# Financial Institutions (GFI)

## Title 3. Banking Institutions -- Commercial Banks

### Subtitle 7. Consolidations, Mergers, and Transfers of Assets

#### Section 3-701

(a) In this subtitle the following words have the meanings indicated.

(b) "Bank" means a commercial bank, a national banking association, an other-state bank, or a federally chartered savings bank or savings and loan association.

(c) "Constituent bank" means a party to a consolidation, merger, or transfer of assets.

(d) "Successor" means the bank that carries on the business of the constituent banks after a consolidation, merger, or transfer of assets.

(e) "Transfer assets", "transfer its assets", or "transfer of assets" means to sell, lease, exchange, or otherwise transfer all or substantially all of the property and assets of a constituent bank.

#### Section 3-702

(a) Any bank may, as provided in this subtitle:

  (1) Consolidate with one or more other banks to form a new consolidated bank;

  (2) Merge into another bank or have one or more other banks merged into it; or

  (3) Transfer its assets to another bank.

(b) If the successor will be a commercial bank:

  (1) The consolidation, merger, or transfer of assets shall be made in accordance with the provisions of this subtitle; and

  (2) If one of the constituent banks is a national banking association or a federally chartered savings bank or savings and loan association, federal law governs its actions and the rights of its stockholders.

(c) If the successor will be a national banking association or a federally chartered savings bank or savings and loan association:

  (1) Federal law governs:

    (i) The actions of a constituent bank;

    (ii) The rights of its stockholders; and

    (iii) The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties; and

  (2) Except for this section and Sec. 3-710 of this subtitle, the other provisions of this subtitle do not apply to the consolidation, merger, or transfer of assets.

(d) If one of the constituent banks is an other-state bank:

  (1) Maryland law governs:

    (i) The actions of the banking institution;

    (ii) The rights of its stockholders; and

    (iii) The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties; and

  (2) The law of the other state governs:

    (i) The actions of the other-state bank;

    (ii) The rights of its stockholders; and

    (iii) The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties.

#### Section 3-703

(a) An agreement of consolidation, merger, or transfer of assets shall be approved by the affirmative vote of a majority of the full authorized membership of the board of directors of each constituent commercial bank.

(b) The agreement shall include:

  (1) The name of each constituent bank and the address of its principal banking office;

  (2) The terms of the proposed transaction;

  (3) A statement that the agreement is subject to approval by the Commissioner and by the stockholders of each constituent bank;

  (4) Provisions for disposing of any stock of the successor that is not taken by objecting stockholders of the constituent banks;

  (5) As to the successor:

    (i) The address of the proposed principal banking office;

    (ii) The authorized capital stock, including the number of shares and the par value of each share of stock;

    (iii) Whether it will issue preferred stock in the proposed transaction and, if so, the amount, terms, and preferences; and

    (iv) Any amendments to its charter and bylaws; and

  (6) Any other provisions that the Commissioner requires to carry out the Commissioner's duties with respect to the proposed transaction.

(c) After the board of directors of each constituent bank has approved the agreement, the following shall be filed with the Commissioner for approval:

  (1) The agreement;

  (2) The name and address of each office of the constituent banks and of the successor;

  (3) The name and residence address of each individual who will be a director when the proposed transaction becomes effective;

  (4) The name and residence address of each individual who will be an officer when the proposed transaction becomes effective;

  (5) A certified copy of the approving resolution of each board of directors, showing the required approval by the board; and

  (6) Evidence of proper action by the board of directors of any constituent national banking association.

(d)

  (1) Except as otherwise provided by law, any person who knowingly submits false information to the Commissioner while complying with subsection (c) of this section is guilty of a misdemeanor.

  (2) A person who violates this section is subject to a fine of not more than $1,000, or imprisonment for not more than 5 years, or both.

#### Section 3-704

(a)

  (1) Except as provided in subsection (b) of this section, the Commissioner shall publish a notice of the filing of the agreement.

  (2) The notice shall be published in the Maryland Register as provided in the State Documents Law.

(b) Subject to confirmation by the Secretary of Labor, the Commissioner may approve an agreement without the notice required by this section if:

  (1) The agreement and proposed transaction meet the requirements of Sec. 3-706 of this subtitle;

  (2) The financial condition or stability of one of the constituent banks is such that a delay of the proposed transaction will cause an economic hardship to it; and

  (3) Approval of the agreement is in the public interest.

#### Section 3-705

Within 6 months after the papers specified in Sec. 3-703(c) of this subtitle have been filed with the Commissioner, the Commissioner shall approve or disapprove the agreement.

#### Section 3-706

(a) The Commissioner shall approve the agreement if:

  (1) The successor meets the requirements of State law for the formation of a new commercial bank;

  (2) The agreement provides an adequate capital structure, including surplus, for the successor in relation to its deposit liabilities and other activities;

  (3) The agreement is fair; and

  (4) The proposed transaction is not against the public interest.

(b) If the successor will not exercise trust powers, the Commissioner may not approve the agreement until the Commissioner is satisfied that successor fiduciaries have been provided adequately for all fiduciary positions held by the constituent banks.

#### Section 3-707

If the Commissioner disapproves an agreement, the Commissioner shall give the constituent banks written notice of the reasons for the disapproval and an opportunity to amend the agreement.

#### Section 3-708

(a) The agreement shall be submitted to the stockholders of each constituent bank for approval by them at a meeting called for that purpose.

(b)

  (1) In addition to any other required notice, the directors of each constituent bank shall give 2 weeks' public notice of the meeting of stockholders.

  (2) The public notice shall be published once in at least one newspaper published in the county where the constituent bank has its principal banking office.

  (3) Each notice of the meeting of stockholders shall state that objecting stockholders will be entitled to payment of the fair value of only those shares of stock that are voted against approval of the agreement.

