Texas Department of Banking Strategic Plan 2025-2029

Texas Department of Banking

Strategic Plan

Fiscal Years 2025-2029

Texas Department of Banking

2601 N. Lamar Blvd.

Austin, Texas 78705

Toll Free 877-276-5554

www.dob.texas.gov

Agency Strategic Plan

Fiscal Years 2025 to 2029

Texas Department of Banking

Finance Commission of Texas

Commission Member Dates of Term Hometown

Phillip A. Holt, Chair

Feb 23, 2016 to Feb 1, 2028

Bonham

Robert (Bob) Borochoff

Feb 22, 2016 to Feb 1, 2028

Houston

Hector J. Cerna

Dec 16, 2015 to Feb 1, 2026

Eagle Pass

Kathleen K. Fields

May 16, 2024 to Feb 1, 2028

San Antonio

Glen Martin (Marty) Green

June 27, 2022 to Feb 1, 2028

Dallas

Troy L. Lambden

May 16, 2024 to Feb 1, 2030

Graham

Sharon McCormick

April 20, 2020 to Feb 1, 2026

Frisco

Roselyn (Rosie) Morris, Ph.D.

March 24, 2022 to Feb 1, 2026

San Marcos

David W. Osborn

May 16, 2024 to Feb 1, 2030

El Paso

Miguel Romano, Jr.

May 16, 2024 to Feb 1, 2030

Austin

Laura Nassri Warren

April 20, 2020 to Feb 1, 2026

Palmhurst

Submitted June 1, 2024

/s/ Charles G. Cooper

_______________

_________________

Charles G. Cooper, Banking Commissioner

Table of Contents

DEPARTMENT OF BANKING MISSION .................................................................................................. 1

AGENCY GOALS AND ACTION PLANS ................................................................................................... 1

Goal: Effective Bank and Trust Regulation ............................................................................................................................. 1

Actions Required to Achieve Goal .............................................................................................................................................. 1

Goals and Action Items Support Statewide Objectives .............................................................................................................. 2

Other Considerations ................................................................................................................................................................. 5

Overview ................................................................................................................................................................................ 5

Effective Examinations ........................................................................................................................................................... 5

Staffing Resources .................................................................................................................................................................. 6

Examination Workforce Challenges ....................................................................................................................................... 7

Challenges for Regulated Entities........................................................................................................................................... 7

Goal: Effective Regulation of Non-Depository Supervision Licensees ..................................................................................... 9

Actions Required to Achieve Goal .............................................................................................................................................. 9

Goals and Action Items Support Statewide Objectives ............................................................................................................ 10

Other Considerations ............................................................................................................................................................... 13

Overview .............................................................................................................................................................................. 13

Effective Examinations ......................................................................................................................................................... 14

Staffing Resources ................................................................................................................................................................ 14

Examination Workforce Challenges ..................................................................................................................................... 15

Challenges for MSBs ............................................................................................................................................................. 16

Challenges for PFCs and PCCs .............................................................................................................................................. 17

Unlicensed and Illegal Activity ............................................................................................................................................. 18

Goal: Effective Regulation Through Corporate Activities ...................................................................................................... 18

Actions Required to Achieve Goal ............................................................................................................................................ 18

Goals and Action Items Support Statewide Objectives ............................................................................................................ 19

Other Considerations ............................................................................................................................................................... 20

Overview .............................................................................................................................................................................. 20

Applications and Filings ........................................................................................................................................................ 20

Technology ........................................................................................................................................................................... 21

Corporate Activities Workforce Challenges ......................................................................................................................... 21

Goal: Effective and Efficient Operations Compliant with State Laws .................................................................................... 22

Actions Required to Achieve Goal ............................................................................................................................................ 22

Goals and Action Items Support Statewide Objectives ............................................................................................................ 22

Other Considerations ............................................................................................................................................................... 24

Overview .............................................................................................................................................................................. 24

Employee Surveys and Job Satisfaction ............................................................................................................................... 25

Legal ..................................................................................................................................................................................... 25

Management Information Systems (MIS) ............................................................................................................................ 26

Financial Education .............................................................................................................................................................. 27

Consumer Assistance ........................................................................................................................................................... 27

Administrative Services ........................................................................................................................................................ 27

COOP .................................................................................................................................................................................... 27

CAPPS ................................................................................................................................................................................... 28

Succession Planning and Employee Retention and Recruiting ............................................................................................ 28

Finance Commission Building ............................................................................................................................................... 30

Sunset Review ...................................................................................................................................................................... 30

REDUNDANCIES AND IMPEDIMENTS ................................................................................................. 31

SUPPLEMENTAL SCHEDULES

SCHEDULE A: BUDGET STRUCTURE…………………….………………………………..………………………..………………A-1

SCHEDULE B: PERFORMANCE MEASURE DEFINITIONS……………………..…….………………………..…….…..…B-1

SCHEDULE C: HISTORICALLY UNDERUTILIZED BUSINESS PLAN………………………...………...………………….C-1

SCHEDULE D: STATEWIDE CAPITAL PLAN…………………………………………………….…..…………………………..N/A

SCHEDULE E: HEALTH & HUMAN SERVICES STRATEGIC PLANNING..……………………………..……...……..N/A

SCHEDULE F: AGENCY WORKFORCE PLAN………………………………………………………………...…..….……..…..F-1

SCHEDULE G: WORKFORCE DEVELOPMENT SYSTEM STRATEGIC PLANNING…………..…………………….N/A

SCHEDULE H: REPORT ON CUSTOMER SERVICE……………………………..………………….…..……………………..H-1

SCHEDULE I: CYBERTRAINING CERTIFICATION………………………………………………………………………………..I-1

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Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 1

Department of Banking Mission

The mission of the Department of Banking is to ensure Texas has a safe, sound, and

competitive financial services system.

Agency Goals and Action Plans

The Department’s mission is accomplished primarily by the examination and supervision of our

chartered and licensed entities. To meet our goals and fulfill our mission, the Department will abide

by these core values and operating principles:

• Adhere to the highest ethical and professional standards.

• Be statutorily accountable and responsible.

• Anticipate and respond to a dynamic environment.

• Identify and promote innovative practices.

• Operate efficiently and maintain consistent and prudent regulatory standards.

• Communicate effectively.

• Foster teamwork while encouraging individual excellence and career development.

• Provide a desirable work environment that values cultural and individual differences.

• Seek input from and be responsive to the public, our supervised entities, and State leadership.

• Adhere to the principle of “Tough but Fair” regulatory oversight.

Goal: Effective Bank and Trust Regulation

Ensure timely, fair, and effective supervision and regulation of the financial institutions under our

jurisdiction. The regulatory process promotes a stable banking and financial services environment and

provides the public with convenient, safe, and competitive financial services. Provide quality regulation

and maintain the credibility of the Department with the public, industries we regulate, federal banking

regulators, and other government agencies.

Actions Required to Achieve Goal

• Conduct commercial bank, trust company, and foreign bank agency, foreign bank branch, and

foreign bank representative office (foreign bank organizations) examinations, in cooperation

with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank (FRB),

while conforming with the Department’s examination priority schedule and in a thorough,

accurate, and timely manner.

• Maintain contact with, and monitor the condition of, regulated entities between examinations

through processes which include an off-site monitoring program. Continue to improve off-site

monitoring processes by augmenting our management information systems (MIS).

• Research and report on changing industry, statutory, and economic conditions, and develop

appropriate supervisory strategies to adapt to these changes.

Agency Goals and Action Plans

2| Texas Department of Banking · 2025-2029 Strategic Plan

• React timely and appropriately when needed to implement disaster preparedness plans and

adjust to changing situations as applicable to continue providing effective oversight of regulated

entities.

• Monitor industry status and engage in regular communication with federal regulators (FDIC and

FRB) and the Conference of State Bank Supervisors (CSBS).

• Obtain feedback from regulated entities regarding proposed rule changes.

• Promote cybersecurity awareness and best practices among our regulated entities and

employees.

• Maintain a cybersecurity tracking system and monitor remediation efforts associated with

cybersecurity incidents reported by our regulated entities.

• Identify and investigate fraudulent activities and insider abuse.

• Ensure correction-oriented enforcement actions are taken, as appropriate, against regulated

entities that demonstrate higher than normal weakness or risk, including consideration of

noncompliance with laws, regulations, and policies.

• Maintain sufficient regulatory resources in the event of industry deterioration or systemic

industry problems, the reallocation of federal regulatory resources away from Texas, or a

significant increase in the regulated asset base.

• Attract and retain qualified employees through a competitive salary program, specialized

training, and career advancement opportunities. Promote a culture of state service as a career.

• Optimize efficiencies in the examination process by utilizing electronic examination tools and

the Department’s secure data exchange portal to share information with regulated entities and

federal counterparts.

• Improve the agency’s technologies through the adoption of cloud offerings, where appropriate,

and by ensuring current technologies are in use to support regulatory obligations and

operations.

• Enhance the Department’s examination procedures and scoping processes to effectively utilize

examination resources for evaluating risks and risk management practices of our regulated

entities.

• Provide regulatory and supervisory information through the agency’s website.

• Maintain accreditation status by CSBS.

Goals and Action Items Support Statewide Objectives

1. Accountable to tax and fee payers of Texas.

Consumers

• Ensure Texans have access to safe and sound financial services providers that comply

with applicable laws and regulations.

• Provide consumers with various avenues for filing complaints on entities regulated by

the Department.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 3

• Protect consumers by maintaining the Closed Account Notification System which

provides depository institutions with a method to report compromised accounts closed

due to fraud or identity theft to check verification entities.

• Ensure adherence to self-leveling, self-funding and Self-Directed, Semi-Independent

(SDSI) statutory requirements.

Regulated Entities

• Provide useful and timely information on the website.

• Issue regulatory and supervisory guidance as appropriate and make these available

through the Department’s Law and Guidance Manual.

• Communicate with industry stakeholders regarding important issues.

• Seek input on the annual budget through a public hearing.

• Provide employees of regulated entities a secure avenue to report suspicious activity,

fraud, or abuse to the Department.

• Ensure that the cost of regulation is reasonable and equitable for all regulated entities.

• Operate efficiently and maintain consistent and prudent regulatory standards.

2. Efficient such that maximum results are produced with a minimum waste of taxpayer

funds, including the elimination of redundant and

non-core functions.

• Continue to coordinate examinations and other supervisory activities and produce joint

regulatory responses when applicable to reduce duplicative responses to financial

institutions.

• Maintain a data exchange portal which is used by regulated entities and examination

staff to improve the secure transmission of information.

• Adopt and maintain appropriate technologies to support efficient, effective, and secure

operations.

• Leverage technology to conduct efficient, risk-focused examinations that target areas

of concern and facilitate effective examinations on and off-site.

• Review examination procedures on a continual basis and develop and refine procedures

to address industry trends when necessary.

• Allow flexible work schedules where appropriate to reduce on-site examination time and

travel burden, and to minimize associated expenses.

• Perform off-site monitoring to maintain awareness of, and contact with, regulated

entities between on-site examinations.

3. Effective in successfully fulfilling core functions, measuring success in achieving

performance measures, and implementing plans to continuously improve.

• Meet or exceed performance measures related to banks, trust companies, and foreign

bank organizations.

• Explore ways to further automate examination and related administrative processes.

Agency Goals and Action Plans

4| Texas Department of Banking · 2025-2029 Strategic Plan

• Monitor legislative and emerging issues as well as their impact on regulated entities.

• Perform continual reviews of examination procedures and policies.

• Review regulatory and supervisory guidance frequently to ensure they are current and

relevant.

• Provide ongoing formal and informal training opportunities for examination staff.

4. Attentive to providing excellent customer service.

• Provide professional and timely resolutions to consumer complaints.

• Seek feedback from consumers upon closure of their complaint against a regulated

entity.

• Seek feedback from regulated entities at the conclusion of each examination and

through the annual Rate the Department Survey.

• Adhere to policies regarding timely dissemination of reports of examinations.

• Notify regulated entities of new or revised rules, regulations, or policies in a timely

manner.

• Participate in outreach events dedicated to informing and educating bankers and trust

administrators.

• Ensure management of banks, trust companies, and foreign bank organizations are well-

informed about the progress of examinations and findings.

5. Transparent such that agency actions can be understood by any Texan.

• Ensure the Department’s website contains the following information:

o Proposed rule changes written in plain language and instructions on how to

submit comments;

o Enforcement actions and orders;

o Examination procedures;

o Corporate applications, notices, and filing activity;

o Department-issued regulatory and supervisory guidance accessible through the

Law and Guidance Manual; and

o Accurate lists of entities currently (or formerly) supervised, registered, and

licensed by the Department.

• Provide status reports regarding agency activities and industry conditions to the Finance

Commission of Texas (FC).

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 5

Other Considerations

Overview

Overall, state-chartered banks are operating with strong capital but face an increasingly challenging

operating environment with labor shortages, high interest rates, and inflationary pressures. Concerns

related to liquidity and credit risks are at the forefront. The Department must be prepared for a

potential rise in problem institutions, which could place additional strains on agency resources. The

Bank and Trust Supervision Division will continue to actively monitor, evaluate, and respond to the

risks posed to our regulated entities. The Department strives to react quickly to changing economic

conditions as well as catastrophic events.

The number and total assets of banking entities supervised by the Department as of December 31,

2023, is shown in the following table:

Regulated Entities

Number of Entities

As of

December 31, 2023

Total Assets

($ millions)

Commercial Banks 213 432,115

Commercial Bank Trust

Departments

35 109,803

(1)

Trust Companies

16 Non-exempt

20 Exempt

170,316

(2)

Offices of Foreign Bank

Organizations (FBOs)

(3)

4 Agencies

17 Representative Offices

3 Branches

114,299

(1) Asset under management is not included in total assets of commercial banks.

(2) Fiduciary assets for public trust companies (non-exempt) only.

(3) Foreign bank agency, representative office, or branch licensed to operate in Texas.

The number of regulated financial institutions has declined over the years primarily due to

consolidations; however, the dollar volume of assets under supervision reflects a significant increase

due to acquisitions, charter conversions, and organic growth. This trend has produced banks that are

more complex, larger in size, operate offices in more diverse geographic locations, and offer a broader

array of products and services.

Effective Examinations

Department employees must be knowledgeable of regulatory changes, emerging trends, and economic

conditions at both the state and national levels to be successful in meeting the agency’s goals.

Monitoring concerns surrounding the stability of state-chartered financial institutions and identifying

the individual banks and trust companies that demonstrate an increased risk profile are critical.

Examiners routinely review institutional exposures to changing economic conditions, and when

appropriate, the agency acts to mitigate these risks.

Agency Goals and Action Plans

6| Texas Department of Banking · 2025-2029 Strategic Plan

The Bank and Trust Supervision Division staff are primarily responsible for conducting examinations

and performing off-site monitoring of state-chartered banks and trust companies. Risk-focused and

forward-looking examinations are conducted utilizing an improved examination scoping process and

risk-focused procedures. Examinations are often performed using a hybrid approach with examination

staff working on-site as well as off-site.

The Department participates with the FDIC and FRB in a longstanding, cooperative examination

program, which provides for both alternating and joint bank examinations. The agency must meet the

highest expectations and supervisory standards to maintain the state’s role in enhancing the dual

banking system. This program improves efficiencies for the Department and federal regulators while

providing a benefit to regulated entities by reducing regulatory burden. As part of the cooperative

examination program, the agency must also be accredited by CSBS.

Division staff utilizes the FDIC’s Examination Tools Suite (ETS) to review and document examinations.

ETS allows for the collaboration of findings among examination staff and review examiners while also

allowing bank examiners with the Department, FDIC, and FRB to share information more effectively

in the examination of financial institutions for safety and soundness.

The agency utilizes a secure

Internet portal for regulated entities and federal counterparts to exchange information with the

Department. A new web-based platform was slated to be released at year-end 2022, however,

programming delays occurred. Progress continues to be made on implementing the selected platform

which will include added security features. The enhanced data exchange platform is projected to be

released in 2025.

Staffing Resources

A large portion of the Department’s resources are dedicated to the activities of the Bank and Trust

Supervision Division. As of March 31, 2024, the division represents 65% of the agency’s 184

employees. Based on the authorized staffing plan, however, the division is understaffed by 20 full-

time employees as of March 2024. In addition, 18% of the division staff are eligible to retire or includes

return-to-work retirees who may leave at any time in 2024. This increases to 26% over the next five

years.

Historically, the agency has experienced high turnover with financial examiners in the first five years

of employment, leaving a void in the number of examiners qualified to become mid-level examiners.

This mid-level workforce gap has been difficult to fill given that there are so few applicants for mid-

level positions that require a certain level of skills and experience. Further, senior management

continues to face the challenges of having a high number of well-tenured financial examiners eligible

to retire over the next five years and a shortage of mid-level examiners available to take their place

if these retirements occur. The Department will continue to focus on recruiting and retention efforts.

As regulated entities continue to become more complex, the need to be fully staffed is more critical.

