A state trust company may invest restricted capital in securities, but must keep at least 50% in readily marketable securities convertible to cash within four business days unless the banking commissioner approves less.
Sec. 184.101. SECURITIES. (a) A state trust company may invest its restricted capital in any type or character of equity or investment securities under the limitations provided by this section. (b) Unless the banking commissioner in writing approves maintenance of a lesser amount, a state trust company must invest and maintain an amount equal to at least 50 percent of the state trust company's restricted capital under Section 182.008 in investment securities that are readily marketable and can be converted to cash within four business days. (c) Subject to Subsection (d), the total investment of its restricted capital in equity and investment securities of any one issuer, obligor, or maker, and the total investment of its restricted capital in mutual funds, held by the state trust company for its own account, may not exceed an amount equal to 15 percent of the state trust company's restricted capital. The banking commissioner may authorize investments in excess of this limitation on written application if the banking commissioner determines that: (1) the excess investment is not prohibited by other applicable law; and (2) the safety and soundness of the requesting state trust company is not adversely affected. (d) Notwithstanding Subsection (c), a state trust company may invest its restricted capital, without limit subject to the exercise of prudent judgment, in: (1) bonds and other legally created general obligations of a state, an agency or political subdivision of a state, the United States, or an agency or instrumentality of the United States; (2) obligations that this state, an agency or political subdivision of this state, the United States, or an agency or instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee; (3) securities that are offered and sold under 15 U.S.C. Section 77d(5); (4) mortgage related securities or small business related securities, as those terms are defined by 15 U.S.C. Section 78c(a); (5) mortgages, obligations, or other securities that are or ever have been sold by the Federal Home Loan Mortgage Corporation under Section 305 or 306, Federal Home Loan Mortgage Corporation Act (12 U.S.C. Sections 1434 and 1455); (6) obligations, participations, or other instruments of or issued by the Federal National Mortgage Association or the Government National Mortgage Association; (7) obligations issued by the Federal Agricultural Mortgage Corporation, the Federal Farm Credit Banks Funding Corporation, or a Federal Home Loan Bank; (8) obligations of the Federal Financing Bank or the Environmental Financing Authority; (9) obligations or other instruments or securities of the Student Loan Marketing Association; or (10) qualified Canadian government obligations, as defined by 12 U.S.C. Section 24. (e) In the exercise of prudent judgment, a state trust company shall, at a minimum: (1) exercise care and caution to make and implement investment and management decisions for the entire investment portfolio, taking into consideration the safety and soundness of the state trust company; (2) pursue an overall investment strategy to enable management to make appropriate present and future decisions; and (3) consider, to the extent relevant to the decision or action: (A) the size, diversification, and liquidity of its corporate assets; (B) the general economic conditions; (C) the possible effect of inflation or deflation; (D) the expected tax consequences of the investment decisions or strategies; (E) the role that each investment or course of action plays within the investment portfolio; and (F) the expected total return of the portfolio. (f) A state trust company may invest its secondary capital in any type or character of equity or investment securities subject to the exercise of prudent judgment according to the standards provided by Subsection (e). (g) The finance commission may adopt rules to administer and carry out this section, including rules to: (1) establish limits, requirements, or exemptions other than those specified by this section for particular classes or categories of investment; or (2) limit or expand investment authority for state trust companies for particular classes or categories of securities or other property. Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 23, eff. Sept. 1, 2001. Amended by: Acts 2015, 84th Leg., R.S., Ch. 250 (S.B. 875), Sec. 10, eff. September 1, 2015.