[Federal Register Volume 83, Number 125 (Thursday, June 28, 2018)]
[Rules and Regulations]
[Pages 30301-30314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13867]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701 and 708b

RIN 3133-AE73


Bylaws; Voluntary Mergers of Federally Insured Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board (Board) is revising the procedures a federally 
insured credit union (FICU) must follow to merge voluntarily with 
another FICU. The changes: Revise and clarify the contents and format 
of the member notice; require merging credit unions to disclose certain 
merger-related financial arrangements for covered persons; increase the 
minimum member notice period; and provide a method for members and 
others to submit comments to the NCUA regarding the proposed merger. In 
addition, the NCUA has replaced its Merger Manual with revised model 
forms that conform to the requirements of this rule. The regulations 
now includes these forms.

DATES: This rule is effective October 1, 2018.

FOR FURTHER INFORMATION CONTACT: Elizabeth Wirick, Senior Staff 
Attorney, Office of General Counsel, 1775 Duke Street, Alexandria, VA 
22314-3428 or telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION: 

I. Background

    In June 2017, the Board issued proposed revisions to the NCUA's 
voluntary merger rule.\1\ The proposed rule was designed to address 
shortcomings in the current rule which did not always provide credit 
union members sufficient time to consider the merger or adequately 
communicate all information relevant to the merger decision.
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    \1\ 82 FR 26605 (June 8, 2017).
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    The proposed revisions addressed the timing and contents of the 
notice provided to members of a merging federal credit union (FCU), 
provided FCU members with an opportunity to make their views known to 
the general membership, clarified the material that must be submitted 
to the NCUA for review, and revised definitions. In addition, the 
proposed rule reorganized the current rule to improve readability and 
clarity. These revisions were designed to ensure that a merging FCU's 
member-owners have more complete and accurate information regarding a 
proposed merger, including disclosure of financial arrangements that 
could create potential conflicts of interest. The proposal also sought 
comments on whether the final rule should apply to all merging FICUs 
rather than only to merging FCUs.
    The Board is now finalizing the proposed rule, with some changes. 
The changes significantly narrow the definition of a ``merger-related 
financial arrangement'' that is subject to disclosure, adopt a less 
burdensome method for members to communicate their views on the merger, 
and apply the entire rule to all FICUs.
    The Board received 84 comments on the proposed rule. Seventy of the 
commenters opposed the rule. Of the remaining 14 commenters, eight 
supported the proposed rule, four supported the proposed rule except 
for the member-to-member communication provision, one addressed only 
the question of whether the rule should apply to federally insured, 
state-chartered credit unions (FISCUs), and one requested an extension 
of the comment period.
    In addition to the comments on the proposed rule, the Board has 
also been informed by a more thorough review of voluntary merger 
proposals since early 2017 (merger review). NCUA staff reviewed the 
member disclosure documents and ballot for every merger application 
submitted by an FCU, with an eye toward identifying ongoing issues. The 
direction of the final rule

[[Page 30302]]

reflects the experience and knowledge the NCUA has gained from the 
merger review process.

II. General Comments on Proposed Rule

    The section-by-section summary of the final rule, below, discusses 
comments on specific provisions of the rule. This section explains the 
Board's views on general comments relating to: (1) The nature of the 
NCUA's authority; (2) credit union member-ownership; and (3) the state 
of the merger landscape for credit unions generally.
    The NCUA's authority to regulate mergers: Several commenters 
questioned the NCUA's authority to regulate credit union mergers, or 
suggested that the NCUA's role is limited to safety and soundness 
concerns. These comments are inaccurate. The FCU Act explicitly 
requires the Board's ``prior written approval'' before a FICU merges 
with another FICU.\2\ Moreover, as detailed in the preamble to the 
proposed rule, the FCU Act requires the Board to consider six factors 
in determining whether to approve FICU mergers and other types of 
transactions.\3\ While several of the factors are safety and soundness-
related, the factors also include ``the convenience and needs of the 
members'' and ``whether the credit union is a cooperative association 
organized for the purpose of promoting thrift among its members and 
creating a source of credit for provident or productive purposes.'' \4\ 
Clearly, the FCU Act expects the Board to consider the effect of the 
proposed merger on credit union members and gives the Board authority 
to deny mergers that do not, in its judgment, serve members well.
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    \2\ 12 U.S.C. 1785(b)(3).
    \3\ 82 FR 26605 (June 8, 2017) (citing 12 U.S.C. 1785(c)).
    \4\ 12 U.S.C. 1785(c).
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    Need for a rule change: Many commenters considered the proposed 
rule unnecessary. Twenty-two commenters opined that the NCUA has 
sufficient authority to address any issues related to particular 
mergers under the current rule. Twenty-two commenters also asserted 
that evidence of a widespread problem with mergers was lacking. While 
the Board agrees that the FCU Act and current regulation provide it 
authority to impose requirements on specific merger transactions on a 
case-by-case basis,\5\ it questions whether this is the best approach 
in the long term. Further, the merger review confirmed prior anecdotal 
reports that the current regulation and model forms do not encourage 
clear member disclosures in many situations, particularly in the area 
of insider benefits. The use of terminology that may not be clear to 
all credit union members, combined with the lack of instructions around 
how to disclose merger-related financial arrangements, often resulted 
in disclosures that obscured critical information. The Board has 
determined that adopting a uniform, explicit standard for disclosures, 
with updated regulatory language and a conforming sample form, is a 
more cost-effective and efficient use of agency resources than the 
case-by-case approach it utilized during the merger review.
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    \5\ Id. 1785(b)(3); 12 CFR 708b.105(b).
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    Nature of Credit Union Membership: Several commenters stated that 
while shareholders of public companies can sell their shares of stock 
at any time, credit union members have no right to the net worth of a 
credit union except in liquidation. This assertion ignores the reality 
that hundreds of credit unions annually return excess net worth to 
members via bonus dividends or interest rebates. Further, the fact that 
ownership of a portion of a credit union's net worth is less negotiable 
than a share of stock in a public company is irrelevant at the time of 
a proposed merger transaction. A credit union in good condition has the 
option of voluntary liquidation instead of voluntary merger. In 
recommending a proposed merger transaction, the board of directors of a 
merging credit union has made the determination to transfer its net 
worth to the continuing credit union instead of voluntarily liquidating 
and disbursing the credit union's net worth to its members.
    Factors contributing to mergers: A number of commenters offered 
thoughtful analyses about how conditions, in the credit union industry 
and at the NCUA, tend to favor mergers and disfavor a robust appraisal 
of whether the merger meets the convenience and needs of the credit 
union's members. Several commenters who supported the rule argued that 
mergers have become the NCUA's method to resolve issues such as CEO 
succession and worrisome financial trends. Also, two commenters opposed 
to the rule stated the NCUA should acknowledge that many mergers occur 
because the merging credit union has determined it cannot keep up with 
increasing and changing regulation. The Board agrees that mergers 
should not be the first resort when an otherwise healthy credit union 
faces succession issues or lack of growth. The changes implemented in 
the final rule, particularly to the member notice, will provide members 
the information they need to determine whether the merger meets their 
needs.
    Role of Boards of Directors and the NCUA: Several commenters who 
supported the rule also asserted that the boards of directors of 
merging credit unions were failing to conduct sufficient due diligence 
and that the NCUA was not enforcing its rule on fiduciary duties for 
directors of FCUs. The merger review documented many instances where 
boards of merging credit unions discussed the possibility of a merger 
with multiple credit unions and approached the merger transaction with 
the best interests of their members as the highest priority. For 
example, one merging credit union wrote to nine different CUs, 
soliciting a merger partner, and conducted interviews with 
representatives of the credit unions that submitted the three best 
responses. The Board acknowledges, however, that not all boards of 
directors are as conscientious about fulfilling their fiduciary duties. 
The Board believes that this final rule, which will provide members 
with a more complete and understandable picture of the merger 
transaction, addresses these concerns. The revised member notice 
clearly communicates information about the merging credit union's net 
worth relative to the continuing credit union's net worth and whether 
insiders will be receiving significant payouts from that net worth. The 
revised member notice will also clearly convey how the proposed merger 
will affect access to locations and services. These changes give 
members greater ability to assess whether the proposed merger is in 
their best interests. The Board also confirms that, for merging FCUs, 
the NCUA's Regional Offices must ensure that boards and management have 
fulfilled their fiduciary duties under 12 CFR 701.4.

III. Comments on Specific Provisions of Proposed Rule and Summary of 
Final Rule

A. Applicability to FISCUs

    In the proposed rule, the Board noted that its concerns may not be 
limited to mergers where the merging credit union is an FCU. The plain 
language of section 205 of the FCU Act provides the NCUA with authority 
to approve mergers for all FICUs, not only FCUs.\6\ Accordingly, the 
Board requested specific comments on whether it should use the 
authority in the FCU Act to also apply the rule to merging FISCUs.\7\
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    \6\ 12 U.S.C. 1785(b)(3).
    \7\ 82 FR 26605, 26613 (June 8, 2017).

