Section 91.1003 - Mergers/Consolidations(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Acquirer credit union--The credit union that will continue in operation after the merger/consolidation.(2) Acquiree credit union--The credit union that will cease to exist as an operating credit union at the time of the merger/consolidation.(3) Merger inducement--A promise by a credit union to pay to the members of another credit union a sum of money or other material benefit upon the successful completion of a merger of the two credit unions.(4) Substantial--An amount that is large in size, value, or importance. For purposes of this section, an amount is substantial if it exceeds $1,000.00 in total.(b) Two or more credit unions organized under the laws of this state, another state, or the United States, may merge/consolidate, in whole or in part, with each other, or into a newly incorporated credit union to the extent permitted by applicable law, subject to the requirements of this rule. A credit union may not offer a merger inducement to another credit union's members as a means of promoting a merger of the two credit unions.(c) Notice of Intent to Merge/Consolidate. The credit unions shall notify the commissioner in writing of their intent to merge/consolidate within ten days after the credit unions' boards of directors formally agree in principle to merge/consolidate.(d) Plan for Merger/Consolidation. Upon approval of a proposition for merger/consolidation by the boards of directors, the credit unions must prepare a plan for the proposed merger/consolidation. The plan shall include: (1) The terms and conditions of the merger n /consolidation including a detailed description of any substantial remuneration, such as bonuses, deferred compensation, early payout of retirement benefits, severance packages, retainers, services agreements, or other substantial financial rewards or benefits that any board member or senior management employee of the acquiree credit union may receive in connection with the merger/consolidation;(2) the current financial reports of each credit union;(3) the combined financial reports of the two or more credit unions;(4) an analysis of the adequacy of the combined Allowance for Loan and Lease Losses account;(5) an explanation of any proposed adjustments to the members' shares, or provisions for reserves, dividends, or undivided profits;(6) a summary of the products and services proposed to be available to the members of the acquirer credit union, with an explanation of any changes from the current products and services provided to the members;(7) a summary of the advantages and disadvantages of the merger/consolidation;(8) the projected location of the main office and any branch location(s) after the merger/consolidation and whether any existing office locations will be permanently closed; and(9) any other items deemed critical to the merger/consolidation agreement by the boards of directors.(e) Submission of an Application to Merge/Consolidate to Department.(1) An application for approval of the merger/consolidation will be complete when the following information is submitted to the commissioner: (A) the merger/consolidation plan, as described in this rule;(B) a copy of the corporate resolution of each board of directors approving the merger/consolidation plan;(C) the proposed Notice of Special Meeting of the members;(D) a copy of the ballot form to be sent to the members;(E) the current delinquent loan summaries for each credit union;(F) a statement as to whether the transaction is subject to the Hart-Scott Rodino Act premerger notification filing requirements; and(G) a request for a waiver of the requirement that the plan be approved by the members of any of the affected credit unions, in the event the board(s) seek such a waiver, together with a statement of the reason(s) for the waiver(s).(2) If the acquirer credit union is organized under the laws of another state or of the United States, the commissioner may accept an application to merge or consolidate that is prescribed by the state or federal supervisory authority of the acquirer credit union, provided that the commissioner may require additional information to determine whether to deny or approve the merger/consolidation. The application will be deemed complete upon receipt of all information requested by the commissioner.(3) Notice of the proposed merger must be published in the Texas Register and Department Newsletter as prescribed in §91.104 (relating to Public Notice and Comment on Certain Applications).(f) Commissioner Action on the Application. (1) The commissioner may grant preliminary approval of an application for merger/consolidation conditioned upon specific requirements being met, but final approval shall not be granted unless such conditions have been met within the time specified in the preliminary approval.(2) The commissioner shall deny an application for merger/consolidation if the commissioner finds any of the following: (A) the financial condition of the acquirer credit union before the merger/consolidation is such that it will likely jeopardize the financial stability of the merging credit union or prejudice the financial interests of the members, beneficiaries or creditors of either credit union;(B) the plan includes a change in the products or services available to members of the acquiree credit union that substantially harms the financial interests of the members, beneficiaries or creditors of the acquiree credit union;(C) the merger/consolidation would probably substantially lessen the ability of the acquirer credit union to meet the reasonable needs and convenience of members to be served;(D) the credit unions do not furnish to the commissioner all information requested by the commissioner which is material to the application;(E) the credit unions fail to obtain any approval required from a federal or state supervisory authority; or(F) the merger/consolidation would be contrary to law.(3) For applications to merge/consolidate in which the products and services of the acquirer credit union after merger/consolidation are proposed to be substantially the same as those of the acquiree and acquirer credit unions, the commissioner will presume that the merger/consolidation will not significantly change or affect the availability and adequacy of financial services in the local community.(g) Procedures for Approval of Merger/Consolidation Plan by the Members of Each Credit Union. (1) The credit unions have the option of allowing their members to vote on the plan in person at a meeting of the members, by mail ballot, or both. With prior approval of the commissioner, a credit union may accept member votes by an alternative method that is reasonably calculated to ensure each member has an opportunity to vote.(2) Members shall be given advance notice of the meeting in accordance with the credit union's bylaws. The notice of the meeting shall:(A) specify the purpose of the meeting and state the date, time, and place of the special meeting;(B) state the reasons for the proposed merger/consolidation;(C) contain a summary of the merger plan and state that any interested person may obtain more detailed information about the merger from the credit union at its principal place of business, or by any method approved in advance by the commissioner;(D) provide the name and location of the acquirer credit union;(E) specify the methods permitted for casting votes; and(F) if applicable, be accompanied by a mail ballot.(h) Completion of Merger/Consolidation.(1) Upon approval of the merger/consolidation plan by the membership, if applicable, the Certificate of Merger/Consolidation shall be completed, signed and submitted to the commissioner for final authority to combine the records. Necessary amendments to the acquirer credit union's articles of incorporation or bylaws shall also be submitted at this time.(2) Upon receipt of the commissioner's written authorization, the records of the credit unions shall be combined as of the effective date of the merger/consolidation. The board of the directors of the acquirer credit union shall certify the completion of the merger/consolidation to the commissioner within 30 days after the effective date of the merger/consolidation.(3) Upon receipt by the commissioner of the completion of the merger/consolidation certification, any article of incorporation or bylaw amendments will be approved and the charter of the acquiree credit union will be canceled.7 Tex. Admin. Code § 91.1003
The provisions of this §91.1003 adopted to be effective March 11, 1998, 23 TexReg 4568; amended to be effective November 16, 2005, 30 TexReg 7434; amended to be effective November 11, 2007, 32 TexReg 7924; amended to be effective November 8, 2009, 34 TexReg 7628; Amended by Texas Register, Volume 42, Number 46, November 17, 2017, TexReg 6509, eff. 11/23/2017; Amended by Texas Register, Volume 45, Number 21, May 22, 2020, TexReg 3437, eff. 5/31/2020