Much of the examination staff have experienced an increase in workload while operating with

insufficient resources, increasing the risk of worker fatigue. This trend is likely to continue until staffing

levels are in line with the staffing plan. Staffing changes due to retirements and resignations resulting

in less experienced examiner staff could affect the agency’s ability to meet its priorities as well as

impact productivity among the remaining staff over the next five years.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 7

Examination Workforce Challenges

Texas state-chartered banks continue to grow in asset-size and complexity, a continuing trend that is

not expected to change for the foreseeable future. To meet the challenges resulting from the growth

in size and sophistication, the Department must retain experienced examiners, provide specialized

training for less experienced staff, and hire qualified personnel with examiner experience if available.

This includes specialty examiners skilled in capital markets, Bank Secrecy Act/Anti-Money Laundering,

trust, and Information Technology (IT) areas.

Banks often rely on third parties to provide various products and services. This includes partnering

with financial technology (FinTech) companies, which are non-depository financial service providers

relying heavily on technology to improve their use and delivery to customers almost exclusively

through an online platform. As banks increase their reliance on these types of companies for services,

the Department will need to provide appropriate training for existing personnel and consider hiring

additional personnel with specific knowledge and background in evaluating the potential risks posed

by this technology, including unique electronic product delivery methods, blockchain technology, and

cryptocurrency. Further, additional tenured examiners will be required to complete these examinations

within the mandated timeframes.

Financial examiners must have the proper experience and training to capably assess the risks in the

industry. The general training policy includes on-the-job training, seminars, conferences, and required

core curriculum of internal and external schools. Training courses and seminars which had been

primarily conducted virtually during the pandemic are gradually transitioning back to a more effective

in-person training format. The Department has resumed conducting in-person internal examiner

schools which were postponed due to the pandemic. In addition, an intense training program for newly

hired assistant examiners was successfully implemented in June 2023. The program focuses on the

fundamentals of commercial bank examination and will be utilized going forward as part of the

agency’s internal training program. This formalized training program is expected to shorten the

timeframe for commissioning financial examiners and improve efficiencies within the agency. IT and

cybersecurity training remains a priority and all Department field examiners and related directors must

attend periodic IT training to stay abreast of this changing environment.

Significant resources are dedicated to developing assistant examiners into commissioned examiners.

The estimated cost to adequately train an examiner in the financial examiner levels I-III through the

first four years of employment is approximately $325,000. This educational investment into an

examiner’s career is essential to achieving the agency’s mission and offering effective examinations.

As banks and trust companies under the Department’s supervision become larger and more complex,

additional resources will be required for staff development, further impacting the agency’s budget in

the next five years.

Efforts to hire experienced examiners from external sources have not been productive; however, we

will attempt to improve staffing levels through enhanced recruiting. As indicated above, the new

internal training program has been successful. We will continue to focus on this method and refine the

structure.

Challenges for Regulated Entities

The Department continually monitors state-chartered banks and the factors that could impact an

institution’s financial condition. The factors listed below are expected to create challenges for the

banking industry over the next five years:

Agency Goals and Action Plans

8| Texas Department of Banking · 2025-2029 Strategic Plan

(1) Cybersecurity threat detection and prevention while also providing modern electronic banking

conveniences for customers.

(2) Instabilities in economic conditions, high interest rates, and inflationary pressures that could

impact asset quality and other performance metrics.

(3) The cost of complying with federal rules and regulations, primarily for smaller community

banks.

(4) Competition for deposits and pricing pressures associated with the tightening of credit

underwriting standards.

(5) Succession planning as it relates to the recruitment and retention of qualified staff to replace

retiring management and board members, especially in smaller, rural communities.

(6) Commercial Real Estate and funding concentrations without effective risk mitigation strategies

especially in an elevated interest rate environment.

(7) Identifying and maintaining safeguards against IT vulnerabilities.

(8) Maintaining reliable funding sources and sound asset quality in an environment of higher

interest rates, compared to prior years, and depreciation within portfolios.

(9) Changes in the Texas economy caused by external events, international trade disputes and

geopolitical conflicts, weakness in specific industries, or cybersecurity incidents which could

impact financial service providers and the customers who rely on them.

(10) Finding new revenue sources without disproportionately increasing compliance, credit, and

operational risks.

(11) Increased competition in the personnel area from other financial service providers, especially

from non-banks.

(12) Climate-related events such as hurricanes, wildfires, floods, and droughts can impact credit

and investment risk.

As financial institutions implement advanced automation and innovative technology including

cybersecurity, data privacy, and data management risks will continue to increase. Financial records

and monetary transmission systems are targets for unauthorized access by sophisticated hackers,

terrorists, and other cybercriminals. The trend toward increasingly sophisticated cyber-attacks is

expected to continue. The Department and federal banking agencies require financial institutions to

perform internal cybersecurity risk assessments that are reviewed at each examination. The

Department maintains a cybersecurity tracking system to monitor events and management’s

remediation efforts associated with incidents reported by our regulated entities. The Department’s

website also provides numerous cybersecurity resources for bankers.

The competitive landscape for commercial banks is changing with the growth and diversity in FinTech

companies and other non-traditional business models. Mortgage lending, insurance, and payment

platforms, for example, are products/services FinTech companies increasingly provide. They often

have faster approval times and lower overall operating costs, placing additional competitive pressures

on traditional brick-and-mortar banks. Strong growth in FinTech-related companies and non-

traditional lines of business models are expected to continue, further impacting the traditional banking

environment. As a result, some banks are strategically partnering with FinTech companies to enhance

the services provided to their customers.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 9

The use of digital assets is disrupting the financial services marketplace, and some Texas state-

chartered banks and trust companies have expressed interest in offering such assets. President Biden

issued an Executive Order (EO) in March 2022, Ensuring the Responsible Development of Digital

Assets. The EO contained six key priorities: consumer and investor protection; promoting financial

stability; countering illicit finance; U.S. leadership in the global financial system and economic

competitiveness; financial inclusion; and responsible innovation. The order tasked the U.S. Treasury

and other federal financial regulators as well as Congress to identify and address risks that digital

assets pose to financial stability and financial market integrity while promoting safe growth. In April

2022, the FDIC issued a Financial Institution Letter that stated, in part, that any FDIC-supervised

institution that intends to engage in crypto or other digital assets should notify the FDIC for review

and feedback. The federal financial regulatory agencies continue to assess current and proposed

crypto-asset-related activities by banking organizations and whether or how they can be legally

permissible, and conducted in a manner that is safe and sound and in compliance with applicable laws

and regulations. The Department has determined that Texas state-chartered banks and trust

companies, under their existing legal powers, can provide custodial services for customers who

possess virtual currency. Digital asset technology is expected to continue evolving over the next five

years and warrants close attention as it has demonstrated to be highly volatile and vulnerable. The

Department will continue to evaluate this technology and the ramifications associated with the EO and

guidance provided by federal agencies and adjust processes as needed to ensure the safety and

soundness of chartered entities.

Goal: Effective Regulation of Non-Depository Supervision Licensees

Ensure timely, fair, and effective supervision and regulation of the non-depository licensees under our

jurisdiction. The regulatory process promotes a stable financial services environment and provides the

public with convenient, safe, and competitive financial services. Provide quality regulation and

maintain the credibility of the Department with the public, industries we regulate, and other

government agencies.

Actions Required to Achieve Goal

• Conduct Money Services Business (MSB), Prepaid Funeral Contract (PFC), and Perpetual Care

Cemetery (PCC) examinations, in conformance with the Department’s examination priority

schedule and in a thorough, accurate, coordinated, and timely manner. MSB examinations are

conducted either independently or jointly with other state regulatory entities, or in cooperation

with federal regulatory entities.

• Maintain contact with and monitor the condition of regulated entities between examinations.

Continue to improve off-site monitoring processes by augmenting our management information

systems (MIS).

• Monitor fluctuations in economic conditions, geopolitical risks, and inflationary pressures that

will impact non-depository financial service providers.

• Promote cybersecurity awareness and best practices among our employees, and regulated

entities.

• Maintain a cybersecurity tracking system for cybersecurity incidents reported by MSBs.

Agency Goals and Action Plans

10| Texas Department of Banking · 2025-2029 Strategic Plan

• Actively participate in the Multi-State MSB Examination Task Force (MMET), Money Transmitter

Regulators Association (MTRA), and CSBS and its various committees, to promote and improve

the nationwide framework for cooperation and coordination among state regulators to ensure

a uniform regulatory oversight of the MSB industry.

• Maintain MSB examination efficiencies through cooperation and coordination among states by

developing uniform examination procedures and practices and actively participating in the

standardization of a networked supervision approach. Participation in the MMET’s multi-state

networked supervision system conserves Department resources and minimizes the regulatory

burden on supervised entities while achieving our objectives.

• Collaborate and coordinate with MSB regulators in other states in the implementation of the

Model Money Transmission Modernization Act (Model Law).

• Collaborate with stakeholders, industry auditors, and legislators in the implementation of the

Digital Assets Service Provider law passed by the 88

Texas Legislature in 2023.

• Optimize efficiencies in the examination process utilizing available electronic examination tools

and the secure data exchange portal to share information with regulated entities and other

state regulators.

• Research, monitor, and report on changes to the industry, including statutory and economic

conditions, and digital assets market evolutions. Develop appropriate supervisory strategies to

adapt to these changes.

• Monitor the impact of potential federal legislation on licensed money transmitters and engage

in regular communication with federal and state regulators.

• Provide the industry access to regulatory and supervisory information through the agency’s

website.

• Obtain feedback from license holders regarding proposed rule changes.

• Identify and investigate non-licensed entities and illegal activities.

• Ensure proper enforcement actions are issued against unlicensed entities to bring such

establishments into compliance with rules and regulations.

• Ensure correction-oriented enforcement actions are issued against regulated entities that

demonstrate noncompliance with rules and regulations.

• Attract and retain qualified employees through a competitive salary program, specialized

training, and career advancement opportunities. Promote a culture of state service as a career.

• React appropriately when needed to implement disaster preparedness plans and adjust to

changing situations as needed to continue to provide effective oversight of regulated entities.

• Maintain MSB accreditation status by CSBS.

Goals and Action Items Support Statewide Objectives

1. Accountable to tax and fee payers of Texas.

Consumers

• Ensure Texans have access to safe and sound financial services providers that comply

with applicable laws and regulations.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 11

• Ensure consumer funds collected for PFCs will be available when needed.

• Ensure the required perpetual care amounts paid by consumers as part of the purchase

of an interment right in a PCC are properly deposited in a trust account and managed

appropriately.

• Ensure consumer funds collected by an MSB are properly accounted for and transmitted

to the consumer’s designated recipient and/or beneficiary or made available to the

consumer at a later time.

• Provide consumers with various avenues for filing complaints on entities regulated by

the Department.

• Oversee the Prepaid Funeral Guaranty Fund.

• Ensure adherence to self-leveling, self-funding and SDSI statutory requirements.

Regulated Entities

• Provide useful and timely information on the website.

• Issue regulatory and supervisory guidance as appropriate and make these available

through the Department’s Law and Guidance Manual.

• Organize stakeholder meetings to gather feedback on proposed rules and regulations.

• Seek input on the annual budget through a public hearing.

• Provide outreach efforts to industry stakeholders for discussing important issues.

• Provide employees of regulated entities a secure avenue to report suspicious activity,

fraud, or abuse to the Department.

• Operate efficiently and maintain consistent and prudent regulatory standards.

• Ensure that the cost of regulation is reasonable and equitable for all regulated entities.

2. Efficient such that maximum results are produced with a minimum waste of taxpayer

funds, including the elimination of redundant and

non-core functions.

• Accept another state's MSB examination report, when certain criteria are met, to avoid

unnecessary regulatory duplication and facilitate the process of supervision and

examination with the least regulatory burden to our licensed entities.

• Maintain a data exchange portal which is used by regulated entities and examination

staff to improve the secure transmission of information.

• Adopt and maintain appropriate technologies to support efficient, effective, and secure

operations.

• Utilize and continue to enhance technology allowing examiners to be more efficient when

on-site and perform portions of an examination off-site, when practical.

• Receive PFC, PCC, and MSB annual report submissions online to reduce processing time.

• Review examination procedures on a continual basis and develop and refine procedures

to address industry trends when necessary.

Agency Goals and Action Plans

12| Texas Department of Banking · 2025-2029 Strategic Plan

• Allow flexible work schedules where appropriate to reduce on-site examination time and

travel burden, and to minimize associated expenses.

• Coordinate and participate in multi-state MSB examinations utilizing the MTRA and

MMET standard examination procedures and networked supervision approach.

3. Effective in successfully fulfilling core functions, measuring success in achieving

performance measures, and implementing plans to continuously improve.

• Meet or exceed performance measures related to MSBs, PFCs, and PCCs.

• Monitor legislative and emerging issues as well as their impact on regulated entities.

• Perform continual reviews of examination procedures and policies.

• Review regulatory and supervisory guidance regularly to ensure they are current and

relevant.

• Explore ways to further automate examination and related administrative processes.

• Provide formal and informal training opportunities for examination staff.

4. Attentive to providing excellent customer service.

• Provide professional and timely resolutions to consumer complaints.

• Seek feedback from consumers upon closure of their complaint against a regulated

entity.

• Maintain PFC website to provide information that will help consumers to make informed

decisions relating to the purchase of preneed funeral merchandise or services.

• Seek feedback from regulated entities through the annual Rate the Department Survey.

• Utilize feedback from MTRA post-examination survey data collected from multi-state

joint examinations.

• Notify regulated entities of new or revised rules, regulations, or policies in a timely

manner.

• Ensure management of entities under examination is well-informed about the progress

of examinations and findings.

5. Transparent such that agency actions can be understood by any Texan.

• Ensure the Department’s website contains the following information:

o Proposed rule changes written in plain language and instructions on how to

submit comments;

o Enforcement actions and orders;

o Examination procedures;

o Corporate applications, notices, and filing activity;

o Department-issued regulatory and supervisory guidance accessible through the

Law and Guidance Manual; and

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 13

o Accurate lists of entities currently (or formerly) supervised, registered, and

licensed by the Department.

• Provide status reports regarding agency activities and industry conditions to the Finance

Commission of Texas (FC).

Other Considerations

Overview

The Department must continue to stay abreast of industry changes and challenges, especially with

more complex MSBs such as those that provide cryptocurrency or other digital asset services. With

the evolving MSB industry and the increase in more complex licensees, the agency will face strains on

staffing and operations if additional resources are not available.

Department staff must remain knowledgeable of regulatory changes, emerging trends, and economic

conditions at both the state and national level to effectively regulate and supervise licensees. The

agency will continue to work closely with organizations, such as CSBS and MTRA, and federal agencies

such as the Financial Crimes Enforcement Network (FinCEN), Consumer Financial Protection Bureau

(CFPB), and Internal Revenue Service to stay informed of the matters affecting our regulated non-

depository industries. Collaborating with other regulators and industry groups helps the Department

provide MSBs with clear and consistent guidance and allows examination personnel to stay abreast of

current and emerging issues. A high level of knowledge and expertise is essential as NDS staff are

increasingly collaborating with the Corporate Activities Division and the Legal Division staff on

applications for new MT licensees. The Department is considered a leader in MSB regulation and

examinations, often leading multi-state examinations, participating in the various non-depository

committees that establish nationwide processes and procedures, and providing guidance on related

emerging issues in the industry.

The number and total assets of the Department’s non-depository licensees subject to examinations

are shown in the following table:

Regulated Entities

Number of Entities

As of

December 31, 2023

Total

Assets

($ millions)

Money Services Businesses* 194 342,675

Prepaid Funeral Contract Sellers

335 4,876

Perpetual Care Cemeteries 245 469

*MT and CEX licensees

The primary regulatory programs administered by the Department are funded through assessments,

like those in Texas Administrative Code, Title 7, §§ 33.27(e)(1) and (e)(2), requiring each regulated

industry to pay its proportionate share of the cost of regulation. The purpose of most fees charged by

the Department, whether for an application, an examination, or another purpose, is to enable the

Department to be self-supporting and each regulatory program to be self-sustaining. Further, since

Agency Goals and Action Plans

14| Texas Department of Banking · 2025-2029 Strategic Plan

the Department may not directly or indirectly cause the State’s General Revenue Fund to incur such

costs, the Department must periodically evaluate its operations and financial forecasts to determine

whether the fee structure equitably funds the cost of regulation, as required by statute, and adequately

supports the department and relevant regulatory programs.

Assessments for the money services industry have remained the same since 2014, and operational

expenses have significantly increased over the 10-year period. Although penalties assessed to both

licensed and unlicensed entities for non-compliance have offset assessments collected from the

industry to fund the cost of regulation, they are inherently inconsistent from year to year. An analysis

of the Department’s current and projected revenues revealed that key regulatory functions performed

by the Non-Depository Supervision Division are not adequately funded by the existing fee structure

primarily due to the increasing complexity of MSB examinations, which require additional staff

resources and higher operational expenses, and the overall declining penalties. The Department has

a proposal to amend §33.27 of the Texas Administrative Code that would give the Commissioner the

ability to increase the allowable annual assessments paid by MSBs to offset the forecasted funding

shortfalls.

