By Romo H.B. No. 1790
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the merger, reorganization, or conversion of state or
1-3 federal savings banks, state or federal savings and loan
1-4 associations, and state banks and the investments of a savings and
1-5 loan association.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section E, Article 5, Chapter III, The Texas
1-8 Banking Code (Article 342-305, Vernon's Texas Civil Statutes), is
1-9 amended to read as follows:
1-10 E. The provisions of the Administrative Procedure and Texas
1-11 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)
1-12 governing contested cases do not apply to charter applications
1-13 filed for the purpose of assuming the assets and liabilities of any
1-14 bank, state or federal savings bank, or state or federal savings
1-15 and loan association deemed by the Banking Commissioner to be in an
1-16 unsafe condition.
1-17 SECTION 2. Article 8, Chapter III, The Texas Banking Code
1-18 (Article 342-308, Vernon's Texas Civil Statutes), is amended to
1-19 read as follows:
1-20 Art. 8. MERGER--TRUST POWERS. Any two or more state banks,
1-21 or if national banks are hereafter authorized by the laws of the
1-22 United States to participate in such a merger, any one or more
1-23 state banks and any one or more national banks domiciled in this
1-24 State, or any state bank and any state or federal savings and loan
2-1 association or state or federal savings bank authorized by the laws
2-2 of this state or the United States to participate in a merger, may,
2-3 with the approval of the Banking Commissioner and the written
2-4 consent of the owners of record of two-thirds of the capital of
2-5 each of said institutions <banks>, be merged. Said merging
2-6 institutions <banks> shall file with the Banking Commissioner:
2-7 (1) A statement of the plan of merger approved by the
2-8 board of directors of each merging institution <bank>, by a
2-9 majority vote of the qualified directors.
2-10 (2) Certificate of merger stating the facts required
2-11 by Article 4 of this chapter and executed and acknowledged by a
2-12 majority of the qualified directors of each merging institution
2-13 <bank>.
2-14 The Banking Commissioner shall thereupon investigate the
2-15 condition of the merging institutions <banks> and if the
2-16 Commissioner <he> finds that the state bank which will result from
2-17 the merger (hereafter called the "resulting bank") will be solvent
2-18 and its capital unimpaired; that it will have adequate capital
2-19 structure; that such merger does not violate the anti-trust laws of
2-20 this state; and that the resulting bank has in all respects
2-21 complied with the laws of this State relative to the incorporation
2-22 of State banks, the Commissioner <he> may approve such merger, and,
2-23 if the Commissioner <he> so approves, the Commissioner <he> shall
2-24 deliver to the resulting bank a certified copy of the certificate
2-25 of merger, which certificate shall constitute the charter and
2-26 articles of association of the resulting bank. The resulting bank
2-27 shall be deemed a continuation in entity and identity of each of
3-1 the institutions <banks> involved in the merger; shall be subject
3-2 to all the liabilities, obligations, duties and relations of each
3-3 merging institution <bank>; and shall without the necessity of any
3-4 conveyance, assignment or transfer become the owner of all of the
3-5 assets of every kind and character formerly belonging to the
3-6 merging institutions <banks>; further, provided, that if any
3-7 merging institution <bank> shall at the time of the merger be
3-8 acting as trustee, guardian, executor, administrator, or in any
3-9 other fiduciary capacity, the resulting bank shall, without the
3-10 necessity of any judicial action or action by the creator of such
3-11 trust, continue such office, trust or fiduciary relationship and
3-12 shall perform all of the duties and obligations and exercise all of
3-13 the powers and authority connected with or incidental to such
3-14 fiduciary relationship in the same manner as though the resulting
3-15 bank had been originally named or designated as such fiduciary.
3-16 The naming or designating by a testator, or the creator of a
3-17 living trust, of any one of the merging institutions <banks> to act
3-18 as trustee, guardian, executor or in any other fiduciary capacity
3-19 shall be considered the naming or designating of the bank resulting
3-20 from the merger.
3-21 A stockholder may dissent from the merger by following the
3-22 procedure provided by Article 5.12, Texas Business Corporation Act.
3-23 That procedure applies to a merger under this article, as if the
3-24 state bank were a corporation organized under the Texas Business
3-25 Corporation Act.