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[[Page 30303]]

    Thirty-one of the thirty-five commenters addressing this issue 
thought the voluntary merger rule should not apply to merging FISCUs. 
These commenters argued that extending the merger rule's applicability 
to FISCUs was unwarranted because merger procedures are already 
regulated under state law and issues related to voluntary mergers do 
not present a safety and soundness threat.
    The Board disagrees with the majority of commenters. Instead, as 
expressed by a minority of commenters, the Board finds that merger 
transactions may present safety and soundness risks which endanger the 
continuing credit union regardless of whether the merging credit union 
is an FCU or a FISCU. For example, members of a merging credit union 
who discover, after the fact, that they were inadequately informed 
about the details of the merger may become disgruntled. The 
dissatisfied members could create bad publicity, creating a reputation 
risk for the continuing credit union. Unhappy members could also choose 
to stop doing business with the continuing credit union, affecting 
earnings projections. In contrast to commenters' assertions, the 
statutory factors the Board must consider in granting or withholding 
approval of a merger transaction include several factors related to 
safety and soundness, such as the financial condition of the credit 
union,\8\ the adequacy of the credit union's reserves,\9\ the economic 
advisability of the transaction,\10\ and the general character and 
fitness of the credit union's management.\11\
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    \8\ 12 U.S.C. 1785(c)(1).
    \9\ Id. (c)(2).
    \10\ Id. (c)(3).
    \11\ Id. (c)(4).
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    Further, several commenters also affirmed the Board's observation 
in the preamble to the proposed rule that the same incentives for 
potential conflicts of interest exist in both FISCUs and FCUs. The 
amended disclosure requirements of the final rule address this 
potential by providing credit union members with information about how 
the merger transaction will affect their interests. The disclosures are 
in keeping with the statutory factors that require the Board to 
consider ``the convenience and needs of the members to be served by the 
credit union'' \12\ as well as whether the credit union conforms to its 
purpose ``of promoting thrift among its members and creating a source 
of credit for provident or productive purposes.'' \13\ The Act does not 
limit these concerns to FCUs and FCU members.
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    \12\ Id. (c)(5).
    \13\ Id. (c)(6).
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    Finally, the other regulations the Board has adopted under the 
authority of Section 205 apply to all FICUs rather than only FCUs. 
These regulations address:
    FICU conversions to banks; \14\
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    \14\ 12 CFR part 708a, subpart A.
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    FICU mergers with banks; \15\ and
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    \15\ 12 CFR part 708a, subpart C.
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    FICU mergers with credit unions not insured by the National Credit 
Union Share Insurance Fund (NCUSIF).\16\
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    \16\ 12 CFR part 708b, subpart B.
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    Applying all portions of the merger rule to all FICUs conforms to 
the approach the Board has taken in these other regulations promulgated 
under the same authority in the FCU Act.
    For the reasons above, the Board has determined to apply the final 
rule to all FICUs. To allow time for FISCUs to comply with the final 
rule, the Board has delayed the effective date until October 1, 2018. 
The final rule will apply only to new merger applications submitted 
after the rule's effective date.

B. Section 708b.2 Definitions

Covered Person
    The proposed rule requires merging FCUs to disclose to members any 
``merger-related financial arrangement'' provided to a ``covered 
person.'' As discussed in the preamble to the proposed rule,\17\ the 
definition of ``senior management official'' in current Sec.  708b.2 
frequently resulted in FCU members having incomplete information about 
the benefits provided to FCU insiders as part of a merger transaction. 
The proposed rule amended Sec.  708b.2 by removing the definition of 
``senior management official'' and adding a definition for ``covered 
person.'' The term ``covered person'' means the credit union's chief 
executive officer or manager; the four most highly compensated 
employees other than the chief executive officer or manager; and any 
member of the board of directors or supervisory committee.
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    \17\ 82 FR 26605, 26606 (June 8, 2017).
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    Thirty-six commenters who addressed the definition of covered 
person opposed it, and suggested a variety of alternatives. Six 
commenters did not object to the definition, and one of these 
commenters suggested expanding it to include family members of covered 
persons. In addition, two commenters agreed the definition of ``senior 
management official'' in the current rule was under-inclusive without 
offering an explicit opinion about the proposed changes.
    The most common objection, stated by twenty-six commenters, was 
that the proposed definition of ``covered person'' would encompass all 
employees at smaller credit unions, when many of these employees are 
not in a position to influence merger discussions. This is an 
inaccurate characterization of many small credit unions. In the course 
of the merger review, the NCUA observed that all of the employees in 
many smaller credit unions exercised leadership or management roles and 
were in a position to influence merger negotiations. For example, in 
one credit union, an employee with the title of ``teller'' was involved 
in locating a merger partner and negotiating the terms of her severance 
payment.
    Many of the objections to the definition of ``covered person'' were 
related to concerns with the proposed rule's expanded definition of 
``merger-related financial arrangement.'' The final rule has a narrower 
definition of merger-related financial arrangement than the proposed 
rule or even the current rule, as detailed below. As a result, fewer 
covered persons will have arrangements that are subject to disclosure. 
Further, the merger review revealed very few instances where family 
members of covered persons received merger-related financial 
arrangements, so the Board does not see the need to expand the 
definition of covered person to include family members. Accordingly, 
the Board is adopting the definition of covered person as proposed.
Merger-Related Financial Arrangements
    The NCUA's merger rule has required merging credit unions to 
disclose ``merger-related financial arrangements'' to members since 
2007. ``Merger-related financial arrangements'' include any increases 
in compensation or benefits that exceed the greater of 15% or 
$10,000.\18\ The proposed rule expanded the definition of ``merger-
related financial arrangement'' to cover increases in compensation or 
benefits received by a covered person, of any amount. Compensation 
includes bonuses, early payout of retirement benefits, increased 
insurance benefits, and any other financial rewards or benefits. The 
proposed rule also considered any increases in the 24 months before 
ratification of the merger proposal, as well as any related increases 
occurring after the merger, as merger-related.
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    \18\ 12 CFR 708b.2.
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    Thirty-seven commenters objected to the proposed expansion of the 
definition of merger-related financial

[[Page 30304]]

