[Federal Register Volume 69, Number 145 (Thursday, July 29, 2004)]
[Proposed Rules]
[Pages 45279-45291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17256]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 69, No. 145 / Thursday, July 29, 2004 / 
Proposed Rules  

[[Page 45279]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 708b


Mergers of Federally-Insured Credit Unions; Voluntary Termination 
or Conversion of Insured Status

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The National Credit Union Administration (NCUA) is issuing a 
proposed rule on credit union mergers, federal share insurance 
terminations, and conversions from federal share insurance to 
nonfederal insurance. The proposed rule establishes communication and 
disclosure requirements to ensure that members are fully and properly 
informed before they vote on whether to convert from federal insurance 
to nonfederal insurance. The proposed rule provides protections to 
members who may lose federal insurance because they have large insured 
accounts at two federally-insured credit unions that are merging or 
they have term accounts at a federally-insured credit union that is 
converting to nonfederal insurance. The proposal also requires merging 
credit unions to analyze the premerger requirements imposed on credit 
unions by the Hart-Scott-Rodino Act and provides other miscellaneous 
updates to the existing rule governing credit union mergers, 
terminations, and conversions of share insurance.

DATES: Comments must be received on or before September 27, 2004.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://www.ncua.gov/news/proposed_regs/proposed_regs.html. Follow the instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Proposed Rule Part 708b (Mergers and Termination or 
Conversion of Insured Status)'' in the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Becky Baker, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.

FOR FURTHER INFORMATION CONTACT: Paul Peterson, Staff Attorney, Office 
of General Counsel, at the above address or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION: 

A. Background

    The Federal Credit Union Act (Act) authorizes the NCUA Board to 
prescribe rules regarding mergers of federally-insured credit unions 
and changes in insured status and requires written approval of the 
Board before one or more federally-insured credit unions merge or 
before a federally-insured credit union terminates federal insurance or 
converts to nonfederal insurance. 12 U.S.C. 1766(a), 1785(b), 1785(c), 
1789(a). Part 708b of NCUA's rules addresses the merger of federally-
insured credit unions and the voluntary termination or conversion of 
federally-insured status. 12 CFR part 708b.
    The Board last made significant changes to part 708b in 1987. 52 FR 
12370 (April 16, 1987). The Board has a policy of continually reviewing 
NCUA regulations to ``update, clarify and simplify existing regulations 
and eliminate redundant and unnecessary provisions.'' NCUA Interpretive 
Ruling and Policy Statement (IRPS) 87-2, Developing and Reviewing 
Government Regulations. As a result of the NCUA's 2003 review, the 
Board determined that part 708b should be updated and modernized.

B. Proposed Amendments

1. Amendment Related to Hart-Scott-Rodino Act

    The Hart-Scott-Rodino Act (HSR Act), codified at 15 U.S.C. 18a, 
requires that parties, including credit unions, to certain mergers or 
acquisitions notify the Federal Trade Commission (FTC) before 
consummating the merger or acquisition. This premerger notification, or 
``HSR filing,'' enables the FTC and the U.S. Department of Justice to 
determine which mergers are likely to be anticompetitive and challenge 
them under the antitrust laws before they are finalized. Credit unions 
that file must pay the FTC a substantial fee ranging from $45,000 up to 
$280,000.
    Only mergers involving relatively large credit unions require HSR 
filings because merging entities that are below a certain asset size 
are exempt. Generally, credit unions need not file if 1) the merging 
credit union has less than $50 million in assets or 2) the merging 
credit union has from $50 million up to $200 million in assets and the 
continuing credit union is below a certain asset size established by 
the FTC. See Introductory Guide II to the Premerger Notification 
Program, To File or Not to File (Premerger Notification Office, Bureau 
of Competition, U.S. Federal Trade Commission, January 2002).
    The proposed amendment requires a merging credit union that has 
more than $50 million in assets as reported on its last call report to 
inform NCUA in its merger proposal if the credit union plans to make an 
HSR filing and, if not, why not. The Board notes that many credit 
unions with more than $50 million in assets for purposes of call 
reporting may have some assets that do not count towards the HSR filing 
thresholds and so the merger may not require HSR filing. Credit unions 
should consult with private counsel about HSR filing issues.

2. Amendments Related to Share Insurance Disclosure.

    Section 151 of the Federal Deposit Corporation Improvement Act of 
1991 (FDICIA) added Sec.  43 to the Federal Deposit Insurance Act 
(FDIA). Pub. L. No. 102-242 (1991), Section 151(a); Pub. L. No. 102-550 
(1992), Section 1603(b)(2); and 12 U.S.C. 1831t(b). Section 43 of the 
FDIA requires, among other things, that depository institutions, 
including credit unions, that do not have federal deposit or share 
insurance make conspicuous disclosure of that fact and its potential 
ramifications to their current and potential account holders in various 
media. For example, nonfederally-insured institutions must make 
conspicuous disclosure in all periodic

[[Page 45280]]

account statements, on each signature card, and on each passbook, 
certificate of account, or similar instrument, that ``the institution 
is not federally-insured, and that if the institution fails, the 
Federal Government does not guarantee that depositors will get back 
their money.'' 12 U.S.C. 1831t(b)(1).
    In a recent report, the U.S. General Accounting Office (GAO) found 
that ``many privately insured credit unions have not always complied 
with the disclosure requirements in Section 43 that are designed to 
notify consumers that the deposits in these institutions are not 
federally-insured.'' Federal Deposit Insurance Act: FTC Best Among 
Candidates to Enforce Consumer Protection Provisions (GAO-03-0971, 
August, 2003), p. 20. As the title of the report suggests, GAO 
concluded that FTC is the most appropriate federal agency to enforce 
the provisions of Sec.  43 with respect to nonfederally-insured credit 
unions. NCUA does have a responsibility, however, to ensure that 
members of a federally-insured credit union are fully informed in 
connection with a vote to terminate federal insurance or to convert 
from federal to nonfederal insurance and that management understands 
and is committed to fulfilling its disclosure requirements post-
conversion. See 12 U.S.C. 1785(c)(5). Accordingly, the proposed 
amendments revise the disclosure requirements in connection with the 
membership vote of credit unions seeking to terminate or convert from 
federal insurance and require the credit unions to acknowledge section 
43 and certify that they will comply with its requirements following 
termination or conversion.
    Federally-insured credit unions intending to terminate federal 
insurance or convert to non-federal insurance must first obtain 
approval from their members, and part 708b currently requires credit 
unions to use certain language to disclose to members, as part of the 
notification of member vote, the effects of insurance termination or 
conversion. The current disclosure language required by part 708b is 
similar to that required by section 43 following the loss of federal 
insurance. The proposed amendments modify the part 708b disclosures to 
make them more consistent with the section 43 disclosures.
    The proposed amendments also update the form notices, ballots, and 
certifications in subpart C of part 708b. The Board intends that credit 
unions desiring to convert must use the forms in subpart C unless the 
Regional Director approves the use of alternative forms.
    Although the current rule has forms for both insurance conversions 
and terminations, the proposal drops the termination forms. The Board 
understands that, currently, no states will permit an insured credit 
union to voluntarily terminate its share insurance. The proposed 
regulation will continue to specify the essential requirements for a 
termination, but the Board feels that specific regulatory forms 
covering terminations are unnecessary.

3. Other Amendments Related to Insurance Conversions and Terminations

a. Timing and Sequence of the Approval Process

    Currently, part 708b requires that NCUA must approve a merger 
before the members vote to approve the merger. By contrast, for 
insurance conversions, part 708b provides two options as to when a 
credit union must give notice: ``[n]otice to the Board may be given 
when membership approval is solicited, or after membership approval is 
obtained.'' Compare 12 CFR 708b.106(a)(1)(mergers) with 
708b.203(c)(conversions). These different provisions may create 
confusion in mergers that also involve insurance conversions. NCUA 
proposes to eliminate this confusion by changing the notice requirement 
for insurance conversions to require a converting credit union to 
notify NCUA and request approval of the conversion before the credit 
union solicits a member vote. This change is consistent with the only 
timing requirement imposed by the Act, which is that NCUA be notified 
at least 90 days before the intended date of conversion. 12 U.S.C. 
1786(a)(2).

b. Right To Redeem Term Share Accounts Without Penalty

    The proposed rule requires, as part of the conversion process, that 
a credit union notify its members in the notice of member vote that, if 
the conversion is approved, it will permit members to close share 
certificate and other term accounts without penalty if done before the 
effective date of conversion. During one recent insurance conversion, 
NCUA received inquiries from some members of the converting credit 
union as to whether they could close term accounts without suffering an 
early withdrawal penalty. As a matter of policy, it is unfair to force 
credit union members to maintain term accounts after the loss of 
federal share insurance. As a matter of contract law, the credit 
union's term account contract may also require the continuation of 
federal account insurance as an express or implied condition.
    The Board does not deem a similar provision allowing members to 
close term accounts without penalty as appropriate in insurance 
termination situations. In insurance termination situations, federal 
insurance may continue for up to a year after the date of termination; 
while in insurance conversion situations, federal insurance is lost 
completely on the date of conversion. See 12 U.S.C. 1786(c).