3-26 SECTION 3. Article 9, Chapter III, The Texas Banking Code
3-27 (Article 342-309, Vernon's Texas Civil Statutes), is amended to
4-1 read as follows:
4-2 Art. 9. REORGANIZATION--INCORPORATION TO TAKE OVER BUSINESS
4-3 OF OTHER BANKS OR STATE OR FEDERAL SAVINGS BANKS OR SAVINGS AND
4-4 LOAN ASSOCIATIONS--TRUST POWERS. A state bank may be incorporated
4-5 to take over the business of any incorporated bank or banks, state
4-6 or national, or of any state or federal savings bank or state or
4-7 federal savings and loan association, as a step in the
4-8 reorganization of such institution <bank> or institutions <banks>,
4-9 (which institution <bank> or institutions <banks>, whether one or
4-10 more, will be hereafter referred to as the "reorganizing
4-11 institution") <"reorganizing bank")>, and shall, subject to the
4-12 provisions of this article, be authorized to purchase assets from
4-13 the reorganizing institution <bank> and as consideration therefor,
4-14 assume all liabilities, known or unknown, of the reorganizing
4-15 institution <bank>, other than its liability to stockholders as
4-16 such.
4-17 Persons desiring to incorporate a state bank under the
4-18 provisions of this article shall proceed in the manner provided in
4-19 Article 5 of this Chapter, and in addition, shall file with the
4-20 Banking Commissioner:
4-21 (1) The proposed contract whereby the state bank is to
4-22 purchase the assets from and assume the liabilities of the
4-23 reorganizing institution <bank>, as above mentioned.
4-24 (2) Contracts, if any, whereby the proposed state bank
4-25 is to purchase for cash the whole or any part of the right of any
4-26 or all of the stockholders of the reorganizing institution <bank>
4-27 to receive liquidating dividends upon liquidation of the
5-1 reorganizing institution <bank>, which contracts shall expressly
5-2 provide that they shall be binding and effective only in event the
5-3 reorganizing institution <bank> is placed in voluntary liquidation
5-4 within ten (10) days of the granting of the application for the
5-5 charter applied for. Such contracts shall be executed on behalf of
5-6 the proposed bank by the persons applying for the charter.
5-7 If the Banking Commissioner, after investigation, determines
5-8 that the proposed bank, if incorporated, will, after its capital
5-9 has been paid in full and all contracts above mentioned finally
5-10 consummated, be solvent, its capital adequate and unimpaired, that
5-11 such reorganization is to the best interest of the reorganizing
5-12 institution <bank>, its depositors, creditors and stockholders and
5-13 the public in general, and that upon incorporation such bank will
5-14 have in all other respects complied with the law, the Commissioner
5-15 <he> shall recommend to the State Banking Board that the charter be
5-16 granted.
5-17 If the State Banking Board concurs in the findings of the
5-18 Banking Commissioner, it shall grant the application, and the
5-19 Banking Commissioner shall deliver a certified copy of the articles
5-20 of association in the manner provided in Article 5 of this chapter.
5-21 Provided, however, that the Banking Commissioner shall not deliver
5-22 a certificate of authority until the contracts above mentioned have
5-23 been fully consummated, and the requirements of Article 7 of this
5-24 chapter have been met. The state bank so incorporated shall be
5-25 deemed a reorganization of the reorganizing institution <bank>, and
5-26 a continuation of such institution <bank> in entity and identity,
5-27 subject to all of its liabilities, obligations, duties and
6-1 relations, save and except its liability to stockholders as such,
6-2 and shall pay and perform each and every obligation, duty and
6-3 liability of the reorganizing institution <bank> in exactly the
6-4 same manner as the reorganizing institution <bank> was obligated to
6-5 do; further provided that if the reorganizing institution <bank>
6-6 was at the time of incorporation of the new state bank, named or
6-7 acting as guardian, trustee, executor, administrator or in any
6-8 other fiduciary capacity, such state bank shall, without the
6-9 necessity of any judicial action, or action by the creator of such
6-10 trust, continue the trusteeship or other fiduciary relation and
6-11 perform all of the duties and obligations of the reorganizing
6-12 institution <bank> and exercise all the powers and authority
6-13 relative thereto; and neither the reorganization of such
6-14 institution <bank>, nor any liquidation of such institution <bank>
6-15 in connection therewith, shall be deemed a resignation or refusal
6-16 to act. The naming or designating by a testator or the creator of
6-17 a living trust of the reorganizing institution <bank> to act as
6-18 trustee, guardian, executor, or in any other fiduciary capacity
6-19 shall be considered the naming or designating of the bank resulting
6-20 from the reorganization.