Effective Examinations

Examinations of MSB, PFC, and PCC entities are conducted using a hybrid approach utilizing a

combination of on-site and off-site activity, considering the risk level of each entity.

The Department participates in the MMET multi-state networked supervision system which utilizes

uniform MSB examination procedures and practices among participating states. This level of

collaboration allows the Department to conserve resources and minimizes the regulatory burden on

supervised entities while achieving agency objectives. The MMET facilitates coordinated examinations

among states as well as in partnership with the CFPB and FinCEN. In addition, the Department’s

examination cycle for MSB license holders aligns closely with several of the other state regulators

participating in the networked supervision of multi-state MSBs. This has improved examination

collaboration and efficiencies and reduced the regulatory burden on MT license holders without

impacting the agency’s ability to effectively ensure compliance with applicable regulations. It also

allows the Department to allocate additional resources to examinations of more complex, higher-risk,

and recently licensed MSBs.

CSBS, in conjunction with a working group that includes Department personnel, developed IT

procedures for all non-depository financial service providers. These procedures will continue to be

utilized by Department examiners as they provide a unified standard when examining MSBs, focusing

on the MT business lines.

CEX license holders are not part of the nationwide networked supervision approach as the Department

is their primary state regulator.

Staffing Resources

Examinations and monitoring of licensees are conducted by Non-Depository Supervision Division

(NDS) staff, which represents 11% of the Department’s employees as of March 31, 2024. Based on

the authorized staffing plan, however, the division is understaffed by five full-time employees as of

March 2024.

Although the number of MSB licensees has remained stable, it is anticipated that additional MSB

licenses will be issued in the next two years. As MSB licensees continue to increase significantly in size

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 15

and complexity, the need to be fully staffed is more critical. Additionally, the passage of Chapter 160

of the Finance Code by the 88

Texas Legislature charges the Department with ensuring money

transmitters that qualify as digital asset service providers comply with certain standards. The statute

requires the Department to utilize staffing resources to build out an expanded regulatory scheme to

administer this new regulation, including an expanded examination scope for the eligible digital asset

service providers.

Additional staff will be needed to conduct IT examinations of MSB license holders. The Department will

need to provide specialized training for less experienced staff and hire qualified personnel with

examiner/industry experience in the IT areas, if available. As a result, the Department will require

more MSB examiners going forward.

The number of PFC licensees continues to decline while the number of PCC licensees remains stable.

These trends are expected to continue over the next five years. Most of the PFC/PCC examination staff

are mid-to-senior level examiners. An additional entry-level examiner will be needed to balance the

staffing for PFC/PCC examiners.

Currently NDS staff are well diversified in terms of experience and knowledge. However, 24% of the

NDS Division is eligible to retire in the next five years. Staffing changes due to retirements or

resignations could affect productivity and examination priorities if there is a significant loss of expertise

and knowledge.

Examination Workforce Challenges

Division staff must stay informed of regulatory changes, and current and emerging issues, and adapt

quickly to adequately supervise non-depository entities. Retaining and maintaining a well-trained staff

to properly oversee licensed MSB, PFC, and PCC entities is critical in protecting the interests of Texas

consumers. The Department requires a core training curriculum for examiners which also creates a

progression for promotion. Employee retention is critical as financial examiner turnover is costly for

the Department.

MSB

The Department must continually develop the supervisory skills of MSB examiners to meet the

challenges of evolving technology, the growing complexity of MSBs, and increasingly sophisticated

cybersecurity threats. Understanding the activities of traditional and emerging payment systems,

including digital assets, blockchain technology, and the multi-layer structure of parties involved, is

vital to ensure public safety and confidence in the various payment systems. Training is essential to

develop and enhance examiners’ skills in this digital arena. However, there could be some difficulty

finding relevant training for some digital assets due to their evolving nature and uncertainties in the

regulatory framework. The Department is working on expanding internal core training materials for

MSB examiners. To stay abreast of the ever-changing IT and cybersecurity environment, all MSB

examiners and the Director of NDS must attend periodic IT training.

Every MSB examination contains an IT component. The reviews may be limited or expanded,

depending on staffing resources and the overall risk of a license holder. Expanded IT reviews are

planned and coordinated with the Bank and Trust Supervision Division’s IT examination staff or with

other state regulatory agencies participating in the examination. Department staff examining MSBs

must be knowledgeable of emerging technologies as MSB licensees expand into more innovative

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16| Texas Department of Banking · 2025-2029 Strategic Plan

products and services. The Department will need more experienced IT examiners to assist with these

examinations as the complexity of the services provided by MSBs grows.

In addition, the Department will continue to be challenged to identify illegal activities and unlicensed

entities doing business with Texans, particularly internet-based companies. Given the continuous

growth in and sophistication of MSB licensees, additional experienced staff is required to complete

examinations and meet performance goals. Staffing changes due to retirements or resignations and

the onboarding of less experienced examiners could strain agency resources. Training costs for NDS

examiners could also increase over the next five years as the agency works on expanding core training

for less experienced MSB examiners.

PFC and PCC

The Department has increased efficiencies by cross training PFC and PCC examination staff and

conducting both on-site and off-site reviews and examinations. The division provides on-the-job

training and utilizes the external sources available for professional growth and development. However,

because of the uniqueness of the regulation of PFCs and PCCs, opportunities for industry-related

training from outside sources are limited, aside from fraud detection and financial statement analysis.

The Department will strive to maintain current staffing levels for PFC and PCC examinations. The

experience levels are well balanced among these examiners; however, an additional entry-level

examiner may be needed should any retirements or turnover occur. If significant staffing changes

occur within the PFC and PCC examination group in the next five years, productivity and examination

priorities could be affected.

Challenges for MSBs

The MSB industry is continually evolving as companies explore new methods for providing existing

and new products to consumers. MSB business plans continue to be more complex, shifting towards

more innovative technology products and services, such as digital assets and blockchain technology,

and away from traditional money transmission activities. FinTech is a growing industry with many

companies capitalizing on innovative technology and the consumer’s reliance on smart devices.

Further, FinTech companies and banks are partnering to provide the products and services that

consumers demand. Internet and mobile payment volumes continue to grow as consumers and

merchants increasingly rely on peer-to-peer payment applications and mobile wallets to complete

financial transactions. The complexity of agreements and business plans will require the Department

to stay abreast of technological advances within the industry.

Each state has its own licensing requirements making it challenging for MTs to operate in multiple

states. Also, states have varying examination frequency cycles which results in most of the larger

multistate MSBs being examined annually by either joint or individual states. To help reduce regulatory

burden, CSBS, in conjunction with a working group that included Department personnel, developed

and released the Model Law in August 2021, which was designed to replace existing state money

transmission laws and create a single set of nationwide standards and requirements for MTs. The

Model Law was devised to standardize definitions, exemptions, the licensing/application process, legal

framework, and safety and soundness requirements to modernize the state financial regulatory

system. If adopted by most states’ legislative bodies, it will ensure the standardization of all areas of

regulation, licensing, and supervision, and eliminate unnecessary regulatory burden for MTs and more

effectively utilize regulator resources. Each state will be responsible for adopting and incorporating the

Model Law into their own statutory framework. The 88

Texas Legislature passed the Money Services

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 17

Modernization Act (Finance Code Chapter 152) which became effective on September 1, 2023. This

Act sets out new requirements including a higher minimum tangible net worth which may create

challenges for some licensees. The Department will continue to work on implementing the

requirements of this model law.

Cryptocurrencies and other digital assets are primarily held by third-party custodial account holders,

or digital asset service providers, that facilitate trading and maintain custody of the digital assets. With

the passage of House Bill 1666 by the 88

Texas Legislature, digital asset service providers that meet

certain conditions are subject to reporting requirements per Chapter 160 of the Finance Code. The

Department, through the Finance Commission, will be issuing rules to clarify these requirements. In

addition, the Department will work with licensees, industry auditors, and legislators to educate and

clarify the requirements of this new law.

As advanced technology is adopted, MSBs must have established policies and procedures that help

prevent criminals from hacking computer information systems, infrastructures, and/or computer

networks containing valuable customer information. As noted previously in the Bank and Trust

Regulation section, MSBs are required to report cybersecurity incidents to the Banking Commissioner

promptly if they experience a material incident. The Department continues to maintain a cybersecurity

tracking system to monitor incidents reported by MSBs. Cybersecurity threat detection and prevention

will remain prevalent for this industry and the agency will continue to promote awareness in this area.

Challenges for PFCs and PCCs

The death care industry, which includes PFCs and PCCs, operates in a well-established regulatory

environment. While the number of permit holders administering trust-funded prepaid funeral benefits

continues to decline due to consolidations and conversions to insurance-funded PFCs, the amount of

funds administered by Department-licensed PFCs is increasing. This trend is expected to continue.

Similar to many other industries, the death care industry has been affected by labor shortages and

employee turnover, including funeral directors, embalmers, and administrative staff. Consequently,

regulated entities frequently require additional regulatory oversight and supervision to assess

compliance deficiencies associated with new employee compliance training.

In the PFC industry, cremations continue to surpass traditional burial rates. This trend is expected to

continue. The rise in cremations can be attributed to several factors. The most prevalent is the lower

cost of cremation when compared to a traditional funeral service. As the shift in consumer demand

continues, the death care industry is responding by offering all-inclusive, direct cremation packages

or by providing specialized products and innovative services to help offset this lost revenue. The

Department must ensure that complete and accurate disclosures of all funeral goods and services

purchased are reflected on prepaid funeral contracts. At the federal level, the Federal Trade

Commission (FTC) is currently evaluating changes to the Funeral Rule, including the proposed

requirement for funeral homes to provide price lists electronically and include the pricelists on any

website maintained by the funeral home. While price lists are reviewed at each PFC examination, this

action would lead to improved public access to funeral goods and services prices.

In the PCC industry, the income generated from perpetual care trust funds is earmarked for the general

maintenance and care of the cemetery. In addition, cemetery profitability continues to be greatly

affected by the trend towards cremation and away from traditional burial. Smaller perpetual care

cemeteries often struggle to generate sufficient revenue to properly maintain the cemetery or employ

sufficient staff to achieve recordkeeping compliance. To assist PCCs with smaller perpetual care trusts,

Agency Goals and Action Plans

18| Texas Department of Banking · 2025-2029 Strategic Plan

funds may be temporarily placed in segregated interest-bearing accounts which provide relief from

cost-prohibitive trustee fees. In addition, many small PCCs have been engaged in soliciting donations

and volunteers from their community to assist in caring for and maintaining the cemetery property.

These challenges for PFC and PCC industries are expected to continue over the next five years.

Department staff will continue to monitor these trends and their impact on PFC and PCC licensees.

Unlicensed and Illegal Activity

The Department continues to monitor for unlicensed money transmission services. With the rise in

popularity of digital assets, business operators exchanging sovereign currency for digital currency may

be considered money transmitters and if so, must be licensed. This can be a challenge to identify as

the business models in this space are diverse and change continually. As such, monitoring for

unlicensed money transmission services has required additional resources from the Legal and NDS

Divisions. When unauthorized activity is identified, the agency issues appropriate administrative

penalties and requires the entity to obtain a permanent license or cease conducting unlicensed

activities in Texas. Over the next five years, additional staffing may be needed as MSBs submit license

applications resulting from unlicensed activity.

The Department also continues to monitor for illegal and fraudulent activity in the death care industry,

including the misallocation or defalcation of prepaid funeral funds or unauthorized sale of prepaid

funeral benefits. The agency will continue to monitor developments in the death care industry issues

that may impact consumer contracts or could pose a threat to the safety and soundness of the licensed

entities.

Goal: Effective Regulation Through Corporate Activities

Provide an effective process to evaluate and act upon corporate filings requesting to initiate, expand,

or modify financial services to Texans. In doing so, ensure that the prospective owners, managers,

and operators of financial service entities are capable of offering citizens of Texas access to convenient,

safe, sound, and competitive financial services.

Actions Required to Achieve Goal

• Process all filings in a timely and thorough manner while adhering to the principle of providing

Texans with access to convenient and competitive financial services operating in a safe and

sound manner.

• Optimize efficiencies in the application process by enhancing automated systems, where

possible, to improve the quality and speed of information exchanged internally and between

the Department, its stakeholders, applicants, and the various federal and state agencies that

we partner with to process applications.

• Reduce dependencies on obsolete technologies through the adoption of cloud offerings where

appropriate and by ensuring current technologies are in use to support regulatory obligations

and operations.

• Perform thorough background checks as appropriate to determine if the individuals proposed

have the experience, personal and financial integrity, and financial acumen to direct and/or

lead a financial institution or MSB’s affairs in a safe, sound, and legal manner.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 19

• Attract and retain qualified employees through a competitive salary program, specialized

training, and career advancement opportunities. Promote a culture of state service as a career.

Goals and Action Items Support Statewide Objectives

1. Accountable to tax and fee payers of Texas.

• Charter and license entities with sound business operations and plans that demonstrate

the ability and propensity to abide by applicable laws, including consumer protection

laws.

• Promote a thriving and competitive financial services industry.

• Prevent the introduction of bad actors into a regulated entity by performing appropriate

background checks.

• Ensure adherence to self-leveling, self-funding and SDSI statutory requirements.

• Ensure that the cost of regulation is reasonable and equitable for all regulated entities.

2. Efficient such that maximum results are produced with a minimum waste of taxpayer

funds, including the elimination of redundant and

non-core functions.

• Ensure staffing resources are periodically evaluated and adjusted in consideration of

application type, volume, complexity, and risk.

• Utilize the Corporate Application Filing Entry (CAFE) platform to securely receive

electronic filings and accompanying documentation.

• Adopt and maintain appropriate technologies to support efficient, effective, and secure

operations.

• Allow the use of federal or other states’ forms, when available, to minimize duplicate

efforts by the applicant.

• Utilize the Nationwide Multistate Licensing System & Registry (NMLS) for receiving and

processing MSB applications.

3. Effective in successfully fulfilling core functions, measuring success in achieving

performance measures, and implementing plans to continuously improve.

• Meet or exceed performance measures for processing bank, trust, MSB, and check

verification company applications.

• Strive to reduce manual processes by leveraging technology.

• Promote collaboration between divisions to extract requisite information.

4. Attentive to providing excellent customer service.

• Expedite application processing, review, and approval processes.

• Monitor compliance with rules to ensure timely responses to applications.

• Review forms and applications regularly to improve the quality of initial submission and

ease of completion, flexibility, and ultimately timely processing.

Agency Goals and Action Plans

20| Texas Department of Banking · 2025-2029 Strategic Plan

• Seek feedback from entities using Corporate Activities Division services through the

annual Rate the Department Survey.

5. Transparent such that agency actions can be understood by any Texan.

• Ensure Corporate Activities application forms are logically organized, readily available

to the public on our website, and meet accessibility standards.

• Provide corporate application activity information on our website.

• Ensure that our website continues to accurately list the entities currently (or formerly)

supervised, registered, and licensed by the Department.

Other Considerations

Overview

The Department is entrusted with ensuring the safety of the public’s money held by businesses that

provide financial services. Entities chartered or licensed by the Department include banks, trust

companies, foreign bank organizations, MSBs, PFC sellers, and PCCs. These chartered or licensed

entities are subject to examinations to ensure each is operating in a safe and sound manner and in

compliance with state and federal laws. Check verification entities are required to register with the

Department but are not subject to examination. The Corporate Activities Division processes, evaluates,

and acts upon all applications and filings requested by businesses wanting to initiate, expand, or

modify financial services for Texans.

Applications and Filings

The strong economy and business-friendly climate in Texas continue to attract companies to the state.

Over the next five years, the volume of corporate applications and filings related to entities chartered

and licensed by the Department is expected to remain at elevated levels while increasing in complexity.

Mergers and consolidations are expected to continue at a steady pace for the banking sector,

particularly among smaller community banks that find it harder to operate profitably in an environment

with increasing costs, competition, regulatory requirements, and succession planning challenges.

Charter conversion activity has been steady. Since the beginning of 2019, there have been 14

conversions of national banks or state savings banks to the Texas commercial bank charter totaling

approximately $22 billion in assets. This trend is expected to continue. Since the 2010s, the number

of de novo bank charters issued has been minimal. There were two de novo bank charters issued

between 2019 and 2023 with one application in process for 2024. In recent years, a commonly used

alternative to obtain a bank charter is for organizers to acquire a smaller bank and then relocate the

home office to a different location. The Department has, however, seen an increase in activity related

to de novo trust company charters. Since 2019, there have been five de novo trust company charters

issued. This application activity is expected to continue. The number of MSB license applications has

significantly increased each year and is expected to grow as advances in digital assets for financial

services evolve.