c. Communications to Members

    The Board proposes to amend the current rule to modify the current 
requirement for Regional Director approval of certain written 
communications to members about insurance terminations or conversions. 
Currently, part 708b requires credit unions to use specific language in 
the notice to members of the pending change in insurance status and 
associated ballot. 12 CFR part 708b, subpart C. It also requires the 
approval of the Regional Director for any modifications to this 
language and any additional communications concerning insurance 
coverage included with the notice or ballot. 12 CFR 708b.303. The 
purpose of this approval requirement is to ensure that members are 
accurately informed about the ramifications of the loss of federal 
insurance coverage. The current approval requirement, however, does not 
extend to communications outside those included with the notice and 
ballot, such as separate mailings, e-mails, or postings on the world-
wide web.
    The Board is concerned about communications that credit unions may 
make that are intended to influence the member vote. While a credit 
union seeking to convert or terminate may make its case for conversion 
or termination to its members, it may not do so by misleading, 
inaccurate, or deceptive representations. For example, the Board 
believes that any discussion of NCUA insurance, or any comparison of 
nonfederal insurance to NCUA insurance, is inaccurate and deceptive if 
it fails to mention the most important aspect of NCUA insurance: by 
law, it is backed by the full faith and credit of the United States 
government. Competitive Equality Banking Act of 1987, Pub. L. No. 100-
86, Section 901, 101 Stat. 657 (1987); Massachussetts Credit Union 
Share Insurance Corporation v. National Credit Union Administration, 
693 F.Supp. 1225, 1230-31 (D.C.D.C. 1988) (``The Court concludes that 
it was the clear and unambiguous intention of the Congress to guarantee 
the resources

[[Page 45281]]

of * * * depository institutions with the full faith and credit of the 
United States.''). The Board is also concerned about representations 
that state or imply that it is difficult or impossible to structure 
accounts at a federally-insured institution to obtain more than 
$100,000 of share insurance coverage as these representations are also 
inaccurate and deceptive. The Board is proposing multiple amendments to 
address these member communications issues.
    The Board is proposing to amend the current rule to clarify the 
concept of ``notice.'' Part 708b currently provides that when the board 
of directors of a federally-insured credit union adopts a resolution 
proposing to convert from federal to nonfederal insurance, including an 
insurance conversion associated with a merger or conversion of charter, 
it must provide its members with written notice of the proposal to 
convert insurance and of the date set for the membership vote. To 
ensure that the members are adequately informed about the nature of the 
insurance conversion, both the current and proposed rules prescribe 
specific forms for this notice. The proposed rule makes clear that the 
first written communication following the resolution to convert that is 
made by or on behalf of the credit union and that informs the members 
that the credit union will seek conversion of insurance is, in fact, 
the notice of the proposal to convert and must be in the prescribed 
form unless the Regional Director approves a different form.
    The proposed rule will also place approval and disclosure 
requirements on ``share insurance communications,'' defined in the 
proposed rule as any written communication, that: is made by or on 
behalf of a federally-insured credit union; is intended to be read by 
two or more credit union members; and mentions share insurance 
conversion or termination. The term covers communications delivered or 
made available before, during, and after the credit union board of 
directors decides to seek conversion or termination. The term includes, 
but is not limited to, communications delivered or made available by 
mail, e-mail, and internet website posting.
    The current rule requires prior Regional Director approval of any 
``[m]odifications or additions to the notices or ballot concerning 
insurance coverage, and any additional communications concerning 
insurance coverage included with the notices or ballot * * * `` 12 CFR 
708b.303. The current rule states that the Regional Director may not 
withhold such approval unless ``it is determined that the credit union, 
by inclusion or omission of information, would materially mislead or 
misinform its membership.'' Id. The proposed retains the prior approval 
requirement and the standard of review, but expands the types of 
communications subject to prior approval. Specifically, the proposed 
rule requires prior approval for all share insurance communications 
made during the voting period, including those communications not 
included with the notices or ballot.
    The current rule does not contain any disclosure requirements for 
communications other than the disclosures contained in the form notice 
and ballot. The proposed rule, however, requires the inclusion of the 
following disclosure language, in a conspicuous fashion, in all share 
insurance communications: ``IF YOU ARE A MEMBER OF THIS CREDIT UNION, 
YOUR ACCOUNTS ARE CURRENTLY INSURED BY THE NATIONAL CREDIT UNION 
ADMINISTRATION, A FEDERAL AGENCY. THIS INSURANCE IS BACKED BY THE FULL 
FAITH AND CREDIT OF THE UNITED STATES GOVERNMENT. IF THE CREDIT UNION 
(CONVERTS TO PRIVATE INSURANCE )(TERMINATES ITS FEDERAL INSURANCE), AND 
THE CREDIT UNION FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE THAT 
YOU WILL GET YOUR MONEY BACK.''
    To make an informed decision about conversion or termination, 
members must understand the potential repercussions from the loss of 
federal insurance. This information is so important it must be provided 
the first time the issue of conversion is raised and every time the 
issue is discussed. The proposed disclosure language tracks the 
disclosures required of nonfederally-insured credit unions by section 
43(b) of the FDIA after conversion. 12 U.S.C. 1831t(b). The proposal 
requires this language be included in all share insurance 
communications whether or not the communication requires prior NCUA 
approval and whether or not the credit union has made a formal decision 
to seek conversion or termination. The Board is concerned, for example, 
about the use of surveys and questionnaires as a vehicle to shape 
member opinion about conversions before the board of directors formally 
resolves to convert. The proposed rule also tracks section 43(b) by 
requiring that the disclosure language be conspicuous. To ensure that 
the disclosure catches the attention of the member, the disclosure must 
be in capital letters, bolded, offset from the other text by use of a 
border, and at least one font size larger than any other text 
(exclusive of headings) used in the communication. As noted above, the 
proposed rule defines ``share insurance communication'' to include only 
those communications intended to be read by two or more members. The 
proposed rule's disclosure and prior approval requirements do not apply 
to any communication that is addressed to a single person if the 
communication is not publicized by, or on behalf of, the credit union, 
or if the same or substantially the same communication is not otherwise 
made to more than one member. So, for example, if a member sent an 
email to a credit union asking for a replacement ballot or seeking more 
information about the member meeting, the credit union's reply would 
not require prior Regional Director approval nor would it need to 
contain the disclosure language.
    The Board also proposes to add a cross-reference to Sec.  740.2 of 
NCUA's advertising regulation, which section prohibits the making of 
false or deceptive representations. 12 CFR 740.2. This cross-reference 
does not create any new requirement, but, rather, reminds credit unions 
of an important preexisting obligation when communicating with members.

d. Eligibility for Nonfederal Insurance

    Not all states permit nonfederal primary share insurance. The 
proposed rule requires, as part of the request for NCUA approval of 
conversion to nonfederal insurance, that the converting credit union 
provide proof that the nonfederal insurer is authorized to issue share 
insurance in the state where the credit union is located and that the 
insurer will insure the credit union.

e. Voting Procedures

    To ensure the integrity of the vote, the proposed rule requires the 
vote be conducted by secret ballot and be administered by an 
independent entity. The Board wants all members, including employee-
members, to be able to vote in their own best interests free from any 
pressure. A secret vote administered by an independent entity will 
eliminate disclosure of early voting returns and pressure on members to 
vote in a certain way or change previously cast votes.
    The proposed rule defines ``independent entity'' as a company with 
experience in conducting corporate elections. No official or senior 
manager of the credit union, or the immediate family members of any 
official or senior manager, may have any ownership interest in, or be 
employed by, the entity.

[[Page 45282]]

4. Miscellaneous Amendments

    The Board is proposing an amendment to require notice to members 
regarding the potential reduction of account insurance coverage 
resulting from the merger of two federally-insured credit unions. Two 
credit unions that are proposing to merge may have overlapping fields 
of membership, and there may be individuals who belong to both credit 
unions. If these individuals have accounts at both credit unions in an 
aggregate amount exceeding $100,000, they run the risk of losing some 
insurance coverage on their accounts as a result of the merger. Last 
December, NCUA finalized a change to its insurance rules to extend 
insurance coverage in this situation for up to six months following a 
merger. 68 FR 75111 (December 30, 2003)(Amendments to 12 CFR part 745). 
Still, some members may not make the appropriate account adjustments 
within the six-month window. To ensure these members are aware of the 
possible loss of coverage, this proposed rule requires the continuing 
credit union either (1) notify all members of the continuing credit 
union of the potential loss of insurance coverage from overlapping 
fields of membership, (2) notify all individuals who are members of 
both credit unions of the potential loss of insurance coverage, or (3) 
determine which members of both credit unions may actually have 
uninsured funds six months after the merger and notify those members of 
the potential loss of insurance coverage.
    The proposed rule clarifies that that the terms ``insurance'' and 
``insured'' as used in part 708b refer to primary share or deposit 
insurance, not to excess insurance.
    The proposed rule requires merging credit unions to analyze the net 
worth of the two credit unions before merger, as calculated under 
generally accepted accounting principles (GAAP), and compare those 
figures with the estimated net worth of the continuing credit union 
after merger. The credit unions must conduct this analysis to determine 
any negative effects on GAAP net worth resulting from a merger.
    The proposed rule also makes other minor changes to modernize the 
language.

