1. I. SCOPE

   1. (a) Pursuant to Section 34-26-1210, a South Carolina state chartered credit union may merge with another South Carolina state chartered credit union, an out-of-state credit union, or a federal credit union with approval of each credit union's regulator. The following procedures shall apply to all proposed mergers involving a South Carolina state chartered credit union.

      II. DEFINITIONS

   2. (a) As used herein:

      1. (1) "Continuing credit union" means the credit union that will continue in operation after the merger.
      2. (2) "Federal credit union" means any credit union chartered by the National Credit Union Administration.
      3. (3) "Merger" means a transaction between two or more credit unions, one of which is a South Carolina state-chartered credit union, in which the credit unions consolidate to form one credit union.
      4. (4) "Merger Proposal" means the information requested in Subsection III(a) of this regulation.
      5. (5) "Merging credit union" means the credit union(s) that will cease to exist as an operating credit union at the time of the merger.
      6. (6) "Merger-related financial arrangement" has the meaning set forth in for this term in 12 CFR 708b.2.
      7. (7) "Out-of-state credit union" means any credit union chartered under the laws of a state or territory of the United States other than South Carolina.
      8. (8) "Record Date" means the date announced by the Board of Directors of the merging credit union as the date by which a person must have been a member of the merging credit union to be eligible to vote on a proposed merger.

      9. (9) "South Carolina state chartered credit union" means any credit union chartered under the laws of South Carolina.

         III. MERGER PROPOSAL REQUIREMENTS AND PROCEDURE

   3. (a) The Board of Financial Institutions must review and approve a proposed merger before the merging credit union(s) may submit the merger to a membership vote. When requesting this approval, a Merger Proposal shall be submitted to the Commissioner of Banking which shall include the following materials:

      1. (1) Resolutions approved by a majority of the members of the Boards of Directors of the continuing credit union and the merging credit union(s) that indicate agreement to pursue a merger;

      2. (2) A Merger Plan which includes:

         1. (i) Current financial reports of each credit union as of the same date;

         2. (ii) Current delinquent loan summaries and analyses of the adequacy of the Allowance for Credit Losses accounts of each credit union as of the same date;

            (iii) Consolidated financial report that describes any provisions for reserves, undivided earnings or dividends;

         3. (iv) An analysis of share values and an explanation of any proposed share adjustments;
         4. (v) Provisions with respect to notification and payment of creditors;

         5. (vi) Description of any merger-related financial arrangement;

            (vii) Explanation of any anticipated changes relative to insurance of member accounts; and

            (viii) A certification that all assets and liabilities of the continuing credit union will conform with the South Carolina Credit Union Act and applicable rules and regulations, where the continuing credit union is a South Carolina state chartered credit union;

      3. (3) Proposed bylaws for the continuing credit union;
      4. (4) Names of individuals proposed to serve on the Board of Directors of the continuing credit union;
      5. (5) Proposed merger agreement;

      6. (6) Proposed Notice of Meeting for the member meeting at which the merging credit union(s)' membership(s) will vote on the proposed merger, which may be the annual meeting or a special meeting, which shall contain a statement that members may vote on the proposed merger in person or by mail ballot (or electronically, if the merging credit union(s)' bylaws permit) received by the merging credit union(s) no later than the date and time announced for the member meeting called to vote on the proposed merger.

         1. (i) If the vote is to be taken at an in-person meeting, the notice shall specify the purpose of the meeting and the time and place.
         2. (ii) If the vote is to be taken by mail or electronic ballot, the notice shall contain instructions for ballot submission and the opening and closing dates for ballot submission. The electronic ballot submission period shall remain open for no less than 5 days and shall end at the date and time announced for the member meeting called to vote on the proposed merger.

      7. (7) A summary of the merger plan, which shall contain, but not necessarily be limited to, the following:

         1. (i) A statement that the merging credit union(s) does or does not have a net worth percentage higher than the continuing credit union;

         2. (ii) A statement as to whether the members of the merging credit union(s) will receive a share adjustment or other distribution of reserves or undivided earnings, including a summary of reasons for the decision; and

            (iii) A detailed description of all merger-related financial arrangements that includes the recipient's name, title and the amount or value of the merger-related financial arrangement.

      8. (8) Statement of the reasons for the proposed merger;
      9. (9) The name of the continuing credit union and its proposed principal place of business;
      10. (10) Listing of branches of each credit union by street address that identifies whether each location is to be closed or retained, and a justification for each expected closure, to include an explanation of how members are to be served in the area of the closed branch;
      11. (11) Current financial statements for each credit union and a consolidated financial statement for the continuing credit union; and
      12. (12) A paper Ballot for Merger Proposal.
   4. (b) The Commissioner of Banking shall review the Merger Proposal and may request correction, clarification, and/or additional information from each credit union prior to presenting the Merger Proposal to the Board of Financial Institutions for consideration.
   5. (c) Upon the review by the Commissioner of Banking of a completed Merger Proposal, the Board of Financial Institutions will consider and act on the proposed merger.
   6. (d) Within 120 calendar days following the Board of Financial Institutions' approval, a majority of the members of the merging credit union(s) must vote to approve the proposed merger. Members must be members as of the Record Date to vote. The Notice of Meeting, as submitted in the Merger Proposal, must be sent to all members of each credit union who are eligible to vote on the transaction, postmarked at least 45 calendar days before the date of the meeting.
   7. (e) The Board of Directors of the merging credit union(s) must certify the results of the membership vote to the Commissioner of Banking within 10 calendar days after the vote is taken. The certification must include the total number of members of record of the credit union, the number who voted on the merger, the number who voted in favor and the number who voted against.
   8. (f) The Board of Directors of the continuing credit union must certify the completion of the merger to the Commissioner of Banking within 30 calendar days after the effective date of the merger and provide the Articles of Merger filed with the South Carolina Secretary of State.

HISTORY: Amended by State Register Volume 7, Issue No. 7, eff July 22, 1983; State Register Volume 14, Issue No. 5, eff May 25, 1990; SCSR 49-1 Doc. No. 5357, eff January 24, 2025.