Applications focused on business models that integrate traditional banking with services typically

provided by MSBs continue to increase. This includes banking models utilizing digital platforms

centered around advanced or blockchain technology. The agency anticipates more bank applications

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 21

and filings with technologically driven business models, including digital assets, over the next five

years. As noted previously in the Bank and Trust Regulation section, in March of 2022, President Biden

issued an Executive Order (EO) on Ensuring the Responsible Development of Digital Assets which

outlined the first approach to addressing the risks and potential benefits of digital assets and their

underlying technology. Since then, federal agencies have developed frameworks and policy

recommendations on how to achieve these priorities. The Department will continue to monitor the

effects of this EO and any new guidance or rules to address current and emerging risks.

As mentioned previously in the Non-Depository Supervision Regulation section, digital asset service

providers that meet certain requirements must obtain and maintain a MT license. The implementation

of this new regulation directly impacts the application process for financial service providers offering

or interested in digital assets. In addition, the passage of the Money Services Modernization Act (Texas

Finance Code Chapter 152) which became effective on September 1, 2023, sets out new requirements

for MSBs that must be considered in the application processes as well. The Department will continue

to update processes associated with this law to ensure the safety and soundness of licensed and

chartered entities.

Applications to register as a check verification entity are nominal. As of December 31, 2023, two check

verification entities were registered with the agency.

Technology

The Department utilizes technology to optimize the efficiency of the application process. Two web-

based programs are available allowing entities to submit applications and notice filings securely

through electronic portals: MSBs use the NMLS to transmit electronic applications, while all other

chartered and registered entities utilize the CAFE platform. All entities, except MSBs, can utilize the

payment feature in CAFE for submitting application filing fees.

As part of the modernization efforts in the MSB licensing process, the Department now participates in

the Multistate Money Services Businesses Licensing Agreement Program (MMLA). This program,

developed in collaboration with CSBS, is designed to streamline and create efficiencies in the licensing

processes for state regulators as well as NMLS users.

Corporate Activities Workforce Challenges

The Department’s Corporate Activities analytical staff evaluates corporate applications and must

continue to stay abreast of current and emerging technologies as well as innovative financial products

and services. To ensure a safe, sound, and competitive financial system, the division must continue

to maintain a knowledgeable staff to ensure financial service providers operating in Texas are properly

vetted and authorized. As applications become more complicated, the review and analysis involved

will need to be expanded. Only recently have staffing levels risen to meet current needs. However, in

the next three to five years, 50% of the management and analytical staff are eligible to retire. The

loss of knowledgeable and experienced staff due to retirements or resignations could place a significant

strain on the activities of this division. Also, additional corporate analysts may be needed to process

applications in a timely and thorough manner as the complexity of transactions and business models

of entities continue to increase.

Corporate analysts are trained to be knowledgeable in evaluating all types of applications, but

additional emphasis on digital assets will be a priority for the foreseeable future. Workforce

development is primarily on-the-job training with external resources available for professional growth

Agency Goals and Action Plans

22| Texas Department of Banking · 2025-2029 Strategic Plan

and development. The cost to effectively train existing and new corporate analysts will increase over

the next five years.

Goal: Effective and Efficient Operations Compliant with State Laws

Ensure that Texans and stakeholders are effectively and efficiently served by high-quality professionals

entrusted to implement regulatory requirements and industry standards, utilize advanced

technologies, safeguard confidential information, provide educational opportunities to support and

strengthen the financial services industry, and assist consumers in resolving complaints with the

financial service providers regulated and licensed by the Department.

Actions Required to Achieve Goal

• Investigate, process, and respond to consumer complaints related to Department-supervised

entities in a professional, appropriate, and timely manner.

• Modernize the internal consumer complaint tracking program and enhance reporting.

• Develop a comprehensive annual budget and staffing plan.

• Adhere to the agency’s annual budget.

• Update and test the Continuity of Operations Plan (COOP) as directed by the State Office of

Risk Management (SORM).

• Promote information security and cybersecurity awareness within the agency through training

and processes designed to protect sensitive data.

• Position the Department for continual modernization of MIS to support regulatory obligations

and operations.

• Utilize technology to streamline processes throughout the agency.

• Complete upgrade of the secure Internet portal for regulated entities and federal counterparts

to exchange information with the Department in fiscal year 2025.

• Engage in regular communication with and reporting to the FC.

• Prepare and deliver accurate SDSI agency reports to the Governor and Legislature in a timely

manner.

• Attract and retain qualified staff and maintain professional service. Promote a culture of state

service as a career.

• Promote financial education.

• Collaborate, when possible, with the Office of Consumer Credit Commissioner (OCCC) and

Department of Savings and Mortgage Lending (DSML) on the FC’s efforts to achieve greater

efficiencies.

Goals and Action Items Support Statewide Objectives

1. Accountable to tax and fee payers of Texas.

• Promote and provide resources for financial education across the state.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 23

• Provide consumers with various avenues for filing complaints against regulated entities.

• Publish contract and purchase information, as well as update the Contract Management

Guide and Handbook on the agency website after each legislative session.

• Provide quarterly reporting of agency financials, budget variance analysis, and

performance measures to the FC.

• Ensure adherence to self-leveling, self-funding, and SDSI statutory requirements.

• Ensure the cost of regulation is reasonable and equitable for all regulated entities.

2. Efficient such that maximum results are produced with a minimum waste of taxpayer

funds, including the elimination of redundant and

non-core functions.

• Utilize a secure means of electronic communication for information sharing with

regulated entities.

• Adopt and maintain appropriate technologies to support efficient, effective, and secure

operations.

• Utilize a document imaging system to maintain documents electronically and allow

information to be shared quickly and easily among staff.

• Implement improvements noted or suggested in performed external audits.

• Comply with all legislative requirements related to contracting.

• Coordinate financial education efforts with the OCCC.

• Share information and collaborate with the other FC agencies.

3. Effective in successfully fulfilling core functions, measuring success in achieving

performance measures, and implementing plans to continuously improve.

• Review internal processes and program applications continuously to find opportunities

to further automate or enhance features using advancing technologies.

• Perform periodic testing of COOP, including disaster recovery efforts.

• Review budget performance on a quarterly basis with explanations as required for

variances between actual expenses and budget.

• Promote and provide cybersecurity awareness training to staff on an annual basis.

• Provide adequate hardware and software to enable staff to efficiently perform their job

duties.

• Conduct annual employee surveys and discuss results with the Employee Advisory

Council (EAC) to explore ideas to retain employees and enhance agency effectiveness

and efficiencies.

4. Attentive to providing excellent customer service.

• Handle consumer complaints in a professional and timely manner.

• Offer various avenues in which a consumer may contact the Department.

Agency Goals and Action Plans

24| Texas Department of Banking · 2025-2029 Strategic Plan

• Provide an extensive selection of consumer-related information on the Department’s

website.

• Work closely with various consumer organizations and trade groups to respond to issues

that are important to our regulated entities.

• Seek feedback from FC agencies on shared services provided by the Department.

5. Transparent such that agency actions can be understood by any Texan.

• Hold an annual public hearing on the agency’s budget prior to submission of budget to

the FC.

• Publish Commissioner’s orders resulting from enforcement actions taken by the

Department, including removal and/or prohibition orders on the Department’s website.

• Seek input to improve the agency’s services.

• Publish procurement information on the agency website. Adhere to and comply with the

Department's Contract Management Guide and Handbook.

• Provide status reports on agency activities for the FC meetings, which are open to the

public.

• Ensure FC meeting agendas, materials and packets, and minutes are posted on the FC

website.

• Comply with the Public Information Act and open government requirements.

• Ensure that consumer complaint processes are clearly defined and posted on the

agency’s website.

• Ensure information posted on the website is in a format compliant with the Americans

with Disabilities Act.

Other Considerations

Overview

The Department obtained SDSI status in 2009. As a self-leveling, self-funding agency, the Department

develops an annual budget that is subsequently evaluated and reviewed by the FC, an eleven-member

governing body that oversees three state agencies: the Department, DSML, and OCCC. The budget

must be approved by the FC before any expenditure can be authorized. Transparency and

accountability are maintained by providing opportunities for public participation in the budgeting

process through an annual public hearing.

The Department is responsible for all direct and indirect costs and is prohibited from causing the

general revenue funds to incur any cost. Revenues are matched with expenditures to ensure chartered

or licensed entities are not charged or assessed more than is required to maintain the agency’s

operations and meet its statutory mandate. All revenues are derived from assessments paid by

regulated entities and placed in a separate account at the Texas Treasury Safekeeping Trust Company.

The Department continually monitors assessment revenue, and adjustments are made to the

assessment levels as needed. As noted previously, the Non-Depository Supervision Division will face

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 25

funding challenges if the Department is unable to increase assessments for fiscal year 2025 and

beyond. The Department has a proposal to amend §33.27 of the Texas Administrative Code that would

give the Commissioner the ability to increase the allowable annual assessments paid by money

services businesses to offset the forecasted funding shortfalls.

Various provisions in the Finance Code and Health and Safety Code authorize the Commissioner to

impose and collect fees to cover only the cost of examination, the equitable or proportionate cost of

maintenance and operation of the Department, and the cost of enforcement. The Department operates

in a prudent and fiscally responsible manner while performing our statutory duties.

The SDSI status has been instrumental in supporting the agency’s efforts to fulfill its mission and

provide our regulated entities with the quality of service needed to ensure public confidence in the

banking and non-depository industries. As a SDSI agency, the Department operates more efficiently

and can: 1) respond effectively and timely to the changing dynamics in our economy and regulated

industries, and 2) adjust budgets to implement changes in staffing strategies as they are needed.

Employee Surveys and Job Satisfaction

The Department values the opinions and ideas of all employees, enabling staff with multiple

opportunities to provide feedback to improve agency effectiveness and efficiency. Employees are

invited annually to participate in either the University of Texas (UT) Survey of Employee Engagement

or an internally developed survey. Participation levels for the most recent UT survey were above 85%.

The Department maintains a Suggestion Box on its intranet for employees to communicate ideas with

senior management.

The EAC meets at least annually to discuss survey results, strengths, and weaknesses of the agency

and provides appropriate suggestions to executive management to enhance agency operations and

the workplace environment. This two-way communication between employees and management is

vital when developing and implementing new programs, employee incentives, and improvements in

work processes. As a result of the interaction, multiple enhancements have been implemented over

the years.

Legal

The Legal Division works with and supports the needs of all divisions within the Department To

continue this service, legal staff must stay abreast of ever-changing regulatory issues and be prepared

to recommend changes during each Legislative session as appropriate. Regulated entities are

becoming extremely complex, adopting innovative technology and business models that are advancing

quickly. As such, the Legal Division staff must continue to develop their knowledge of the evolving

FinTech industry, including digital assets. According to the Department’s March 2024 staffing report,

the Legal Division is short staffed and needs to hire three FTEs to reach the authorized staffing level.

Retirements and resignations over the past two years have impacted the legal staff workload as they

continue to operate with insufficient resources. This trend is likely to continue until staffing levels align

with the staffing plan. Currently, the division is evaluating a new technology source that could assist

with legal research and ease some of the workload on the legal staff. Over the next five years, the

legal staff will be challenged to keep pace with emerging issues for all regulated entities.

Agency Goals and Action Plans

26| Texas Department of Banking · 2025-2029 Strategic Plan

Management Information Systems (MIS)

The Department’s MIS Division is responsible for managing, maintaining, and enhancing the

Department’s enterprise services, applications, networks, and infrastructure to provide secure,

consistent, reliable services for stakeholders by promoting and facilitating the adoption and integration

of technology. The MIS Division supports various areas with technical support, end-user application

support, custom application development, stable and efficient infrastructure, and computer security

including security training. Staff members must continue to improve their skills and knowledge of

current innovations and advances to provide efficient and effective operations while identifying and

meeting the future needs of the agency.

An IT Steering Committee, facilitated by the Chief Information Officer (CIO) who reports directly to

the Deputy Commissioner in accordance with Government Code §2054.075, sets priorities based on

the goals and objectives of the agency. The CIO manages all MIS staff, technology adoption,

implementation and related maintenance, and technology policies and procedures.

Over the next five years, the MIS Division plans to implement a series of initiatives in line with the

agency’s goals and objectives to continue modernizing its services. Emphasis is being placed on

modernizing legacy applications and improving the overall security posture while maintaining a balance

between value and cost of services. Adopting cloud paradigm models such as distributed databases,

container computing, DevOps procedures, and improved security monitoring represent the strategic

direction charted.

While MIS will continue to work on modernizing services in the next five years, staff shortages could

impact the division as state agencies are at a competitive disadvantage for IT talent because of pay

and slow onboarding processes, including a mandated waiting period of sixty days for health coverage,

when compared to the private sector. For example, the Department continues to struggle with finding

experienced programmers and has been relying on contractors to perform some of the programming

needs.

MIS Information Resources Planning

The CIO is primarily responsible for evaluating, adopting, and implementing new technologies while

supporting the State Strategic Plan for Information Resource Management. To meet the Department’s

objectives, the agency must maintain up-to-date computer technology that allows maximum

confidentiality, integrity, and availability. This will be accomplished by continuing to update

technology, progressing with the transition to web services for all stakeholders, and continuously

providing information security training. Furthermore, the MIS Division exercises its contingency plans

in connection with the Continuity of Operations Plan (COOP) to ensure services can continue during a

disaster or security related event.

The Department’s IT Steering Committee and related governance processes ensure efforts are focused

on agency goals, resources are prioritized, and a workplan is implemented to support long-term

objectives while balancing operations and maintenance responsibilities. Policies and procedures

supporting the successful implementation and adoption of technology are continuously refined. The

Department’s ISO focus is on risk mitigation through policy and procedure compliance, gap and

deficiency identification, technology implementation validation, and reporting technology compliance.

The Department will continue to devote resources to explore new technologies to improve its efficiency

and create a better work environment for its employees.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 27

Financial Education

The results of the 2021 FDIC National Survey of Unbanked and Underbanked Households illustrate the

need for the Department to remain committed to promoting financial education. Although there have

been slight improvements in the unbanked households, an estimated 5.6% of Texas households were

noted to be unbanked. The survey collects information on bank account ownership; use of prepaid

cards and nonbank online payment services; use of nonbank money orders, check cashing, and money

transfer services; and use of bank and nonbank credit. According to the survey, Texas has one of the

highest percentages of unbanked or underbanked households in the nation. Bankers help Texans in

making informed decisions about budget, credit, asset-building, savings, and debt management

through financial education.

The Department continues to collaborate with the OCCC to promote financial education initiatives

through webinars, some of which are directed toward unbanked communities. In addition, the agency

is a member of the FDIC Alliance for Economic Inclusion which promotes financial education initiatives

to the public. Collaboration with state and federal agencies will continue for the foreseeable future.

Consumer Assistance

A consumer assistance supervisor oversees and manages the daily operations of the consumer

assistance area. The staff in this area investigates consumer complaints related to regulated bank and

trust companies. As larger, more complex organizations choose a Texas state-charter, additional

consumer assistance specialists could be needed to provide professional and timely resolutions to

consumer complaints and inquiries. Staff in the NDS division investigates consumer complaints related

to regulated MSBs, PFCs, and PCCs. In the next five years, increased training covering evolving

products and services, such as digital assets, will be necessary.

Administrative Services

The Administrative Services Division is responsible for the Department’s fiscal function which includes

budgeting and accounting; the procurement function which includes purchasing, contracting, and

Headquarters building management; and the risk management function. This also includes the

collaboration with the other two FC agencies to provide facilities support, space management, and

coordinating the receipt and distribution of mail for all three agencies. Over the next five years, the

Department will continue to collaborate with the other two FC agencies to find more opportunities to

provide shared services and improve efficiency. The possibility of additional building projects will

require additional resources in the procurement area, and the Department must assess the staffing

needs to properly administer the program.

Department staff involved in procurement are Certified Texas Contract Developers and Certified Texas

Contract Managers. They attend the continuing education made available by the Statewide

Procurement Education System to maintain their certifications. Although not required, the newly

appointed ISO is scheduled to attend training addressing IT negotiations basics to better understand

DIR IT-related contracts and maintain consistent communications between the procurement staff and

MIS when purchasing information technology goods and services.

COOP

The Department complies with the directives of SORM by updating and testing the COOP. As required,

the Department submits COOP updates to SORM by January of every odd fiscal year and COOP

Agency Goals and Action Plans

28| Texas Department of Banking · 2025-2029 Strategic Plan

exercises by January of every even fiscal year. The agency will continue to comply with these

requirements as well as review and improve our continuity of operations plan and related exercises to

address a wide range of emergencies and events.

CAPPS

The Department transitioned into CAPPS, the single sign-on, web-based source of financial and

HR/Payroll information for state agencies. The Department will continue to face the challenge of

dedicating resources to ensure thorough business process analysis for new processes and disposition

of legacy systems are completed. Training staff on the various aspects of CAPPS will place stress on

current resources, and the Department must assess the staffing needs of affected divisions to properly

administer the program.