arrangement. Twenty-three of these commenters thought that the NCUA 
should retain a threshold similar to or higher than that in the current 
rule. Fourteen commenters suggested that increases in compensation and 
benefits for staff transferring to continuing credit unions from 
merging credit unions are to be expected, because continuing credit 
unions are usually significantly larger than merging credit unions. A 
number of these commenters said disclosure should not be required in 
situations where an employee receives an increase as a result of 
transferring to the continuing credit union. Two commenters recommended 
disclosure of merger-related financial arrangements as an aggregate 
amount rather than broken out by individual recipient.
    A smaller number of commenters either had no issues with the 
proposed definition of merger-related financial arrangement or wanted 
more detail in disclosures about merger-related financial arrangements. 
Two emphasized that all payments to management should be disclosed to 
members. One commenter suggested that the rule should provide for 
clawback of any merger-related financial arrangement not disclosed at 
the time of merger.
    The final rule adopts a narrower definition of the term ``merger-
related financial arrangement'' than proposed based on commenters' 
suggestions as well as experience gained from the merger review. The 
final definition covers fewer types of compensation than the definition 
in the current rule. In particular, the final rule will not require 
employer-provided medical insurance, retirement, and other benefits 
offered on a non-discriminatory basis to all employees of the 
continuing credit union to be disclosed as merger-related financial 
arrangements. All of the seven commenters who responded to the Board's 
question about whether such benefits should be subject to disclosure 
specifically requested that these types of benefits not be subject to 
disclosure.
    The merger review provided further support for revising the 
definition of ``merger-related financial arrangement.'' The NCUA 
experienced significant difficulties in obtaining sufficient 
information about benefits at the continuing and merging credit unions 
because, in most cases, staff for the merging credit union were 
genuinely uninformed about the relevant details of their benefits plans 
at the merging and continuing credit unions. It thus seems unlikely 
that benefits offered to all employees of the continuing credit union 
would be a source of potential conflicts of interest. The merger review 
also confirmed the difficulties in quantifying and explaining these 
benefits in the member notice. Even after obtaining information on plan 
costs and benefits, it was often difficult to determine whether, for 
example, a particular health insurance plan at a continuing credit 
union was superior to that at a merging credit union. Potential 
benefits from new retirement plans are too far removed in time to 
accurately project what benefits, if any, might result. The Board 
agrees with commenters that benefits offered on a non-discriminatory 
basis to all employees of the continuing credit union need not be 
disclosed as merger-related financial arrangements for employees of the 
merging credit union. The definition of merger-related financial 
arrangement in the final rule thus excludes employer-provided medical 
insurance, retirement, and other benefits offered on a non-
discriminatory basis to all employees of the continuing credit union.
    The final rule also retains the current threshold for the value of 
merger-related financial arrangements in the current rule. This means 
that only merger-related increases that exceed the greater of $10,000 
or 15% of compensation must be disclosed. As discussed in the preamble 
to the proposed rule, the Board believed eliminating the threshold 
would offer regulatory relief and promote clarity. In light of the 
number of comments requesting a de minimis threshold such as this, the 
Board has determined to retain the current rule's requirement that only 
increases that exceed the greater of $10,000 or 15% are subject to 
disclosure. Increases below this threshold are less likely to 
incentivize staff of merging credit unions to promote a merger that is 
not in members' best interests.
    The proposed rule also includes any increases received in the 24 
months before the merger, as well as related increases paid after the 
merger, in the definition of ``merger-related financial arrangement.'' 
Commenters objected to not having a date certain after a merger when 
compensation increases will not be deemed merger-related. Several 
commenters also stated that the NCUA should retain its ``but for'' test 
when considering whether an increase is merger-related and only require 
disclosure for increases that would not have occurred but for the 
merger. The Board has determined that the definition of ``merger-
related financial arrangement'' in the final rule will include only 
increases that occurred because of, or in anticipation of, a merger 
(i.e., the ``but for'' test).
    Merging credit unions should, however, be aware that any increases 
occurring in the 24 months before the merger may be deemed merger-
related after review of board minutes, examination reports, and other 
relevant information. Similarly, continuing credit unions should be on 
notice that compensation provided only to staff transferred from the 
merging credit union is likely also merger-related and should be 
disclosed in the member notice if it is above the threshold amounts. If 
the NCUA discovers that a member notice was misleading or inaccurate 
about the amount of merger-related financial arrangements, it may take 
appropriate enforcement action.
    While benefits that are available to all employees of a continuing 
credit union are not merger-related financial arrangements under the 
final rule, the Board emphasizes that any benefits that apply only to 
certain employees must be disclosed as merger-related financial 
arrangements if they meet the threshold in the rule. Some examples of 
these types of benefits include supplemental retirement plans for high-
ranking employees, additional life insurance for certain employees, and 
additional paid leave time. Also, the following arrangements, 
identified during the merger review, provide other examples of the 
types of benefits that must be disclosed if they exceed the threshold 
amount.
    Life insurance and annuities: One merging credit union had reduced 
the value of an executive's life insurance policy when the original 
premiums failed to yield the desired amount. Because the value of the 
policy was reduced, the executive became 100% vested in the policy 
several years earlier than scheduled. This reduction occurred several 
years before the merger. Shortly before the merger, and at the request 
of the continuing credit union, the merging credit union made another 
payment to restore the life insurance policy to the original amount, 
but without reverting to the original vesting schedule. This is a 
merger-related financial arrangement because, but for the merger, the 
executive's life insurance would have had a lower value.
    Payment for accrued leave: In many mergers, executives or staff 
receive payment for accrued leave. The Board recognizes that many 
merging credit unions permit employees to cash out accrued leave under 
certain circumstances. Some credit union policies give employees the 
option to receive payment for accrued leave at specified times like 
year-end, some allow payouts when employees leave

[[Page 30305]]

the credit union, and some policies allow both types of payments. 
Credit unions and their employees who have such policies often take the 
view that any payments for accrued leave should not be deemed merger-
related financial arrangements. This is an overly narrow approach. 
Regardless of whether a merging credit union's policies give employees 
the right to cash out leave, the test is whether the payment for leave 
occurs earlier in time or in a greater amount because of the merger.
    Bonuses: The Board is aware that the boards of directors of many 
merging credit unions want to recognize employees for their service to 
the credit union and do this by authorizing some type of payment to 
employees during the merger process. Some commenters and merging credit 
unions have argued that such payments in recognition of past service 
should not be deemed merger-related. In determining whether such 
payments must be disclosed, the NCUA will, as discussed above, apply 
the ``but for'' test and only require disclosure of payments that would 
not have occurred but for the merger.
    Severance payment agreements: In several mergers, continuing credit 
unions executed employment agreements with employees of the merging 
credit union that constituted merger-related financial arrangements. 
Some contracts guaranteed employment for a number of months or years, 
with the proviso that if the employee was terminated for any reason 
other than for cause, the continuing credit union would pay the 
employee compensation for the remainder of the period. Other contracts 
were even more generous and promised to pay the employee compensation 
for the agreed-upon period even if the employee quit. Employment 
contracts that guarantee payment of compensation for a set period are 
merger-related financial arrangements if they result from the merger 
and meet the threshold in the definition.
    The above examples are not an exhaustive list. The general rule is 
that any benefit that an employee from a merging credit union will 
receive at the continuing credit union that is greater than the 
threshold amount must be disclosed as a merger-related financial 
arrangement unless an identical benefit is offered to all employees of 
the continuing credit union. Also, any benefit under an existing 
arrangement that is triggered by a change in control provision is, by 
definition, a merger-related financial arrangement if it is greater 
than the threshold amount.
    While the Board agrees with many commenters on various aspects of 
the subject of merger-related financial arrangements, a number of 
commenters made flatly erroneous comments on this topic. These include 
comments that: (1) Discounted the nature of member ownership and the 
obligations a credit union has to its member-owners; (2) made incorrect 
statements about disclosure requirements applicable to other entities; 
and (3) ignored the potential for conflicts of interest due to 
increases in compensation. For example, five commenters suggested that 
the NCUA's review of merger-related compensation alone would suffice 
and disclosure to members was unnecessary. Another suggested that 
members have no role in considering merger-related payments to 
employees. These comments are legally inaccurate and philosophically 
off-base. The net worth of a credit union belongs to its members. 
Payments to insiders, especially in the context of a voluntary merger 
where a credit union could choose to liquidate and distribute its net 
worth among its members, are distributions of the credit union's net 
worth. Accordingly, members should be informed when a significant 
payout occurs.
    Another objection the NCUA heard frequently during the merger 
review was that requiring such disclosures would cause merger votes to 
fail. The merger review demonstrates these fears have no basis in 
reality. During the merger review, despite heightened scrutiny and 
disclosures of merger-related financial arrangements, no mergers failed 
for this reason.\19\
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    \19\ Of the 139 mergers reviewed as of May 7, 2018, the NCUA is 
aware of only two that were not approved by members and those 
mergers had no merger-related financial arrangements.
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    Similarly, some commenters opined that the proposed rule would 
subject the compensation of employees of merging credit unions to a 
higher level of scrutiny than employees of any other type of industry. 
Contrary to these assertions, even if the proposal's requirement to 
disclose increases in compensation related to the merger had been 
adopted as proposed, employees of merging credit unions are subject to 
far fewer disclosures about their compensation than employees of other 
industries. The existing rule and proposed rule only require disclosure 
of the amount of increases above the threshold amount. In contrast, 
many employees and executives in other industries are subject to 
disclosure of the entire amount of their compensation. Salary 
information for the CEO, CFO and the three other most highly 
compensated employees of publically-traded companies is available in 
filings with the Securities and Exchange Commission. Salary information 
for CEOs of non-profit organizations, including state-chartered credit 
unions, is available on Form 990 filed with the Internal Revenue 
Service.
    Other commenters seemed unaware of the potential for conflicts of 
interest associated with merger-related financial arrangements. Several 
stated that higher salaries at the continuing credit union do not 
present a conflict of interest necessitating disclosure, or that such 
increases should only be subject to disclosure if the total amount of 
an employee's salary would be above what is customary for similar 
positions at the continuing credit union. The Board disagrees. The 
prospect of a significantly higher salary at the continuing credit 
union could be a motivating factor in an individual's choice to 
advocate for a merger, both internally within the credit union 
leadership and with members. Credit union management may well have 
considerable influence with members, who may look to management for 
trusted opinions and advice about whether the proposed merger is in the 
best interests of the credit union and its members. It is not 
unimaginable that the prospect of a significantly higher compensation 
package could affect an individual manager's thinking about the 
desirability of the merger.
    The Board does not object to the fact that employees of merging 
credit unions may be seeking or receiving higher remuneration through a 
merger. The Board agrees that in many cases, employees of merging 
credit unions are receiving below-market pay, and some of these credit 
unions do not have the ability to appropriately compensate their 
deserving employees. During the merger review, the vast majority of 
mergers that included compensation increases had increases that were 
below the threshold amount for merger-related financial arrangements in 
the current and final rule. Thus, the continuing credit union was able 
to adjust compensation to market rates without triggering a disclosure 
requirement. The final rule simply requires that members be informed of 
significant increases, so that they understand all of the factors 
potentially contributing to the merger.
    One commenter requested the disclosure requirement only apply to 
the amount of the increase, not entire compensation. The Board 
reiterates that, as stated in the rule text and discussed in the 
preamble to the proposal, and as under the current rule, only the 
amounts of the increases are subject to disclosure.

