# Financial Institutions (GFI)

## Title 9. Savings and Loan Associations

### Subtitle 6. Conversions; Extraordinary Actions

#### Section 9-601

A mutual association may convert to a capital stock association if:

(1) Its members approve;

(2) Its charter is amended; and

(3) The Division Director approves.

#### Section 9-602

To convert to a capital stock association, a mutual association shall deliver to the Division Director:

(1) A filing fee of $1,000;

(2) An application for conversion;

(3) A certified copy of the resolution of the board of directors that authorizes the conversion;

(4) The proposed amended charter and bylaws amendments;

(5) The proposed notice of the meeting to consider conversion, and the time and manner in which notice will be given to members;

(6) The proposed proxy statement;

(7) The proposed plan of conversion; and

(8) A certified audit of the association.

#### Section 9-603

A proposed plan of conversion to a capital stock association shall provide:

(1) That each savings account holder will receive a withdrawable savings account in the converted association that is equal in amount to the withdrawable savings account in the mutual association;

(2) That all savings accounts will remain insured;

(3) That each savings account holder shall receive, without payment, nontransferable subscription rights to capital stock in the converted association;

(4) The number of shares of stock that will be sold;

(5) That subscription rights shall be on a basis pro rata to the member's interest in the mutual association, however, fractional shares need not be issued;

(6) That the conversion to a capital stock association does not result in any reduction of the converting association's reserves and net worth;

(7) An independent evaluation of the converting association's pro forma market value as converted to support the offering of stock to the converting association's members;

(8) The business purposes to be accomplished by the conversion;

(9) The manner in which capital stock in the converted association will be sold and distributed;

(10) A statement that capital stock is not insured; and

(11) That all earned surplus shall be distributed to members on a basis pro rata to the member's interest in the mutual association. However, prior to such a distribution, there shall be set aside sufficient earned surplus in order to insure satisfying the requirements of Sec.Sec. 9-218, 9-220, 9-221 and 9-324 of this title.

#### Section 9-604

The Division Director:

(1) Shall review an application for conversion to a capital stock association;

(2) Shall determine:

  (i) Whether the plan is fair to the members of the converting association and the general public;

  (ii) That insurance of the savings accounts will remain in effect after the conversion;

  (iii) That, after conversion, the association will be in sound financial condition and will be soundly managed;

  (iv) That conversion will not impair the capital of the association nor adversely affect the association's operations; and

  (v) That no person will receive any inequitable gain or advantage by reason of the conversion; and

(3) May require any changes that are necessary to ensure full disclosure of all material facts.

#### Section 9-605

Within 60 days of the filing of an application, if the Division Director finds that the mutual association has met the requirements of Sec. 9-604 of this subtitle, the Division Director shall issue to the converting association a letter of preliminary approval of the conversion.

#### Section 9-606

(a) On receipt of the Division Director's letter of preliminary approval, the board of directors of the converting association shall call a meeting of the members for the purpose of considering the plan of conversion to a capital stock association.

(b) At least 10 days, but not more than 90 days, before the meeting, the converting association shall mail notice of the meeting to all members entitled to vote.

#### Section 9-607

A proposed plan of conversion to a capital stock association and proposed charter amendments to conform to the conversion require approval by a majority vote of the total number of votes eligible to be cast by the members of a mutual association.

#### Section 9-608

(a) The board of directors of the converting association shall deliver to the Division Director:

  (1) A certified copy of the minutes of the meeting at which the conversion was approved; and

  (2) The executed charter amendments and a conformed copy.

(b) On receipt of the minutes and charter amendments under subsection (a) of this section, the Division Director shall:

  (1) Endorse the executed copy of the charter amendments as approved; and

  (2) Send to the converting association:

    (i) The endorsed copy; and

    (ii) A final order of approval of the conversion to a capital stock association.

#### Section 9-609

Any applicant aggrieved by the action or nonaction of the Division Director under Sec. 9-605 or Sec. 9-608 of this subtitle may appeal to the Circuit Court for Baltimore City.

#### Section 9-610

(a) After the final order of approval, the board of directors of the converting association shall file the endorsed charter amendments with the State Department of Assessments and Taxation.

