2013 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 1. DEPARTMENT OF FINANCIAL INSTITUTIONS CHAPTER 7.1. VOLUNTARY SUPERVISORY CONVERSION
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IC 28-1-7.1
Chapter 7.1. Voluntary Supervisory Conversion
IC 28-1-7.1-1
"Depository financial institution"
Sec. 1. As used in this chapter, "depository financial institution"
has the meaning set forth in IC 28-1-1-6, but does not include a credit
union.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-2
"Standard conversion"
Sec. 2. As used in this chapter, "standard conversion" refers to a
transaction permitted under any of the following:
(1) IC 28-1-21.4.
(2) IC 28-1-21.6.
(3) IC 28-1-21.8.
(4) IC 28-1-21.9.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-3
Depository financial institution with mutual ownership; authority
to engage in voluntary supervisory conversion
Sec. 3. A depository financial institution with mutual ownership
may engage in a voluntary supervisory conversion only as set forth
in this chapter.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-4
Voluntary supervisory conversion; types of transactions
Sec. 4. A voluntary supervisory conversion of a depository
financial institution may include one (1) or more of the following
transactions:
(1) A merger of the depository financial institution into an
interim depository financial institution with stock ownership.
(2) Following a conversion of the depository financial
institution, a sale of shares of the converted depository financial
institution directly to an acquirer, which may be a person,
company, depository institution, or depository institution
holding company.
(3) A merger or consolidation with an existing or newly created
depository financial institution. Except as provided in this
chapter, a merger or consolidation under this subdivision must
be authorized by, and is subject to, any other applicable laws
and regulations.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-5
Voluntary supervisory conversion; eligibility; conditions
Sec. 5. A depository financial institution with mutual ownership
is eligible for a voluntary supervisory conversion under this chapter
if, in the judgment of the director, the voluntary supervisory
conversion satisfies at least one (1) of the following conditions:
(1) Both of the following apply:
(A) The depository financial institution is significantly
undercapitalized, or is undercapitalized and a standard
conversion to stock form is not feasible.
(B) After the voluntary supervisory conversion, the
converted depository financial institution will likely be a
viable entity, or the one (1) or more entities resulting from
the voluntary supervisory conversion will likely be viable
entities.
(2) Severe financial conditions threaten the stability of the
depository financial institution and a voluntary supervisory
conversion to stock form is likely to:
(A) improve the financial condition of the depository
financial institution; or
(B) result in one (1) or more entities with an improved
financial condition.
(3) The depository financial institution is in receivership or
conservatorship, or in imminent danger of receivership or
conservatorship, and the voluntary supervisory conversion will
enable the depository financial institution to:
(A) terminate the receivership or conservatorship; or
(B) avoid the institution of a receivership or conservatorship.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-6
Director's determination of resulting entity's viability; conditions;
authority of director to act; applicability of law governing mergers
and consolidations; waiver of law
Sec. 6. (a) The director may determine under section 5(1)(B) of
this chapter, based upon information then available to the director,
that a voluntary supervisory conversion will likely result in a
depository financial institution becoming a viable entity with stock
ownership if all the following are satisfied:
(1) The depository financial institution resulting from the
conversion will be adequately capitalized.
(2) The depository financial institution resulting from the
conversion, and any person acquiring capital stock in the
depository financial institution resulting from the conversion,
will comply with all applicable supervisory policies.
(3) The depository financial institution involved in, or the one
(1) or more entities resulting from, the conversion will be
insured by the Federal Deposit Insurance Corporation.
(4) The voluntary supervisory conversion is in the best interest
of:
(A) the depository financial institution involved in, or the
one (1) or more entities resulting from, the conversion; and
(B) the public.
(5) The voluntary supervisory conversion will not injure or be
detrimental to:
(A) the depository financial institutions involved in, or the
one (1) or more entities resulting from, the conversion; or
(B) the public interest.
(b) The director may act on a voluntary supervisory merger,
consolidation, sale, or other disposition on behalf of the department.
(c) Except as otherwise provided in this chapter, a provision of
IC 28-1-7 concerning mergers or consolidations applies to a
voluntary supervisory conversion under this chapter unless the
director determines that the provision should be waived or
considered inapplicable with respect to a particular voluntary
supervisory conversion. The director may make a determination
described in this subsection if the director finds, in the director's
discretion, that the determination will:
(1) facilitate the consummation of the voluntary supervisory
conversion; and
(2) in the director's judgment and considering the available
information under the prevailing circumstances, result in one
(1) or more entities that are more favorable to the public than if:
(A) the provision were not waived or considered
inapplicable; or
(B) the voluntary supervisory conversion were not approved.
As added by P.L.89-2011, SEC.33. Amended by P.L.6-2012,
SEC.192.
IC 28-1-7.1-7
Depositors; no right to participate in or approve conversion; no
ownership interests in converted institution; liquidation account
Sec. 7. Depositors of a depository financial institution with
mutual ownership do not have the right to approve or participate in
a voluntary supervisory conversion, and will not have any legal or
beneficial ownership interests in the converted depository financial
institution, unless the department allows otherwise. Depositors may
have interests in a liquidation account, if one is established.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-8
Plan of conversion; adoption by board; contents
Sec. 8. A majority of the board of directors of a depository
financial institution with mutual ownership must adopt a plan of
voluntary supervisory conversion. The plan adopted must include the
following:
(1) The name and address of the depository financial institution.
(2) The name and address of each proposed purchaser of
conversion shares and a description of that purchaser's
relationship to the depository financial institution.
(3) The title, per unit par value, number, and per unit and
aggregate offering price of shares that the converted depository
financial institution will issue.
(4) The number and percentage of shares that each investor will
purchase or acquire in a merger or other combination.
