Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 2 - TEXAS DEPARTMENT OF BANKING › Chapter 15 - CORPORATE ACTIVITIES › Subchapter F - APPLICATIONS FOR MERGER, CONVERSION, AND PURCHASE OR SALE OF ASSETS › Section 15.106 - Application for Authority to Sell Assets

Current through Reg. 49, No. 28; July 12, 2024
(a) Scope. This section governs an
				  application for the sale of assets pursuant to the Finance Code, §
										RSA 32.405. A
				  state bank that seeks to continue engaging in the business of banking after
				  selling assets for a sales price exceeding an amount equal to three times the
				  bank's unimpaired capital and surplus, pursuant to Finance Code, §
										RSA
				  32.405(a), may not
				  consummate the sale of assets without the written approval of the banking
				  commissioner. A state bank seeking to sell all or substantially all of its
				  assets after obtaining approval of its shareholders must submit a plan of
				  voluntary dissolution and liquidation to the banking commissioner for approval
				  under the Finance Code, §
										RSA
				  32.405(c) and
				  §§36.101 et seq, and the transaction is outside the scope of this
				  section. A sale of assets requiring shareholder approval in which all
				  liabilities of the seller are assumed by a depository institution, which is in
				  substance and intent a merger, is considered to be a merger subject to §
										RSA
				  15.104 of this title (relating to Application
				  for Merger or Share Exchange) or §
										RSA
				  15.107 of this title (relating to Notice of
				  Merger, Reorganization, or Conversion of a State Bank into Another Form of
				  Financial Institution).
(b)
				  Subsection (f) of this section specifically addresses a sale of assets without
				  shareholder approval under the Finance Code, §
										RSA
				  32.405(c) or Finance Code,
				  §
										RSA
				  203.003.
(c) Form of application. The applicant must
				  submit a fully completed, verified application on a form prescribed by the
				  banking commissioner and simultaneously tender the required filing fee pursuant
				  to §
										RSA
				  15.2 of this title (relating to Filing and
				  Investigation Fees). The application must, except to the extent waived by the
				  banking commissioner, include:
(1) a summary
				  of the proposed transaction, including a description of the types and total
				  dollar amounts of assets and liabilities transferred;
(2) a copy of all agreements related to the
				  proposed transaction executed by an authorized representative of each party to
				  the transaction;
(3) for each party
				  to the transaction, a certified copy of those portions of the minutes of board
				  meetings and shareholder or participant meetings at which action was taken
				  regarding approval of the transaction, or a certificate of an officer verifying
				  the action taken by the board of directors and the shareholders or participants
				  approving the transaction, or an explanation of the basis for concluding that
				  this action was not required;
(4)
				  an assessment of the continuing viability of the applicant, including a
				  description of its future prospects, proposed officers and directors, and
				  proposed branches and other locations;
(5) an assessment of the current regulatory
				  and financial condition of each party to the transaction;
(6) if the proposed transaction will change
				  the existing CRA delineated community of the applicant, a copy of the proposed
				  CRA map depicting the proposed delineated community of the applicant;
(7) a copy of current financial statements
				  for each entity involved in the proposed transaction, accompanied by an
				  affidavit of no material change dated no earlier than 30 days prior to the date
				  of submission of the application;
(8) a copy of the latest annual report for
				  each financial institution and bank holding company involved in the proposed
				  transaction;
(9) that portion of
				  the watch list of the applicant that identifies low-quality assets being sold
				  or related liabilities being transferred;
(10) a description of all material, legal or
				  administrative proceedings involving the applicant;
(11) an opinion of legal counsel that
				  conforms with §
											RSA
				  15.109 of this title (relating to Opinion of
				  Legal Counsel), concluding:
(A) the sale of
				  assets by the applicant has been duly authorized by the board and shareholders
				  or participants of the applicant in accordance with the Texas Business
				  Organizations Code, or that such authorization is not required, stating the
				  basis for that conclusion;
(B) the
				  transaction will not cause or result in a material violation of the laws of
				  this state relative to the organization and operation of state banks;
(C) all deposit liabilities transferred in
				  the transaction will be discharged or otherwise assumed or retained by a
				  financial institution that is authorized by law to do so;
(D) each purchasing entity that is not a
				  financial institution will not be engaged in the unauthorized business of
				  banking; and
(E) all conditions
				  with respect to the transaction imposed by the banking commissioner have been
				  satisfied or otherwise resolved or, to the best knowledge of legal counsel, no
				  conditions have been imposed;
(12) a copy of each filing regarding the
				  proposed transaction that is required by another governmental authority,
				  complete with all related attachments, exhibits, and correspondence;
(13) a current pro forma balance sheet and
				  income statement of the applicant, with adjustments, reflecting the proposed
				  sale of assets as of the most recent quarter ended immediately prior to the
				  filing of the application;
(14) a
				  copy of the applicant's strategic plan that complies with the department's
				  Memorandum 1009, including projections of the balance sheet and income
				  statement of the applicant as of the quarter ending one year from the date of
				  its current pro forma financial statement required in accordance with paragraph
				  (13) of this subsection;
(15) an
				  explanation of compliance with or nonapplicability of the provisions of
				  governing law relating to the rights of dissenting shareholders;
(16) an explanation of the manner and basis
				  of valuing any of the shares or other evidences of ownership of a party that
				  will constitute part of the consideration received for the sold
				  assets;
(17) for antitrust
				  purposes, an analysis of the anticipated competitive effect of the proposed
				  transaction in the affected markets and a statement of the basis of the
				  analysis of the competitive effects, or alternatively, a copy of the analysis
				  of competitive effects of the proposed transaction addressed in the companion
				  federal regulatory agency application, if applicable; and
(18) other information that the banking
				  commissioner, in the exercise of discretion considers necessary to make an
				  informed decision to approve or deny the proposed transaction.