(c) The agreement shall be approved by the stockholders of each constituent bank by the affirmative vote of two thirds of all the votes entitled to be cast on the matter.

#### Section 3-709

(a) When the executed agreement and a copy of the resolution of the stockholders of each constituent bank, certified by its secretary or cashier, have been filed with the Commissioner and the Commissioner has approved the transaction, the Commissioner shall issue to the successor a certificate of consolidation, merger, or transfer of assets that sets forth the name of each constituent bank and the name of the successor.

(b) The constituent banks may designate an effective date and time, not earlier than the date of the certificate, to be included in the certificate of consolidation, merger, or transfer of assets.

(c) Unless the certificate of consolidation, merger, or transfer of assets specifies a later effective date and time, the consolidation, merger, or transfer of assets becomes effective upon issuance of the certificate by the Commissioner.

(d) This certificate is conclusive evidence of the consolidation, merger, or transfer of assets and of the correctness of all proceedings relating to it.

#### Section 3-710

(a) The successor shall act promptly to file and record the agreement in the same manner as required for articles of incorporation.

(b) One of the following certificates may be recorded in any office where deeds are recorded to evidence the new name in which the property of the constituent banks is held:

  (1) A certificate of consolidation, merger, or transfer of assets that the Commissioner issues;

  (2) A certificate that the Comptroller of the Currency of the United States or the Director of the Office of Thrift Supervision issues to effect a merger or consolidation in which a national banking association or a federally chartered savings bank or savings and loan association is the successor; or

  (3) A certificate of consolidation, merger, or transfer of assets issued by the bank supervisory agency of the State by which an other-state bank is chartered.

#### Section 3-711

The stockholders' approval of a merger agreement constitutes the adoption of the charter and bylaws of the successor, including any amendments set forth in the agreement.

#### Section 3-712

(a) Consummation of a consolidation or merger has the effects provided in this section.

(b) The separate existence of each constituent bank, except the successor, ceases.

(c)

  (1) The successor shall be considered the same business and corporate entity as each of the constituent banks and has all of the rights, powers, and duties of each constituent bank, except:

    (i) As limited by the successor's charter or bylaws; and

    (ii) As limited by the Commissioner or the bank supervisory agency of the state by which an other-state bank is chartered under subsection (e) of this section.

  (2) Each constituent bank's rights, franchises, and interests in any property become the property of the successor without any deed, transfer, or other action.

  (3) The successor has the same powers that each constituent bank had as to any property held in any fiduciary capacity, without any deed, transfer, or other action. The successor may be removed or replaced as fiduciary in the same manner and to the same extent as the constituent bank.

(d)

  (1) Unless this construction would be unreasonable, any reference to any constituent bank in any writing, whether executed or taking effect before or after the consolidation or merger, shall be interpreted as a reference to the successor.

  (2) The successor may use the name of any constituent bank if it can do any act more conveniently under that name.

(e) If a constituent bank has assets or engages in business activities that do not conform to the law governing the successor, the Commissioner or the bank supervisory agency of the state by which an other-state bank is chartered may allow a reasonable time for the successor to conform to that law.

(f) Unless the Commissioner approves, the successor may not carry on its books an asset received from a constituent bank at a higher value than that on the books of the constituent bank at the time of the last examination by a State or federal bank examiner before the effective date of the consolidation or merger.

#### Section 3-713

Consummation of a transfer of assets has the effects provided in Sec. 3-115 of the Corporations and Associations Article.

#### Section 3-718

(a) The successor in a consolidation, merger, or transfer of assets may offer to pay in cash to the objecting stockholders of a constituent bank not more than what it considers to be the fair value of their shares of stock as of the time of the stockholders' meeting approving the transaction.

(b) An objecting stockholder who accepts the offer is barred from receiving the appraised fair value of the shares of stock under Sec. 3-719 of this subtitle.

#### Section 3-719

(a) The owner of shares of stock that were voted against a consolidation, merger, or transfer of assets is entitled to receive the fair value of those shares, in cash, if the transaction becomes effective.

(b) A stockholder who desires to receive payment of the fair value for shares under this section, within 30 days after the transaction becomes effective, shall:

  (1) Make a written demand on the successor for payment; and

  (2) Surrender the stock certificates.

#### Section 3-720

(a) The fair value of the shares of stock shall be determined as of the date of the stockholders' meeting approving the consolidation, merger, or transfer of assets.

(b)

  (1) The determination of fair value shall be made by three appraisers as follows:

    (i) One chosen by the owners of two thirds of the shares involved;

    (ii) One chosen by the board of directors of the successor; and

    (iii) The third chosen by the other two appraisers.

  (2) The fair value to which any two appraisers agree shall govern.

  (3) The appraisers shall give notice of the fair value determination to the successor and to each stockholder who has made demand for the determination under Sec. 3-719 of this subtitle.

(c)

  (1) Within 5 days after the appraisers give the notice of the fair value determination, a stockholder who is dissatisfied with that value may notify the Commissioner.

  (2) The Commissioner shall have the shares reappraised.

  (3) This reappraisal is final and binding as to the value of the shares of stock of that stockholder.

(d)

  (1) If the appraisal to be made under subsection (b) of this section is not completed within 90 days after the consolidation, merger, or transfer of assets becomes effective, the Commissioner shall have an appraisal made.

  (2) This appraisal is final and binding as to the value of the shares of stock of all objecting stockholders.

(e) The successor shall pay the expenses of each appraisal made under this section.

#### Section 3-721

Any amount due to an objecting stockholder under this Part II is a debt of the successor.

---

Md. Code Ann., Fin. Inst. (as displayed at mgaleg.maryland.gov, October 16, 2026)