Succession Planning and Employee Retention and Recruiting

Management succession planning will continue to be a significant priority over the next five years, as

approximately 28% of the agency’s staff, or 51 employees, will be eligible to retire, including eight

who are return-to-work retirees. Approximately 70% of the employees in the five-year period are

eligible to retire in 2024. The anticipated loss of knowledge and expertise from so many potential

retirees is a primary concern for the Department. As a state agency with less than 185 employees

currently, we rely heavily on these individuals to oversee the agency’s regulatory and operational

activities. The trend of regulating larger, more complex organizations is expected to continue, which

will require more tenured and experienced examiners to successfully fulfill our mission. The

Department will be challenged to manage the impact of these prospective retirements and must

continue to evaluate and adjust its compensation program to hire and retain qualified employees

throughout the agency where appropriate.

In addition to the number of potential vacancies due to retirement, the Department also has a total of

37 vacant positions as of March 31, 2024, the majority of which are financial examiners. In 2023, the

Department implemented an expanded recruiting strategy to help fill the number of current and

expected vacancies. Dedicated Human Resources staff focus on augmenting recruiting efforts. These

efforts include engaging in active recruiting through CAPPS Recruit, LinkedIn and other online or

application-based platforms, increasing attendance at university career fairs, creating employment

marketing materials, enhancing the “Jobs” page on the Department’s website, and reducing the

timeline from job postings to employment offers. Staff recruiting efforts will remain a focus for the

next five years as the Department will face challenges competing for talent in the financial services

industry.

As noted in the 2023-2027 Strategic Plan, executive management’s structure changed, with a second

Deputy Commissioner remaining unfilled since August 2021. Further, senior management has changed

significantly in the last two years, with the hiring of a new general counsel and human resource

manager. Both individuals have been with the agency for less than one year as of May 2024. Two

other division director positions are also vacant, one of which has been vacant since July 2021 and

remains unfilled as of May 2024.

One reason the Department struggles with attracting specialized talent, specifically in the Austin area,

is the high cost of living. To allow internal employees the opportunity to try a different role prior to

committing, the Department opened a few temporary assignments for specialized positions located in

Austin in 2024. The hands-on experience enables staff to determine if the work and career change is

a good fit before committing to the position.

Agency Goals and Action Plans

2025-2029 Strategic Plan · Texas Department of Banking | 29

As a smaller state agency, the opportunities for career advancement of the administrative staff are

limited, and turnover of the administrative staff remains an issue for the agency. Turnover causes

more of the agency’s staffing to be directed at achieving the primary mission, and as a result,

secondary and tertiary goals suffer. Additionally, the agency is aware that the Texas economy and the

increased competition for skilled workers may be attractive to Department personnel due to higher

salaries.

To lessen the impact of these foreseeable vacancies and prepare for a shift in leadership, the

Department continues its focus on developing up-and-coming employees to fill these positions. We

anticipate that these efforts will help to better prepare current employees for taking on new roles as

the need arises with minimal disruption to daily operations. Efforts include:

• Cross-training to expose staff to other aspects of the agency;

• Mentoring and training mid-level managers to perform the duties of senior managers;

• Utilizing Supervisor Evaluations to provide employees with a feedback mechanism and

increasing the effectiveness of the supervisory staff;

• Attending management development courses sponsored by the Government Center for

Management Development;

• Involving staff in special projects and participating in committees with organizations outside

of the Department; and

• Utilizing a competency-based evaluation system to align performance management across

the agency and increase communication of performance expectations.

Retaining employees and encouraging them to make employment with the agency a career is also

critical to the Department’s success. The Department has adapted to the changing workforce and has

worked to improve the work-life balance aspect of the job, including conducting examinations in a

hybrid model, allowing some personnel to work remotely, reducing travel and commuting time. Some

personnel have resigned citing the ability to permanently work from home as the primary factor in

accepting new employment. Although more employers are asking employees to return to the office

post pandemic, the financial services industry continues to be challenged with talent wanting jobs

which offer work at home on a more permanent basis.

In addition, the Department will need to find more ways to use automation to make processes more

efficient and continue striving for salaries that are comparable to FDIC counterparts. Strategies already

established include:

• Pre-employment screening using a work style profile to ensure the agency is selecting

candidates for employment who are most suited for the position;

• Internship program to assist with recruitment;

• Tuition reimbursement program;

• Travel stipend for extensive overnight travel;

• Temporary work assignments that provide relief from frequent overnight travel;

• Flexible work schedules that promote work/life balance; and

• Competitive compensation strategy for financial examiners.

Agency Goals and Action Plans

30| Texas Department of Banking · 2025-2029 Strategic Plan

The Department’s SDSI status yields the ability to adjust salaries to retain and attract qualified

personnel and strive for comparable salary levels with the FDIC. While this flexibility yields the

Department the ability to typically retain quality staff, it is incumbent upon management to continue

to attract new employees to train and develop to ensure the Department’s mission. To evaluate

salaries across the agency, the Department must continue to conduct comprehensive compensation

studies for all staff. The study must encompass market salary data analysis, compensation system

design, internal and external alignment solutions, identification of career paths, and an effective total

compensation program and communication plan to provide transparency for employees. Since the last

study, private sector salaries have risen due to labor shortages and the high cost of living in and

around Texas.

Finance Commission Building

The Department is headquartered in the Finance Commission Building at 2601 N. Lamar Blvd, which

it shares and co-owns with the DSML and OCCC, the other FC agencies. During the 85

Legislature,

Regular Session 2017, the Texas Legislature enacted Senate Bill 1349 allowing the Texas Department

of Transportation (TxDOT) to sell certain excess land to the FC agencies. The agencies are in

communication with the Texas Department of Motor Vehicles and TxDOT regarding the parcel on the

Camp Hubbard campus and a letter of intent for the purchase of the four-acre parcel was provided

after receiving the Environmental Site Assessments. The FC agencies and TxDOT will collaborate to

implement a final agreement for the Camp Hubbard parcel.

Cash reserves have been set aside to cover future expenses related to the purchase or construction

of a new building and relocation. As required by SB 646 passed during the 86

Legislature, Regular

Session 2019, the agencies received authorization from the Office of the Governor in March 2023 to

increase the reserves for long-term planning, consistent with the December 2021 action of the FC.

Additional authorizations for the project will be needed from the Office of the Governor in the future.

Sunset Review

The Department was evaluated by the Texas Sunset Advisory Commission during their 2018 - 2019

review cycle, as required by the Texas Sunset Act. The 86

Legislature extended the existence of the

agency through September 1, 2031, under the continued oversight of the FC.

REDUNDANCIES AND IMPEDIMENTS

2023-2027 Strategic Plan · Texas Department of Banking | 31

Redundancies and Impediments

The Department reviews Texas Administrative Code rules on an ongoing basis and makes modifications

as necessary to reflect changes in state and federal laws, clarify existing laws, and address the

dynamics of the changing industries. Periodic reviews of fee rules are performed to ensure each

regulated area covers its cost of regulation. Each legislative session, the Department works with state

legislators to make necessary changes to state statutes to improve regulations for the industries we

charter or license and to reduce any barriers that could impact the Department’s effectiveness and

efficiency in meeting our mission. The Department did not identify any potential redundancies and

impediments.

REDUNDANCIES AND IMPEDIMENTS

SERVICE, STATUTE,

RULE, OR REGULATION

(PROVIDE SPECIFIC

CITATION IF

APPLICABLE)

None.

DESCRIBE WHY THE

SERVICE, STATUTE,

RULE, OR REGULATION

IS RESULTING IN

INEFFICIENT

ORINEFFECTIVE

AGENCY OPERATIONS

None.

PROVIDE AGENCY

RECOMMENDATION

FOR MODIFICATION

OR ELIMINATION

None.

DESCRIBE THE

ESTIMATED COST

SAVINGS OR OTHER

BENEFIT ASSOCIATED

WITH RECOMMENDED

CHANGE

None.

SCHEDULE A

Budget Structure

2025-2029 Strategic Plan - Texas Department of Banking | A-1

The Department of Banking has been a Self-Directed, Semi-Independent agency since 2009 and therefore

does not have a bill pattern in the General Appropriations Act. The Department, which is self-funding and

self-leveling, is responsible for all costs as no resources are appropriated from the General Revenue Fund.

All revenues for operations are derived from assessments and fees paid by regulated entities. The revenues

are placed in a separate account at the Texas Treasury Safekeeping Trust Company and not included in

the General Revenue Fund.

The Department develops a budget annually that is made available to the public on our website and

presented to the Finance Commission (FC) for evaluation. The budgeting process begins in the last quarter

of the fiscal year with the proposed budget presented at a public hearing typically at the end of July or first

of August. The final budget is presented to the FC at its regularly scheduled August meeting and must

receive FC approval before any expenditure can be made.

GOAL: EFFECTIVE BANK AND TRUST REGULATION

Ensure timely, fair, and effective supervision and regulation of the financial institutions and other licensees

under our jurisdiction. The regulatory process promotes a stable banking and financial services environment

and provides the public with convenient, safe, and competitive financial services.

OBJECTIVE

Quality Bank Regulation: Provide quality regulation and maintain the credibility of the Department with

the public, industries we regulate, federal banking regulators and other government agencies by achieving

these objectives through 2029:

 Examinations of regulated entities will be performed within required timeframes.

 Correction-oriented enforcement action will be taken, as appropriate, against regulated entities that

demonstrate higher than normal weakness or risk.

 Accreditation status by the Conference of State Bank Supervisors (CSBS) is maintained.

 Agency will strive to attract and retain qualified employees.

OUTCOME MEASURES

 Percentage of banks receiving examinations within required timeframes.

 Percentage of foreign bank organizations receiving examinations within required timeframes.

 Percentage of trust companies receiving examinations within required timeframes.

 Percentage of problem institutions with appropriate supervisory actions in place.

 Certificate of accreditation by the CSBS maintained in good standing.

STRATEGIES

Bank Examination: Conduct commercial bank, trust company, and foreign bank organization

examinations in cooperation with the Federal Deposit Insurance Corporation (FDIC) and the Federal

Reserve Bank (FRB), in conformance with the Department’s examination priority schedule and in a

thorough, accurate, and timely manner. Maintain national accreditation with the CSBS. Maintain contact

with, and monitor the condition of, regulated entities between examinations through processes which

include an off-site monitoring program. Monitor industry status and engage in regular communication with

the FDIC, FRB, and CSBS. Promote cybersecurity awareness among regulated entities. Optimize

efficiencies in the examination process, including automating examination procedures, adopting electronic

examination tools, and utilizing the secure data exchange portal to share information with regulated entities

and federal counterparts. Research and report on changing industry, statutory, and economic conditions.

Provide the industry with electronic access to regulatory and supervisory information through the website.

Apply formal enforcement actions when necessary to maintain integrity within the industries regulated.

SCHEDULE A

Budget Structure

A-2 | Texas Department of Banking -2025-2029 Strategic Plan

FDIC / FRB / Industry Deterioration: Maintain a contingency plan to provide additional regulatory

resources in the event of industry deterioration or systemic industry problems, the reallocation of federal

regulatory resources away from Texas, a significant increase in the regulated asset base or a substantial

loss of examiners.

OUTPUT MEASURES

 Number of bank examinations performed.

 Number of foreign bank organization examinations, trust company, trust department, bank holding

company, and information technology examinations and other specialized reviews performed.

EFFICIENCY MEASURES

 Bank and Trust Division cost per million in assets regulated.

 Assets examined per examiner day (in millions).

EXPLANATORY MEASURES

 Percentage of banks classified safe and sound.

 Number of Texas state-chartered banks.

 Total assets of Texas state-chartered banks (in billions).

SCHEDULE A

Budget Structure

2025-2029 Strategic Plan - Texas Department of Banking | A-3

GOAL: EFFECTIVE REGULATION OF NON-DEPOSITORY SUPERVISION LICENSEES

Ensure timely, fair, and effective supervision and regulation of the non-depository supervision licensees

under our jurisdiction. The regulatory process promotes a stable financial services environment and

provides the public with convenient, safe, and competitive financial services.

OBJECTIVE

Quality Non-Depository Regulation: Provide quality regulation and maintain the credibility of the

Department with the public, the industries we regulate, and other government agencies by achieving these

objectives through 2029:

 Examinations of regulated entities will be performed within required timeframes.

 Correction-oriented enforcement action will be taken against regulated entities that demonstrate

higher than normal weakness or risk.

 MSB Accreditation status by the CSBS is maintained;

 Agency will strive to attract and retain qualified employees.

OUTCOME MEASURES

 Percentage of Money Service Business (MSB) licensees examined within required timeframes.

 Percentage of Prepaid Funeral Contract (PFC) licensees examined within required timeframes.

 Percentage of Perpetual Care Cemetery (PCC) licensees examined within required timeframes.

 Percentage of PCC and PFC applications processed within statutory period.

 Certificate of MSB accreditation by the CSBS maintained in good standing.

STRATEGIES

Non-Depository Examination: Conduct PCC, PFC and MSB examinations, in cooperation with federal

and other state regulatory entities, in conformance with the Department’s examination priority schedule and

in a thorough, accurate, and timely manner. Maintain national accreditation with the CSBS. Monitor industry

status and engage in regular communication with other states and the Money Transmitter Regulators

Association (MTRA). Promote cybersecurity awareness among regulated entities. Maintain contact with

and monitor the condition of regulated entities between examinations though off-site monitoring. Optimize

efficiencies in the examination process, including automating the data exchange of examination documents

through a secure portal, and utilizing electronic examination procedures and reference materials. Research

and report on changing industry, statutory, and economic conditions. Ensure proper enforcement actions

are taken against unlicensed and licensed entities.

OUTPUT MEASURE

 Number of Non-Depository Supervision licensees examined.

EFFICIENCY MEASURE

 Average direct cost per PFC and PCC licensee examination.

 Average direct cost per MSB licensee examination.

EXPLANATORY MEASURE

 Dollar amount of PFCs in force (in billions).

 Number of Non-Depository Supervision licensees.

 Percentage of Non-Depository Supervision licensees classified safe and sound.

SCHEDULE A

Budget Structure

A-4 | Texas Department of Banking -2025-2029 Strategic Plan

GOAL: EFFECTIVE REGULATION THROUGH CORPORATE ACTIVITIES

Provide an effective process to evaluate and act upon corporate filings requesting to initiate, expand, or

modify financial services to Texans. In doing so, ensure that the prospective owners, managers, and

operators of financial service entities are capable of offering citizens of Texas access to convenient, safe,

sound, and competitive financial services.

OBJECTIVE

Corporate Activities: Ensure that the corporate filings requesting to initiate, expand, or modify financial

services receive a timely and thorough review resulting in knowledgeable and competent recommendations

while also assessing the applicants’ abilities to provide convenient, safe, sound, and competitive financial

services to the public.

OUTCOME MEASURE

 Percentage of applications and notices for banks, trust companies, MSBs, and check verification

companies (CVEs) processed within statutory time periods.

STRATEGIES

Application Processing: Optimize efficiencies in the application process by enhancing and automating

systems, where possible, in order to improve the quality and speed of information exchanged during the

processing of corporate applications, notices and other filings. Perform thorough background checks to

determine if the individuals proposed have the experience, personal and financial integrity, and financial

acumen to direct and/or lead a financial institution’s or MSB’s affairs in a safe, sound, and legal manner.

Process applications and notices timely and thoroughly, resulting in knowledgeable and competent

recommendations.

OUTPUT MEASURE

 Number of applications and notices processed for banks, trust companies, MSBs, and CVEs.

SCHEDULE A

Budget Structure

2025-2029 Strategic Plan - Texas Department of Banking | A-5

GOAL: EFFECTIVE AND EFFICIENT OPERATIONS COMPLIANT WITH STATE LAWS

Ensure that Texans and stakeholders are effectively and efficiently served by high-quality professionals

entrusted to implement regulatory requirements and industry standards, utilize advanced technologies,

safeguard confidential information, provide educational opportunities to support and strengthen the financial

services industry, and assist consumers in resolving complaints with the financial service providers

regulated and licensed by the Department.

OBJECTIVE

Consumer Complaints: Ensure that all complaints are thoroughly reviewed, processed, and resolved

within 90 calendar days while maintaining professional service.

Central Administration: Develop a comprehensive annual budget and staffing plan to aid in attracting and

retaining qualified staff and maintain professional services while promoting a culture of state service as a

career.

OUTCOME MEASURES

 Percentage of written complaints closed within 90 days.

 Percentage of regular employees separated from the agency.

 Percentage of regular employees separated from the agency (excluding retirements).

 Percentage of actual expenditures to budgeted expenditures.

STRATEGIES

Complaint Processing: Provide consumers with several methods for filing complaints against regulated

entities. Investigate, process, and respond to formal written complaints timely and thoroughly using

knowledge of applicable laws and regulations to resolve and close requests.

Administration: Indirect/Central Administration provides leadership and support for internal customer

service and agency operations management.

OUTPUT MEASURE

 Number of written complaints closed.