[[Page 30306]]

    The merger review identified many instances where a merging credit 
union had not disclosed all merger-related financial arrangements in 
their member notices. In some of these cases, credit union 
representatives asserted that the payment should not be deemed merger-
related if the merging credit union had the ability to make this 
payment. The determinative factor is not whether the merging credit 
union could have chosen to make this payment had it remained a separate 
credit union. If that were the standard, many payments by a merging 
credit union would fall outside the definition. Rather, the relevant 
question is, ``Would this payment have occurred if the credit union 
were not merging?'' If the answer is no, then the payment is merger-
related and the merging credit union must disclose it on the member 
notice if it exceeds the threshold amount.
    Finally, during the merger review, staff identified a number of 
instances where merging credit unions with significant levels of 
merger-related financial arrangements made the required disclosures, 
but surrounded the disclosure of the amounts with voluminous text. Some 
draft disclosures, particularly those prepared by outside attorneys, 
seemed designed to obscure or bury the fact of the payments in the name 
of providing ``context'' about the need for the payments. Again, 
nothing in the FCU Act or the final rule prohibits payments, in any 
amount, to insiders of a merging credit union. The Board neither 
encourages nor discourages such payments, as this determination rests 
with the boards of the merging and continuing credit unions and the 
members of the merging credit union. The Board, however, is requiring 
that disclosures to members of the merging credit union be clear and 
understandable, as provided in the revised model member notice.
Record Date
    The proposed rule also adds a definition of ``record date'' to 
clarify which FCU members are eligible to vote on a proposed merger. 
The NCUA received only two comments on this provision, both of which 
supported adding this definition. Accordingly, the definition of 
``record date'' in Sec.  708b.2 is unchanged from the proposed rule.

C. Section 708b.105 Submission of Merger Proposal to the NCUA

    The proposed rule required the merging and the continuing credit 
unions to submit their respective board minutes to the NCUA that 
reference the merger during the 24 months before the boards of 
directors of the credit unions approved the merger plan. Twelve 
commenters thought this time period was excessive and suggested a 
shorter period, while one commenter observed that merger-related 
discussions might have begun earlier than two years before the merger. 
The merger review documented many merger-related discussions that 
occurred before the six-or twelve-month lookback some commenters 
favored. Also, while examiners review board minutes during exams, these 
are not, as some commenters claimed, available for the Regional Office 
to download when a merger package is submitted. Accordingly, the final 
rule adopts this requirement as proposed.
    The proposed rule also added a requirement that the merging and 
continuing credit unions certify that there are no other merger-related 
financial arrangements other than those disclosed in the notice to the 
members of the merging credit union. The final rule adopts this 
requirement as proposed, with one addition. As suggested by one 
commenter, the final rule adds the requirement that the CEOs of both 
credit unions also sign the certification.

D. Section 708b.106 Approval of the Merger Proposal by Members

Timing Requirements for Member Notice
    The proposed rule increased the length of the minimum notice period 
preceding the meeting to discuss and vote on the merger proposal. Under 
the current rule, a merger meeting and vote could occur as few as seven 
days after the merging FCU mails notice of the meeting to its members. 
The proposal required a merging FCU to mail notice of the meeting and 
vote at least 45, but no more than 90, days before the meeting. Twenty-
three commenters expressed an opinion about the notice period. Sixteen 
of the commenters suggested a shorter notice period, although several 
of these commenters also agreed the current seven-day minimum was too 
short. Six commenters supported the proposal's timeframe or requested a 
longer notice period. One commenter agreed the current seven-day notice 
period was insufficient but did not suggest an alternative.
    The Board is adopting the timing requirements for the member notice 
as proposed, except for FICUs seeking to terminate NCUSIF coverage. The 
Board agrees with commenters who noted that the process of 
relinquishing the charter of a functioning credit union, and 
determining the disposition of the merging credit union's net worth, 
merits allowing members sufficient time to consider the merger 
proposal. The value of a credit union charter is considerable even 
without considering the net worth of the merging credit union. 
Obtaining a new credit union charter is time-consuming and requires 
organizers to raise capital. Moreover, usually most or all of the 
merging credit union's net worth transfers to the continuing credit 
union. For these reasons, an expanded notice period is appropriate.
    The Board does not agree with some commenters' concerns that the 
45-day minimum notice period will create problems when a quick merger 
is necessary. The Board reminds these commenters that the merger rule 
already permits the NCUA to waive the member vote if it finds that a 
merging credit union is in danger of insolvency and that a merger would 
avoid a loss to the NCUSIF.\20\ If a merging credit union's situation 
is severe enough to warrant a waiver of the member vote, obviously the 
45-day notice requirement would not apply. For other merging credit 
unions, the addition of a reasonable number of days to the process will 
not affect the merger. OGC's merger review did not identify any mergers 
where changing the required notice period would have caused the merger 
proposal to fail. Further, once credit unions build in the increased 
notice period into their estimates of the timeframe required to merge, 
the effect on merger transactions should be minimal.
---------------------------------------------------------------------------

    \20\ 12 CFR 708b.105(b).
---------------------------------------------------------------------------

    The Board is not lengthening the notice period for mergers where a 
FICU is proposing to terminate NCUSIF coverage by merging with a non-
federally insured credit union. For terminations of NCUSIF coverage, 
the FCU Act specifies a notice period of at least seven days, but no 
more than 30 days.\21\ The Board cannot adopt a regulation that would 
conflict with the statute and so is retaining the requirement in the 
current rule for a notice period of seven to 30 days for mergers that 
result in termination of NCUSIF coverage.
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 1786(d)(2).
---------------------------------------------------------------------------

    Ideally, the Board would prefer to impose requirements for 
providing member notice in mergers that involve termination of federal 
share insurance that are the same as requirements for member notices in 
mergers that do not include federal share insurance termination. The 
required statutory notice period for federal share insurance 
termination,\22\ however, makes this

[[Page 30307]]

impossible. Accordingly, the final rule retains the existing 
requirement that FICUs proposing to merge into a non-federally insured 
credit union must send their members notice at least 7 but not more 
than 30 days before the member vote.
---------------------------------------------------------------------------

    \22\ Id.
---------------------------------------------------------------------------

    In practice, however, many members of FICUs seeking to terminate 
NCUSIF coverage already receive a notice period that is closer to the 
notice period the final regulation imposes for other types of mergers. 
The FCU Act requires that at least 20% of members participate in the 
vote to terminate federal share insurance coverage.\23\ Because of this 
participation requirement, some credit unions seeking to terminate 
NCUSIF coverage provide an additional, pre-notice communication to 
increase the likelihood of achieving the required member participation. 
The 7- to 30-day notice period in the FCU Act applies only once a 
credit union's board approves a proposal to terminate insurance 
coverage.\24\ As the FCU Act is silent about notices before the credit 
union board approves an NCUSIF termination proposal, the NCUA has 
permitted credit unions seeking to terminate NCUSIF coverage to send an 
additional notice in advance of the credit union board's approval to 
advise members that the credit union's board will be considering the 
matter.\25\
---------------------------------------------------------------------------

    \23\ Id.
    \24\ Id.
    \25\ 70 FR 3279, 3285 (Jan. 24, 2005).
---------------------------------------------------------------------------

Contents of Member Notice
    The proposed rule also included changes to the contents of the 
notice members of merging credit unions receive. These changes were 
designed to improve the quality and readability of the information 
provided in the member notice. Relatively few commenters made specific 
observations about these provisions, and the comments were mixed. Three 
commenters, who were otherwise opposed to the rule, affirmatively noted 
they had no objections to these changes or that they improved clarity. 
Two commenters deemed the goal of having a short, understandable notice 
unrealistic. One commenter said that merging credit unions should 
determine what information is most relevant to their members. Several 
commenters worried that lengthy disclosures would make members less 
likely to read them.
    Several commenters thought the member disclosure documents should 
contain more information. One requested the notice include more 
information about the factors the credit union's board considered in 
determining to merge and in selecting a merger partner. Five suggested 
the disclosures should include additional information about the 
disposition of the merging credit union's net worth. These suggestions 
included: (1) Requiring the merging credit union to disclose the ratio 
of member benefits to the merging credit union's net worth compared to 
the ratio of merger-related financial arrangements to the merging 
credit union's net worth; (2) requiring the notice to discuss the 
possibility of a merger dividend to members; and (3) requiring the 
notice to state the dollar amount of the merging credit union's net 
worth. Another commenter requested specific disclosures when an 
acquiring credit union books ``negative good will'' due to the merger, 
including the merging credit union's estimated book value and market 
value presented in terms of dollars per member. Other commenters 
requested that instead of requiring information about life savings and 
loan protection insurance, which are infrequently offered, the notice 
should require specific information about more common products and 
services.
    The Board is adopting the amended disclosures mostly as proposed. 
The only change in the final rule is the addition of information in the 
member notice about the effect of the merger on ATM access. In the 
proposal, the Board inquired whether the required disclosures in the 
notice should be expanded to include items such as ATM access or fee 
comparisons.\26\ Several commenters requested the member notice include 
information about any ATM access changes, as well as other suggestions. 
The Board believes that the amended disclosures adequately convey to 
members the most relevant information--how the merger will affect 
locations and services and how or if there will be a distribution of 
the merging credit union's net worth. In addition, as discussed below, 
the NCUA has added revised sample member notice and ballot forms that 
conform to the requirements in Sec.  708b.304.
---------------------------------------------------------------------------