Regulatory Procedures

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a proposed rule may have on 
a substantial number of small credit unions (those under ten million 
dollars in assets). Each year, there are about 300 mergers that involve 
federally-insured credit unions, and about 250 of these mergers involve 
small credit unions. In almost all cases, however, the small credit 
union merges into a much larger continuing credit union. The larger 
credit union is available to assist the small credit union with each 
step in the merger process, keeping the economic impact on the small 
credit union to a minimum. Accordingly, the Board does not anticipate 
that this proposed rule would have a significant economic impact on a 
substantial number of small credit unions, and, therefore, a regulatory 
flexibility analysis is not required.

B. Paperwork Reduction Act

    Section 708b contains information collection requirements. As 
required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), 
NCUA has submitted a copy of this proposed rule as part of an 
information collection package to the Office of Management and Budget 
(OMB) for its review and approval for revision of Collection of 
Information, Mergers of Federally Insured Credit Unions, Control Number 
3133-0024.
    The proposed Sec.  708b ensures that NCUA has sufficient 
information to determine whether to approve the proposed merger, 
insurance conversion, or insurance termination. The proposed Sec.  708b 
further ensures that members have sufficient and accurate information 
to exercise their vote properly concerning the proposed merger, 
insurance conversion, or insurance termination. The proposed Sec.  708b 
also protects the property interests of members that may lose some or 
all of the federal insurance due to a merger, conversion, or 
termination of insurance.

Mergers

    Each year, there are approximately 300 mergers involving one or 
more federally insured credit unions. NCUA estimates that it will take 
the two merging credit unions about 25 hours between them to prepare 
the required merger documents (proposed Sec.  708b.103), to collect and 
submit the required information to NCUA (proposed Sec.  708b.104), to 
provide required insurance disclosures if the merger involves a share 
insurance conversion (proposed Sec.  708b.206), to notify members of 
the merger and send them the ballot (proposed Sec.  708b.106), to 
notify NCUA of the merger's completion (proposed Sec.  708b.108), and 
to notify the members of the results of the merger and the possible 
effect on their insurance coverage (proposed Sec.  708b.101(e)). Three 
hundred respondents (the two merging credit unions together treated as 
one respondent) times 25 hours per respondent equals 7,500 total annual 
burden hours associated with this collection of information.

Share Insurance Terminations.

    Approximately zero credit unions each year engage in share 
insurance terminations. If one or more credit unions does engage in a 
voluntary termination of insurance in the future NCUA estimates there 
will be minimal burden in the form of collections of information on 
those credit unions. NCUA estimates that it will take each credit union 
10 hours to prepare the required termination documents and notice to 
NCUA (proposed Sec.  708b.201), the notice to members and ballot 
(proposed Sec.  708b.202), and the required disclosures in other 
communications that the credit union plans to send to its members 
(proposed Sec.  708b.206). Zero respondents times 10 hours per 
respondent equals zero total annual burden hours associated with this 
collection of information.

Share Insurance Conversions

    Approximately three credit unions each year engage in share 
insurance conversions outside of the merger context. NCUA estimates 
there will be minimal burden in the form of collections of information, 
since NCUA provides forms and form language in the regulation and 
associated manuals. NCUA estimates that it will take each credit union 
10 hours to prepare the required conversion documents and notice to 
NCUA (proposed Sec.  708b.203), the notice to members and ballot 
(proposed Sec.  708b.204), and the required disclosures in other 
communications that the credit union plans to send to its members 
(proposed Sec.  708b.206). Three respondents times 10 hours per 
respondent equals 30 total annual burden hours associated with this 
collection of information.

Total annual burden hours = 7,530.

    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, Attn: Mark Menchik, Room 
10226, New Executive Office Building, Washington, DC 20503.
    The NCUA considers comments by the public on this proposed 
collection of information in--

--Evaluating whether the proposed collection of information is 
necessary

[[Page 45283]]

for the proper performance of the functions of the NCUA, including 
whether the information will have a practical use;
--Evaluating the accuracy of the NCUA's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
--Enhancing the quality, usefulness, and clarity of the information to 
be collected; and
--Minimizing the burden of collection of information on those who are 
to respond, including through the use of appropriate automated 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology; e.g., permitting electronic 
submission of responses.

    The Paperwork Reduction Act requires OMB to make a decision 
concerning the collection of information contained in these proposed 
regulations between 30 and 60 days after publication of this document 
in the Federal Register. Therefore, a comment to OMB is best assured of 
having its full effect if OMB receives it within 30 days of 
publication. This does not affect the deadline for the public to 
comment to the NCUA on the proposed regulations.

C. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. The proposed rule would not have substantial 
direct effects on the states, on the connection between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this proposed rule does not constitute a policy that 
has federalism implications for purposes of the executive order.

D. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this proposed rule would not affect 
family well-being within the meaning of Sec.  654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 
2681 (1998).

E. Agency Regulatory Goal

    NCUA's goal is to promulgate clear and understandable regulations 
that impose minimal regulatory burden. We request your comments on 
whether the proposed rule is understandable and minimally intrusive.

List of Subjects in 12 CFR Part 708b

    Credit Unions, Mergers of Credit Unions, Reporting and 
Recordkeeping Requirements.

    By the National Credit Union Administration Board on July 22, 
2004.
Becky Baker,
Secretary of the Board.
    For the reasons stated above, NCUA proposes to revise 12 CFR part 
708b as follows:

PART 708b--MERGERS OF FEDERALLY-INSURED CREDIT UNIONS; VOLUNTARY 
TERMINATION OR CONVERSION OF INSURED STATUS

Sec.
708b.1 Scope.
708b.2 Definitions.
Subpart A--Mergers 708b.101 Mergers generally.
708b.102 Special provisions for federal insurance.
708b.103 Preparation of merger plan.
708b.104 Submission of merger proposal to the NCUA.
708b.105 Approval of merger proposal by NCUA.
708b.106 Approval of the merger proposal by members.
708b.107 Certificate of vote on merger proposal.
708b.108 Completion of merger.
Subpart B--Voluntary Termination or Conversion of Insured Status
708b.201 Termination of insurance.
708b.202 Notice to members of proposal to terminate insurance.
708b.203 Conversion of insurance.
708b.204 Notice to members of proposal to convert insurance.
708b.205 Modifications to notice.
708b.206 Share insurance communications to members.
Subpart C--Forms
708b.301 Conversion of insurance (State Chartered Credit Union).
708b.302 Conversion of insurance (Federal Credit Union).
708b.303 Conversion of insurance through merger.

    Authority: 12 U.S.C. 1766, 1785, 1786, 1789.


Sec.  708b.1  Scope.

    (a) Subpart A of this Part prescribes the procedures for merging 
one or more credit unions with a continuing credit union where at least 
one of the credit unions is federally-insured.
    (b) Subpart B of this Part prescribes the procedures and notice 
requirements for termination of federal insurance or conversion of 
federal insurance to nonfederal insurance, including termination or 
conversion resulting from a merger.
    (c) Subpart C prescribes required forms for use in conversion of 
federal insurance to nonfederal insurance.
    (d) Nothing in this Part restricts or otherwise impairs the 
authority of the NCUA to approve a merger pursuant to Section 205(h) of 
the Act.
    (e) This Part does not address procedures or requirements that may 
be applicable under state law for a state credit union.


Sec.  708b.2  Definitions.

    (a) Continuing credit union means the credit union that will 
continue in operation after the merger.
    (b) Convert, conversion, and converting, when used in connection 
with insurance, refer to the act of canceling federal insurance and 
simultaneously obtaining insurance from another insurance carrier. They 
mean that after cancellation of federal insurance the credit union will 
be nonfederally-insured.
    (c) Federally-insured means insured by the National Credit Union 
Administration (NCUA) through the National Credit Union Share Insurance 
Fund (NCUSIF).
    (d) Independent entity means a company with experience in 
conducting corporate elections. No official or senior manager of the 
credit union, or the immediate family members of any official or senior 
manager, may have any ownership interest in, or be employed by, the 
entity.
    (e) Insurance and insured refer to primary share or deposit 
insurance. These terms do not include excess share or deposit insurance 
as referred to in Part 740.
    (f) Merging credit union means the credit union that will cease to 
exist as an operating credit union at the time of the merger.
    (g) Nonfederally-insured means insured by a private or cooperative 
insurance fund or guaranty corporation organized or chartered under 
state or territorial law.
    (h) Share insurance communication means any written communication, 
excluding the form communications in Subpart C of this Part, that is 
made by or on behalf of a federally-insured credit union, that is 
intended to be read by two or more credit union members, and that 
mentions share insurance conversion or termination. The term includes 
communications delivered or made available before, during, and after 
the credit union board of directors decides to seek conversion or 
termination. The

[[Page 45284]]

term includes, but is not limited to, communications delivered or made 
available by mail, e-mail, and internet website posting.
    (i) State credit union means any credit union organized and 
operated according to the laws of any state, the several territories 
and possessions of the United States, or the Commonwealth of Puerto 
Rico. Accordingly, state authority means the appropriate state or 
territorial regulatory or supervisory authority for any such credit 
union.
    (j) Terminate, termination, and terminating, when used in reference 
to insurance, refer to the act of canceling federal insurance and mean 
that the credit union will become uninsured.
    (k) Uninsured means there is no share or deposit insurance 
available on the credit union accounts.