SCHEDULE A

Budget Structure

A-6 | Texas Department of Banking -2025-2029 Strategic Plan

THIS PAGE INTENTIONALLY LEFT BLANK

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-1

GOAL: EFFECTIVE BANK AND TRUST REGULATION

Outcome Measure: 01-01.01 Percentage of Banks Receiving Examinations Within Required

Timeframes

Definition

The number of banks due for examination per the examination priority schedule

(described in Supervisory Memorandum 1003) and examinations started timely by

the Department of Banking, Federal Deposit Insurance Corporation (FDIC), or

Federal Reserve Bank (FRB) during the reporting period. An examination is the

process by on-site or off-site review, to review and evaluate the records of a

regulated entity to the extent necessary to determine compliance with applicable

laws.

Purpose

The Department is under a statutory mandate regarding examination frequency.

This measure indicates how well the agency is meeting its mandate.

Data Source

Bank and Trust Division staff enters all commercial examinations started and

completed by the Department of Banking, FDIC, or FRB into the Department’s

database. Data is maintained on the total number of banks due for examinations

per the examination priority schedule. The number of examinations in the

numerator and denominator includes banks examined by the Department of

Banking and federal agencies, whether joint or independent. Past due banks

include those banks with examinations held in abeyance pending their exit from

the state system.

Methodology

Total number of bank examinations started within required timeframes divided by

the number of examinations due during the reporting period as determined by

Administrative Memorandum 2041. The base date used to calculate the

examination due date is the earliest of 60 calendar days from the start date of the

examination or the mail date for the report of examination. The base date plus the

examination frequency cycle are used to determine the next examination due date.

Data Limitations

The number of banks receiving an examination within required timeframes could

significantly decrease in the event of: (1) Material deterioration in the overall

condition of the state’s financial institutions which would require a more frequent

examination schedule; (2) An inability of the federal banking authorities to meet

their examination responsibilities due to a reallocation of personnel to other

priorities; and (3) A significant increase in the number of new bank charters.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-2 | Texas Department of Banking · 2025-2029 Strategic Plan

Outcome Measure: 01-01.02 Percentage of Foreign Bank Organizations (FBO) Receiving

Examinations Within Required Timeframes

Definition

Number of FBOs due for examinations per the examination priority schedule and

examinations started timely by the Department of Banking or FRB during the

reporting period. An examination is the process by on-site or off-site review, to

review and evaluate the records of a regulated entity to the extent necessary to

determine compliance with applicable laws.

Purpose

The Department is under a statutory mandate regarding examination frequency.

This measure indicates how well the agency is meeting its mandate.

Data Source

Bank and Trust Division staff enters all FBO examinations performed by the

Department of Banking or FRB, whether joint or independent into the Department’s

database. Data is maintained on the total number of FBOs due for examinations

per examination priority schedule and includes all agencies examined by the

Department or the FRB.

Methodology

The number of FBOs receiving examinations within required timeframes divided

by the number of examinations due during the reporting period as determined by

Administrative Memorandum 2041. The base date used to calculate the

examination due date is the date located on the report of examination cover letter.

The base date plus the examination frequency cycle are used to determine the

next examination due date.

Data Limitations

The number of FBOs receiving an examination within required timeframes could

significantly decrease in the event of: (1) Material deterioration in the overall

condition of the state’s financial institutions which would require a more frequent

examination schedule; (2) An inability of the FRB to meet their examination

responsibilities due to a reallocation of personnel to other priorities; and (3) A

significant increase in the number of new bank charters.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-3

Outcome Measure: 01-01.03 Percentage of Trust Companies Receiving Examinations Within

Required Timeframes

Definition

Number of trust companies’ due for examinations per the examination priority

schedule (described in Supervisory Memorandum 1004) and examinations started

timely by the Department of Banking during the reporting period, less trust

companies in liquidation or forfeiture of charter. An examination is the process by

on-site or off-site review, to review and evaluate the records of a regulated entity

to the extent necessary to determine compliance with applicable laws.

Purpose

The Department is under a statutory mandate regarding examination frequency.

This measure indicates how well the agency is meeting its mandate.

Data Source

Bank and Trust Division staff enters all trust company examinations performed by

the Department of Banking into the Department’s database. Data is maintained on

the total number of trust companies due for examinations per examination priority

schedule and includes all trust companies examined by the Department.

Methodology

Total number of trust company examinations started within required timeframes

divided by the number of examinations due during the reporting period as

determined by Administrative Memorandum 2041. The base date used to calculate

the examination due date is the earliest of 60 calendar days from the start date of

the examination or the mail date for the report of examination. The base date plus

the examination frequency cycle are used to determine the next examination due

date.

Data Limitations

The number of trust companies receiving an examination within required

timeframes could significantly decrease in the event of: (1) Material deterioration

in the overall condition of the state’s trust companies which would require a more

frequent examination schedule; and (2) A significant increase in the number of new

trust companies.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-4 | Texas Department of Banking · 2025-2029 Strategic Plan

Outcome Measure: 01-01.04 Percentage of Problem Institutions with Appropriate Supervisory

Actions in Place

Definition

Number of banks with a composite CAMELS (Capital, Asset Quality, Management,

Earnings, Liquidity, and Sensitivity to Market Risk) rating of 3, 4, or 5 with Cease

& Desist Orders, Determination Letters, Memorandums of Understanding,

Commitment Letters, Board Resolutions, or Letters of Agreement in effect at the

time of the cut-off date for the reporting period, divided by number of banks with a

composite CAMELS rating of 3, 4, or 5 as of the cut-off date.

Purpose

It is the Department’s policy to impose a supervisory action on an institution which

is not operating safely and soundly, to encourage and assist the institution in taking

corrective action to improve its condition.

Data Source

Bank and Trust Division staff enters rating information about the condition of each

bank after an examination is completed by the Department of Banking, FDIC, or

the FRB into the Department’s database. Data is maintained on the CAMELS

rating of each institution.

Methodology

To calculate the percentage of problem institutions with appropriate supervisory

actions, divide the number of 3, 4, or 5 rated banks with one of the administrative

actions shown above either open or pending as of the fiscal quarter-end by the

total number of banks rated a composite 3, 4, or 5 as of the same fiscal quarter-

end date.

Data Limitations

This number could naturally increase if there were a substantial deterioration in the

condition of the banking industry.

New Measure

Calculation Method

Noncumulative

Target Attainment

Meet target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-5

Outcome Measure: 01-01.05 Certificate of Accreditation by the Conference of State Bank

Supervisors (CSBS) Maintained in Good Standing

Definition

Department is accredited by the CSBS as of the end of the reporting period. 100%

- Department is accredited. 0% - Department is not accredited.

Purpose

CSBS accreditation is a national standard of excellence among financial

regulators. The Department must maintain its accreditation to participate in

supervision of interstate banking and maintain credibility among federal regulators

and the national Congress.

Data Source

A certificate of accreditation is awarded to the Department. This is displayed in the

reception area of the agency’s headquarters building.

Methodology

Determine if the annual CSBS accreditation is in good standing. If so, answer

“YES.”

Data Limitations

None

New Measure

Calculation Method

Noncumulative

Target Attainment

To remain accredited

SCHEDULE B

Performance Measure Definitions

B-6 | Texas Department of Banking · 2025-2029 Strategic Plan

Output Measure: 01-01.06 Number of Bank Examinations Performed

Definition

Number of regular, limited, abbreviated, joint, and concurrent examinations of

banks by the Department of Banking started during the reporting period. An

examination is the process by on-site or off-site review, to review and evaluate the

records of a regulated entity to the extent necessary to determine compliance with

applicable laws.

Purpose

This measure is an indication of the volume of examination activity. It consists of

the number of commercial examinations performed by the Department including

joint examinations with a federal agency during the fiscal quarter.

Data Source

Bank and Trust Division staff enters all bank examinations conducted by the

Department of Banking, FDIC, or the FRB into the Department’s database. Data is

maintained on the total number of banks examined within any given time period.

Methodology

The measure is obtained by counting all independent Department of Banking and

joint examinations performed during the fiscal quarter from the examinations

started reports for commercial examinations.

Data Limitations

Consolidation from mergers and acquisitions within these entities could

significantly reduce the number of institutions and therefore reduce the number of

examinations performed.

On the other hand, the number of examinations could increase in the event of

significant influx of new charter or conversion activity or an increase in problem

banks which would require a more frequent examination cycle.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-7

Output Measure: 01-01.07 Number of Foreign Bank Organization Examinations, Trust

Company, Trust Department, Bank Holding Company, and Information

Technology (IT) Examinations and Other Specialized Reviews Performed

Definition

Number of FBO, trust company, trust department, bank holding company, and IT

examinations by the Department of Banking started during the reporting period.

This measure includes joint examinations with a federal agency and other

specialized reviews.

Purpose

This measure is an indication of the volume of examination activity.

Data Source

Bank and Trust Division staff enters all foreign bank organization examinations,

trust company, trust department, bank holding company, and IT examinations and

other specialized reviews conducted by the Department of Banking, FDIC, or the

FRB into the Department’s database. Data is maintained on the total number of

entities examined within any given time period.

Methodology

The total number is obtained by counting all independent Department of Banking

examinations and joint examinations from the examination started reports for

foreign bank agency and branch examinations, foreign bank representative office

examinations, trust companies, trust departments, bank holding companies, and

IT examinations and other specialized reviews.

Data Limitations

The number of examinations could significantly decrease in the event of (1) A

significant change in services or powers that could necessitate expanded

examination time periods in order to fully investigate these new activities; (2) An

inability of the federal banking authorities to meet their examination responsibilities

due to a reallocation of personnel to other priorities; and (3) Consolidation of

regulated entities through mergers and acquisitions.

On the other hand, the number of examinations could increase in the event of a

significant influx of new charter or conversion activity or an increase in problem

banks which would require a more frequent examination cycle.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-8 | Texas Department of Banking · 2025-2029 Strategic Plan

Efficiency Measure: 01-01.08 Bank and Trust Division Cost per Million in Assets Regulated

Definition

Total Bank and Trust Division costs expressed as a ratio of the total state-

chartered bank assets as of the reporting period (in millions).

Purpose

To assist in review of the efficiency of the Department’s Bank and Trust operations.

Data Source

Bank and Trust Division expenses are derived from the Department’s accounting

system. Total assets are based on the most recent calendar quarter-end.

Methodology

The total Bank and Trust expenses at end of the reporting period are divided by

the total assets of all state-chartered banks as of the reporting period (in millions).

Data Limitations

Legislative increases in allowable travel expenses or statewide merit increase

could increase this measure. Total assets of state-chartered banks in Texas could

materially increase with an influx of new charter or conversion activity or

substantially decrease due to consolidation from merger and acquisition activity.

New Measure

Yes

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-9

Efficiency Measure: 01-01.09 Assets Examined per Examiner Day (in Millions)

Definition

Total assets examined by the Department over the reporting period divided by

examiner days.

Purpose

To assist in review of the efficiency of the Department’s examinations.

Data Source

Bank financial information is obtained during each examination and is uploaded

into the Department’s database.

Methodology

The total assets for banks examined by the Department over the reporting period

divided by examiner days. Examiner days is obtained by counting total examiners

at the end of the reporting period and multiplying by the number of days in the

fiscal year.

Data Limitations

This number could change dramatically if mergers and consolidation increase the

asset size of many of our regulated entities. Further, an increase in the risk profile

of institutions requiring more oversight could also affect this calculation.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-10 | Texas Department of Banking ·2025-2029 Strategic Plan

Explanatory Measure: 01-01.10 Percentage of Banks Classified Safe and Sound

Definition

The total number of state-chartered banks with a composite CAMELS rating of 1

or 2 and non-rated (new charters), divided by the total number of state-chartered

banks as of the reporting period cut-off date.

Purpose

This measure is indicative of the condition of the state banking system.

Data Source

Bank and Trust Division staff enters rating information about the condition of each

bank after an examination is completed by the Department of Banking, FDIC, or

the FRB into the Department’s database. Data is maintained on the CAMELS

rating of each institution.

Methodology

Divide the total number of state-chartered banks rated 1 or 2 and non-rated (new

charters) by the total number of state-chartered banks at the end of the reporting

period. It should be further noted that new banks that have not yet been examined

are considered safe and sound and/or in compliance with state requirements for

calculation of this measure.

Data Limitations

The overall condition of a material number of institutions could deteriorate due to

adverse economic conditions and substantially increase the percentage of banks

not classified as safe and sound.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-11

Explanatory Measure: 01-01.11 Number of Texas State-Chartered Banks

Definition

The total number of Texas state-chartered banks as of the reporting period cut-off

date.

Purpose

This measure is indicative of the volume of banks under the agency’s supervision.

Data Source

The number of Texas state-chartered banks is maintained in the agency’s

database.

Methodology

The total number of banks in the agency’s database as of the last day of the

appropriate fiscal quarter.

Data Limitations

The number of Texas state-chartered banks could materially increase with an

influx of new charter or conversion activity and substantially decrease due to

consolidation from merger and acquisition activity.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-12 | Texas Department of Banking ·2025-2029 Strategic Plan

Explanatory Measure: 01-01.12 Total Assets of Texas State-Chartered Banks (in Billions)

Definition

Total assets of all state-chartered banks as of the reporting period cut-off date.

Purpose

This measure is indicative of the volume of bank assets under the agency’s

supervision.

Data Source

Bank financial information is uploaded quarterly into the agency’s database.

Methodology

The total assets of all Texas state-chartered banks as of the end of the reporting

period. Total assets are as of the most recent calendar quarter-end.

Data Limitations

Total assets of state-chartered banks in Texas could materially increase with an

influx of new charter or conversion activity or substantially decrease due to

consolidation from merger and acquisition activity.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-13

GOAL: EFFECTIVE REGULATION OF NON-DEPOSITORY SUPERVISION LICENSEES

Outcome Measure: 01-02.01 Percentage of Money Service Business (MSB) Licensees Examined

Within Required Timeframes

Definition

The number of MSB license holders with examinations started by the Department

of Banking, including accepting the report of examination of another state agency

or federal government, or the report prepared by an independent accounting firm

(described in Supervisory Memorandum 1024 and statute), over the 24-month

period preceding the cut-off prior to the reporting date, divided by the number of

MSB license holders required to be examined as of the cut-off date per the

examination frequency cycle (describe in Supervisory Memorandum 1023). An

examination is the process by on-site or off-site review, including accepting the

report of examination of another state agency, to review and evaluate the records

of a licensee that relate to the regulated activity to the extent necessary to

determine compliance with applicable laws.

Purpose

The Department is under a statutory mandate, as further detailed in Supervisory

Memorandum 1023, regarding examination frequency. This measure indicates

how well the agency is meeting its mandate.

Data Source

Examination data is maintained by the Division of Non-Depository Supervision staff

at the agency’s headquarters who enter this information into the Department’s

database. The database produces reports that list: (1) MSB examinations started

during the 24-month period preceding the cut-off prior to the reporting date and (2)

MSB license holders required to be examined as of the cut-off date.

Methodology

The percentage is calculated by dividing the MSB examinations started during the

24-month period preceding the cut-off prior to the reporting date (Report 1 above),

including accepting the report of examination of another state agency, by the

number of MSB license holders required to be statutorily examined as of the cut-

off date (Report 2 above). The base date used to calculate the examination due

date is generally the earliest of 60 calendar days from the start date of the

examination or the mail date for the report of examination. The base date plus the

examination frequency cycle are used to determine the next examination due date.

Data Limitations

Standards have been established in statute and by rule to ensure that

examinations are performed within acceptable timeframes; however, the level of

experience and efficiency of each examiner, along with retaining and hiring

qualified examiners, can be limiting factors. This measure would also be affected

by a significant increase or decrease in licensees.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-14 | Texas Department of Banking ·2025-2029 Strategic Plan

Outcome Measure: 01-02.02 Percentage of Prepaid Funeral Contract (PFC) Licensees Examined

Within Required Timeframes

Definition

The number of PFC license holders with examinations started by the Department

of Banking over the 18-month period preceding the cut-off prior to the reporting

date, divided by the number of PFC license holders required to be statutorily

examined as of the cut-off date. An examination is the process by on-site or off-

site review, to review and evaluate the records of a licensee that relate to the

regulated activity to the extent necessary to determine compliance with applicable

laws.

Purpose

The Department is under a statutory mandate regarding examination frequency.

This measure indicates how well the agency is meeting its mandate.

Data Source

Examination data is maintained by the Division of Non-Depository Supervision staff

at the agency’s headquarters who enter this information into the Department’s

database. The database produces reports that list: (1) PFC examinations started

during the 18-month period preceding the cut-off prior to the reporting date and (2)

PFC license holders required to be examined as of the cut-off date.

Methodology

The percentage is calculated by dividing the PFC examinations started during the

18-month period preceding the cut-off prior to the reporting date (Report 1 above)

by the number of PFC license holders required to be statutorily examined as of the

cut-off period (Report 2 above). The base date used to calculate the examination

due date is generally the earliest of 60 calendar days from the start date of the

examination or the mail date for the report of examination. The base date plus the

examination frequency cycle are used to determine the next examination due date.