    \26\ 82 FR 26605, 26610 (June 8, 2017).
---------------------------------------------------------------------------

    The Board also clarifies that the member notice and ballot should 
not be combined with other types of notices. For example, one draft 
member notice submitted during the merger review attempted to combine 
the merger notice with the Supervisory Committee audit.\27\ The merger 
notice included a statement at the very end that the member should 
check their account balances as listed on an enclosed sheet, and unless 
they returned another document disputing the balance, the credit 
union's records were presumed correct. Although this procedure is the 
most common way credit unions conduct Supervisory Committee audits and 
is not problematic on its own, in this case, members who failed to read 
to the end of the member notice would not have realized they also 
needed to verify their account balances. The Board understands the 
appeal of consolidating information into fewer mailings, but this 
convenience for the credit union is outweighed by the danger that 
members will miss information about the proposed merger, the other 
issue, or both.
---------------------------------------------------------------------------

    \27\ The Act requires an FCU's Supervisory Committee to verify 
member account balances at least once every two years. 12 U.S.C. 
1761d.
---------------------------------------------------------------------------

Member Comments on the Proposed Merger Transaction
    The proposed rule included provisions to facilitate member 
discussions about the merger transaction. These provisions, modelled on 
a similar requirement in the NCUA's rule governing credit union to bank 
conversions, would establish procedures to allow for member-to-member 
(MTM) communication in advance of a member vote. The MTM communication 
provision was the least popular part of the proposed rule, with 45 
commenters opposing it. The most common objection was that the MTM 
communication process would delay the merger process, make mergers more 
complicated and costly, or discourage them entirely. Another frequently 
expressed fear was that disgruntled members, employees or competitors 
would use the MTM communication to convey misleading or inaccurate 
information. Other commenters opined that the MTM would expose the 
merging and continuing credit unions to reputation or litigation risk, 
raise the costs of mergers, and that members prefer alternate methods 
of receiving communications from other members. Finally, a few 
commenters objected to the NCUA's role in overseeing the MTM 
communication process and disagreed with the NCUA's observation that 
the proportion of votes in favor of merger is lower for ballots cast in 
person than for ballots cast by mail and, therefore, justifies the need 
for additional MTM communication.
    Commenters suggested a variety of alternatives to the MTM 
provisions of the proposed rule. Two commenters suggested the merging 
credit union aggregate all member comments and either distribute one 
communication, or share the aggregated comments at or before the 
special meeting. Three commenters suggested holding an extra

[[Page 30308]]

member meeting either during the voting period or before the voting 
period where members can obtain information on and discuss the merger, 
with a summary of the meeting posted online. Two commenters suggested 
that the NCUA create an online posting for each merger that allows 
members to submit comments. Further, one commenter requested public 
notice at the time a merger application is filed with the NCUA.
    The Board believes many of the commenters' fears about the MTM 
communication provision are unlikely to materialize. The MTM 
communication provisions were modelled after those in the NCUA's part 
708a regulation on credit union conversions to banks. Since the MTM 
communication provisions of part 708a took effect in early 2007, there 
have been eleven bank conversion attempts. An MTM communication 
occurred in fewer than half of these attempts. As most proposed bank 
conversions, which have a greater effect on member rights than a merger 
with another credit union, do not have an MTM communication, the Board 
finds it unlikely that many credit union merger proposals would evoke 
MTM communications.
    In terms of the potential for abuse, the Board reminds commenters 
that the proposed rule provided for the NCUA to review MTM 
communications that merging credit unions find inaccurate or 
misleading. While this process would require time and effort on the 
NCUA's part, the Board expects this commitment would not be major 
because only a small proportion of credit union mergers would involve 
MTM communications.
    In summary, the Board believes many of the commenters' fears about 
the effects of the MTM communication provisions are exaggerated. 
Nevertheless, the Board agrees that there may be an alternative way to 
accomplish the Board's goal of permitting members to dialogue about the 
proposed merger transaction while avoiding the features that made the 
MTM communication objectionable to commenters. The Board requested 
comments about all aspects of the proposed rule, which includes the MTM 
communication provision. The Board is now adopting the suggestions of 
two commenters who requested that the NCUA provide publicly accessible 
information about proposed merger transactions on the NCUA's website, 
with a section for member comments. The final rule requires the member 
notice to include information about the NCUA website where merger 
information and member comments are posted, as well as the email and 
physical addresses where members may submit their comments for posting.
    Other regulators regularly provide similar information on their 
websites about pending transactions of regulated institutions. The 
Office of the Comptroller of the Currency (OCC), for example, posts a 
weekly listing of all applications it has received and actions it has 
taken.\28\ The actual applications for transactions such as mergers, 
are also posted on the OCC's website, along with a section for posting 
public comments.\29\
---------------------------------------------------------------------------

    \28\ https://www.occ.gov/topics/licensing/corporate-activities-weekly-bulletin/index-weekly-bulletin.html.
    \29\ https://www.occ.gov/topics/licensing/public-comment/index-public-comments.html.
---------------------------------------------------------------------------

    The Board intends to establish a page on the NCUA's website similar 
to the OCC's, allowing credit union members and the public to view non-
confidential portions of merger applications. The member notice will 
include a link to the website where the merger application and comments 
will be available, as well as information about how to submit a 
comment. Because the purpose of the website is to encourage dialogue 
between credit union members, the NCUA will post comments only from 
credit union members, as well as any responses from credit union 
management. Members must include their name and their city and state of 
residence, at a minimum, or their comment will not be posted. The NCUA 
will review comments before posting to ensure that the comments are 
appropriate and limited to the topic of the proposed merger.
    For the reasons above, the merger applications website replaces the 
MTM communication provisions of the proposed rule. The NCUA is in the 
process of developing the website, and it will be operational by the 
effective date of this rule.
Electronic Notification and Voting
    As part of the merger review, a credit union inquired if it could 
supply the member notice, and conduct the member vote, electronically. 
The Board does not object to providing member notices and other 
documents electronically to members who have previously agreed to 
electronic notification. Nor does the Board object to providing the 
option to vote electronically. Credit unions using electronic means, 
however, must also allow members to vote by paper ballot in person or 
by mail and should ensure that their bylaws allow for voting by 
electronic means.
Return of Net Worth to Members
    Several times during the merger review, credit unions inquired 
about the permissible methods of calculating how to return some net 
worth to members. In particular, some credit unions wanted to base the 
calculation on loan balances as well as, or in addition to, the 
traditional methodology of using share account balances to calculate a 
merger dividend. The FCU Act does not specify a particular methodology 
for returning net worth to members of a merging credit union. Also, the 
Act has general authority for loan-related rebates; credit union boards 
may ``authorize interest refunds to members of record at the close of 
business on the last day of any dividend period from income earned and 
received in proportion to the interest paid by them during that 
dividend period.'' \30\ The merger regulation is also not specific, 
simply requiring that a merging credit union must provide an 
explanation of ``any provisions for reserves, undivided earnings or 
dividends.'' \31\ Borrowers, as well as savers, contribute to building 
a credit union's net worth. Accordingly, the Board clarifies that the 
regulation does not prohibit returning a portion of net worth to 
members based on loan balances. The Board cautions that merging credit 
unions that are returning a portion of net worth based on loan balances 
must describe the payment accurately. Payments based on loan balances 
should use a term such as ``interest rebate,'' as dividends only apply 
to share accounts. Also, the NCUA will review benefits provided to 
covered persons and will require disclosure if a return of net worth 
occurs in an amount that exceeds the threshold for merger-related 
financial arrangements.
---------------------------------------------------------------------------

    \30\ 12 U.S.C. 1761b(9).
    \31\ 12 CFR 708b.104(a)(6).
---------------------------------------------------------------------------

E. Forms

    In the proposed rule, the NCUA committed to issue revised forms and 
revisions to its Merger Manual in conjunction with any final 
rulemaking.\32\ In light of the fact that subpart C of part 708b 
already contains many merger-related forms, the Board has determined to 
eliminate a separate merger manual and incorporate all relevant forms 
into the rule. Having all merger-related information in the same 
location will ease compliance for credit unions. It will also prevent 
the Merger Manual and forms from falling out of conformance over time 
due to regulatory changes.
---------------------------------------------------------------------------

    \32\ 82 FR 26605, 26610 (June 8, 2017).

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

[[Page 30309]]

    The final regulation now includes a new Sec.  708b.304 that 
includes all of the merger-related forms for a FICU merging into 
another FICU. Most of the forms are substantially identical to existing 
forms in the merger manual. The Member Notice, however, has been 
significantly revised. The revisions incorporate all of the 
requirements of the final rule. The NCUA, is not, however, making this 
format mandatory and will consider other notices that provide the same 
level and type of information to members. Merging credit unions should 
be aware, however, that NCUA approval of alternate forms of member 
notices will require extra time, as Regional Offices will likely need 
to consult with the Office of General Counsel about the modified 
language.