(b) When the State Department of Assessments and Taxation accepts the charter amendments for record, the mutual association becomes a capital stock association.

#### Section 9-611

(a) In this section, "savings and loan association" means a savings and loan association organized under this title as a mutual association.

(b) Notwithstanding any other provision of this title, the Division Director may approve a conversion of a savings and loan association to a capital stock association that deviates from the standard requirements of this title if the circumstances of the conversion would, under federal law, permit the Federal Home Loan Bank Board to authorize a modified conversion.

(c) The Division Director may approve a modified conversion only if:

  (1) The Division Director determines that:

    (i) The stability of the savings and loan association is threatened by severe financial difficulties;

    (ii) The conversion to a capital stock form is likely to improve the financial condition of the savings and loan association;

    (iii) The association will be viable after the conversion; and

    (iv) The approval of the conversion is not detrimental to the public interest; and

  (2) The approval imposes the same conditions that federal law requires or permits.

(d)

  (1) The Division Director may adopt rules and regulations for a modified conversion, including:

    (i) Procedures for application and approval; and

    (ii) Conditions for approval of the Division Director in the final order.

  (2) The Division Director may approve the chartering of a capital stock corporation to acquire the assets of, or merge with, a mutual association under this section.

(e) A conversion under this section is not subject to the requirements contained in the following sections of this title:

  (1) Sec.Sec. 9-206 through 9-208, inclusive;

  (2) Sec.Sec. 9-216 through 9-222, inclusive;

  (3) Sec.Sec. 9-601 through 9-609, inclusive; and

  (4) Sec.Sec. 9-627 through 9-630, inclusive.

#### Section 9-612

(a) In this section, "savings and loan association" means a savings and loan association organized under this title as a mutual association.

(b) Notwithstanding any other provision of this title, the Division Director may approve the voluntary conversion of a savings and loan association to a capital stock association and the sale of the association's newly issued capital stock to a third party or parties in a transaction in which the association members have no rights of approval or participation and no rights to the continuance of any legal or beneficial ownership interest in the converted association if the circumstances of the conversion and sale would, under federal law, permit the Federal Home Loan Bank Board to authorize a voluntary supervisory stock conversion.

(c) The Division Director may approve a voluntary supervisory stock conversion only if:

  (1) The Division Director determines that:

    (i) The Division Director would have grounds to seek the appointment of a conservator or receiver under this title;

    (ii) No equity value would be realized by the savings and loan association's mutual account holders after liquidation of the association;

    (iii) Severe financial conditions exist that threaten the financial stability of the savings and loan association;

    (iv) The conversion to a capital stock form is likely to improve the financial condition of the savings and loan association;

    (v) The association will be viable after the conversion; and

    (vi) The approval of the conversion is not detrimental to the public interest; and

  (2) The approval imposes the same conditions that federal law requires or permits.

(d)

  (1) The Division Director may adopt rules and regulations for a voluntary supervisory stock conversion, including:

    (i) Procedures for application and approval; and

    (ii) Conditions for approval of the Division Director in the final order.

  (2) The Division Director may approve the chartering of a capital stock corporation to acquire the assets of, or merge with, a mutual association under this section.

(e) A conversion under this section is not subject to the requirements contained in the following sections of this title:

  (1) Sec.Sec. 9-206 through 9-208, inclusive;

  (2) Sec.Sec. 9-216 through 9-222, inclusive;

  (3) Sec.Sec. 9-601 through 9-609, inclusive; and

  (4) Sec.Sec. 9-627 through 9-630, inclusive.

#### Section 9-613

A Maryland savings and loan association may convert to a federal association if:

(1) It is eligible to become a member of the federal home loan bank system;

(2) Its members approve;

(3) Within 6 months after member approval, the association acts to convert in the manner required by federal law; and

(4) It receives a federal charter.

#### Section 9-614

(a) If a savings and loan association wishes to convert to a federal association, the board of directors shall call a meeting of the members of the savings and loan association for the purpose of considering the proposal to convert.

(b) The savings and loan association shall give notice of the meeting as provided in Title 2, Subtitle 5 of the Corporations and Associations Article.

#### Section 9-615

A proposal to convert to a federal association requires approval by a majority vote of the total number of votes eligible to be cast by the members of the savings and loan association.