Data Limitations

Standards have been established in statute and by rule to ensure that

examinations are performed within acceptable timeframes; however, the level of

experience and efficiency of each examiner along with retaining and hiring

qualified examiners can be limiting factors. This measure would also be affected

by a significant increase or decrease in licensees.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-15

Outcome Measure: 01-02.03 Percentage of Perpetual Care Cemetery (PCC) Licensees Examined

Within Required Timeframes

Definition

The number of PCC license holders with examinations started by the Department

of Banking over the 18-month period preceding the cut-off prior to the reporting

date, divided by the number of PCC license holders required to be examined as of

the cut-off date per the examination frequency policy (described in Supervisory

Memorandum 1031). An examination is the process by on-site or off-site review,

to review and evaluate the records of a licensee that relate to the regulated activity

to the extent necessary to determine compliance with applicable laws.

Purpose

The Department is under a statutory mandate, as further detailed in Supervisory

Memorandum 1031, regarding examination frequency. This measure indicates

how well the agency is meeting its mandate.

Data Source

Examination data is maintained by the Division of Non-Depository Supervision staff

at the agency headquarters who enters this information into the database. The

database produces reports that list: (1) PCC examinations started during the 18-

month period preceding the cut-off prior to the reporting date and (2) PCC license

holders required to be examined as of the cut-off date.

Methodology

The percentage is calculated by dividing the PCC examinations started during the

18-month period preceding the cut-off prior to the reporting date (Report 1 above)

by the number of PCC license holders required to be statutorily examined as of the

cut-off period (Report 2 above). The base date used to calculate the examination

due date is generally the earliest of 60 calendar days from the start date of the

examination or the mail date for the report of examination. The base date plus the

examination frequency cycle are used to determine the next examination due date.

Data Limitations

Standards have been established in statute and by rule to ensure that

examinations are performed within acceptable timeframes; however, the level of

experience and efficiency of each examiner along with retaining and hiring

qualified examiners can be limiting factors. This measure would also be affected

by a significant increase or decrease in licensees.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-16 | Texas Department of Banking ·2025-2029 Strategic Plan

Outcome Measure: 01-02.04 Percentage of PCC and PFC Applications Processed Within

Statutory Period

Definition

The number of PCC and PFC applications processed within the statutory periods,

expressed as a ratio of the number of PCC and PFC applications processed during

the reporting period.

Purpose

This measure provides an indication of the Department’s compliance with the

statutory requirements pertaining to PCC and PFC applications.

Data Source

All application processing data is maintained in the Department’s database which

produces reports for the applications processing function. The following

information is maintained for each application: date of receipt, date of response,

date of completion, days to complete, and date of final action. A report is also

generated which lists all received, pending and approved applications during the

reporting period. Staff in each of the two areas input data as applications are

received and as the processing function takes place. The reports can be produced

for any given date and are readily available to check the status of an application.

Methodology

A percentage is obtained by dividing the number of PCC and PFC applications

processed within the statutory periods for the reporting period divided by the

number of PCC and PFC applications processed during the same reporting period.

Data Limitations

Limitations include the level of experience of the staff who process the applications

and understaffing. Operating procedures have been developed to ensure that

applications are processed within the required time frame; however, the level of

experience and efficiency of the staff and reviewing officials, along with retaining

and hiring qualified employees are limiting factors.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-17

Outcome Measure: 01-02.05 Certificate of MSB Accreditation by the CSBS Maintained in Good

Standing

Definition

Department is accredited by the CSBS as of the end of the reporting period. 100%

- Department is accredited. 0% - Department is not accredited.

Purpose

CSBS accreditation is a national standard of excellence among MSB state

regulators.

The Department maintains its accreditation to promote consistency in

the supervision of MSBs and maintain credibility among state and federal

regulators.

Data Source

A certificate of accreditation is awarded to the Department. This is displayed in the

reception area of the agency’s headquarters building.

Methodology

Determine if the annual CSBS accreditation is in good standing. If so, answer

“YES.”

Data Limitations

None

New Measure

Yes

Calculation Method

Noncumulative

Target Attainment

To remain accredited

SCHEDULE B

Performance Measure Definitions

B-18 | Texas Department of Banking ·2025-2029 Strategic Plan

Output Measure: 01-02.06 Number of Non-Depository Supervision Licensees Examined

Definition

The aggregate number of MSB, PFC and PCC examinations started by the

Department of Banking, including accepting the report of examination of another

state agency or federal government, or the report prepared by an independent

accounting firm, in the reporting period. An examination is the process by on-site

or off-site review, to review and evaluate the records of a licensee that relate to the

regulated MSB, PFC and PCC businesses to the extent necessary to determine

compliance with applicable laws.

Purpose

This measure shows the total number of examinations started during a reporting

period and can also be used to determine the percentage of licensees examined

during that same period. This data is used by management to determine examiner

efficiency, evaluate staffing requirements, schedule future examinations, and to

assess the overall effectiveness of the Division of Non-Depository Supervision’s

examination program.

Data Source

The Division of Non-Depository Supervision staff enter examination information

into the Department’s database. The database produces reports that list all

examinations started for any given reporting period for each regulated area. Totals

from these reports are combined to arrive at the total number of Non-Depository

Supervision Licensees examined during the reporting period.

Methodology

Reports for each regulated area that list and detail the start date of each

examination for a reporting period are generated in the database and the totals

from these reports are added together to determine the number of Non-Depository

Supervision examinations performed during a reporting period.

Data Limitations

Standards have been established in statute and by rule to ensure that

examinations are performed within acceptable timeframes; however, the level of

experience and efficiency of each examiner, along with retaining and hiring

qualified examiners, can be limiting factors. This measure would also be affected

by a significant increase or decrease in licensees.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-19

Efficiency Measure: 01-02.07 Average Direct Cost per PFC and PCC Licensee Examination

Definition

Total direct PFC and PCC licensee examination costs divided by the number of

examinations started by the Department of Banking over the reporting period. An

examination is the process by on-site or off-site review, to review and evaluate the

records of a licensee that relate to the regulated activity to the extent necessary to

determine compliance with applicable laws.

Purpose

To measure the average direct cost of each PFC and PCC licensee’s examination

performed over the reporting period. This measure provides an indication of the

Department’s use of its resources, personnel, and time as it relates to the

examination of PFC and PCC licensees.

Data Source

Data used to calculate the average cost per PFC and PCC licensee examination

is derived from the Department’s accounting system. The system allocates all

direct costs incurred by the Department which are associated with the examination

of any PFC and PCC licensee during the reporting period. Data is collected and

summarized by the accounting system. The number of licensee examinations

performed over the reporting period is derived from the database report which lists

each examination performed during the period and provides a total of the number

of examinations performed over the reporting period.

Methodology

The total direct costs associated with the examination of any PFC and PCC

licensee are divided by the number of examinations performed over the reporting

period. The resulting figure is an average direct cost per PFC and PCC licensee

examination.

Data Limitations

Legislative increases in allowable travel expenses or a statewide merit increase

could increase this measure.

New Measure

Calculation Method

Noncumulative

Target Attainment

Lower than target

SCHEDULE B

Performance Measure Definitions

B-20 | Texas Department of Banking ·2025-2029 Strategic Plan

Efficiency Measure: 01-02.08 Average Direct Cost per MSB Licensee Examination

Definition

Total direct MSB licensee examination costs, divided by the number of

examinations started by the Department of Banking over the reporting period. An

examination is the process by on-site or off-site review, including accepting the

report of examination of another state agency, to review and evaluate the records

of a licensee that relate to the regulated activity to the extent necessary to

determine compliance with applicable laws.

Purpose

To measure the average direct cost of each MSB licensee’s examination

performed over the reporting period. This measure provides an indication of the

Department’s use of its resources, personnel, and time as it relates to the

examination of MSB licensees.

Data Source

Data used to calculate the average cost per MSB licensee examination is derived

from the Department’s accounting system which allocates all direct costs incurred

by the Department which are associated with the examination of any MSB licensee

during the reporting period. Data is collected and summarized by the accounting

system. The number of licensee examinations performed over the reporting period

is derived from the database report which lists each examination performed during

the period and provides a total of the number of examinations performed over the

reporting period.

Methodology

The total direct costs associated with the examination of any MSB licensee are

divided by the number of examinations performed over the reporting period. The

resulting figure is an average direct cost per MSB licensee examination.

Data Limitations

Legislative increases in allowable travel expenses or a statewide merit increase

could increase this measure.

New Measure

Calculation Method

Noncumulative

Target Attainment

Lower than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-21

Explanatory Measure: 01-02.09 Dollar Amount of PFCs in Force (in Billions)

Definition

The total dollars (aggregate) in PFCs held by PFC licensees regulated by the

Department of Banking at the close of the most recent calendar year.

Purpose

Provides an indication of the dollar volume of PFCs regulated by the Department

of Banking. This measure assists in determining industry trends and growth

patterns, assessing personnel needs, and evaluating examination policies and

procedures.

Data Source

Data is derived from the most recent Departmental examination report of each

licensee. The reports contain the total dollar amount and number of PFCs held by

the licensee as of the most recent examination. Data contained in the reports is

entered into the database. A report is produced summarizing the total number and

amount of PFCs sold.

Methodology

The Department’s database, containing each licensee’s total number of

outstanding contracts and total dollar amount of outstanding contracts, produces

a report which provides a total of the aggregate total dollar amount in PFCs held

by PFC licensees.

Data Limitations

The number of contracts and/or the dollar amount of outstanding contracts

reported by each licensee at the most recent examination is dependent on

information provided by the licensee.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-22 | Texas Department of Banking ·2025-2029 Strategic Plan

Explanatory Measure: 01-02.10 Number of Non-Depository Supervision Licensees

Definition

Total number of Non-Depository Supervision licensees as of the reporting period

cut-off date.

Purpose

Provides an indication of the total number of entities licensed by the Department

of Banking and under the supervision of the Division of Non-Depository

Supervision. This measure is useful for determining industry trends and growth

patterns of the three areas (PCC, PFC, and MSB) within the Division of Non-

Depository Supervision. Information is also useful to assess personnel needs and

to evaluate regulatory policies and procedures for each area.

Data Source

Each of the three areas within the Division of Non-Depository Supervision (PCC,

PFC, and MSB) maintains in the database a master list, which shows each

licensed entity. An entity is transferred to the master list upon becoming an active

license.

Methodology

Totals from each area’s master listing of licensees as of the reporting period cut-

off date are combined to arrive at the total number of Division of Non-Depository

Supervision licensees as of the reporting period cut-off date.

Data Limitations

The number of licensees could fluctuate depending on the number of new

licensees and/or the surrendering or revocation of licenses.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-23

Explanatory Measure: 01-02.11 Percentage of Non-Depository Supervision Licensees Classified

Safe and Sound

Definition

The total number of MSB, PFC and PCC licensees examined with a uniform risk

rating of 1, 2, or 3, divided by the total number of MSB, PFC and PCC licensees

examined as of the most recent fiscal quarter-end.

Purpose

This measure is indicative of the condition of MSBs, PFCs and PCCs licensed in

this state.

Data Source

The Division of Non-Depository Supervision staff enters into the database rating

information for each Non-Depository Supervision licensee after an examination is

completed by the Department of Banking, including accepting the report of

examination of another state agency. Data is maintained on the uniform risk rating

of each Non-Depository Supervision licensee.

Methodology

Divide the total number of MSB, PFC and PCC licensees with a uniform risk rating

of 1, 2, or 3, by the total number of Non-Depository Supervision licensees

examined at least once at the end of the reporting period.

Data Limitations

The overall condition of a material number of licensees could deteriorate due to

adverse economic conditions and substantially increase the percentage of

licensees not classified as safe and sound.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-24 | Texas Department of Banking ·2025-2029 Strategic Plan

GOAL: EFFECTIVE REGULATION THROUGH CORPORATE ACTIVITIES

Outcome Measure: 01-03.01 Percentage of Applications and Notices for Banks, Trust

Companies, Money Service Businesses (MSB), and Check Verification

Companies (CVEs) Processed within Statutory Time Periods

Definition

The number of applications and notices for banks, trust companies, MSBs, and

CVEs processed within the statutorily required periods, expressed as a ratio of the

number of such applications processed during the reporting period. The time

periods for completing these activities are prescribed by rule or statute.

Purpose

This measure shows the extent of compliance with statutory and rule limitations on

the time allowed for corporate processing. A high percentage of compliance is

suggestive of an efficient and effective division that is responsive to the requests

of the applicants. Processing deadlines bring some certainty to the process and

recognition of lost opportunity costs to the applicants. Further, a high percentage

of compliance helps the Department remain competitive vis-à-vis other banking

regulatory agencies.

Data Source

Data is derived from the Department’s database. Corporate Activities Division staff

make the initial entry including the received date for all corporate filings from

information supplied by applicants. Additional entries are made to indicate

acceptance for filings, requests for additional information and date of decision.

Methodology

The ratio is computed by dividing the number of compliant initial-reply and

processing time limits for applicable corporate filings divided by the total number

of initial-reply and processing time limits that are mandated for applicable

corporate filings. The database produces reports that (1) lists all corporate filings

with initial reply and processing times compared to mandated limits and (2) totals

all compliant and non-compliant initial reply and processing times for each

transaction type.

Data Limitations

Standards are established in statute and by rule to ensure that all corporate filings,

especially those subject to rule or statutory time limits, are performed timely;

however, the Department has no control over the number or types of applications

submitted during a particular time period. In some instances, the Corporate

Activities Division is dependent upon the actions of others in order to reach a

decision. For example, a conversion examination by the Bank and Trust Division

must be completed before a decision can be rendered. Additionally, because the

Commissioner is the only person authorized to make decisions on some types of

applications, processing may extend beyond the required timeframe because of

scheduling conflicts.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-25

Output Measure: 01-03.02 Number of Applications and Notices Processed for Banks, Trust

Companies, Money Service Businesses (MSB), and Check Verification

Companies (CVEs).

Definition

Number (aggregate) of applications and notices completed for banks, trust

companies, MSBs, and CVEs.

Purpose

This data is used to judge not only the types of activities undertaken by the

regulated entities, but to predict future performance of the regulated industries. In

most instances the Texas public will feel the effect of these actions and the

economic health of the state will be affected. Agency staffing and training

requirements can also be impacted based upon the types of filings.

Data Source

Data is derived from the Department’s database. Corporate Activities Division staff

make the initial entry including received date for all corporate filings from

information supplied by applicants. Additional entries are made to indicate

acceptance for filing, requests for additional information, and date of decision.

Methodology

A pre-defined report format for this measure is contained within the database. The

report allows the user to select a beginning and ending date, which is typically a

fiscal quarter. The resulting report then lists, by type of filing, the respective number

of corporate submissions by one of the following three categories: approved/no

objection, denied, or withdrawn. The report also provides a total for each type as

well as a grand total. The number used for the performance measure takes the

total of the number of submissions for the applicable reporting period.

Data Limitations

Standards are established in statute and by rule to ensure corporate submissions

are performed timely; however, the Department has no control over the number or

types of filings submitted during a particular time period. In some instances, the

Corporate Activities Division is dependent upon the actions of others in order to

reach a decision. For example, a conversion examination by the Bank and Trust

Division must be completed before a decision can be rendered. Additionally,

because the Commissioner is the only person authorized to make decisions on

some types of applications, processing may extend beyond the required timeframe

because of scheduling problems. Further, the number and timing of submissions

received by the Corporate Activities Division is a function of the private sector and,

as such, is beyond the control of the Division.

New Measure

Calculation Method

Cumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

B-26 | Texas Department of Banking ·2025-2029 Strategic Plan

GOAL: EFFECTIVE AND EFFICIENT OPERATIONS COMPLIANT WITH STATE LAWS

Outcome Measure: 01-04.01 Percentage of Written Complaints Closed Within 90 Days

Definition

The percentage of written complaints filed against regulated or licensed entities

closed within 90 calendar days of receipt.

Purpose

The Department’s policy is to act on all formal written complaints from the public

regarding the entities that we license and/or regulate within the prescribed

timeframe. This measure indicates how well the agency is meeting the mandate.

Data Source

Data is derived from databases administered by the Strategic Support and Non-

Depository Supervision Divisions. The complainant information, including the date

received and closed, is entered into the applicable databases by the applicable

division staff.

Methodology

The measure is calculated by dividing the total number of formal written complaints

that were closed in 90 calendar days or less by the total of all formal written

complaints closed by the Strategic Support and Non-Depository Supervision

Divisions during the same reporting period.

Data Limitations

Various governing statutes allow 30 days for the entity to reply to a complaint. The

percentage closed could naturally decrease if there are a substantial number of

complex complaints. The resolution of complaints requires cooperation from

regulated entities and a delay in an entities’ response could extend the processing

time.

New Measure

Calculation Method

Noncumulative

Target Attainment

Higher than target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-27

Output Measure: 01-04.02 Number of Written Complaints Closed

Definition

The number of written complaints filed against regulated or licensed entities closed

over the reporting period.

Purpose

This measure reflects the number of formal written complaints received and closed

from the public regarding the entities that we license and/or regulate.