III. Conforming and Clarifying Amendments to Other NCUA Regulations

Appendix A to Part 701, Federal Credit Union Bylaws

    As discussed above, the Board is requiring merging credit unions to 
mail member notices at least 45 days, but no more than 90 days, before 
the meeting to vote on a proposed merger. Accordingly, the Board is 
proposing to amend Article IV of the FCU Bylaws to be consistent with 
the proposed amendments to part 708b.

IV. Regulatory Procedures

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires the NCUA to prepare an 
analysis of any significant economic impact a regulation may have on a 
substantial number of small entities (primarily those under $100 
million in assets).\33\ This rule will affect relatively few small 
credit unions. Accordingly, the NCUA certifies that this regulation 
will not have a significant economic impact on a substantial number of 
small entities.\34\
---------------------------------------------------------------------------

    \33\ 5 U.S.C. 603(a).
    \34\ Id. 605(a).
---------------------------------------------------------------------------

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.) 
requires that the Office of Management and Budget (OMB) approve all 
collections of information by a Federal agency from the public before 
they can be implemented. Respondents are not required to respond to any 
collection of information unless it displays a current, valid OMB 
control number.
    The proposed increase in burden under Sec.  708b.106 associated 
with member-to-member communications has been eliminated. NCUA will 
offer a website where members can post comments on proposed mergers.
    NCUA believes that the certification requirement under Sec.  
708b.104 does not warrant an increase to the 5 hours already allotted a 
respondent to submit the merger proposal to NCUA. Similarly, the 
requirement to supply two years of board meeting minutes will also not 
add to the burden since FICUs must maintain these minutes and make them 
available for examiners. This also applies to Sec.  708b.106(b) where 
the final rule specifies the contents of a member notice. This notice 
is to include the addition of the website where members can share 
comments and a targeted listing of branch locations of merging credit 
unions. This will not increase the 7 hours currently approved for a 
respondent to provide this notice.
    In accordance with the PRA, the information collection requirements 
included in this final rule have been submitted to OMB for approval 
under control number 3133-0024. The proposed rule made revisions to the 
information collection requirements under OMB control number 3133-0182; 
but with the removal of the member-to-member communications, there is 
no change to the burden.
    Estimated number of respondents: 214 FICU.
    Estimated total annual burden hours: 7,490.

C. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. The 
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order to adhere to fundamental 
federalism principles. The final rule does not have substantial direct 
effects on the states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nothing in the 
rule precludes states from adopting more rigorous requirements. 
Further, the requirements for FISCUs are the same as for FCUs, and are 
designed to provide disclosure to members, that are similar to, or less 
burdensome than the requirements imposed by the SEC on state-chartered 
publicly-traded companies, or by the IRS on state-chartered non-profits 
(including many FISCUs). The NCUA has therefore determined that this 
final rule does not constitute a policy that has federalism 
implications for purposes of the executive order.

D. Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this rule will not affect family well-
being within the meaning of section 654 of the Treasury and General 
Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 
(1998).

E. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) provides generally for congressional review of agency rules. A 
reporting requirement is triggered in instances where NCUA issues a 
final rule as defined by Section 551 of the Administrative Procedure 
Act. NCUA does not believe this final rule is a ``major rule'' within 
the meaning of the relevant sections of SBREFA. NCUA has submitted the 
rule to the OMB for its determination in that regard.

List of Subjects

12 CFR Part 701

    Advertising, Credit, Credit unions, Fair housing, Insurance, 
Reporting and recordkeeping requirements.

12 CFR Part 708b

    Credit unions, Mergers of credit unions.

    By the National Credit Union Administration Board, on June 21, 
2018.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the National Credit Union 
Administration amends 12 CFR parts 701 and 708b as follows:

PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 continues to read as follows:

    Authority:  12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 
701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also 
authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. 
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.


0
2. Revise the first sentence of Section 2 of Article IV of appendix A 
to part 701 to read as follows:

Appendix A to Part 701--Federal Credit Union Bylaws

* * * * *

Article IV. Meetings of Members

* * * * *
    Section 2. Notice of meetings required. a. The secretary must 
give written notice to

[[Page 30310]]

each member: At least 30 but no more than 75 days before the date of 
the annual meeting; at least 7 days before the date of any special 
meeting; and at least 45 but no more than 90 days before the date of 
any meeting to vote on a merger with another credit union. * * *
* * * * *

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

0
3. The authority citation for part 708b continues to read as follows:

    Authority:  12 U.S.C. 1752(7), 1766, 1785, 1786, and 1789.


0
4. Amend Sec.  708b.2 as follows:
0
a. Add a definition in alphabetical order for ``Covered person''.
0
b. Revise the definition of ``Merger-related financial arrangement''.
0
c. Add a definition in alphabetical order for ``Record date''.
0
d. Remove the definition for ``Senior management official''.
    The revisions and additions read as follows:


Sec.  708b.2  Definitions.

* * * * *
    Covered person means the chief executive officer or manager (or a 
person acting in a similar capacity); each of the four most highly 
compensated employees other than the chief executive officer or 
manager; and any member of the board of directors or the supervisory 
committee.
* * * * *
    Merger-related financial arrangement means a material increase in 
compensation or benefits because of, or in anticipation of, a merger 
that any covered person of a merging credit union has received during 
the 24 months before the date the boards of directors of both credit 
unions approve the merger plan. It also means a material increase in 
compensation or benefits that any covered person of a merging credit 
union will receive in the future because of the merger. This includes 
the sum of all increases in direct and indirect compensation, such as 
salary, bonuses, leave, deferred compensation, early payout of 
retirement benefits, or any other financial rewards, other than 
benefits available to all employees of the continuing credit union on 
identical terms and conditions. A material increase is an increase in 
value that exceeds the greater of 15 percent of existing compensation 
or benefits or $10,000.
* * * * *
    Record date means a date announced by the board of directors of a 
merging credit union as the date by which a person must have been a 
member of the merging credit union to be eligible to vote on a proposed 
merger.
* * * * *

0
8. Amend Sec.  708b.104 by revising paragraphs (a)(4), (5) and (8), 
removing the period at the end of paragraph (a)(9)(ii) and adding a 
semicolon in its place, and adding paragraphs (a)(10) and (11) to read 
as follows.


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

    (a) * * *
    (4) Proposed Notice of Special meeting of the Members;
    (5) Copy of the form of Ballot to be sent to the members;
* * * * *
    (8) If the merging credit union's assets on its latest call report 
are equal to or greater than the threshold amount established and 
published in the Federal Register annually by the Federal Trade 
Commission under 15 U.S.C. 18a(a)(2)(B)(i), 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;
* * * * *
    (10) Board minutes for the merging and continuing credit union that 
reference the merger for the 24 months before the date the boards of 
directors of both credit unions approve the merger plan; and
    (11) A certification signed by the CEOs and Chairmen of the merging 
credit union and the continuing credit union, using the form in Sec.  
708b.304(c), that there are no merger-related financial arrangements to 
covered persons other than those disclosed in the notice required by 
paragraph (a)(4) of this section.

0
9. Revise Sec.  708b.106 to read as follows:


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

    (a) Advance notice of member vote. Members of the merging credit 
union must receive written notice at least 45 calendar days, but no 
more than 90 calendar days, before any member meeting called to vote on 
the merger proposal.
    (b) Contents of member notice. While the merging credit union may 
refer members to attachments for additional information or explanation, 
the notice provided to members pursuant to paragraph (a) of this 
section must be in the form set forth in subpart C of this part and 
contain the following information:
    (1) A statement of the purpose of the meeting and the time and 
place;
    (2) A statement that members may vote on the merger proposal in 
person or by mail ballot (or electronically, if the credit union's 
Bylaws so permit) received by the merging credit union no later than 
the date and time announced for the member meeting called to vote on 
the merger proposal;
    (3) A statement about the availability of a website where members 
of the merging credit union can share comments and questions about the 
merger pursuant to paragraph (d) of this section;
    (4) A summary of the merger plan, including but not necessarily 
limited to:
    (i) A statement that the merging credit union does or does not have 
a higher net worth percentage than the continuing credit union;
    (ii) A statement as to whether the members of the merging credit 
union will receive a share adjustment or other distribution of reserves 
or undivided earnings, including a summary of reasons for the decision 
and, at the merging credit union's discretion, a short explanation 
about the capital level;
    (iii) An explanation of any changes to ATM access or to services 
such as life savings protection insurance or loan protection insurance;
    (iv) If the continuing credit union is not federally insured, an 
explanation of any changes related to federal share insurance; and
    (v) A detailed description of all merger-related financial 
arrangements. This description must include the recipient's name and 
title as well as, at a minimum, the amount or value of the merger-
related financial arrangement expressed, where possible, as a dollar 
figure;
    (5) A statement of the reasons for the proposed merger; and
    (6) A statement identifying the physical locations of the merging 
credit union by street address, stating whether each location is to be 
closed or retained, and a list of branches of the continuing credit 
union by street address that are located in reasonable proximity to the 
merging credit union's locations.
    (c) Additional documents. The notice provided to members pursuant 
to paragraph (a) of this section shall be accompanied by the following 
separate documents:
    (1) The current financial statements for each credit union and a 
consolidated financial statement for the continuing credit union;

