to promote efficient regulation and   effect cost reductions for the department and covered financial   institutions; and                (2)  may not limit public participation as permitted   under certain federal regulations.           Sec. 282.102.  CONFIDENTIALITY; PRIVILEGES. Any   information or material shared for purposes of coordination or   joint participation under this subchapter continues to be subject   to the requirements under any federal or state law regarding the   privacy or confidentiality of the information or material. Any   privilege arising under federal or state law, including the rules   of any federal or state court, with respect to the information or   material, continues to apply to the information or material.          Sec. 282.103.  AUTHORITY NOT LIMITED. This subchapter may   not be construed as limiting the authority of the banking   commissioner to independently conduct examinations of and   enforcement actions against a covered financial institution.          SECTION 2.  Subchapter C, Chapter 404, Government Code, is   amended by adding Section 404.0213 to read as follows:          Sec. 404.0213.  CONSIDERATION OF FINANCIAL INSTITUTION'S   COMMITMENT TO COMMUNITY. (a) In addition to any other requirements   under law, the comptroller shall consider a financial institution's   record and current level of financial commitment to the   institution's local community when deciding whether to deposit   state funds in the financial institution. The comptroller may   consider:                (1)  for financial institutions subject to the   Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et   seq.), the current and historical ratings that the financial   institution has received, to the extent that those ratings are   publicly available, under that law;                (2)  any changes in ownership, management, policies, or   practices of the financial institution that may affect the level of   the financial institution's commitment to the institution's   community;                (3)  the financial impact that the withdrawal or denial   of deposits of state funds might have on the financial institution;   and                (4)  the financial impact to the state as a result of   withdrawing state funds or refusing to deposit additional state   funds in the financial institution.          (b)  State funds may not be deposited in a financial   institution subject to the Community Reinvestment Act of 1977 (12   U.S.C. Section 2901 et seq.) unless the institution has a current   rating of satisfactory or outstanding under that law.          (c)  When investing or depositing state funds, the   comptroller may give preference to financial institutions that have   a current rating of outstanding under the Community Reinvestment   Act of 1977 (12 U.S.C. Section 2901 et seq.).          (d)  This section may not be construed as authorizing the   comptroller to conduct an examination or investigation of a   financial institution or to receive information that is not   publicly available and the disclosure of which is otherwise   prohibited by law.          SECTION 3.  This Act takes effect September 1, 2021.