#### Section 9-618

A federal association may convert to a Maryland savings and loan association if:

(1) Its principal office is in this State;

(2) Its members approve;

(3) The Division Director approves; and

(4) Immediately upon filing its articles of incorporation with the State Department of Assessments and Taxation, the association will convert to a commercial bank under the provisions of Sec.Sec. 9-631 through 9-639 of this subtitle or convert to a federally chartered savings and loan association under Sec.Sec. 9-613 through 9-615 of this subtitle.

#### Section 9-619

A proposal to convert to a Maryland savings and loan association requires approval by a majority vote of the total number of votes eligible to be cast by the members of the federal association.

#### Section 9-620

To convert to a Maryland savings and loan association, the board of directors of a federal association shall deliver to the Division Director:

(1) A written application in the form that the Division Director requires;

(2) The executed copy of the proposed articles of incorporation and a conformed copy;

(3) The proposed bylaws;

(4) Any additional exhibits the Division Director requires; and

(5) A filing fee of $1,000.

#### Section 9-621

(a)

  (1) When the Division Director receives the items listed in Sec. 9-620 of this subtitle, the Division Director shall publish a notice of the filing.

  (2) The notice shall state that a public hearing is scheduled on a date that is not more than 45 days after the filing.

(b) The notice shall be published:

  (1) At least once each week for 2 successive weeks in a newspaper of general circulation in the political subdivision where the principal business office of the converting federal association is located; and

  (2) In the Maryland Register as provided in the State Documents Law.

#### Section 9-622

The Division Director shall approve an application if the Division Director finds:

(1) The converting federal association has met the requirements of Subtitle 2 of this title that relate to the formation of a savings and loan association;

(2) The character, responsibility, and general fitness of the officers and directors of the converting federal association command confidence and warrant belief that the business of the converting association will be conducted honestly and efficiently in accordance with the intent of this title; and

(3) Allowing the federal association to convert to a Maryland savings and loan association will promote the public interest.

#### Section 9-623

(a) The Division Director may require any change in the proposed articles of incorporation or bylaws that the Division Director considers necessary.

(b) Within 60 days after the scheduled hearing, the Division Director shall pass an order approving or denying the application to convert.

(c) Any applicant aggrieved by the order of the Division Director may appeal to the Circuit Court for Baltimore City.

(d)

  (1) After the time for appeal of the order expires or on final determination of any appeal taken, the Division Director shall endorse and date each copy of the article "approved" or "denied".

  (2) If the Division Director approves the articles, the Division Director shall:

    (i) Return the endorsed, executed articles to the chairman of the board of directors; and

    (ii) Keep the endorsed, conformed copy.

#### Section 9-624

(a) On final order of approval of the articles of incorporation by the Division Director, the board of directors of the converting association shall file for record with the State Department of Assessments and Taxation the endorsed, executed articles of incorporation.

(b) When the State Department of Assessments and Taxation accepts the articles of incorporation for record, the federal association becomes a Maryland savings and loan association.

(c) The board of directors of the converted association shall send a copy of the certificate acknowledging acceptance of the articles of incorporation to the Division Director.

#### Section 9-627

(a) A savings and loan association may consolidate with, merge with or into, or transfer its assets to any other savings and loan association, any savings bank, or any out-of-state association as defined in Sec. 9-1001(i) of this title if:

  (1) It complies with Title 3 of the Corporations and Associations Article;

  (2) The Division Director approves the plan of consolidation, merger, or transfer of assets; and

  (3) The out-of-state association complies with Sec. 9-1004 of this title.

(b) Notwithstanding any other provision of this section or any other law, the approval by the shareholders or members of a savings and loan association for which a receiver has been appointed under Sec. 9-708 of this title of a plan of consolidation, merger, or transfer of assets of that savings and loan association is not required if, after notice and a hearing, the circuit court administering the receivership determines that:

  (1) The savings and loan association is insolvent; or

  (2) Consummation of the transactions contemplated by the plan of consolidation, merger, or transfer of assets will not result in the shareholders or members of the savings and loan association receiving property of a lesser value in their capacity as shareholders or members than they otherwise would upon a complete liquidation of the savings and loan association in receivership.