6-21 The new state bank shall give notice of its assumption of the
6-22 liabilities of the reorganizing institution <bank> by publishing
6-23 notice thereof once each week for a period of two (2) weeks in some
6-24 newspaper of general circulation published in the county of its
6-25 domicile, or in event no such newspaper is published in said
6-26 county, then in a newspaper of general circulation published in an
6-27 adjacent county. The first notice shall be published within ten
7-1 (10) days after the delivery of the certificate of authority to
7-2 such bank.
7-3 SECTION 4. Article 10, Chapter III, The Texas Banking Code
7-4 (Article 342-310, Vernon's Texas Civil Statutes), is amended to
7-5 read as follows:
7-6 Art. 10. PURCHASE OF ASSETS OF ANOTHER BANK OR STATE OR
7-7 FEDERAL SAVINGS BANK OR SAVINGS AND LOAN ASSOCIATION--DISBURSING
7-8 AGENT. Any state bank may, with the consent of the Banking
7-9 Commissioner, purchase the whole or any part of the assets of any
7-10 other state bank or of any national bank domiciled in this State,
7-11 or of a state or federal savings bank or state or federal savings
7-12 and loan association, and may hold the purchase price and any
7-13 additional funds delivered to it by the selling institution <bank>
7-14 in trust for or as a deposit to the credit of the selling
7-15 institution <bank>. The purchasing bank may act as agent of the
7-16 selling institution <bank> in disbursing the funds so held in trust
7-17 or on deposit by paying the depositors and creditors of the selling
7-18 institution <bank>, provided that if the purchasing bank acts under
7-19 written contract of agency which specifically names each depositor
7-20 and creditor and the amount to be paid each, and if such agency is
7-21 confined to the purely ministerial act of paying such depositors
7-22 and creditors the amounts due them as determined by the selling
7-23 institution <bank> and reflected in the contract of agency and
7-24 involves no discretionary duties or authority other than the
7-25 identification of the depositors and creditors named, and if such
7-26 contract is approved by the Banking Commissioner, then the
7-27 purchasing bank may rely upon such contract of agency and the
8-1 instructions included therein, and shall not be in any way liable
8-2 or responsible for any error made by the selling institution <bank>
8-3 in determining its liabilities, the depositors and creditors to
8-4 whom such liabilities are due, or the amounts due such depositors
8-5 and creditors; nor liable or in any way responsible for any
8-6 preference which may result from the payments made pursuant to such
8-7 contract of agency and the instructions included therein. Further
8-8 provided that, in event the selling institution <bank> should, at
8-9 any time after such sale of assets, be closed and come into the
8-10 hands of the Banking Commissioner or<, if a national bank> into the
8-11 hands of a receiver, then the purchasing bank shall pay to the
8-12 Banking Commissioner as statutory liquidator or to the receiver of
8-13 such state or national institution <bank> the balance of the funds
8-14 held by it in trust or on deposit for the selling institution
8-15 <bank>, not theretofore paid to the depositors and creditors of the
8-16 selling institution <bank>, and shall thereupon stand discharged of
8-17 any and all liabilities, obligations or responsibilities to the
8-18 selling institution <bank>, its receiver, the Banking Commissioner
8-19 as its statutory liquidator, or to the depositors, creditors or
8-20 stockholders thereof. Provided further that payment to any
8-21 depositor or creditor of the selling institution <bank> of the
8-22 amount to be paid him under the terms of the contract of agency may
8-23 be effected by the purchasing bank opening an account in the name
8-24 of such depositor or creditor, crediting such account with the
8-25 amount to be paid the depositor or creditor under the terms of such
8-26 agency contract, and mailing a duplicate deposit ticket evidencing
8-27 such credit to such depositor or creditor at his address as
9-1 reflected by the records of the selling institution <bank>, or
9-2 delivering it to him personally, and the relation of debtor to
9-3 creditor shall thereupon arise between the purchasing bank and such
9-4 depositors and creditors to the extent and only to the extent of
9-5 the credit reflected by such deposit tickets. Further provided,
9-6 that if any such depositor or creditor checks upon the credit so
9-7 created, or if he does not within sixty (60) days of the mailing or
9-8 the personal delivery of such deposit ticket protest the
9-9 transaction and demand payment from the selling institution <bank>,
9-10 he shall be deemed to have ratified the transaction and to the
9-11 extent of the credit so created to have accepted the obligation of
9-12 the purchasing bank as reflected by said deposit ticket in
9-13 satisfaction of the obligation of the selling institution <bank>,
9-14 and the obligation of the selling institution <bank> to the extent
9-15 of such credit shall be deemed paid and satisfied within the
9-16 meaning of this article.