Subpart A--Mergers


Sec.  708b.101  Mergers generally.

    (a) In any case where a merger will result in the termination of 
federal insurance or conversion to nonfederal insurance, the merging 
credit union must comply with the provisions of Subparts B and C in 
addition to this Subpart A.
    (b) A federally-insured credit union must have the prior written 
approval of the NCUA before merging with any other credit union.
    (c) Where the continuing credit union is a federal credit union, it 
must be in compliance with the chartering policies of the NCUA.
    (d) Where the continuing or merging credit union is a state credit 
union, the merger must be permitted by state law or authorized by the 
state authority.
    (e) Where both the merging and continuing credit unions are 
federally-insured and the two credit unions have overlapping fields of 
membership, the continuing credit union must, within three months after 
completion of the merger, either:
    (1) Notify all members of the continuing credit union of the 
potential loss of insurance coverage if they had overlapping 
membership, (2) Notify all individuals and entities that were actually 
members of both credit unions of the potential loss of insurance 
coverage, or
    (3) Determine which members of both credit unions may actually have 
uninsured funds six months after the merger and notify those members of 
the potential loss of insurance coverage.


Sec.  708b.102  Special provisions for federal insurance.

    (a) Where the continuing credit union is federally-insured, the 
NCUSIF will assess a deposit and a prorated insurance premium (unless 
waived in whole or in part for all insured credit unions during that 
year) on the additional share accounts insured as a result of the 
merger of a nonfederally-insured or uninsured credit union with a 
federally-insured credit union.
    (b) Where the continuing credit union is nonfederally-insured or 
uninsured but desires to be federally-insured as of the date of the 
merger, it must submit an application to the appropriate Regional 
Director when the merging credit union requests approval of the merger 
proposal. If the Regional Director approves the merger, the NCUSIF will 
assess a deposit and a prorated insurance premium (unless waived in 
whole or in part for all insured credit unions during that year) on any 
additional share accounts insured as a result of the merger.
    (c) Where the continuing credit union is nonfederally-insured or 
uninsured and does not make application for insurance, but the merging 
credit union is federally-insured, the continuing credit union is 
entitled to a refund of the merging credit union's NCUSIF deposit and 
to a refund of the unused portion of the NCUSIF share insurance premium 
(if any). If the continuing credit union is uninsured, the NCUSIF will 
make the refund only after expiration of the one-year period of 
continued insurance coverage noted in subsection (e) of this section.
    (d) Where the continuing credit union is nonfederally-insured, 
NCUSIF insurance of the member accounts of a merging federally-insured 
credit union ceases as of the effective date of the merger.
    (e) Where the continuing credit union is uninsured, NCUSIF 
insurance of the member accounts of the merging federally-insured 
credit union will continue for a period of one year, subject to the 
restrictions in Section 206(d)(1) of the Act.


Sec.  708b.103  Preparation of merger plan.

    (a) Upon the approval of a proposition for merger by the boards of 
directors of the credit unions, the two credit unions must prepare a 
plan for the proposed merger that includes:
    (1) Current financial statements for both credit unions;
    (2) Current delinquent loan summaries and analyses of the adequacy 
of the Allowance for Loan and Lease Losses account;
    (3) Consolidated financial statements, including an assessment of 
the generally accepted accounting principles (GAAP) net worth of each 
credit union before the merger and the GAAP net worth of the continuing 
credit union after the merger;
    (4) Analyses of share values;
    (5) Explanation of any proposed share adjustments;
    (6) Explanation of any provisions for reserves, undivided earnings 
or dividends;
    (7) Provisions with respect to notification and payment of 
creditors;
    (8) Explanation of any changes relative to insurance such as life 
savings and loan protection insurance and insurance of member accounts;
    (9) Provisions for determining that all assets and liabilities of 
the continuing credit union will conform with the requirements of the 
Act (where the continuing credit union is a federal credit union); and
    (10) Proposed charter amendments (where the continuing credit union 
is a federal credit union). These amendments, if any, will usually 
pertain to the name of the credit union and the definition of its field 
of membership.
    (b) [Reserved.]


Sec.  708b.104  Submission of merger proposal to the NCUA.

    (a) Upon approval of the merger plan by the boards of directors of 
the credit unions, the credit unions must submit the following 
information to the Regional Director:
    (1) The merger plan, as described in this Part;
    (2) Resolutions of the boards of directors;
    (3) Proposed Merger Agreement;
    (4) Proposed Notice of Special Meeting of the Members (for merging 
federal credit unions);
    (5) Copy of the form of Ballot to be sent to the members (for 
merging federal credit unions);
    (6) Evidence that the state's supervisory authority approves the 
merger proposal (for states that require such agreement before NCUA 
approval);
    (7) Application and Agreement for Insurance of Member Accounts (for 
continuing state credit unions desiring to become federally-insured);
    (8) If the merging credit union has $50 million or more in assets 
on its latest call report, a statement about whether the two credit 
unions intend to make a Hart-Scott-Rodino Act premerger notification 
filing with the Federal Trade Commission and, if not, an explanation 
why not; and
    (9) For mergers where the continuing credit union is not federally-
insured and will not apply for federal insurance:
    (i) A written statement from the continuing credit union that it 
``will fully comply with the requirements of 12 U.S.C. 1831t(b), 
including all

[[Page 45285]]

notification and acknowledgment requirements''; and
    (ii) Proof that the accounts of the credit union will be accepted 
for coverage by the nonfederal insurer (if the credit union will have 
nonfederal insurance).


Sec.  708b.105  Approval of merger proposal by the NCUA.

    (a) In any case where the continuing credit union is federally-
insured and the merging credit union is nonfederally-insured or 
uninsured, the NCUA will determine the potential risk to the NCUSIF.
    (b) If the NCUA finds that the merger proposal complies with the 
provisions of this Part and does not present an undue risk to the 
NCUSIF, it may approve the proposal subject to any other specific 
requirements as it may prescribe to fulfill the intended purposes of 
the proposed merger. For mergers of federal credit unions into 
federally-insured credit unions, if the NCUA determines that the 
merging credit union is in danger of insolvency and that the proposed 
merger would reduce the risk or avoid a threatened loss to the NCUSIF, 
the NCUA may permit the merger to become effective without an 
affirmative vote of the membership of the merging credit union 
otherwise required by Sec.  708b.106 of this Part.
    (c) NCUA may approve any proposed charter amendments for a 
continuing federal credit union contingent upon the completion of the 
merger. All charter amendments must be consistent with NCUA chartering 
policy.


Sec.  708b.106  Approval of the merger proposal by members.

    (a) When the merging credit union is a federal credit union, the 
members must:
    (1) Have the right to vote on the merger proposal in person at the 
annual meeting, if within 60 days after NCUA approval, or at a special 
meeting to be called within 60 days of NCUA approval, or by mail 
ballot, received no later than the date and time announced for the 
annual meeting or the special meeting called for that purpose.
    (2) Be given advance notice of the meeting in accordance with the 
provisions of Article IV, Meetings of Members, Federal Credit Union 
Bylaws. The notice must:
    (i) Specify the purpose of the meeting and the time and place;
    (ii) Contain a summary of the merger plan, including, but not 
necessarily limited to, current financial statements for each credit 
union, a consolidated financial statement for the continuing credit 
union, analyses of share values, explanation of any proposed share 
adjustments, explanation of any changes relative to insurance such as 
life savings and loan protection insurance and insurance of member 
accounts;
    (iii) State reasons for the proposed merger;
    (iv) Provide name and location, including branches, of the 
continuing credit union;
    (v) Inform the members that they have the right to vote on the 
merger proposal in person at the meeting or by written ballot to be 
received no later than the date and time announced for the annual 
meeting or the special meeting called for that purpose; and
    (vi) Be accompanied by a Ballot for Merger Proposal.
    (b) Approval of a proposal to merge a federal credit union into a 
federally-insured credit union requires the affirmative vote of a 
majority of the members of the merging credit union who vote on the 
proposal. If the continuing credit union is uninsured or nonfederally-
insured, the voting requirements of subpart B apply. If the continuing 
credit union is nonfederally-insured, the merging credit union must use 
the form notice and ballot in Subpart C of this Part unless the 
Regional Director approves the use of different forms.


Sec.  708b.107  Certificate of vote on merger proposal.

    The board of directors of the merging federal credit union must 
certify the results of the membership vote to the Regional Director 
within 10 days after the vote is taken. The certification must include 
the total number of members of record of the credit union, the number 
who voted on the merger, the number who voted in favor, and the number 
who voted against. If the continuing credit union is nonfederally-
insured, the merging credit union must use the certification form in 
Subpart C of this Part unless the Regional Director approves the use of 
a different form.


Sec.  708b.108  Completion of merger.