#### Section 9-628

A savings and loan association may effect a statutory merger into any other savings and loan association, any savings bank, or any out-of-state association as defined in Sec. 9-1001(i) of this title if the plan of statutory merger:

(1) Complies with Title 3 of the Corporations and Associations Article;

(2) Is approved by:

  (i) The board of directors of both the successor and the transferor;

  (ii) The shareholders or members of a transferor association; and

  (iii) The Division Director; and

(3) The out-of-state association complies with Sec. 9-1004 of this title.

#### Section 9-629

A savings and loan association may reorganize, partially liquidate, or dissolve if:

(1) It complies with Title 3 of the Corporations and Associations Article; and

(2) The Division Director approves the plan of reorganization, partial liquidation, or dissolution.

#### Section 9-630

(a) To consolidate, merge, transfer assets, effect a statutory merger, reorganize, partially liquidate, or dissolve, a savings and loan association shall deliver to the Division Director the proposed plan of the respective action.

(b)

  (1) Except as provided in paragraph (3) of this subsection, the Division Director shall publish notice of the filing of a plan of consolidation, merger, transfer of assets, statutory merger, reorganization, partial liquidation, or dissolution.

  (2) The notice shall be published:

    (i) In a newspaper of general circulation in the political subdivision in which the principal office of each savings and loan association named in the plan is located; and

    (ii) In the Maryland Register as provided in the State Documents Law.

  (3) Subject to the confirmation of the Secretary of Labor, the Division Director may approve a plan of consolidation, merger, reorganization, transfer of assets, statutory merger, partial liquidation, or dissolution without the required notice if a delay of such a plan would result in economic hardship to either party to a merger.

(c) The Division Director shall examine any plan submitted under subsection (a) of this section and shall determine if:

  (1)

    (i) The successor savings and loan association, if it is an association chartered under the laws of this State, satisfies the requirements of Subtitle 2 of this title that relate to organization as a savings and loan association; or

    (ii) The successor savings and loan association, if it is a savings and loan association not chartered under the laws of this State, satisfies the requirements of the laws of the jurisdiction in which it is organized that relate to the organization of savings and loan associations in that jurisdiction; and

  (2) The plan would be consistent with adequate and sound savings and loan practices and in the public interest. In making the determination required by this paragraph, the Division Director shall consider:

    (i) The financial history and condition of the parties to the plan;

    (ii) Their prospects;

    (iii) The management of the association;

    (iv) The effect of the plan on competition; and

    (v) The convenience and needs of the area in this State primarily to be served by the resulting association.

(d)

  (1) Within 60 days of the filing, the Division Director shall approve or disapprove any plan submitted under subsection (a) of this section.

  (2) The Division Director shall give priority consideration to any plan for the acquisition of a savings and loan association which, on or before July 1, 1987, was not insured by the Federal Savings and Loan Insurance Corporation, had not received conditional approval for federal insurance, and was not substantially likely to qualify for federal insurance.

  (3) If the Division Director approves the plan of consolidation, merger, transfer of assets, statutory merger, partial liquidation, dissolution, or reorganization, the Division Director shall certify each document that the State Department of Assessments and Taxation requires.

(e) Any applicant aggrieved by the action or nonaction of the Division Director may appeal to the Circuit Court for Baltimore City.

#### Section 9-631

A capital stock savings and loan association may convert to a commercial bank if:

(1) Its stockholders approve;

(2) Its charter is amended;

(3) The Commissioner approves;

(4) All deposits will be insured throughout the conversion;

(5) The depositors of the capital stock savings and loan association immediately prior to the conversion shall be entitled to deposits in the commercial bank of like amounts, interest rate and other terms, without interruption of interest;

(6) All deposits shall be insured by the Federal Deposit Insurance Corporation up to the maximum amount provided by law;

(7) It complies with Title 3 of the Corporations and Associations Article; and

(8) It has met all the requirements of this part and other applicable provisions in this article.

