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| ## Comptroller of the Currency                                        |
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| > **Administrator of National Banks**                                 |
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Washington, D. C.

**Corporate Decision #2001-33**

**December 2001**

**DECISION OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY**

**ON THE APPLICATION TO MERGE STOCKMENS FINANCIAL CORPORATION INTO
STOCKMENS NATIONAL BANK IN COTULLA, COTULLA, TEXAS**

**November 29, 2001**

##### I. INTRODUCTION

Stockmens National Bank in Cotulla, Cotulla, Texas, ("Stockmens Bank")
applied to the Office of the Comptroller of the Currency ("OCC") for
approval to merge Stockmens Financial Corporation ("SFC") into Stockmens
Bank, under 12 U.S.C. § 215a-3 (the "Merger"). Stockmens Bank is a
direct wholly-owned national bank subsidiary of SFC, a registered bank
holding company. SFC is a Texas corporation with its principal place of
business in Cotulla, Texas. It owns 100% of the outstanding shares of
Stockmens Bank. Its only other asset is a small amount of cash, and it
has no debt. The purpose of the Merger is simply to eliminate Stockmens
Bank's holding company. There will be no change in the operations of
Stockmens Bank. In the Merger, shareholders of SFC will receive
equivalent shares in Stockmens Bank with the result that SFC will go out
of existence and the former holding company shareholders will own the
bank directly.

**II. DISCUSSION**

In December 2000, Congress amended the National Bank Consolidation and
Merger Act, 12 U.S.C. § 215 *et seq.*, to add a new section 6 expressly
authorizing the merger of a national bank with its nonbank subsidiaries
or affiliates: "Upon the approval of the Comptroller, a national bank
may merge with one or more of its nonbank subsidiaries or affiliates."
12 U.S.C. § 215a-3(a), as added by section 1206 of the Financial
Regulatory Relief and Economic Efficiency Act of 2000 (Title XII of the
American Homeownership and Economic Opportunity Act of 2000), Pub L. No.
106-569, 114 Stat. 2944, 3034 (December 27, 2000). Section 1206 was
adopted in order to facilitate the ability of banking organizations to
effect corporate restructuring between national banks and their
subsidiaries and affiliates in the most efficient way possible, while
preserving regulatory oversight by requiring OCC approval. *See* S. Rep.
No. 106-11, 106^th^ Cong., 1^st^ Sess. 8 (1999).

SFC is not a bank and owns all of the outstanding shares of Stockmens
Bank, and so it is a nonbank affiliate of Stockmens Bank for purposes of
section 215a-3.[^1] SFC's only activity is to own the shares of
Stockmens Bank. Its only other asset is a small amount of cash, and it
has no debt. After the Merger, there will be no change in the operations
of Stockmens Bank. The Merger will not grant Stockmens Bank any power or
authority not permissible for a national bank under other applicable
provisions of law. SFC is a Texas corporation. Texas law authorizes
Texas corporations to merge with foreign corporations or other entities,
including national banks, with the foreign corporation as the surviving
corporation.[^2] Stockmens Bank represents that it and SFC will comply
with the requirements of Texas law for the merger of a Texas corporation
with a foreign corporation. Accordingly, the Merger is authorized under
section 215a-3.[^3]

**III. CONCLUSION AND APPROVAL**

For the reasons set forth above, including the representations and
commitments of the applicants, we find that the merger of SFC into
Stockmens Bank is legally authorized under 12 U.S.C. § 215a-3. The
transaction raises no supervisory or policy concerns. Accordingly, the
application is hereby approved.[^4]

Signed 11/29/01

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Julie L. Williams Date

First Senior Deputy Comptroller

and Chief Counsel

Application Control Number: 2001-SW-02-0034

[^1]: ^?^ Since Stockmens Bank is wholly-owned by SFC we need not decide
    in this application what minimum level of ownership is required to
    make an entity an "affiliate" of a bank for purposes of section
    215a-3. We note, however, that consideration of related statutes,
    namely, 12 U.S.C. § 371c (affiliate transactions) and the Bank
    Holding Company Act, suggests that Congress intended a similar 25%
    ownership threshold for section 215a-3.

[^2]: *See* Texas Bus. Corp. Act Ann. art. 5.01 (West 2001). *See also*
    Texas Bus. Corp. Act Ann. art. 5.19 (West 2001) (merger between
    parent and 90%-owned subsidiary). *Cf.* Texas Fin. Code § 32.301
    (merger of Texas state bank and other entities, with approval of
    bank commissioner, following procedures in Texas Business
    Corporation Act).

[^3]: The Merger is also subject to approval under the Bank Merger Act,
    and Stockmens Bank applied to the Federal Deposit Insurance
    Corporation for approval and published notice of the merger under
    the Bank Merger Act. *See* 12 U.S.C. § 1828(c)(1)(A) (no insured
    bank "shall merge or consolidate with any noninsured bank or
    institution" without the approval of the FDIC). Stockmens Bank is an
    insured bank; SFC is not an insured depository institution. The FDIC
    received no comments from the public and approved its application on
    November 2, 2001.

[^4]: ^?^ This approval, and the activities and communications by OCC
    employees in connection with the filing, do not constitute a
    bilateral contract, express or implied, or any other obligation
    binding upon the OCC, the United States, any agency or entity of the
    United States, or an officer or employee of the United States, and
    do not affect the ability of the OCC to exercise its supervisory,
    regulatory, and examination authorities under applicable law and
    regulations. The foregoing may not be waived or modified by any
    employee or agent of the OCC or the United States.