    (a) Upon approval of the merger proposal by the NCUA and by the 
state supervisory authority (where the continuing or merging credit 
union is a state credit union) and by the members of each credit union 
where required, the credit unions may complete the merger.
    (b) Upon completion of the merger, the board of directors of the 
continuing credit union must certify the completion of the merger to 
the Regional Director within 30 days after the effective date of the 
merger.
    (c) Upon the NCUA's receipt of certification that the merger has 
been completed, the NCUA will cancel the charter of the merging federal 
credit union (if applicable) and the insurance certificate of any 
merging federally-insured credit union.

Subpart B--Voluntary Termination or Conversion of Insured Status


Sec.  708b.201  Termination of insurance.

    (a) A state credit union may terminate federal insurance, if 
permitted by state law, either on its own or by merging into an 
uninsured credit union.
    (b) A federal credit union may terminate federal insurance only by 
merging into, or converting its charter to, an uninsured state credit 
union.
    (c) A majority of the credit union's members must approve a 
termination of insurance by affirmative vote. The credit union must use 
an independent entity to collect and tally the votes and certify the 
results for all terminations, including terminations that involve a 
merger or charter conversion. The vote must also be taken by secret 
ballot, meaning that no credit union employee or official can determine 
how a particular member voted.
    (d) Termination of federal insurance requires the NCUA's prior 
written approval. A credit union must notify the NCUA and request 
approval of the termination through the Regional Director in writing at 
least 90 days before the proposed termination date and within one year 
after obtaining the membership vote. The notice to the NCUA must 
include:
    (1) A written statement from the credit union that it ``will fully 
comply with the requirements of 12 U.S.C. 1831t(b), including all 
notification and acknowledgment requirements;'' and
    (2) A certification of the member vote. The certification must 
include the total number of members of record of the credit union, the 
number who voted in favor of the termination, and the number who voted 
against.
    (e) The NCUA will approve or disapprove the termination in writing 
within 90 days after being notified by the credit union.


Sec.  708b.202  Notice to members of proposal to terminate insurance.

    (a) When the board of directors of a federally-insured credit union 
adopts a resolution proposing to terminate federal insurance, including 
termination due to a merger or conversion of charter, it must provide 
its members with written notice of the proposal to terminate and of the 
date set for the membership vote. The first written communication 
following the resolution that is made by or on behalf of the credit

[[Page 45286]]

union and that informs the members that the credit union will seek 
termination is the notice of the proposal to terminate. This notice 
must:
    (1) Inform the members of the requirement for a membership vote and 
the date for the vote;
    (2) Explain that the insurance provided by the NCUA is federal 
insurance and is backed by the full faith and credit of the United 
States government; and
    (3) Include a conspicuous statement that if the termination or 
merger is approved, and the credit union, or the continuing credit 
union in the case of a merger, subsequently fails, the federal 
government does not guarantee the member will get his or her money 
back.
    (b) The credit union must deliver the notice in person to each 
member, or mail it to each member at the address for the member as it 
appears on the records of the credit union, not more than 30 nor less 
than 7 days before the date of the vote. The membership must be given 
the opportunity to vote by mail ballot. The credit union may provide 
the notice of the proposal and the ballot to members at the same time.
    (c) If the membership and the NCUA approve the proposition for 
termination of insurance, the credit union must give the members prompt 
and reasonable notice of termination.


Sec.  708b.203  Conversion of insurance.

    (a) A federally-insured state credit union may convert to 
nonfederal insurance, if permitted by state law, either on its own or 
by merging into a nonfederally-insured credit union.
    (b) A federal credit union may convert to nonfederal insurance only 
by merging into, or converting its charter to, a nonfederally-insured 
state credit union.
    (c) Conversion to nonfederal insurance requires the prior written 
approval of the NCUA. After the credit union board of directors 
resolves to seek a conversion, the credit union must notify the 
Regional Director promptly, in writing, of the desired conversion and 
request NCUA approval of the conversion. The notification must be in 
the form specified in Subpart C of this part, unless the Regional 
Director approves a different form. The credit union must provide this 
notification and request for approval to the Regional Director at least 
14 days before the credit union notifies it members and seeks their 
vote and at least 90 days before the proposed conversion date.
    (d) Approval of a conversion of federal to nonfederal insurance 
requires the affirmative vote of a majority of the credit union's 
members who vote on the proposition, provided at least 20 percent of 
the total membership participates in the voting. The credit union must 
use an independent entity to collect and tally the votes and certify 
the results for all conversions, including conversions that involve a 
charter conversion or merger. The vote must be taken by secret ballot, 
meaning that no credit union employee or official can determine how a 
particular member voted.
    (e) For all conversions, the notice to the NCUA must include:
    (1) A written statement from the credit union that it ``will fully 
comply with the requirements of 12 U.S.C. 1831t(b), including all 
notification and acknowledgment requirements;'' and
    (2) Proof that the nonfederal insurer is authorized to issue share 
insurance in the state where the credit union is located and that the 
insurer will insure the credit union.
    (f) The board of directors of the credit union and the independent 
entity that conducts the membership vote must certify the results of 
the membership vote to the NCUA within 10 days after the deadline for 
receipt of votes. The certification must include the total number of 
members of record of the credit union, the number who voted on the 
conversion, the number who voted in favor of the conversion, and the 
number who voted against. The certification must be in the form 
specified in Subpart C of this Part.
    (g) Generally, the NCUA will approve or disapprove the conversion 
in writing within 14 days after receiving the certification of the 
vote.
    (h) For conversions by merger, the merging credit unions must 
follow the procedures specified in Subparts A and B of this Part and 
use the forms specified in Subpart C of this Part. In the event the 
procedures of Subpart A and B conflict, the credit union must follow 
Subpart B.


Sec.  708b.204  Notice to members of proposal to convert insurance.

    (a) When the board of directors of a federally-insured credit union 
adopts a resolution proposing to convert from federal to nonfederal 
insurance, including an insurance conversion associated with a merger 
or conversion of charter, it must provide its members with written 
notice of the proposal to convert insurance and of the date set for the 
membership vote. The first written communication following this 
resolution that is made by or on behalf of the credit union and that 
informs the members that the credit union will seek conversion of 
insurance is the notice of the proposal to convert. This notice must:
    (1) Inform the members of the requirement for a membership vote and 
the date for the vote;
    (2) Explain that the insurance provided by the NCUA is federal 
insurance and is backed by the full faith and credit of the United 
States government, while the insurance provided by the nonfederal 
insurer is not guaranteed by the federal or any state government;
    (3) Include a conspicuous statement that if the conversion or 
merger is approved, and the credit union, or the continuing credit 
union in the case of a merger, subsequently fails, the federal 
government does not guarantee the member will get his or her money 
back;
    (4) Inform the members that if the conversion or merger is 
approved, the credit union will permit members that have share 
certificates or other term accounts at the credit union to close those 
accounts before the effective date of the merger without any early 
withdrawal penalty; and
    (5) Be in the form set forth in Subpart C of this Part, unless the 
Regional Director approves a different form.
    (b) The credit union must deliver the notice in person to each 
member or mail it to each member at the address for the member as it 
appears on the records of the credit union, not more than 30 nor less 
than 7 days before the date for the vote. The credit union must give 
the membership the opportunity to vote by mail ballot. The form of the 
ballot must be as set forth in Subpart C of this Part, unless the 
Regional Director approves the use of a different form. The notice of 
the proposal and the ballot may be provided to the members at the same 
time.
    (c) If the membership and the NCUA approve the proposition for 
conversion of insurance, the credit union will give prompt and 
reasonable notice to the membership. The notice must identify the 
effective date of the conversion, and include a conspicuous statement 
that:
    (1) The conversion will result in the loss of federal share 
insurance, and
    (2) The credit union will, at any time before the effective date of 
conversion, permit all members who have share certificates or other 
term accounts to close those accounts without an early withdrawal 
penalty.


Sec.  708b.205  Modifications to notice.

    (a) Any modifications or additions to the notices, ballots, or 
certifications as provided in Subpart C of this Part may be made only 
with the prior written approval of the Regional Director and, in the 
case of a state credit union, also require the approval of the 
appropriate state authority. For information directed

[[Page 45287]]

to members, the Regional Director may withhold approval of such 
modifications or additions if he or she determines that the credit 
union, by inclusion or omission of information, would materially 
mislead or misinform its membership.
    (b) Federally-insured state credit unions may include additional 
language in the notice and ballot regarding state requirements for 
mergers, where appropriate.


Sec.  708b.206  Share insurance communications to members.