9-17 SECTION 5. Article 13, Chapter III, The Texas Banking Code
9-18 (Article 342-313, Vernon's Texas Civil Statutes), is amended to
9-19 read as follows:
9-20 Art. 13. MERGER, REORGANIZATION, OR CONVERSION OF STATE BANK
9-21 INTO NATIONAL BANK OR STATE OR FEDERAL SAVINGS BANK OR SAVINGS
9-22 AND LOAN ASSOCIATION. The owners of record of two-thirds of the
9-23 capital of any solvent state bank may, by vote or written consent,
9-24 authorize its officers and directors to take such action as may be
9-25 necessary under the laws of the United States or the state laws
9-26 governing savings and loan associations and savings banks to merge,
9-27 reorganize, or convert it into a national bank, state or federal
10-1 savings bank, or state or federal savings and loan association,
10-2 provided, however, that the state bank shall not cease to be a
10-3 state bank subject to the supervision of the Banking Commissioner
10-4 until (1) the Banking Commissioner has been given written notice of
10-5 the intention to merge, reorganize, or convert for at least thirty
10-6 (30) days, (2) such bank has published notice thereof at least once
10-7 a week for four (4) weeks in a newspaper of general circulation
10-8 published in the county of its domicile, or, if no such newspaper
10-9 is published in the county, in an adjacent county, (3) the bank has
10-10 filed with the Banking Commissioner a transcript of the merger,
10-11 reorganization, or conversion proceedings, sworn to by a majority
10-12 of the qualified directors and a publisher's certificate showing
10-13 publication of the notice above provided, and (4) such bank has
10-14 received a certificate of authority to do business as a national
10-15 bank, state or federal savings bank, or state or federal savings
10-16 and loan association.
10-17 SECTION 6. Article 13a, Chapter III, The Texas Banking Code
10-18 (Article 342-313a, Vernon's Texas Civil Statutes), is amended to
10-19 read as follows:
10-20 Art. 13a. CONVERSION OF NATIONAL BANK OR STATE OR FEDERAL
10-21 SAVINGS BANK OR SAVINGS AND LOAN ASSOCIATION INTO STATE BANK. A
10-22 national bank, state or federal savings bank, or state or federal
10-23 savings and loan association <or association> located in this state
10-24 which follows the procedures prescribed by the laws of the United
10-25 States or this state to convert into a state bank, shall be granted
10-26 a certificate of incorporation in the state when the State Banking
10-27 Board finds that the institution <bank> meets the standards as to
11-1 location of office, capital structure and business experience of
11-2 officers and directors for the incorporation of a state bank. In
11-3 considering the application for conversion from a national bank,
11-4 state or federal savings bank, or state or federal savings and loan
11-5 association into a state bank the Board shall consider and
11-6 determine that the new bank meets with all the requirements of a
11-7 new state bank applicant. The conversion is governed by this
11-8 Article and not by Article 9 of this chapter. Included also in the
11-9 application of a national bank for conversion and to be considered
11-10 along with the other information submitted shall be the terms of
11-11 the transition from a national bank into a state bank which shall
11-12 also show that the provisions of Public Law 706 of the 81st
11-13 Congress of the United States have been fully satisfied. <Such
11-14 conversion shall be governed by the provisions of this Article and
11-15 shall not be governed by Article 9, now codified as Article
11-16 342-309, Vernon's Texas Civil Statutes.>
11-17 SECTION 7. Chapter V, The Texas Banking Code (Article
11-18 342-501 et seq., Vernon's Texas Civil Statutes), is amended by
11-19 adding Article 14 to read as follows:
11-20 Art. 14. HOME MORTGAGE REQUIREMENTS FOR RESULTING
11-21 INSTITUTION. (a) In this article:
11-22 (1) "Financial institution" means a state or federal
11-23 bank, a state or federal savings bank, or a state or federal
11-24 savings and loan association.
