1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Surviving credit union--The credit union that will continue in operation after the merger/consolidation.
   2. (2) Merging credit union--The credit union that will cease to exist as an operating credit union at the time of the merger/consolidation.
2. (b) Two or more credit unions authorized to conduct business in this state may merge/consolidate, in whole or in part, with each other subject to commission rules.
3. (c) A credit union authorized to conduct business under the laws of this state may merge/consolidate with a credit union authorized to conduct business under the laws of another state or U.S. territory, to the extent permitted by the laws of the state or territory in question and subject to commission rules. A credit union authorized to conduct business under the laws of this state may also merge/consolidate with a credit union authorized to conduct business under the laws of the United States to the extent permitted by the laws of the United States and subject to commission rules. Each such application/plan shall comply with the applicable requirements of this section, and shall include a certified copy of an order from the appropriate supervisory authority approving the merger/consolidation, or other evidence satisfactory to the commissioner that all regulatory requirements of the out of state or federal supervisory authority have been satisfied.

4. (d) Approval to Merge/Consolidate. The following are required for the completion of a merger/consolidation of credit unions:

   1. (1) approval of the merger/consolidation plan by resolution of the board of directors of each credit union;
   2. (2) approval of the merger/consolidation plan by vote of the members of each credit union as set forth in §122.151 of the Act, unless waived by the commissioner; and
   3. (3) approval by the commissioner of the merger/consolidation plan, the certificate of merger/consolidation, and the requisite amendment to the surviving credit union's articles of incorporation or bylaws.
5. (e) Notice of Intent to Merge/Consolidate. The credit unions shall notify the commissioner of their intent to merge/consolidate by filing a copy of the resolution adopted by each credit union's board of directors that evidences their intent to merge/consolidate.

6. (f) Plan for Merger/Consolidation. Upon the commissioner's acknowledgment of receipt of the notice of intent to merge/consolidate, a plan for the proposed merger/consolidation shall be prepared. The plan shall include:

   1. (1) the current financial reports of each credit union;
   2. (2) the combined financial reports of the two credit unions;
   3. (3) an explanation of any proposed adjustments to the members' shares, deposits, reserves, or undivided profits;
   4. (4) a summary of the products and services proposed to be available to the members of the surviving credit union, with an explanation of any changes from the current products and services provided to the members;
   5. (5) a summary of the advantages and disadvantages of the merger/consolidation;
   6. (6) the projected location of the main office and any branch location(s) after the merger/consolidation; and
   7. (7) any other items deemed critical to the merger/consolidation agreement by the boards of directors.

7. (g) Submission of an Application to Merge/Consolidate to Department.

   1. (1) An application for approval of the merger/consolidation will be complete when the following information is submitted to the commissioner:

      1. (A) the merger/consolidation plan, as described in this rule;
      2. (B) a copy of the resolution of each board of directors approving the merger/consolidation plan;
      3. (C) the proposed Notice of Special Meeting of the members and a copy of the ballot form to be used, unless approval by the members is waived by the commissioner;
      4. (D) the current delinquent loan summaries for each credit union;
      5. (E) evidence that relevant supervisory authorities and the share insurer are in agreement with the merger/consolidation proposal; and
      6. (F) 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. (2) If the surviving 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 surviving 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.
8. (h) Upon receipt of a completed application, notice of the proposed merger/consolidation will be published in the Texas Register and Department Newsletter.

9. (i) Commissioner Action on the Application.

   1. (1) The commissioner shall approve the application for merger/consolidation upon the finding from information submitted in the application that the proposed merger/consolidation will promote the welfare and stability of the merging and surviving credit unions.

   2. (2) The commissioner shall deny an application for merger/consolidation if the commissioner finds any of the following:

      1. (A) the financial condition of the surviving 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;
      2. (B) the plan includes a change in the products or services available to members of the merging credit union that substantially harms the financial interests of the members, beneficiaries or creditors of the merging credit union;
      3. (C) the merger/consolidation would probably substantially lessen the ability of the surviving credit union to meet the reasonable needs and convenience of members to be served;
      4. (D) the credit unions do not furnish to the commissioner all information requested by the commissioner which is material to the application;
      5. (E) the credit unions fail to obtain any approval required from a federal or state supervisory authority; or
      6. (F) the merger/consolidation would be contrary to law.
   3. (3) For applications to merge/consolidate in which the products and services of the surviving credit union after merger/consolidation are proposed to be substantially the same as those of the merging and surviving 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.

10. (j) Procedures for Approval of Merger/Consolidation Plan by the Members of Each Credit Union.

    1. (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 by a combination of both.

    2. (2) Members shall be given advance notice of the meeting in accordance with the credit union's bylaws. The notice of the meeting shall:

       1. (A) specify the purpose of the meeting;
       2. (B) state the reasons for the proposed merger/consolidation;
       3. (C) state that the merger/consolidation plan will be presented to the members;
       4. (D) provide the name and location of the surviving credit union;
       5. (E) specify whether the vote will be taken in person at the meeting, by mail ballot to be received by the credit union no later than the date and time of the meeting, or by combination of both methods; and
       6. (F) be accompanied by a mail ballot and a copy of the merger/consolidation plan if voting by mail is permitted.

11. (k) Completion of Merger/Consolidation.

    1. (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 surviving credit union's articles of incorporation or bylaws shall also be submitted at this time.
    2. (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 surviving 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. (3) Upon receipt by the commissioner of the certification of the merger/consolidation in which the surviving credit union will operate under a Texas charter, any article of incorporation or bylaw amendments will be approved at the same time the charter of the merging credit union is canceled.

Source Note:The provisions of this §91.1003 adopted to be effective March 11, 1998, 23 TexReg 4568.