    (a) Every share insurance communication must comply with Sec.  
740.2 of this Chapter, which, in part, prohibits federally-insured 
credit unions from making any representation that is inaccurate or 
deceptive in any particular.
    (b) Every share insurance communication about share insurance 
conversion must contain the following conspicuous statement: ``IF YOU 
ARE A MEMBER OF THIS CREDIT UNION, YOUR ACCOUNTS ARE CURRENTLY INSURED 
BY THE NATIONAL CREDIT UNION ADMINISTRATION, A FEDERAL AGENCY. THIS 
FEDERAL INSURANCE IS BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED 
STATES GOVERNMENT. IF THE CREDIT UNION CONVERTS TO PRIVATE INSURANCE 
AND THE CREDIT UNION FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE 
THAT YOU WILL GET YOUR MONEY BACK.'' The statement must:
    (1) Appear on the first page of the communication where conversion 
is discussed and, if the communication is on an internet website 
posting, must be visible without scrolling; and
    (2) Must be in capital letters, bolded, offset from the other text 
by use of a border, and at least one font size larger than any other 
text (exclusive of headings) used in the communication.
    (c) Every share insurance communication about share insurance 
termination must contain the following conspicuous statement: ``IF YOU 
ARE A MEMBER OF THIS CREDIT UNION, YOUR ACCOUNTS ARE CURRENTLY INSURED 
BY THE NATIONAL CREDIT UNION ADMINISTRATION, A FEDERAL AGENCY. THIS 
FEDERAL INSURANCE IS BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED 
STATES GOVERNMENT. IF THE CREDIT UNION TERMINATES ITS FEDERAL INSURANCE 
AND THE CREDIT UNION FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE 
THAT YOU WILL GET YOUR MONEY BACK.'' The statement must:
    (1) Appear on the first page of the communication where termination 
is discussed and, if the communication is on an internet website 
posting, must be visible without scrolling; and
    (2) Must be in capital letters, bolded, offset from the other text 
by use of a border, and at least one font size larger than any other 
text (exclusive of headings) used in the communication.
    (d) Any share insurance communication that will be made during the 
voting period may be made only with the prior written approval of the 
Regional Director and, in the case of a state credit union, also with 
the approval of the appropriate state authority. The Regional Director 
may withhold approval of such communications if he or she determines 
that the communication, by inclusion or omission of information, would 
materially mislead or misinform the credit union's membership. For 
purposes of this paragraph, the voting period begins on the date of the 
board of director's resolution to seek conversion or termination and 
ends on the date the member voting closes.

Subpart C--Forms


Sec.  708b.301  Conversion of insurance (State Chartered Credit Union).

    Unless the Regional Director approves the use of different forms, a 
state chartered credit union must use the forms in this section in 
connection with a conversion to nonfederal insurance.
    (a) Form letter notifying NCUA of intent to convert:

(insert name), NCUA Regional Director

(insert address of NCUA Regional Director)

Re: Notice of Intent to Convert to Private Share Insurance

Dear Director (insert name):
    In accordance with federal law at Title 12, United States Code 
Section 1785(b)(1)(D), I request the National Credit Union 
Administration approve the conversion of (insert name of credit 
union) from federal share insurance to private primary share 
insurance with (insert name of private insurance company).
    On (insert date), the board of directors of (insert name of 
credit union) resolved to pursue the conversion from federal 
insurance to private insurance. A copy of the resolution is 
enclosed.
    On (insert date), the credit union plans to solicit the vote of 
our members on the conversion. The credit union will employ (insert 
name, address, and telephone number of independent entity) to 
conduct the member vote. The credit union will use the form notice 
and ballot required by NCUA regulations, and will certify the 
results to NCUA as required by NCUA regulations.
    Aside from the notice and ballot, the credit union (does)(does 
not) intend to provide its members with additional written 
information about the conversion. I understand that NCUA regulations 
forbid any communications to members, including communications about 
NCUA insurance or private insurance, that are inaccurate or 
deceptive. I have enclosed copies of all draft communications that, 
under NCUA regulations, require your review and approval.
    (Insert name of State) allows credit unions to obtain primary 
share insurance from (insert name of private insurance company). I 
have enclosed a copy of a letter from (insert name and title of 
state regulator) establishing that (insert name of private insurer) 
has the authority to provide (insert name of credit union) with 
primary share insurance.
    I have enclosed a copy of a letter from (insert name of private 
insurer) indicating it has accepted (insert name of credit union) 
for primary share insurance and will insure the credit union 
immediately upon the date that it loses its federal share insurance.
    You have my assurances that, in connection with the proposed 
conversion of (insert name of credit union) to private share 
insurance, the credit union will fully comply with all the notice, 
disclosure, and acknowledgment requirements of 12 U.S.C. 1831t(b). 
Upon conversion, the credit union will keep the Federal Trade 
Commission apprised of its efforts to comply with section 1831t(b).
    The point of contact for conversion matters is (insert name and 
title of credit union employee), who can be reached at (insert 
telephone number).

     Sincerely,

(signature)

Chief Executive Officer.

Enclosures

    (b) Form notice to members of intent to convert and special meeting 
of members:

Notice of Proposal to Convert to Nonfederally-insured Status and 
Special Meeting of Members

(Insert Name of Converting Credit Union)

    On (insert date), the board of directors of your credit union 
approved a proposition to convert from federal share (deposit) 
insurance to nonfederal insurance. You are encouraged to attend a 
special meeting of our credit union at (insert address) on (insert 
time and date) to address this proposition.

Purpose of Meeting

    The meeting has two purposes:
    1. To consider and act upon a proposal to convert your account 
insurance from federal insurance to private insurance.
    2. To approve the action of the Board of Directors in 
authorizing the officers of the credit union to carry out the 
proposed conversion.

Insurance Conversion

    Currently, your accounts have share insurance provided by the 
National Credit Union Administration, an agency of the

[[Page 45288]]

federal government. The basic federal coverage is up to $100,000, 
but accounts may be structured in different ways, such as joint 
accounts, payable-on-death accounts, or IRA accounts, to achieve 
federal coverage of much more than $100,000. If the conversion is 
approved, your federal insurance will terminate on the effective 
date of the conversion. Instead, your accounts in the credit union 
will instead be insured up to $(insert dollar amount) by (insert 
name of insurer), a corporation chartered by the State of (insert 
name of State). The federal insurance provided by the National 
Credit Union Administration is backed by the full faith and credit 
of the United States government. The private insurance you will 
receive from (insert name of insurer), however, is not guaranteed by 
the federal or any state or local government.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
  IF THIS CONVERSION IS APPROVED, AND THE (insert name of credit union)
 
      FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL GET
 
                            YOUR MONEY BACK.
 
------------------------------------------------------------------------

    Also, because this conversion, if approved, would result in the 
loss of federal share insurance, the credit union will, at any time 
after approval of the conversion and before the effective date of 
conversion, permit all members who have share certificates or other 
term accounts to close those accounts without an early withdrawal 
penalty.
    The board of directors has concluded that the proposed 
conversion is desirable for the following reasons: (insert reasons). 
(This is an optional paragraph. If it is used, the proposed language 
must be submitted to the Regional Director for approval).
    The proposed conversion will result in the following one-time 
cost associated with the conversion: (List the total estimated 
dollar amount, including (1) the cost of conducting the vote, (2) 
the cost of changing the credit union's name and insurance logo, and 
(3) attorney and consultant fees.) The conversion must have the 
approval of a majority of members who vote on the proposal, provided 
at least 20 percent of the total membership participates in the 
voting.
    Enclosed with this Notice of Special Meeting is a ballot. If you 
cannot attend the meeting, please complete the ballot and return it 
to (insert name and address of independent entity conducting the 
vote) by no later than (insert time and date). To be counted, your 
ballot must reach us by that date and time.
    By order of the board of directors.

(signature of Board Presiding Officer)

(insert title and date)

    (c) Form ballot:

Ballot for Conversion to Nonfederally-insured Status

(Insert Name of Converting Credit Union)

Name of Member: (insert name)
Account Number: (insert account number)

    The credit union must receive this ballot by (insert date and 
time for vote). Please mail or bring it to: (Insert name of 
independent entity and address)
    I understand if the conversion of the (insert name of credit 
union) is approved, the National Credit Union Administration share 
(deposit) insurance I now have, up to $100,000, or possibly more if 
I use different accounts structures, will terminate upon the 
effective date of the conversion. Instead, my shares in the (insert 
name of credit union) will be insured up to $(insert dollar amount) 
by (insert name of insurer), a corporation chartered by the State of 
(insert name of state). The federal insurance provided by the 
National Credit Union Administration is backed by the full faith and 
credit of the United States Government. The private insurance 
provided by (insert name of insurer) is not.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
    I FURTHER UNDERSTAND THAT IF THIS CONVERSION IS APPROVED, AND THE
 
  (insert name of credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT
 
                GUARANTEE THAT I WILL GET MY MONEY BACK.
 
------------------------------------------------------------------------

    I vote on the proposal as follows (check one box):
    [ ] Approve the conversion to private insurance and authorize 
the Board of Directors to take all necessary action to accomplish 
the conversion.
    [ ] DO NOT approve the conversion to private insurance.