11-25 (2) "Home mortgage" means an interest-bearing loan, or
11-26 a participation in an interest-bearing loan, that is:
11-27 (A) made to purchase, improve, or construct a
12-1 home;
12-2 (B) evidenced by a promissory note; and
12-3 (C) secured by a mortgage, mortgage deed, deed
12-4 of trust, or other instrument that constitutes a lien on the home.
12-5 (3) "Resulting institution" means the financial
12-6 institution that carries on in this state the business of a
12-7 financial institution after a merger with or a reorganization,
12-8 conversion, consolidation, or acquisition of another financial
12-9 institution.
12-10 (b) The percentage of home mortgage loans held in the loan
12-11 portfolio of a resulting institution may not be less than the
12-12 percentage of home mortgage loans held in the loan portfolio of the
12-13 financial institution involved in the merger, reorganization,
12-14 conversion, consolidation, or acquisition that, on the 30th day
12-15 before the date of the merger, reorganization, conversion,
12-16 consolidation, or acquisition, has the greatest percentage of home
12-17 mortgage loans in its loan portfolio.
12-18 (c) The percentage of home mortgage loans held in a
12-19 financial institution's loan portfolio is computed by dividing the
12-20 total principal amount of the financial institution's outstanding
12-21 home mortgage loans by the total principal amount of all of the
12-22 financial institution's outstanding loans.
12-23 (d) This article applies to all financial institutions to
12-24 the extent permitted by federal law and by Article XVI, Section
12-25 16(c), of the Texas Constitution.
12-26 SECTION 8. Section 4, Article 12, Chapter IX, The Texas
12-27 Banking Code (Article 342-912, Vernon's Texas Civil Statutes), is
13-1 amended to read as follows:
13-2 Sec. 4. APPLICATION AND FILINGS BY OUT-OF-STATE BANK HOLDING
13-3 COMPANY SEEKING ACQUISITION. An out-of-state bank holding company
13-4 that seeks to take an action specified in Section 1 of this article
13-5 for which a copy of the application must be filed with the banking
13-6 commissioner shall also file with the banking commissioner, when it
13-7 delivers the application:
13-8 (1) evidence that the out-of-state bank holding
13-9 company is authorized to take the action under Article 16 of this
13-10 chapter;
13-11 (2) evidence that the out-of-state bank holding
13-12 company and each state bank, national bank in this state, and bank
13-13 holding company being acquired will, after the acquisition, comply
13-14 with applicable capital adequacy guidelines, and that the
13-15 consolidated equity capital condition of these banks in this state
13-16 during the first three years after being acquired will be
13-17 maintained at least at the level existing immediately prior to the
13-18 acquisition less the consolidated net loss of these banks, if any;
13-19 (3) agreements, subject to any contrary provision of
13-20 applicable federal law, that while the out-of-state bank holding
13-21 company directly or indirectly owns or controls any national bank
13-22 in this state,<:>
13-23 <(A)> a majority of the directors of each
13-24 national bank shall be residents of the State of Texas, except that
13-25 directors who are employees or officers or spouses of employees or
13-26 officers of the bank, out-of-state bank holding company, or an
13-27 affiliate of the bank or out-of-state bank holding company may not
14-1 be counted as residents of the State of Texas for the purpose of
14-2 this subdivision <paragraph>; and
14-3 <(B) the out-of-state bank holding company will
14-4 not directly or indirectly own or control:>
14-5 <(i) an institution located in this state,
14-6 the deposits of which are insured by the Federal Deposit Insurance
14-7 Corporation or any successor performing similar functions, unless
14-8 the institution is a bank as defined by Section 2, Bank Holding
14-9 Company Act of 1956 (12 U.S.C. Sec. 1841); or>
14-10 <(ii) an institution located in this
14-11 state, the deposits of which are insured by the Federal Savings and
14-12 Loan Insurance Corporation or any successor performing similar
14-13 functions; and>
14-14 (4) an agreement to provide such additional
14-15 information as may be required by rules promulgated by the banking
14-16 commissioner.