(5) The aggregate number and percentage of shares that each
director or officer of the converted depository financial
institution, and any affiliates (as defined in IC 28-1-18.2-1) or
associates (as defined in 12 CFR 563b.25) of the director or
officer, will purchase.
(6) A description of any liquidation account to be established in
connection with the voluntary supervisory conversion.
(7) Certified copies of all resolutions of the board of directors
of the depository financial institution relating to the conversion.
As added by P.L.89-2011, SEC.33. Amended by P.L.27-2012,
SEC.41.
IC 28-1-7.1-9
Application to department; required information and documents
Sec. 9. The following information and documents must be
included in an application for a voluntary supervisory conversion
made to the department:
(1) Evidence establishing that the depository financial
institution with mutual ownership meets the eligibility
requirements set forth in this chapter.
(2) An opinion of qualified, independent counsel or of an
independent, certified public accountant concerning the tax
consequences of the conversion, or an IRS ruling indicating that
the transaction qualifies as a tax free reorganization.
(3) A plan of voluntary supervisory conversion that complies
with section 8 of this chapter.
(4) A business plan, when required by the department.
(5) The depository financial institution’s most recent audited
financial statements and call report.
(6) A detailed explanation of how the current capital levels
make the depository financial institution eligible to engage in a
voluntary supervisory conversion under this chapter.
(7) A description of the estimated conversion expenses.
(8) Evidence supporting the value of any noncash asset
contributions. Appraisals must be acceptable to the department
and each noncash asset must meet all other department policy
guidelines.
(9) Pro forma financial statements that reflect the effects of the
transaction. The depository financial institution must identify
its tangible, core, and risk based capital levels and show the
adjustments necessary to compute the pro forma capital levels.
The depository financial institution must prepare its pro forma
statements in conformance with department regulations and
policy.
(10) The proposed articles of incorporation and bylaws, if any,
of the depository financial institution formed as a result of the
voluntary supervisory conversion.
(11) The proposed stock certificate form, if any, for the
depository financial institution formed as a result of the
voluntary supervisory conversion.
(12) A copy of any agreements between the depository financial
institution formed as a result of the voluntary supervisory
conversion and proposed purchasers.
(13) A copy and description of all existing and proposed
employment contracts. The depository financial institution
formed as a result of the voluntary supervisory conversion must
include information describing the term, salary, and severance
provisions of the contract, the identity and background of the
officer or employee to be employed, and the amount of any
conversion shares to be purchased by the officer or employee or
his or her affiliates (as defined in IC 28-1-18.2-1) or associates
(as defined in 12 CFR 563b.25).
(14) Any:
(A) required filings under federal law; or
(B) waivers of compliance with federal law obtained as a
result of conflicts with state law.
(15) Applications for permission to organize a stock association
and for approval of a merger, if applicable, and a copy of any
application for Federal Home Loan Bank membership or FDIC
insurance of accounts, if applicable.
(16) A statement describing any other applications required
under federal or state banking laws for all transactions related
to the conversion, copies of all dispositive documents issued by
regulatory authorities relating to the applications, and, if
requested by the department, copies of the applications and
related documents.
(17) A description of any of the features of the application that
do not conform to the requirements of this section, including
any request for waiver of such requirements.
(18) An opinion of counsel acceptable to the department as to
the legality of the voluntary supervisory conversion.
(19) Any other information or documents requested by the
director.
As added by P.L.89-2011, SEC.33. Amended by P.L.27-2012,
SEC.42.
IC 28-1-7.1-10
Denial of application; findings by director
Sec. 10. The director may not approve an application to engage in
a voluntary supervisory conversion if the director makes any of the
following findings:
(1) That the depository financial institution does not meet the
eligibility requirements for a voluntary supervisory conversion
under this chapter, or that the proceeds from the sale of the
conversion stock, less the expenses of the conversion, would be
insufficient to satisfy any applicable viability requirement.
(2) That the transaction is detrimental to or would cause
potential injury to the depository financial institution or is
contrary to the public interest.
(3) That the depository financial institution or its acquirer, or
the controlling parties or directors and officers of the depository
financial institution or its acquirer, have engaged in unsafe or
unsound practices in connection with the voluntary supervisory
conversion.
(4) That the depository financial institution fails to justify an
employment contract incidental to the conversion, or that the
employment contract will be an unsafe or unsound practice or
represent a sale of control.
As added by P.L.89-2011, SEC.33.
IC 28-1-7.1-11
Approval of application; conditions
Sec. 11. (a) The director shall condition approval of a voluntary
supervisory conversion application on the applicant satisfying all of
the following:
(1) The depository financial institution must complete the
conversion stock sale, if any, not later than three (3) months
after the director approves the application. The director may
grant an extension for good cause.
(2) The depository financial institution and its acquirer must
comply with all applicable laws, rules, and regulations.
(3) The depository financial institution and its acquirer must
satisfy any other requirements or conditions imposed by the
director.
(4) The depository financial institution involved in, or the one
(1) or more entities resulting from, the voluntary supervisory
conversion must obtain insurance coverage of their deposits by
the Federal Deposit Insurance Corporation.
(b) The director may condition approval of a voluntary
supervisory conversion application on either of the following:
(1) The applicant must satisfy any conditions and restrictions
the director imposes to prevent unsafe or unsound practices, to
protect the public interest, or to prevent potential injury or
detriment to the depository financial institution before and after
the conversion. The director may impose these conditions and
restrictions on the depository financial institution (before and
after the conversion), its acquirer, controlling parties, or
directors and officers of the depository financial institution or
its acquirer.
(2) A larger amount of capital, if necessary, for safety and
soundness reasons must be infused following the voluntary
supervisory conversion.
As added by P.L.89-2011, SEC.33.
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