Signed-----------------------------------------------------------------
     (Insert printed member's name)
Date:------------------------------------------------------------------

    (d) Form certification of member vote to NCUA:

Certification of Vote on Conversion to Nonfederally-insured Status

    We, the undersigned officers of the (insert name of converting 
credit union), certify the completion of the following actions:
    1. At a meeting on (insert date), the Board of Directors adopted 
a resolution to seek the conversion of our primary share insurance 
coverage from NCUA to (insert name of private insurer).
    2. Not more than 30 nor less than 7 days before the date of the 
vote, copies of the notice of special meeting and the ballot, as 
approved by the National Credit Union Administration, were mailed to 
our members.
    3. The credit union arranged for the conduct of a special 
meeting of our members at the time and place announced in the Notice 
to consider and act upon the proposed conversion.
    4. At the special meeting, the credit union arranged for an 
explanation of the conversion to the members present at the special 
meeting.
    5. (Insert name), an entity independent of the credit union, 
conducted the membership vote at the special meeting. The members 
voted as follows:
    (insert) Number of total members
    (insert) Number of members present at the special meeting
    (insert) Number of members present who voted in favor of the 
conversion
    (insert) Number of members present who voted against the 
conversion
    (insert) Number of additional written ballots in favor of the 
conversion
    (insert) Number of additional written ballots opposed to the 
conversion
    (insert ``20% or more'') OR (insert ``Less than 20%'') of the 
total membership voted. Of those who voted, a majority voted (inset 
``in favor of'') OR (``against'') conversion.
    The action of the members at the special meeting was recorded in 
the minutes.
    This certification signed the (insert date).

(signature of Board Presiding Officer)
(insert typed name and title)
(signature of Board Secretary)
(insert typed name and title)

    I (insert name), an officer of the (insert name of independent 
entity that conducted the vote), hereby certify that the information 
recorded in paragraph 5 above is accurate.
    This certification signed the (insert date):

(signature of officer of independent entity)(typed name, title, and 
phone number)


Sec.  708b.302  Conversion of Insurance (Federal Credit Union).

    Unless the Regional Director approves the use of different forms, a 
federal credit union must use the following forms in this section in 
connection with a conversion to a nonfederally-insured state charter.

[[Page 45289]]

    (a) Form letter notifying NCUA of intent to convert:

(insert name), NCUA Regional Director
(insert address of NCUA Regional Director)
Re: Notice of Intent to Convert to State Charter and to Private 
Share Insurance

Dear Director (insert name):
    In accordance with federal law at Title 12, United States Code 
Section 1785(b)(1)(D), I request the National Credit Union 
Administration approve the conversion of (insert name of federal 
credit union) to a state charter in (insert name of state) and from 
federal share insurance to private primary share insurance with 
(insert name of private insurance company).
    On (insert date), the board of directors of (insert name of 
credit union) resolved to pursue the charter conversion and the 
conversion from federal insurance to private insurance. A copy of 
the resolution is enclosed.
    On (insert date), the credit union plans to solicit the vote of 
our members on the conversion. The credit union will employ (insert 
name, address, and telephone number of independent entity) to 
conduct the member vote. The credit union will use the form notice 
and ballot required by NCUA regulations, and will certify the 
results to NCUA as required by NCUA regulations.
    Aside from the notice and ballot, the credit union (does)(does 
not) intend to provide our members with additional written 
information about the conversion. I understand that NCUA regulations 
forbid any communications to members, including communications about 
NCUA insurance or private insurance, that are inaccurate or 
deceptive. I have enclosed copies of all draft communications that, 
under NCUA regulations, require your review and approval.
    I have enclosed a copy of a letter from (insert name and title 
of state regulator) indicating approval of our conversion to a state 
charter.
    (Insert name of State) allows credit unions to obtain primary 
share insurance from (insert name of private insurance company). I 
have enclosed a copy of a letter from (insert name and title of 
state regulator) establishing that (insert name of private insurer) 
has the authority to provide (insert name of credit union), after 
conversion to a state charter, with primary share insurance.
    I have enclosed a copy of a letter from (insert name of private 
insurer) indicating it has accepted (insert name of credit union) 
for primary share insurance and will insure the credit union 
immediately upon the date that it loses its federal share insurance.
    You have my assurances that, in connection with the proposed 
conversion of (insert name of credit union) to a state charter and 
to private share insurance, the credit union will fully comply with 
all the notice, disclosure, and acknowledgment requirements of 12 
U.S.C. 1831t(b). Upon conversion, the credit union will keep the 
Federal Trade Commission apprised of its efforts to comply with 
section 1831t(b).
    Enclosed you will also find other information required by NCUA's 
Chartering and Field of Membership Manual, Chapter 4, Sec.  III.C.
    The point of contact for conversion matters is (insert name and 
title of credit union employee), who can be reached at (insert 
telephone number).

     Sincerely,

(signature),
Chief Executive Officer.

Enclosures
    (b) Form notice to members of intent to convert and special meeting 
of members:

Notice of Proposal to Convert to a State Charter and to Nonfederally-
insured Status and Special Meeting of Members

(Insert name of converting credit union)

    On (insert date), the board of directors of your credit union 
approved a proposition to convert from federal share (deposit) 
insurance to nonfederal insurance and to convert from a federal 
credit union to a state-chartered credit union. You are encouraged 
to attend a special meeting of our credit union at (insert address) 
on (insert time and date) to address this proposition.

Purpose of Meeting

    The meeting has two purposes:
    1. To consider and act upon a proposal to convert your credit 
union from a federal charter to a state charter and your account 
insurance from federal insurance to private insurance.
    2. To approve the action of the Board of Directors in 
authorizing the officers of the credit union to carry out the 
proposed conversion.

Insurance Conversion

    Currently, your accounts have share insurance provided by the 
National Credit Union Administration, an agency of the federal 
government. The basic federal coverage is up to $100,000, but 
accounts may be structured in different ways, such as joint 
accounts, payable-on-death accounts, or IRA accounts, to achieve 
federal coverage of much more than $100,000. If the conversion is 
approved, your federal insurance will terminate on the effective 
date of the conversion. Instead, your accounts in the credit union 
will instead be insured up to $(insert dollar amount) by (insert 
name of insurer), a corporation chartered by the State of (insert 
name of State). The federal insurance provided by the National 
Credit Union Administration is backed by the full faith and credit 
of the United States government. The private insurance you will 
receive from (insert name of insurer), however, is not guaranteed by 
the federal or any state or local government.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
  IF THIS CONVERSION IS APPROVED, AND THE (insert name of credit union)
 
      FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL GET
 
                            YOUR MONEY BACK.
 
------------------------------------------------------------------------

    Also, because this conversion, if approved, would result in the 
loss of federal share insurance, the credit union will, at any time 
after approval of the conversion and before the effective date of 
conversion, permit all members who have share certificates or other 
term accounts to close those accounts without an early withdrawal 
penalty.
    The board of directors has concluded that the proposed 
conversion is desirable for the following reasons: (insert reasons) 
(This is an optional paragraph. If it is used, and if it makes 
reference to the insurance conversion, the proposed language must be 
submitted to the Regional Director for approval).
    The proposed conversion will result in the following one-time 
cost associated with the conversion: (List the total estimated 
dollar amount, including (1) the cost of conducting the vote, (2) 
the cost of changing the credit union's name and insurance logo, and 
(3) attorney and consultant fees.) The conversion must have the 
approval of a majority of members who vote on the proposal, provided 
at least 20 percent of the total membership participates in the 
voting.
    Enclosed with this Notice of Special Meeting is a ballot. If you 
cannot attend the meeting, please complete the ballot and return it 
to (insert name and address of independent entity conducting the 
vote) by no later than (insert time and date). To be counted, your 
ballot must reach us by that date and time.
    By order of the board of directors.

(signature of Board Presiding Officer)

(insert title and date)
    (c) Form ballot:

Ballot for Conversion to State Charter and Nonfederally-insured Status

(Insert name of converting credit union)

Name of Member: (insert name)
Account Number: (insert account number)

    The credit union must receive this ballot by (insert date and 
time for vote). Please mail or bring it to: (Insert name of 
independent entity and address)
    I understand if the conversion of the (insert name of credit 
union) is approved, the National Credit Union Administration share 
(deposit) insurance I now have, up to $100,000, or possibly more if 
I use different accounts structures, will terminate upon the 
effective date of the conversion. Instead, my

[[Page 45290]]

shares in the (insert name of credit union) will be insured up to 
$(insert dollar amount) by (insert name of insurer), a corporation 
chartered by the State of (insert name of state). The federal 
insurance provided by the National Credit Union Administration is 
backed by the full faith and credit of the United States Government. 
The private insurance provided by (insert name of insurer) is not.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
     I FURTHER UNDERSTAND THAT, IF THIS CONVERSION IS APPROVED, AND
 
  THE (insert name of credit union) FAILS, THE FEDERAL GOVERNMENT DOES
 
              NOT GUARANTEE THAT I WILL GET MY MONEY BACK.
 
------------------------------------------------------------------------

    I vote on the proposal as follows (check one box):
    [ ] Approve the conversion of charter and conversion to private 
insurance and authorize the Board of Directors to take all necessary 
action to accomplish the conversion.
    [ ] DO NOT approve the conversion of charter and the conversion 
to private insurance.