14-17 SECTION 9. Sections 3 and 4, Article 16, Chapter IX, The
14-18 Texas Banking Code (Article 342-916, Vernon's Texas Civil
14-19 Statutes), are amended to read as follows:
14-20 Sec. 3. <The authority granted by Section 1 of this article
14-21 is not available to an out-of-state bank holding company that
14-22 directly or indirectly owns or controls:>
14-23 <(1) an institution located in this state, the
14-24 deposits of which are insured by the Federal Deposit Insurance
14-25 Corporation or any successor performing similar functions, unless
14-26 such institution is a bank as defined by Section 2, Bank Holding
14-27 Company Act of 1956 (12 U.S.C. Sec. 1841); or>
15-1 <(2) an institution located in this state, the
15-2 deposits of which are insured by the Federal Savings and Loan
15-3 Insurance Corporation or any successor performing similar
15-4 functions.>
15-5 <Sec. 4.> The authority granted in Section 1 of this article
15-6 is not available to an out-of-state bank holding company if after
15-7 the transaction the aggregate deposits of the state banks and
15-8 national banks domiciled in this state owned or controlled,
15-9 directly or indirectly, by the out-of-state bank holding company
15-10 would exceed 25 percent of the total deposits of all state banks
15-11 and national banks in this state as reported in the most recently
15-12 available reports of condition or similar reports filed with state
15-13 or federal authorities. For purposes of this section, the term
15-14 "deposit" has the meaning assigned by Section 2(3), Federal Deposit
15-15 Insurance Act (12 U.S.C. Sec. 1813).
15-16 SECTION 10. Section 10.02, Texas Savings and Loan Act
15-17 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
15-18 as follows:
15-19 Sec. 10.02. CONVERSION INTO STATE CHARTERED ASSOCIATION.
15-20 Any Federal association or state or national bank may convert
15-21 itself into an association under this Act upon a majority vote of
15-22 the members, shareholders, or stockholders of such Federal
15-23 association or state or national bank cast at an annual meeting or
15-24 any special meeting called to consider such action. Copies of the
15-25 minutes of the proceedings of such meeting of members,
15-26 shareholders, or stockholders, verified by affidavit of the
15-27 secretary or an assistant secretary, shall be filed in the office
16-1 of the Commissioner and with the Office of Thrift Supervision or
16-2 its successor <mailed to the Federal Home Loan Bank Board,
16-3 Washington, D.C.,> within ten (10) days after such meeting. Such
16-4 verified copies of the proceedings of the meeting when so filed
16-5 shall be presumptive evidence of the holding and action of such
16-6 meeting. At the meeting at which conversion is voted upon, the
16-7 members, shareholders, or stockholders shall also vote upon the
16-8 directors who shall be the directors of the state-chartered
16-9 association after conversion takes effect. Such directors then
16-10 shall execute two (2) copies of the application for certificate of
16-11 incorporation provided in this Act. The Commissioner shall, upon
16-12 receipt of such application, cause the converting institution
16-13 <association> to be examined and if the Commissioner <he> finds
16-14 that it is in sound condition, approve the conversion and insert in
16-15 the certificate of incorporation, at the end of the paragraph
16-16 preceding the testimonium clause, the following: "This association
16-17 is incorporated by conversion from _____ (a Federal savings and
16-18 loan association, state bank, or national bank, as applicable)."
16-19 Each of the directors chosen for the new association shall sign and
16-20 acknowledge the application for certificate of incorporation as
16-21 subscribers thereto and the proposed bylaws as incorporators of the
16-22 new association. The provisions of this Act shall, so far as
16-23 applicable, apply to such conversion. The state-chartered
16-24 association shall be a continuation of the corporate entity of the
16-25 converting Federal association or state or national bank and
16-26 continue to have all of its property and rights.
16-27 SECTION 11. Chapter 10, Texas Savings and Loan Act (Article
17-1 852a, Vernon's Texas Civil Statutes), is amended by adding Section
17-2 10.021 to read as follows:
17-3 Sec. 10.021. CONVERSION INTO OTHER FINANCIAL INSTITUTION.
17-4 (a) An association subject to this Act may convert itself into a
17-5 state or national bank or state or federal savings bank on
17-6 application to the commissioner.
17-7 (b) A conversion under this section may be initiated by the
17-8 adoption of a resolution declaring that the association is to be
17-9 converted. The resolution must be adopted by a majority vote of
17-10 the members or shareholders of the association entitled to vote at
17-11 an annual or special meeting called to consider the conversion. A
17-12 copy of the minutes of the proceedings of the meeting, verified by
17-13 an affidavit of the secretary or an assistant secretary, shall be
17-14 filed in the office of the commissioner not later than the 10th day
17-15 after the date of the meeting. A sworn and filed copy of the
17-16 proceedings of the meeting is presumptive evidence of the meeting
17-17 and action taken.