[[Page 30311]]

    (2) Any additional information or explanatory material that the 
merging credit union wishes to provide that does not detract from the 
required disclosures and gives further detail to members regarding 
information disclosed pursuant to paragraph (b) of this section; and
    (3) A Ballot for Merger Proposal.
    (d) Member information. Within 30 calendar days of receiving the 
notice provided to members pursuant to paragraph (a) of this section, 
members may jointly or individually submit a comment about the merger 
to the NCUA. The NCUA will post these comments on a website accessible 
to credit union members.
    (e) Posting member comments. The NCUA reserves the right to not 
post comments that it reasonably believes:
    (1) Are false or misleading with respect to any material fact;
    (2) Omit a material fact necessary to make the statement in the 
material not false or misleading;
    (3) Relate to a personal claim or personal grievance, or solicit 
personal gain or business advantage by or on behalf of any party;
    (4) Address any matter, including a general economic, political, 
racial, religious, social, or similar cause that is not related to the 
proposed merger;
    (5) Directly or indirectly and without expressed factual foundation 
impugn a person's character, integrity, or reputation;
    (6) Directly or indirectly and without expressed factual foundation 
make charges concerning improper, illegal, or immoral conduct; or
    (7) Directly or indirectly and without expressed factual foundation 
make statements impugning the safety and soundness of the credit union.
    (f) Clear and conspicuous disclosures required. Any information 
required by paragraph (b) of this section to be disclosed on the notice 
provided to members pursuant to paragraph (a) of this section must be 
legible, written in plain language, and reasonably understandable by 
ordinary consumers.
    (g) Approval of a proposal to merge. Approval of a proposal to 
merge a federally-insured 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. Members must be members 
as of the record date to vote. If the continuing credit union is not 
federally insured, the requirements of subpart B of this part also 
apply, and the merging credit union must use the appropriate form 
ballot and notice in subpart C of this part unless the Regional 
Director approves the use of different forms. If the continuing credit 
union is federally insured, use of the sample form notice, ballot, and 
certification of vote forms in subpart C of this part will satisfy the 
requirements of this subpart.

0
10. Add Sec.  708b.304 to read as follows:


Sec.  708b.304   Merger of a federally-insured credit union into 
another federally-insured credit union.

    (a) Merger resolution for continuing credit union, NCUA 6302. The 
continuing credit union's board of directors must complete this form 
after it votes to merge with the merging credit union. The merger 
package required by Sec.  708b.104 must include merger resolutions from 
both the merging and continuing credit unions.

Merger Resolution (Continuing Credit Union)

Resolution

    The Board of Directors believes our credit union should merge 
with [name of merging credit union] (merging credit union). Our 
credit union will assume the merging credit union's shares and 
liabilities. The merging credit union will transfer to our credit 
union all of its assets, rights, and property. All members of the 
merging credit union will receive shares in our credit union, which 
will stay in business under its present charter.

Certification

    We, the Board Presiding Officer and Secretary of this credit 
union, are authorized to:
     Seek National Credit Union Administration Regional 
Director approval of the merger.
     Execute and deliver the merger agreement on the 
effective date of the merger.
     Execute all agreements and other papers required to 
complete the merger.
    We certify to the National Credit Union Administration that the 
foregoing is a full, true, and correct copy of a resolution adopted 
by the Board of Directors of our credit union at a meeting held 
under our bylaws on [month and date], 20__. A quorum was present and 
voted. The resolution is duly recorded in the minutes of the meeting 
and is still in full force and effect.

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Board Presiding Officer

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Date

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Secretary

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Date

    (b) Merger resolution for merging credit union, NCUA 6303. The 
merging credit union's board of directors must complete this form after 
it votes to merge with the continuing credit union. The merger package 
required by Sec.  708b.104 must include merger resolutions from both 
the merging and continuing credit unions.

Merger Resolution (Merging Credit Union)

Resolution

    The Board of Directors believes our credit union should merge 
with [name of continuing credit union] (continuing credit union). 
The continuing credit union will assume the shares and liabilities 
of our credit union. Our credit union will transfer to the 
continuing credit union all of our assets, rights, and property. All 
members of our credit union will receive shares in the continuing 
credit union, which will stay in business under its present charter.

Certification

    We, the Board Presiding Officer and Secretary of this credit 
union, are authorized to:
     Seek National Credit Union Administration Regional 
Director approval of the merger.
     Execute and deliver the merger agreement on the 
effective date of the merger.
     Execute all agreements and other papers required to 
complete the merger.
    We certify to the National Credit Union Administration that the 
foregoing is a full, true, and correct copy of a resolution adopted 
by the Board of Directors of our credit union at a meeting held 
under our bylaws on [month and day], 20__. A quorum was present and 
voted. The resolution is duly recorded in the minutes of the meeting 
and is still in full force and effect.

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Board Presiding Officer

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Date

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Secretary

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Date

    (c) Merger agreement, Form 6304. Submit a proposed merger agreement 
to the NCUA with the initial merger package required by Sec.  708b.104. 
Do not sign, date, or notarize the proposed agreement. At the 
completion of the merger, officials of the merging and continuing 
credit unions must sign this agreement and have it notarized. The 
continuing credit union should retain the original document. Send one 
copy of the executed form to the NCUA Regional Director (see Form NCUA 
6309 in paragraph (g) of this section). The date you execute this 
document is the effective date of the merger.

Merger Agreement

    This agreement is made and entered into on [month and day], 
20__, by and between [name of continuing credit union] (continuing 
credit union) and [name of merging credit union] (merging credit 
union). The continuing credit union and the merging credit union 
agree to the following terms:
    1. The merging credit union will transfer to the continuing 
credit union all of its assets, rights, and property.
    2. The continuing credit union will assume and pay all 
liabilities of the merging credit

[[Page 30312]]

union. In addition, the continuing credit union will issue all 
members of the merging credit union the same amount of shares they 
currently own in the merging credit union, subject to the following 
share adjustments (if any):

[Name of continuing credit union] by:

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Board Presiding Officer

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Treasurer

[Name of merging credit union] by:

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Board Presiding Officer

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Treasurer

Before me a Notary Public (or other authorized officer) appeared the 
above named [name of Board presiding officer] and [name of 
Treasurer], Board Presiding Officer and Treasurer of [name of 
continuing credit union], who being personally known to me as (or 
proved by the oath of credible witnesses to be) the persons who 
executed the annexed instrument acknowledged the same to be their 
free act and deed and in their respective capacities the free act 
and deed of said credit union.

(SEAL)

Notary Public
My commission expires______, 20__.

State of---------------------------------------------------------------

County of--------------------------------------------------------------

Before me a Notary Public (or other authorized officer) appeared the 
above named [name of Board Presiding Officer] and [name of 
Treasurer], Board Presiding Officer and Treasurer of [name of 
merging credit union], who being personally known to me as (or 
proved by the oath of credible witnesses to be) the persons who 
executed the annexed instrument acknowledged the same to be their 
free act and deed and in their respective capacities the free act 
and deed of said credit union.

(SEAL)

Notary Public
My commission expires______, 20__.

State of---------------------------------------------------------------

County of--------------------------------------------------------------


    (d) Sample form notice to members, NCUA 6305A. If a federally 
insured credit union is merging into another federally insured credit 
union, use of this form will meet the requirements of Sec.  708b.106. 
Brackets provide instructions or indicate that the merging credit union 
should fill in the appropriate information, or select the appropriate 
option to conform the notice to the circumstances of the merger.

Notice of Meeting of the Members of [Name] Credit Union

    The Board of Directors of [name of merging credit union] have 
called a [special] meeting of the members of this credit union at 
[location, address], on [month, day, year] at [time]. The purpose of 
this meeting is:
    1. To consider and act upon a plan and proposal for merging 
[name of merging credit union] with and into [name of continuing 
credit union] (hereinafter referred to as the ``Continuing Credit 
Union''), whereby all assets and liabilities of the [name of merging 
credit union] will be merged with and into the Continuing Credit 
Union. All members of [name of merging credit union] will become 
members of the Continuing Credit Union and will be entitled to and 
will receive shares in the Continuing Credit Union for the shares 
they own in [name of merging credit union] on the effective date of 
the merger.
    2. To ratify, confirm and approve the action of the Board of 
Directors in authorizing the officers of [name of merging credit 
union], subject to the approval of members, to do all things and to 
execute all agreements, documents, and other papers necessary to 
carry out the proposed merger.
    The Board of Directors of [name of merging credit union] 
encourages you to attend the meeting and vote on the proposed 
merger. Whether or not you expect to attend the meeting, we urge you 
to sign, date and promptly return the enclosed ballot to vote on the 
proposed merger.
    If you wish to submit comments about the merger to share with 
other members, you may submit them to the National Credit Union 
Administration (NCUA) at [insert email address] or [insert physical 
address]. The NCUA will post comments received from members on its 
website, along with the member's name, subject to the limitations 
and requirements of its regulations.