Signed-----------------------------------------------------------------
     (Insert printed member's name)
Date:------------------------------------------------------------------

    (d) Form certification to NCUA of member vote:
    Certification of Vote on Conversion to State Charter and 
Nonfederally-insured Status
    We, the undersigned officers of the (insert name of converting 
credit union), certify the completion of the following actions:
    1. At a meeting on (insert date), the Board of Directors adopted 
a resolution to seek the conversion of our credit union to a state 
charter and the conversion of our primary share insurance coverage 
from NCUA to (insert name of private insurer).
    2. Not more than 30 nor less than 7 days before the date of the 
vote, copies of the notice of special meeting and ballot, as 
approved by the National Credit Union Administration, were mailed to 
our members.
    3. The credit union arranged for the conduct of a special 
meeting of our members at the time and place announced in the Notice 
to consider and act upon the proposed conversion.
    4. At the special meeting, the credit union arranged for an 
explanation of the conversion to the members present at the special 
meeting.
    5. (Insert name), an entity independent of the credit union, 
conducted the membership vote at the special meeting. The members 
voted as follows:
    (insert) Number of total members
    (insert) Number of members present at the special meeting
    (insert) Number of members present who voted in favor of the 
conversion
    (insert) Number of members present who voted against the 
conversion
    (insert) Number of additional written ballots in favor of the 
conversion
    (insert) Number of additional written ballots opposed to the 
conversion
    (insert ``20% or more'') OR (insert ``Less than 20%'') of the 
total membership voted. Of those who voted, a majority voted (inset 
``in favor of'') OR (``against'') conversion.
    The action of the members at the special meeting was recorded in 
the minutes.
    This certification signed the (insert date).

(signature of Board Presiding Officer)
(insert typed name and title)
(signature of Board Secretary)
(insert typed name and title)

    I (insert name), an officer of the (insert name of independent 
entity that conducted the vote), hereby certify that the information 
recorded in paragraph 5 above is accurate.
    This certification signed the (insert date):

(signature of officer of independent entity)(typed name, title, and 
phone number)


Sec.  708b.303  Conversion of insurance through merger.

    Unless the Regional Director approves the use of different forms, a 
federally-insured credit union that is merging into a nonfederally-
insured credit union must use the forms in this section.
    (a) Form notice to members of intent to merge and convert and 
special meeting of members:

Notice of Special Meeting on Proposal to Merge and Convert to 
Nonfederally-insured Status

(Insert name of merging credit union)

    On (insert date), the Board of Directors of your credit union 
approved a proposition to merge with (insert name of continuing 
credit union) and to convert from federal share (deposit) insurance 
to nonfederal insurance. You are encouraged to attend a special 
meeting of our credit union at (insert address) on (insert time and 
date).

Purpose of Meeting

    The meeting has two purposes:
    1. To consider and act upon a proposal to merge our credit union 
with (insert name of continuing credit union), the continuing credit 
union.
    2. To approve the action of the Board of Directors of our credit 
union in authorizing the officers of the credit union, subject to 
member approval, to carry out the proposed merger.
    If this merger is approved, our credit union will transfer all 
its assets and liabilities to the continuing credit union. As a 
member of our credit union, you will become a member of the 
continuing credit union. On the effective date of the merger, you 
will receive shares in the continuing credit union for the shares 
you own now in our credit union.

Insurance Conversion

    Currently, your accounts have share insurance provided by the 
National Credit Union Administration, an agency of the federal 
government. The basic federal coverage is up to $100,000, but 
accounts may be structured in different ways, such as joint 
accounts, payable-on-death accounts, or IRA accounts, to achieve 
federal coverage of much more than $100,000. If the merger is 
approved, your federal insurance will terminate on the effective 
date of the merger. Instead, your accounts in the credit union will 
be insured up to $(insert dollar amount) by (insert name of 
insurer), a corporation chartered by the State of (insert name of 
State). The federal insurance provided by the National Credit Union 
Administration is backed by the full faith and credit of the United 
States government. The private insurance you will receive from 
(insert name of insurer), however, is not guaranteed by the federal 
or any state or local government.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
  IF THIS MERGER IS APPROVED AND THE (insert name of continuing credit
 
    union) FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL
 
                          GET YOUR MONEY BACK.
 
------------------------------------------------------------------------

    Also, because this merger, if approved, would result in the loss 
of federal share insurance, the (insert name of merging credit 
union) will, at any time after approval of the merger and before the 
effective date of merger, permit all members who have share 
certificates or other term accounts to close those accounts without 
an early withdrawal penalty.

[[Page 45291]]

Other Information Related to the Proposed Merger

    The directors of the participating credit unions carefully 
analyzed the assets and liabilities of the participating credit 
unions and appraised each credit union's share values. The appraisal 
of the share values appears on the attached individual and 
consolidated financial statements of the participating credit 
unions.
    The directors of the participating credit unions have concluded 
that the proposed merger is desirable for the following reasons: 
(insert reasons) (If any of the reasons are related to the 
conversion from federal to nonfederal insurance, the proposed 
language must be submitted to the Regional Director for approval).
    The Board of Directors of our credit union believes the merger 
should include/not include an adjustment in shares for the following 
reasons: (insert reasons)
    The main office of the continuing credit union will be as 
follows: (insert location)
    The branch office(s) of the continuing credit union will be as 
follows: (insert locations)
    The merger must have the approval of a majority of members who 
vote on the proposal, provided at least 20 percent of the total 
membership participates in the voting.
    Enclosed with this Notice of Special Meeting is a Ballot for 
Merger Proposal and Conversion to Nonfederally-insured Status. If 
you cannot attend the meeting, please complete the ballot and return 
it to (insert name of independent entity conducting vote) at (insert 
mailing address) by no later than (insert date and time). To be 
counted, your ballot must reach (insert name of independent entity 
conducting vote) by the date and time announced for the meeting.
    By order of the board of directors.

(signature of Board Presiding Officer)
(insert name and title of Board Presiding Officer) (insert date)

    (b) Form ballot:

Ballot for Merger Proposal and Conversion to Nonfederally-insured 
Status

Name of Member: (insert name)
Account Number: (insert account number)

    The credit union must receive this ballot by (insert date and 
time for vote). Please mail or bring it to: (Insert name of 
independent entity and address)
    I understand if the merger of conversion of the (insert name of 
merging credit union)into the (insert name of merging credit union 
is approved, the National Credit Union Administration share 
(deposit) insurance I now have, up to $100,000, or possibly more if 
I use different accounts structures, will terminate upon the 
effective date of the conversion. Instead, my shares in the (insert 
name of credit union) will be insured up to $(insert dollar amount) 
by (insert name of insurer), a corporation chartered by the State of 
(insert name of state). The federal insurance provided by the 
National Credit Union Administration is backed by the full faith and 
credit of the United States Government. The private insurance 
provided by (insert name of insurer) is not.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
      I FURTHER UNDERSTAND THAT, IF THIS MERGER IS APPROVED AND THE
 
 (insert name of continuing credit union) FAILS, THE FEDERAL GOVERNMENT
 
            DOES NOT GUARANTEE THAT I WILL GET MY MONEY BACK.
 
------------------------------------------------------------------------

    I vote on the proposal as follows (check one box):
    [ ] Approve the merger and the conversion to private insurance 
and authorize the Board of Directors to take all necessary action to 
accomplish the merger and conversion.
    [ ] DO NOT approve the merger and the conversion to private 
insurance.
Signed-----------------------------------------------------------------
     (Insert printed member's name)
Date:------------------------------------------------------------------

    (c) Form certification of vote:

Certification of Vote on Merger Proposal and Conversion to 
Nonfederally-insured Status of the (Insert name of merging credit 
union)

    We, the undersigned officers of the (insert name of merging 
credit union), certify the completion of the following actions:
    1. At a meeting on (insert date), the Board of Directors adopted 
a resolution approving the merger of our credit union with (insert 
name of continuing credit union).
    2. Not more than 30 nor less than 7 days before the date of the 
vote, copies of the notice of special meeting and the ballot, as 
approved by the National Credit Union Administration, and a copy of 
the merger plan announced in the notice, were mailed to our members.
    3. The credit union arranged for the conduct of a special 
meeting of our members at the time and place announced in the Notice 
to consider and act upon the proposed merger.
    4. At the special meeting, the credit union arranged for an 
explanation of the merger proposal and any changes in federally-
insured status to the members present at the special meeting.
    5. (insert name), an entity independent of the credit union, 
conducted the membership vote at the special meeting. At least 20 
percent of our total membership voted and a majority of voting 
members favor the merger as follows:
    (insert) Number of total members
    (insert) Number of members present at the special meeting
    (insert) Number of members present who voted in favor of the 
merger
    (insert) Number of members present who voted against the merger
    (insert) Number of additional written ballots in favor of the 
merger
    (insert) Number of additional written ballots opposed to the 
merger
    6. The action of the members at the special meeting was recorded 
in the minutes.
    This certification signed the (insert date):

(signature of Board Presiding Officer)
(insert typed name and title)
(signature of Board Secretary)
(insert typed name and title)

    I (insert name), an officer of the (insert name of independent 
entity that conducted the vote), hereby certify that the information 
recorded in paragraph 5 above is accurate.
    This certification signed the (insert date):

(signature of officer of independent entity)(typed name, title, and 
phone number)
[FR Doc. 04-17256 Filed 7-28-04; 8:45 am]
BILLING CODE 7535-01-P