Data Source

Data is derived from Department databases administered by the Strategic Support

and Non-Depository Supervision Divisions. The complainant information, including

the date received and closed, is entered into the applicable databases by the

applicable division staff.

Methodology

The measure is calculated as the sum of the total number of formal written

complaints processed and closed by staff in the Strategic Support and Non-

Depository Supervision Divisions during the reporting period.

Data Limitations

The number of complaints received may fluctuate based on consumer issues

during the reporting period. The level of complaints cannot be controlled by the

Department.

New Measure

Calculation Method

Cumulative

Target Attainment

Meet Target

SCHEDULE B

Performance Measure Definitions

B-28 | Texas Department of Banking ·2025-2029 Strategic Plan

Outcome Measure: 01-05.01 Percentage of Regular Employees Separated from the Agency

Definition

The percentage of employees separated from the agency during the reporting

period.

Purpose

Staff turnover is an important way to measure both the effectiveness of the human

resources management system and the overall management of the agency. If

turnover is high, the agency will incur additional costs associated with hiring new

staff; these costs include conducting interviews, checking references, and training,

among others. Retention of qualified staff, or lack thereof, can impact productivity

and performance.

Data Source

Data is derived from databases administered by Human Resources. The hire date

and separation date are entered into the applicable databases by the division staff.

Methodology

To calculate this quarterly, divide the number of separations during the reporting

period by the average number of employees during the fiscal year, expressed as

a percent.

To calculate this annually, divide the number of separations during the

fiscal year by the average number of employees during the fiscal year.

Data Limitations

The number of separations may fluctuate during the reporting period and cannot

be controlled by the Department.

New Measure

Calculation Method

Noncumulative

Target Attainment

Meet Target

SCHEDULE B

Performance Measure Definitions

2025-2029 Strategic Plan · Texas Department of Banking | B-29

Outcome Measure: 01-05.02 Percentage of Regular Employees Separated from the Agency

(Excluding Retirements)

Definition

The percentage of employees separated from the agency during the reporting

period, excluding retirements.

Purpose

Staff turnover is an important way to measure both the effectiveness of the human

resources management system and the overall management of the agency. If

turnover is high, the agency will incur additional costs of hiring new staff; these

costs include conducting interviews, checking references, and training, among

others. Retention of qualified staff, or lack thereof, can impact productivity and

performance.

Data Source

Data is derived from databases administered by Human Resources. The hire date

and separation date are entered into the applicable databases by the division staff.

Methodology

To calculate this quarterly, divide the number of separations minus retirements

during the fiscal year by the average number of employees during the reporting

period, expressed as a percent. To calculate this annually, divide the number of

separations minus retirements during the fiscal year by the average number of

employees during the fiscal year.

Data Limitations

The number of separations may fluctuate during the reporting period and cannot

be controlled by the Department.

New Measure

Calculation Method

Noncumulative

Target Attainment

Meet Target

SCHEDULE B

Performance Measure Definitions

B-30 | Texas Department of Banking ·2025-2029 Strategic Plan

Outcome Measure: 01-05.03 Percentage of Actual Expenditures to Budgeted Expenditures

Definition

The percentage of actual expenditures to budgeted expenditures.

Purpose

To determine budgeting accuracy and efficient use of resources.

Data Source

Data is derived from the Centralized Accounting and Payroll/Personnel System

(CAPPS).

Methodology

To calculate this quarterly, use the total actual expenditures divided by total

budgeted expenditures for the reporting period. To calculate this annually, use the

total actual expenditures divided by total budgeted expenditures for the fiscal year.

Data Limitations

Unanticipated expenditures, which may not be controlled, can occur during the

reporting period.

New Measure

Calculation Method

Noncumulative

Target Attainment

Meet Target

SCHEDULE C

Historically Underutilized Business Plan

2025-2029 Strategic Plan · Texas Department of Banking | C-1

HISTORICALLY UNDERUTILIZED BUSINESS (HUB) PLAN

HUB POLICY

The Department of Banking has adopted a policy to achieve the proportional Historically Underutilized

Businesses (HUB) expenditure targets established by the Texas Comptroller of Public Accounts. As part of

this policy, the Department will make a good faith effort to assist HUBs in receiving a portion of the total

contract value of all contracts that are expected to be awarded in a fiscal year. Whenever possible and

practical, the Department purchases from HUBs regardless of dollar value.

When purchasing goods and services, the Department utilizes the Comptroller of Public Accounts

Statewide Procurement Division’s (SPD) Centralized Master Bidders List (CMBL), which includes all

certified HUB vendors. Any noncertified HUB vendors identified by the Department during this process are

encouraged to obtain certification by the SPD.

HUB ACTIVITY

The Department routinely monitors its progress toward achieving the SPD HUB goals. Over the last several

years, the Department has exceeded its HUB targets in the categories of Professional Services and

Commodities Contracts.

ATE HUB GOALS COMPARED TO DEPARTMENT OF BANKING FISCAL YEARS

Contracts

State

Goal

Agency

FY 2023

Agency

FY 2022

Agency

FY 2021

Agency

FY 2020

Professional Services Contracts 23.7%

100% 81.14%

89.05% 100%

Commodities Contracts 21.1%

68.87% 48.25%

81.68% 63.37%

SCHEDULE C

Historically Underutilized Business Plan

C-2 | Texas Department of Banking · 2025-2029 Strategic Plan

THIS PAGE INTENTIONALLY LEFT BLANK

Texas Department of Banking

June 2024

Fiscal Years 2025-2029

WORKFORCE

PLAN

Texas Department of Banking

2601 N. Lamar Blvd.

Austin, Texas 78227

877-276-5554

www.dob.texas.gov

SCHEDULE F: AGENCY WORKFORCE PLAN

2025-2029 Workforce Plan · Texas Department of Banking | 1

Table of Contents

OVERVIEW .......................................................................................................................................... 2

DEPARTMENT OF BANKING MISSION .................................................................................................. 3

AGENCY GOALS AND ACTION PLANS ................................................................................................... 3

Goal: Effective Bank and Trust Regulation 3

Actions Required to Achieve Goal .............................................................................................................................................. 3

Goal: Effective Regulation of Non-Depository Supervision Licensees 4

Actions Required to Achieve Goal .............................................................................................................................................. 5

Goal: Effective Regulation Through Corporate Activities 6

Actions Required to Achieve Goal .............................................................................................................................................. 6

Goal: Effective and Efficient Operations Compliant with State Laws 6

Actions Required to Achieve Goal .............................................................................................................................................. 6

Anticipated Changes 7

CURRENT WORKFORCE PROFILE (SUPPLY ANALYSIS)............................................................................ 8

Workforce Demographics 8

Department Workforce by Job Category ................................................................................................................................... 9

Employee Turnover .................................................................................................................................................................. 10

Retirement Eligibility and Return to Work Retirees ................................................................................................................. 12

Veteran Workforce ................................................................................................................................................................... 12

FUTURE WORKFORCE PROFILE (DEMAND ANALYSIS) ......................................................................... 13

Critical Functions 13

Expected Workforce Changes 13

Anticipated Increase in Employees Needed 13

Future Workforce Skills Needed 14

GAP ANALYSIS ................................................................................................................................... 15

Succession Planning, Retention and Recruiting 15

Anticipated Shortage/Surplus of Employees 16

Gap Analysis 17

STRATEGY DEVELOPMENT ................................................................................................................. 18

Gap: Current employees need additional training to gain and retain critical skills. ......................................................... 18

Gap: Attracting and retaining talented employees. ......................................................................................................... 18

Gap: Leadership Development ......................................................................................................................................... 19

SCHEDULE F: Agency Workforce Plan

2 | 2025-2029 Workforce Plan · Texas Department of Banking

Overview

The Department of Banking’s (Department) mission is carried out primarily through chartering,

licensing, examination, supervision, and consumer assistance. Regulated entities receive examinations

and off-site monitoring to ensure they are operating in a safe and sound manner and complying with

state and federal laws. The ability to adequately supervise the entities under the Department’s

jurisdiction requires that sufficient support be provided to our financial examiners, as well as the

regulated entities through professionalism, technology, legal services, communication, and

administrative services.

The Department is a Self-Directed, Semi-Independent (SDSI) agency operating under the oversight

of the Finance Commission of Texas (FC). As a SDSI agency, the Department is not required to have

its budget approved by the Legislature. The FC is responsible for setting the spending authority or

limits for the agency each year.

The Department competes with financial service providers, other state agencies, and federal regulatory

agencies for its professional examination staff. The agency is authorized to employ 220 full-time

equivalent (FTE) employees and as of March 31, 2024, it employed 184 individuals, the majority of

whom are financial examiners. The Bank and Trust Supervision Division is staffed with 94 field

examiners and the Non-Depository Supervision Division is staffed with 16 field examiners. As of March

31, 2024, there are 24 vacant field financial examiner positions.

The Department has worked diligently to reduce turnover and must continue its efforts to sustain a

qualified workforce. Changes in the labor market along with the resignation trends in 2022 and 2023,

heightened the importance of monitoring turnover and employee satisfaction.

Historically, industry crises highlighted the need to retain well-trained and tenured staff to provide

appropriate regulatory supervision during adverse events such as an economic downturn. The

Department must be well positioned to handle these potential contingencies rather than become

complacent during times of prosperity. The agency strives for examiner salaries that are comparable

to the Federal Deposit Insurance Corporation (FDIC) counterparts. With SDSI status, the agency has

had the ability to reasonably adjust salaries to remain competitive.

Offering competitive employment incentives and career opportunities remains a priority. Flexible work

weeks and work-at-home options are requested benefits from staff and applicants for employment.

The Department works under a hybrid workforce model that allows for some work at home

opportunities. Though the travel burden cannot be fully eliminated, the Department continually

searches for avenues to reduce the amount of overnight travel and related staff turnover. With that

goal, the Department has implemented technological improvements in the agency’s infrastructure over

time, such as increased network bandwidth, information sharing through the secure data exchange

portal, and the use of Microsoft Teams to enhance the Department’s information exchange capabilities,

complementing the hybrid work model. In addition, leveraging technology such as the enhanced

imaging methods used by regulated entities has allowed examination staff to access required

documents for off-site review, further contributing to a reduction in travel.

The Department offers a Student Educational Employment Program (SEEP), which is a paid internship

program in partnership with Texas A&M University, Sam Houston State University, Stephen F. Austin

State University, Texas Tech University, and other universities with dedicated banking programs. The

purpose of the SEEP is to introduce students to a financial examiner career. Interns who are successful

in the SEEP program (as evaluated by the Regional Director) are offered employment as a Financial

SCHEDULE F: Agency Workforce Plan

2025-2029 Workforce Plan · Texas Department of Banking | 3

Examiner I upon graduation, contingent on positions being available and the student’s ability to meet

the minimum qualifications for the position.

Department of Banking Mission

The mission of the Department of Banking is to ensure Texas has a safe, sound, and competitive

financial services system.

Agency Goals and Action Plans

The Department’s mission is accomplished primarily by the examination and supervision of our

chartered and licensed entities. To meet our goals and fulfill our mission, the Department will abide

by these core values and operating principles:

• Adhere to the highest ethical and professional standards.

• Be statutorily accountable and responsible.

• Anticipate and respond to a dynamic environment.

• Identify and promote innovative practices.

• Operate efficiently and maintain consistent and prudent regulatory standards.

• Communicate effectively.

• Foster teamwork while encouraging individual excellence and career development.

• Provide a desirable work environment that values cultural and individual differences.

• Seek input from and be responsive to the public, our supervised entities, and State leadership.

• Adhere to the principle of “Tough but Fair” regulatory oversight.

Goal: Effective Bank and Trust Regulation

Ensure timely, fair, and effective supervision and regulation of the financial institutions under our

jurisdiction. The regulatory process promotes a stable banking and financial services environment and

provides the public with convenient, safe, and competitive financial services. Provide quality regulation

and maintain the credibility of the Department with the public, industries we regulate, federal banking

regulators, and other government agencies.

Actions Required to Achieve Goal

• Conduct commercial bank, trust company, and foreign bank agency, foreign bank branch, and

foreign bank representative office (foreign bank organizations) examinations, in cooperation

with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank (FRB),

while conforming with the Department’s examination priority schedule and in a thorough,

accurate, and timely manner.

• Maintain contact with, and monitor the condition of, regulated entities between examinations

through processes which include an off-site monitoring program. Continue to improve off-site

monitoring processes by augmenting our management information systems (MIS).

SCHEDULE F: Agency Workforce Plan

4 | 2025-2029 Workforce Plan · Texas Department of Banking

• Research and report on changing industry, statutory, and economic conditions, and develop

appropriate supervisory strategies to adapt to these changes.

• React timely and appropriately when needed to implement disaster preparedness plans and

adjust to changing situations as applicable to continue providing effective oversight of regulated

entities.

• Monitor industry status and engage in regular communication with federal regulators (FDIC and

FRB) and the Conference of State Bank Supervisors (CSBS).

• Obtain feedback from regulated entities regarding proposed rule changes.

• Promote cybersecurity awareness and best practices among our regulated entities and

employees.

• Maintain a cybersecurity tracking system and monitor remediation efforts associated with

cybersecurity incidents reported by our regulated entities.

• Identify and investigate fraudulent activities and insider abuse.

• Ensure correction-oriented enforcement actions are taken, as appropriate, against regulated

entities that demonstrate higher than normal weakness or risk, including consideration of

noncompliance with laws, regulations, and policies.

• Maintain sufficient regulatory resources in the event of industry deterioration or systemic

industry problems, the reallocation of federal regulatory resources away from Texas, or a

significant increase in the regulated asset base.

• Attract and retain qualified employees through a competitive salary program, specialized

training, and career advancement opportunities. Promote a culture of state service as a career.

• Optimize efficiencies in the examination process by utilizing electronic examination tools and

the Department’s secure data exchange portal to share information with regulated entities and

federal counterparts.

• Improve the agency’s technologies through the adoption of cloud offerings, where appropriate,

and by ensuring current technologies are in use to support regulatory obligations and

operations.

• Enhance the Department’s examination procedures and scoping processes to effectively utilize

examination resources for evaluating risks and risk management practices of our regulated

entities.

• Provide regulatory and supervisory information through the agency’s website.

• Maintain accreditation status by CSBS.

Goal: Effective Regulation of Non-Depository Supervision Licensees

Ensure timely, fair, and effective supervision and regulation of the non-depository licensees under our

jurisdiction. The regulatory process promotes a stable financial services environment and provides the

public with convenient, safe, and competitive financial services. Provide quality regulation and

maintain the credibility of the Department with the public, industries we regulate, and other

government agencies.

SCHEDULE F: Agency Workforce Plan

2025-2029 Workforce Plan · Texas Department of Banking | 5

Actions Required to Achieve Goal

• Conduct Money Services Business (MSB), Prepaid Funeral Contract (PFC), and Perpetual Care

Cemetery (PCC) examinations, in conformance with the Department’s examination priority

schedule and in a thorough, accurate, coordinated, and timely manner. MSB examinations are

conducted either independently or jointly with other state regulatory entities, or in cooperation

with federal regulatory entities.

• Maintain contact with and monitor the condition of regulated entities between examinations.

• Monitor fluctuations in economic conditions, geopolitical risks, and inflationary pressures that

will impact non-depository financial service providers.

• Promote cybersecurity awareness and best practices among our employees, and regulated

entities.

• Maintain a cybersecurity tracking system for cybersecurity incidents reported by MSBs.

• Actively participate in the Multi-State MSB Examination Task Force (MMET), Money Transmitter

Regulators Association (MTRA), and CSBS and its various committees, to promote a nationwide

framework for cooperation and coordination among state regulators to ensure a uniform

regulatory oversight of the MSB industry.

• Maintain MSB examination efficiencies through cooperation and coordination among states by

developing uniform examination procedures and practices and actively participating in the

standardization of a networked supervision approach. Participation in the MMET’s multi-state

networked supervision system conserves Department resources and minimizes the regulatory

burden on supervised entities while achieving our objectives.

• Collaborate and coordinate with MSB regulators in other states in the implementation of the

Model Money Transmission Modernization Act (Model Law).

• Collaborate with stakeholders, industry auditors, and legislators in the implementation of the

Digital Assets Service Provider laws passed by the 88

Texas Legislature in 2023.

• Optimize efficiencies in the examination process utilizing electronic examination tools and the

secure data exchange portal to share information with regulated entities and other state

regulators.

• Research, monitor, and report on changes to the industry, including statutory and economic

conditions, and digital assets market evolutions. Develop appropriate supervisory strategies to

adapt to these changes.

• Monitor the impact of potential federal legislation on licensed money transmitters and engage

in regular communication with federal and state regulators.

• Provide the industry access to regulatory and supervisory information through the agency’s

website.

• Obtain feedback from license holders regarding proposed rule changes.

• Identify and investigate non-licensed entities and illegal activities.

• Ensure proper enforcement actions are issued against unlicensed entities to bring such

establishments into compliance with rules and regulations.

SCHEDULE F: Agency Workforce Plan

6 | 2025-2029 Workforce Plan · Texas Department of Banking