Regular Session
Texas Department of Banking • Banking Commissioner
Key implementation requirements and action items for compliance with this legislation
The "Safety and Soundness" Catch-All:
Section 1(7) grants the Banking Commissioner the power to prohibit *“any other activity determined... to threaten the safety and soundness of the state trust company.”*
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This bill's path through the Texas Legislature
BILL ANALYSIS |
| H.B. 3806 |
| By: Lambert |
| Pensions, Investments & Financial Services |
| Committee Report (Unamended) |
| BACKGROUND AND PURPOSE Under state law, the banking commissioner may appoint a supervisor over a state trust company that is in hazardous condition. While under supervision, certain activities are restricted without prior approval from the banking commissioner or the supervisor. H.B. 3806 seeks to make the statute establishing these restrictions consistent with statutes applicable to other entities under the jurisdiction of the Texas Department of Banking by restricting a state trust company under supervision from engaging in any other activity the commissioner determines to threaten the safety and soundness of the company and extending a restriction on the payment of cash dividends to all dividends.
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| CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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| RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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| ANALYSIS H.B. 3806 amends the Finance Code to revise the actions a state trust company under supervision due to a determination of hazardous condition by the banking commissioner is prohibited from taking without prior approval of the commissioner or the supervisor, or as otherwise permitted or restricted by the order of supervision, as follows: ·includes among such prohibited actions engaging in any activity determined by the banking commissioner to threaten the safety and soundness of the state trust company; and ·removes the specification that the dividends the state trust company is prohibited from paying to shareholders or participants are cash dividends. |
| EFFECTIVE DATE September 1, 2025.
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| H.B. No. 3806 | ||
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| relating to prohibited activities of a state trust company under | ||
| supervision. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 185.106, Finance Code, is amended to | ||
| read as follows: | ||
| Sec. 185.106. DUTIES OF STATE TRUST COMPANY UNDER | ||
| SUPERVISION. During a period of supervision, a state trust | ||
| company, without the prior approval of the banking commissioner or | ||
| the supervisor or as otherwise permitted or restricted by the order | ||
| of supervision, may not: | ||
| (1) dispose of, sell, transfer, convey, or encumber | ||
| the state trust company's assets; | ||
| (2) lend or invest the state trust company's funds; | ||
| (3) incur a debt, obligation, or liability; | ||
| (4) pay a [ |
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| shareholders or participants; | ||
| (5) solicit or accept any new client accounts; [ |
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| (6) remove an executive officer or director, change | ||
| the number of executive officers or directors, or have any other | ||
| change in the position of executive officer or director; or | ||
| (7) engage in any other activity determined by the | ||
| banking commissioner to threaten the safety and soundness of the | ||
| state trust company. | ||
| SECTION 2. This Act takes effect September 1, 2025. | ||
| TO: | Honorable Stan Lambert, Chair, House Committee on Pensions, Investments & Financial Services |
| FROM: | Jerry McGinty, Director, Legislative Budget Board |
| IN RE: | HB3806 by Lambert (Relating to prohibited activities of a state trust company under supervision.), As Introduced |
| Source Agencies: | 451 Department of Banking |
| LBB Staff: | JMc, FV, GDZ, KSi |
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Common questions about HB3806
HB3806 significantly expands the Texas Department of Banking’s authority over state trust companies placed under supervision. Effective September 1, 2025, the law extends the prohibition on unapproved dividends to include non-cash assets and freezes the institution's ability to hire, fire, or alter the Board of Directors without prior Commissioner approval. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: September 1, 2025.
HB3806 was authored by Texas Representative Stan Lambert during the Regular Session.
HB3806 was signed into law by Governor Greg Abbott on June 20, 2025.
HB3806 is enforced by Texas Department of Banking and Banking Commissioner.
The compliance urgency for HB3806 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
The cost impact of HB3806 is estimated as "low". This may vary based on industry and implementation requirements.
HB3806 addresses topics including financial, financial--general, property interests, property interests--trusts and banking commissioner of texas.
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