17-18 (c) An application for conversion shall be approved by the
17-19 commissioner if the commissioner determines that the association is
17-20 in good standing. For purposes of this subsection, an association
17-21 is in good standing if the association has paid all fees,
17-22 assessments, and money due and payable to the Savings and Loan
17-23 Department of Texas.
17-24 (d) A copy of the charter issued to the new financial
17-25 institution by the appropriate financial institution regulatory
17-26 agency or a certificate showing the organization of the new
17-27 institution as a financial institution, certified by the secretary
18-1 or assistant secretary of the appropriate financial institution
18-2 regulatory agency, shall be filed with the commissioner. Failure
18-3 to file the charter or certificate with the commissioner does not
18-4 affect the validity of the conversion.
18-5 (e) Following the approval of the application for conversion
18-6 by the commissioner and on the granting of a charter by the
18-7 appropriate financial institution regulatory agency, the
18-8 institution receiving the new charter ceases to be an association
18-9 incorporated under this Act and is no longer subject to the
18-10 supervision and control of the commissioner, as provided by this
18-11 Act.
18-12 (f) On the conversion of an association into another
18-13 financial institution, the corporate existence of the association
18-14 does not terminate, but the new financial institution is a
18-15 continuation of the converting association. All property of the
18-16 converting association, including its rights, titles, and interests
18-17 in and to all property, whether real, personal, or mixed, and
18-18 things in action, and every right, privilege, interest, and asset
18-19 of any value or benefit then existing, or pertaining to it, or
18-20 which would inure to it, immediately by operation of law and
18-21 without any conveyance or transfer and without any further act or
18-22 deed remains and vests in and continues to be the property of the
18-23 financial institution into which the association has converted.
18-24 The new financial institution has, holds, and enjoys those
18-25 properties, rights, privileges, interests, and assets in its own
18-26 right as fully and to the same extent as they were possessed, held,
18-27 and enjoyed by the converting association. The new financial
19-1 institution at the time the conversion takes effect has and
19-2 succeeds to all the rights, obligations, and relations of the
19-3 converting association. A pending action or other judicial
19-4 proceeding to which the association is a party is not abated or
19-5 discontinued by reason of the conversion but may be prosecuted to
19-6 final judgment, order, or decree in the same manner as if the
19-7 conversion into the new financial institution had not been made.
19-8 The new financial institution may continue a pending action in its
19-9 corporate name as the new financial institution, and a judgment,
19-10 order, or decree may be rendered for or against it that might have
19-11 been rendered for or against the converting association.
19-12 SECTION 12. Section 10.03, Texas Savings and Loan Act
19-13 (Article 852a, Vernon's Texas Civil Statutes), is amended to read
19-14 as follows:
19-15 Sec. 10.03. REORGANIZATION, MERGER, AND CONSOLIDATION.
19-16 (a) Pursuant to a plan adopted by the board of directors and
19-17 approved by the Commissioner, and subject to the provisions of
19-18 Chapter 9 of this Act, an association shall have power to
19-19 reorganize or to merge or consolidate with another association,
19-20 <or> Federal association, foreign association, state or national
19-21 bank, or state or federal savings bank; provided, that the plan of
19-22 such reorganization, merger or consolidation shall be approved by a
19-23 majority of the total vote the members or shareholders are entitled
19-24 to cast. Approval may be voted at either an annual meeting or at a
19-25 special meeting called to consider such action. A shareholder of a
19-26 capital stock association has the same dissenter's rights as a
19-27 shareholder of a domestic corporation under the Texas Business
20-1 Corporation Act. In all cases the corporate continuity of the
20-2 resulting corporation shall possess the same incidents as that of
20-3 an entity <association> which has converted in accordance with this
20-4 Act. The home office of the association in the proposed merger
20-5 possessing the largest assets shall be designated as the home
20-6 office of the surviving entity <association>, unless otherwise
20-7 approved by the Commissioner.
