In this subtitle, “mutual association” means an association that: Is a corporation chartered under the laws of the State as a savings and loan association that does not have the authority to issue capital stock; Is insured by the State of Maryland Deposit Insurance Corporation; and Has assets of $15,000,000 or less or had total assets of less than $15,000,000 as of May 18, 1985.

A mutual association may convert to a credit union if: Its members approve; and Approval is granted by: The Division Director; and The Commissioner.

If a mutual association wishes to convert to a credit union, the board of directors of the mutual association shall call a meeting of the members of the mutual association for the purpose of considering the proposal to convert. The mutual association shall give notice of the meeting as provided in Title 2, Subtitle 5 of the Corporations and Associations Article.

A proposed plan of conversion to a credit union shall be approved by a majority vote of the total number of votes eligible to be cast by the members of the mutual association.

To convert to a credit union, the mutual association shall deliver to the Commissioner: A written application for conversion in the form that the Maryland Department of Labor requires; Any additional exhibits the Department may require; Any filing fee set by the Department by regulation; and Its proposed amended articles and bylaws. Upon receipt of an application to convert, the Commissioner shall examine the mutual association. The examination shall include, but not be limited to, the following: The financial history and condition of the mutual association including: The identification of overvalued assets, undisclosed nonperforming loans, and understated liabilities; The identification of assets that may become nonperforming assets upon conversion; The identification of loans in default and loans past due over 60 days; Review of material litigation affecting the mutual association, and the identification of significant judgments, orders or decrees affecting its financial status; and Review of mortgage contracts, participating loans, and other commitments; and The management of the association. As a condition of approval of an application of conversion, the Commissioner may require a mutual association to have its books and records audited and certified under § 9–502 of this title.

In reviewing an application for conversion, the Commissioner shall determine: Whether, after conversion, the credit union will be in sound financial condition and will be soundly managed; and That no person will receive any inequitable gain or advantage by reason of the conversion. An application for conversion may only be approved if it is found that: The converting mutual association has met the requirements of Title 6 of this article; The converting mutual association will qualify for share insurance by the Credit Union Insurance Corporation or the National Credit Union Administration Share Program; The converting mutual association has credited to the reserve fund 6 percent of its risk assets; and The public interest will be promoted by allowing the mutual association to convert to a credit union.

On approval of the application for conversion, the applicant shall file an endorsed copy of the application with the State Department of Assessments and Taxation. The mutual association becomes a credit union when the application and endorsed amended articles and bylaws by the State Department of Assessments and Taxation accepts the application for record. The credit union shall certify the acceptance of the application and endorsed amended articles and bylaws by the State Department of Assessments and Taxation within 10 days of receiving the acceptance to the Commissioner.

The Commissioner may require any changes to the application or exhibits that the Department considers necessary. If the application for conversion is denied, the Commissioner shall endorse and date a copy of the application “denied”, return it to the mutual association, and certify this action to the State of Maryland Deposit Insurance Fund Corporation. If the application for conversion is approved, the Commissioner shall: Sign, date, and endorse each copy of the application for conversion as “approved”; Keep and record 1 copy of each endorsed application; and Certify these actions taken to the share insurer.

In addition to membership authorized in § 6-302 of this article, a credit union resulting from a conversion under this subtitle may permit individuals who, at the time of conversion, are members, savings account holders, directors, officers, employees, or borrowers of a mutual association, to become members of the resulting credit union.