#### Section 9-632

To convert to a commercial bank, a capital stock savings and loan shall deliver to the Commissioner:

(1) A filing fee of $1,000;

(2) An application for conversion;

(3) A certified copy of the resolution of the board of directors that authorizes the conversion;

(4) The proposed amended charter and bylaws amendments;

(5) The proposed notice of the meeting to consider conversion, and the time and manner in which notice will be given to stockholders;

(6) The proposed proxy statement;

(7) The proposed plan of conversion; and

(8) Any additional documents required by the Commissioner.

#### Section 9-633

The Commissioner:

(1) Shall review an application for conversion to a commercial bank;

(2) Shall determine:

  (i) Whether the plan is fair to the stockholders of the converting association and the general public;

  (ii) That insurance of the savings accounts will remain in effect after the conversion;

  (iii) That, after conversion, the commercial bank will be in sound financial condition and will be soundly managed;

  (iv) That conversion will not impair the capital of the association nor adversely affect the association's operations; and

  (v) That no person, member, employee, or otherwise will receive any inequitable gain or advantage by reason of the conversion;

(3) May require any changes that are necessary to ensure full disclosure of all material facts;

(4) May not issue a certificate of authority to commence business to a commercial bank unless all the requirements of this article governing a commercial bank have been met;

(5) May modify the initial capitalization requirements of the commercial bank if the Commissioner determines that a modification is:

  (i) Reasonably required to protect the welfare of the commercial bank; and

  (ii) Not detrimental to the public interest or to the commercial bank; and

(6) May adopt regulations to carry out the provisions of this part.

#### Section 9-634

Within 60 days of the filing of an application, if the Commissioner finds that the stock association has met the requirements of Sec. 9-633 of this subtitle, the Commissioner shall issue to the converting association a letter of preliminary approval of the conversion.

#### Section 9-635

(a) On receipt of the Commissioner's letter of preliminary approval, the board of directors of the converting association shall call a meeting of the members for the purpose of considering the plan of conversion to a commercial bank.

(b) At least 10 days, but not more than 90 days, before the meeting, the converting association shall mail notice of the meeting to all members entitled to vote.

#### Section 9-636

A proposed plan of conversion to a commercial bank and proposed charter amendments to conform to the conversion require approval by a majority vote of the total number of votes eligible to be cast by the stockholders of a stock association.

#### Section 9-637

(a) The board of directors of the converting association shall deliver to the Commissioner:

  (1) A certified copy of the minutes of the meeting at which the conversion was approved; and

  (2) The executed charter amendments and a conformed copy.

(b) On receipt of the minutes and charter amendments under subsection (a) of this section, the Commissioner shall:

  (1) Endorse the executed copy of the charter amendments as approved; and

  (2) Send to the converting association:

    (i) The endorsed copy; and

    (ii) A final order of approval of the conversion to a commercial bank.

#### Section 9-638

Any applicant aggrieved by the action or nonaction of the Commissioner under this subtitle may appeal to the Circuit Court for Baltimore City.

#### Section 9-639

(a) After the final order of approval, the board of directors of the converting association shall file the endorsed charter amendments with the State Department of Assessments and Taxation.

(b) When the State Department of Assessments and Taxation accepts the charter amendments for record, the stock association becomes a commercial bank.

#### Section 9-640

(a) Except as provided in subsections (b), (c), and (d) of this section, a capital stock savings and loan association converted under this part to a commercial bank may exercise all the powers of, and shall be subject to all the restrictions imposed on, a commercial bank under this article.

(b) A commercial bank that results from a conversion of a capital stock savings and loan association may hold assets or conduct business activities, other than insurance assets and insurance activities, that result from the conversion and that do not conform with applicable law, unless a different period is authorized by federal regulatory agencies:

  (1) For a period of 5 years after the conversion; and

  (2) If the Commissioner approves, for an additional period not exceeding 5 years.

(c) A commercial bank resulting from a conversion of a capital stock savings and loan association may hold insurance assets or conduct insurance activities that were held or conducted before the conversion and that do not conform with applicable law, for a period of 2 years after the date of conversion, unless a different period is authorized by federal regulatory agencies.

(d) Except as provided in subsection (c) of this section, a commercial bank resulting from the conversion of a capital stock savings and loan association may hold insurance assets or conduct insurance activities only to the extent permitted under applicable law for a Maryland commercial bank.

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