20-8 (b) Upon being presented with a plan of reorganization,
20-9 merger, or consolidation, the Commissioner shall give public notice
20-10 of the proposed reorganization, merger, or consolidation in the
20-11 county or counties in which the association or associations
20-12 participating in the proposed plan have offices and give any
20-13 interested party an opportunity to appear, present evidence, and be
20-14 heard for or against the proposed plan. The hearing shall be held
20-15 before a hearing officer designated by the Commissioner. If a
20-16 protest is not received on or before the date of hearing, the
20-17 hearing may be dispensed with by the Commissioner or hearing
20-18 officer. The provisions of the Administrative Procedure and Texas
20-19 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)
20-20 applicable to a contested case apply to the hearing, except that
20-21 the notice and hearing provisions of that Act and of this section
20-22 do not apply to an application under this section if the
20-23 Commissioner has designated the merger to be a supervisory merger,
20-24 under rules adopted by the Finance Commission, and in that event,
20-25 the application and all information relating to the application is
20-26 confidential and privileged from public disclosure.
20-27 (c) The Commissioner shall issue an order denying the
21-1 proposed plan if the Commissioner finds that:
21-2 (1) the reorganization, merger, or consolidation would
21-3 substantially lessen competition or be in restraint of trade and
21-4 would result in a monopoly or be in furtherance of a combination or
21-5 conspiracy to monopolize or attempt to monopolize the savings and
21-6 loan industry in any part of the state, unless the anticompetitive
21-7 effects of the proposed reorganization, consolidation, or merger
21-8 are clearly outweighed in the public interest by the probable
21-9 effect of the reorganization, merger, or consolidation in meeting
21-10 the convenience and needs of the community to be served;
21-11 (2) in a merger or consolidation, the financial
21-12 condition of either entity <association> would jeopardize the
21-13 financial stability of any <the other> association that is a party
21-14 to the plan;
21-15 (3) the proposed plan is not in the best interest of
21-16 any association <the associations> that is a party <are parties> to
21-17 the plan;
21-18 (4) the experience, ability, standing, competence,
21-19 trustworthiness, or integrity of the management of the entities
21-20 <associations> proposing the plan is such that the reorganization,
21-21 merger, or consolidation would not be in the best interest of the
21-22 associations that are parties to the plan;
21-23 (5) after reorganization, merger, or consolidation the
21-24 surviving entity <association> would not be solvent, have adequate
21-25 capital structure, or be in compliance with the laws of this state;
21-26 (6) the entities <associations> proposing the plan
21-27 have not furnished all of the information pertinent to the
22-1 application reasonably requested by the Commissioner; or
22-2 (7) the entities <associations> proposing the plan are
22-3 not acting in good faith.
22-4 SECTION 13. The Texas Savings and Loan Act (Article 852a,
22-5 Vernon's Texas Civil Statutes) is amended by adding Sections 5.07
22-6 and 5.08 to read as follows:
22-7 Sec. 5.07. INVESTMENT WITHIN ASSOCIATION'S LOCAL SERVICE
22-8 AREA. (a) Each association shall maintain in its portfolio at
22-9 least 15 percent of its local service area deposits in the
22-10 following categories of assets and investments:
22-11 (1) first and second lien residential mortgage loans
22-12 or foreclosed residential mortgage loans originated from within the
22-13 association's local service area;
22-14 (2) home improvement loans;
22-15 (3) interim residential construction loans;
22-16 (4) mortgage-backed securities secured by loans from
22-17 within the association's local service area; and
22-18 (5) loans for community reinvestment purposes.
22-19 (b) The commissioner shall define an applicant's local
22-20 service area at the time of its incorporation or upon application
22-21 within 180 days of the effective date of this legislation. Unless
22-22 otherwise agreed to by the commissioner and the applicant, the
22-23 applicant may rely on this definition for the duration of the
22-24 applicant's corporate existence as an association.
22-25 (c) The commissioner and the finance commission shall adopt
22-26 rules to implement this section. The rules shall define the
22-27 categories of loans and investments described in Subsection (a) of
23-1 this section. The commissioner may grant certain limited-term
23-2 waivers from the requirements of Subsection (a) of this section if
23-3 quality loans in the categories described in that subsection are
23-4 not available from within the association's local service area.
23-5 Sec. 5.08. CONVERSION APPLICATION PROCESS. An application
23-6 to convert an institution to a state savings bank shall be
23-7 processed pursuant to the Texas Savings Bank Act.
23-8 SECTION 14. The importance of this legislation and the
23-9 crowded condition of the calendars in both houses create an
23-10 emergency and an imperative public necessity that the
23-11 constitutional rule requiring bills to be read on three several
23-12 days in each house be suspended, and this rule is hereby suspended,
23-13 and that this Act take effect and be in force from and after its
23-14 passage, and it is so enacted.