(a) Words and terms used in this subchapter that are
defined in the Finance Code, Title 3, Subtitle A, have the same meanings
as defined in the Finance Code.
(b) When these words and terms are used in this subchapter
they will have these meanings, unless the context clearly indicates
otherwise.
(1) Annual report--Formal financial statements and
accompanying narrative of management issued yearly for the benefit
of shareholders and other interested parties.
(2) Chartering agency--A government authority that
has chartering jurisdiction over an entity involved in a transaction
under this subchapter.
(3) Conversion--The conversion of a state bank into
a successor form of financial institution pursuant to the Finance
Code, §32.501, or the conversion of a financial institution into
a state bank pursuant to the Finance Code, §32.502.
(4) Corporation or domestic corporation--A corporation
for profit subject to the provisions of the Texas Business Organizations
Code, except a foreign corporation.
(5) CRA--The federal Community Reinvestment Act, 12
United States Code, §§2901 et seq.
(6) Current financial statements--Audited financial
statements dated as of a date not more than 180 days prior to the
date of submission of an application, or unaudited financial statements
dated as of a date not more than 90 days prior to the date of submission
of an application.
(7) Financial institution--An entity defined as a financial
institution under Finance Code §201.101(1)(A) - (D).
(8) Foreign corporation--A corporation for profit organized
under laws other than the laws of this state.
(9) Low-quality asset--An asset as defined in 12 United
States Code, §371c(b)(10), currently an asset that falls in any
one or more of these categories:
(A) an asset classified as "substandard," "doubtful,"
or "loss," or treated as "other loans especially mentioned" in the
most recent report of examination or inspection of an affiliate prepared
by either a federal or state supervisory agency;
(B) an asset in a nonaccrual status;
(C) an asset on which principal or interest payments
are more than 30 days past due; or
(D) an asset whose terms have been renegotiated or
compromised due to the deteriorating financial condition of the obligor.
(10) Material administrative proceeding--A past or
pending proceeding by a state, federal, or foreign regulatory agency
against the applicant or other person involved in a transaction under
this subchapter that resulted in or could result in the issuance of
a cease and desist, removal, enforcement action, determination letter
or other order, including an order of supervision or conservatorship;
excluding, however, a past proceeding that resulted in an order, other
than a removal order, that has been satisfied or otherwise terminated
more than five years prior to the date the application or notice requesting
the information is submitted.
(11) Material legal proceeding--
(A) a past or pending criminal proceeding against the
applicant or other person involved in a transaction under this subchapter
that resulted or may result in conviction of the applicant or other
person of a crime under a state or federal law or the law of a foreign
country relating to banks, other financial institutions, securities,
financial instrument reporting, or another crime involving moral turpitude;
or
(B) a past or pending proceeding that has or may result
in a judgment against the applicant or other person or entity involved
in a transaction under this subchapter and the loss contingency must
be disclosed in the financial statements of the entity under generally
accepted accounting principles, or is otherwise material.
(12) Merger--A transaction that is:
(A) the division of a financial institution into two
or more new financial institutions or into a surviving financial institution
or one or more new financial institutions, domestic or foreign corporations,
or other entities, at least one of which is a state bank or is not
a financial institution; or
(B) the combination of one or more financial institutions
with one or more financial institutions, domestic or foreign corporations,
or other entities, at least one of which is a state bank, resulting
in:
(i) one or more surviving financial institutions, domestic
or foreign corporations, or other entities;
(ii) the creation of one or more new financial institutions,
domestic or foreign corporations, or other entities; or
(iii) one or more surviving financial institutions,
domestic or foreign corporations, or other entities and the creation
of one or more new financial institutions, domestic or foreign corporations,
or other entities; or
(C) another transaction involving a financial institution
or other entity, at least one of which is a state bank, which is considered
a merger under the Texas Business Organizations Code.
(D) an interstate merger transaction as defined in
Finance Code, §201.002(a)(27).
(13) Other entity--An entity, whether or not organized
for profit, other than a financial institution or a domestic or foreign
corporation, including without limitation a not-for-profit corporation,
limited or general partnership, joint venture, joint stock company,
cooperative, association, insurance company, trust company, or other
legal entity organized pursuant to the laws of this state or another
state or country to the extent the laws or the constituent documents
of that entity, consistent with the laws, permit that entity to enter
into a merger or share exchange subject to this subchapter.
(14) Principal executive officer--An officer primarily
responsible for the execution of board policies and operation of the
bank in accordance with the Finance Code, §33.106.
(15) Purchase of assets--The purchase other than in
the ordinary course of business of all or substantially all of the
assets of a state bank or another entity. This may include an interstate
merger transaction as defined in Finance Code, §201.002(a)(27)(B).
(16) Regulatory restriction--A memorandum of understanding,
determination letter, notice of determination, order to cease and
desist, or other state or federal administrative enforcement order
issued by a state or federal banking regulatory agency, or another
limitation imposed on a financial institution by a state or federal
banking regulatory agency that restricts its ability to act without
authorization from the regulatory agency imposing the condition.
(17) Resulting state bank--A state bank subject to
the provisions of this subchapter that is a surviving entity in a
merger.
(18) Sale of assets--The sale, lease, exchange, or
other disposition of substantially all of the assets of a state bank
other than in the ordinary course of business. This may include an
interstate merger transaction as defined in Finance Code, §201.002(a)(27)(B).
(19) Share exchange--A transaction by which one or
more financial institutions, domestic or foreign corporations, or
other entities acquire all of the outstanding shares of one or more
classes or series of one or more state banks under the authority of
the Finance Code, §32.008, and the Texas Business Organizations
Code.
(20) Substantially all of the assets--More than 50%
of the assets or assets sufficient to materially impact the net earnings
of a state bank involved in a transaction under this subchapter.
(21) Verified--Documents submitted by the applicant
that have been attested to as true and correct. Attested documents
filed pursuant to this subchapter are not required to be notarized.
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