Other Information Related to the Proposed Merger:

    The Board of Directors has carefully evaluated and analyzed the 
assets and liabilities of the credit unions and the value of shares 
in both credit unions. The financial statements of both credit 
unions, as well as the projected combined financial statement of the 
continuing credit union, follow as separate documents. In addition, 
the following information applies to the proposed merger.
    Reasons for merger: The Board of Directors has concluded that 
the proposed merger is desirable and in the best interests of 
members because [insert reasons].
    Net worth: The net worth of a merging credit union at the time 
of a merger transfers to the continuing credit union. [Name of 
merging credit union] [has or does not have] a higher net worth 
ratio than [name of continuing credit union].
    Share adjustment or distribution: [Choose option A or B and 
delete the other.]
    A: [Name of merging credit union] will not distribute a portion 
of its net worth to its members in the merger. The board of 
directors has determined a share adjustment, or other distribution 
of [name of merging credit union]'s net worth is unnecessary because 
[insert reasons].
    B: [Name of merging credit union] will distribute a portion of 
its net worth to its members in the merger. The board of directors 
has determined to distribute a portion of [name of merging credit 
union]'s net worth as [describe method of calculating share 
adjustment or other provisions for reserves, undivided earnings or 
dividends.]
    Locations of merging and continuing credit union: [Name of 
merging credit union]'s main office at [street address, city] will 
[close/remain open/remain open for__]. [If the merging credit union 
has branches, insert the same statement about the branch locations]. 
[Name of continuing credit union] has the following locations that 
are near [name of merging credit union]. [List address and type of 
location--i.e. main office, full-service branch for each non-ATM 
location of the continuing credit union in reasonable proximity to 
the locations of the merging credit unions.]
    Changes to services and member benefits: [If applicable, explain 
any loss of services, such as increases in fees or loss of ATM 
access, as well as any changes to benefits such as life savings 
protection insurance or loan protection insurance. If inapplicable, 
delete entire section.]
    Merger-related financial arrangements: [ ]
    [If inapplicable, delete entire section.] NCUA Regulations 
require merging credit unions to disclose certain increases in 
compensation that any of the merging credit union's officials or the 
five most highly compensated employees have received or will receive 
in connection with the merger. The following individuals have 
received or will receive such compensation:

------------------------------------------------------------------------
       Name          Title        Description of increase        Amount
------------------------------------------------------------------------
                   ........  .................................  ........
------------------------------------------------------------------------
                   ........  .................................  ........
------------------------------------------------------------------------
                   ........  .................................  ........
------------------------------------------------------------------------
                   ........  .................................  ........
------------------------------------------------------------------------
                   ........  .................................  ........
------------------------------------------------------------------------


[[Page 30313]]

    Please note that the proposed merger must have the approval of 
the majority of members who vote.
    Enclosed with this Notice of Special Meeting is a Ballot for 
Merger Proposal. If you cannot attend the meeting, please complete 
the Ballot and return it to [mailing address]. To be counted, your 
Ballot must be received by [month, day, year] at [time of special 
meeting].

BY THE ORDER OF THE BOARD OF DIRECTORS:

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President

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Date

    (e) Form ballot, NCUA 6306A.

Ballot for Merger Proposal

Name of Member:

Account Number:

    Your credit union must receive this ballot by [insert date of 
meeting]. Please mail or bring it to:

[insert credit union address]

    I have read the Notice of Special Meeting for the members of 
Credit Union. The meeting will be held on the above date to consider 
and act upon the merger proposal described in the notice. I vote on 
the proposal as follows (check one box):
[ ] Approve the proposed merger and authorize the Board of Directors 
to take all necessary action to accomplish the merger.

[ ] Do not approve the proposed merger.

Signed:----------------------------------------------------------------
Member's Name

Date:------------------------------------------------------------------

    (f) Form certification of vote, NCUA 6308A. Within ten calendar 
days after the membership vote, the merging credit union must complete 
this form and mail it to the NCUA Regional Director.

Certification of Vote on Merger Proposal of the Credit Union

[Merging]

    We, the undersigned officers of the [name of merging credit 
union], certify the completion of the following actions:
    1. At a meeting on [month and day], 20__, the Board of Directors 
adopted a resolution approving the merger of our credit union with 
[name of continuing credit union] (continuing credit union).
    2. Not more than 90 days or less than 45 days before the date of 
the vote, our members received copies of the notice of meeting and 
the ballot, as approved by the National Credit Union Administration.
    3. The credit union arranged for a meeting of our credit union 
members at the time and place announced in the notice to consider 
and act upon the proposed merger.
    4. At the meeting, the members present received an explanation 
of the merger proposal and any changes in products, services and 
locations.
    5. The members of our credit union voted on of the merger as 
follows:

___Number of members present at the meeting
___Number of members present who voted in favor of the merger
___Number of members present who voted against the merger
___Number of additional written ballots in favor of the merger
___Number of additional written ballots opposed to the merger

    6. The action of the members at the meeting was recorded in the 
minutes.

This certification signed [month and day], 20__.

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Board Presiding Officer

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Secretary

    (g) Form certification of completion of merger, NCUA 6309. Within 
30 calendar days after the effective date of the merger, the continuing 
credit union must complete this form and mail it to the NCUA Regional 
Director with the documents listed on the form.

Certification of Completion of Merger

    We, the undersigned officers of the above-named credit union, 
certify to the National Credit Union Administration as follows:
    1. The merger of our credit union with [name of merging credit 
union] was completed as of [month day and year of the executed 
merger agreement], according to the terms and plan approved by this 
Board of Directors by a resolution adopted at the meeting held on 
[month day and year of board of directors meeting]. We previously 
provided a certified copy of the resolution to the National Credit 
Union Administration.
    2. We completed all required steps for the merger and 
transferred the merging credit union's assets.
    Attached to this certification are the following documents:
    1. Financial reports for each credit union immediately before 
the completion of the merger.
    2. A consolidated financial report for the continuing credit 
union immediately after the completion of the merger.
    3. The charter of the merging federal credit union [if 
available].
    4. The insurance certificate for the merging federally insured 
credit union [if available].
    5. A copy of the executed merger agreement, Form NCUA 6304.

This certification signed [month and day], 20__.

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Board Presiding Officer

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Treasurer

    (h) Form calculation of PAS ratio, NCUA 6311. The merger package 
required by Sec.  708b.104 must include PAS calculations for both the 
merging and continuing credit unions. The Probable Asset/Share Ratio 
(PAS) reflects the relative worth of $1 of shares in a credit union, 
assuming it will be an on-going concern. The ratio is computed by 
dividing the net value of assets by the credit union's total shares.

    ADDITIONS: Cash is valued at book less any known potential 
losses. Loans are valued at book net of probable estimated loan 
losses (ALLL). Investments are valued at book value less any known 
losses. However, if a long-term investment is likely to be 
liquidated prior to maturity, it is valued at current market value. 
Fixed Assets are valued at book, except when major fixed assets are 
not in use or are in the process of being sold. In these instances, 
the asset is valued at its probable market value. Other Assets are 
valued at the most realistic value to the credit union, usually not 
to exceed book value.
    DEDUCTIONS: Notes Payable are valued at book. Accounts Payable 
are valued at book. Other Liabilities are valued at book. Contingent 
and/or Unrecorded Liabilities are valued at the most realistic known 
value. This item should include any unrecorded dividends not accrued 
for the accounting period. Subsidiary Ledger Differences are 
deducted if the credit union is likely to suffer a loss due to the 
problem. Other Losses include any other known losses. Do not include 
deficits in undivided earnings or net losses because they have 
already reduced assets if properly recorded.

           Probable Asset/Share Ratio--Continuing Credit Union
------------------------------------------------------------------------
                                     Book Value          Market Value
------------------------------------------------------------------------
ADDITIONS:
    Cash......................  ...................  ...................
    Loans.....................  ...................  ...................
    Investments...............  ...................  ...................
    Fixed Assets..............  ...................  ...................
    Other Assets..............  ...................  ...................
                               -----------------------------------------
        Total (A).............  ...................  ...................
DEDUCTIONS:
    Notes Payable.............  ...................  ...................

[[Page 30314]]

 
    Accounts Payable..........  ...................  ...................
    Other Recorded Liabilities  ...................  ...................
    Contingent and/or           ...................  ...................
     Unrecorded Liabilities.
    Subsidiary Ledger           ...................  ...................
     Differences (Losses)
     Other Losses.
                               -----------------------------------------
        Total (B).............  ...................  ...................
                               -----------------------------------------
            Net Value of        ...................  ...................
             Assets (A-B).
Total Shares..................  ...................  ...................
Probable Asset/Share Ratio....  ...................  ...................
------------------------------------------------------------------------


            Probable Asset/Share Ratio--Merging Credit Union
------------------------------------------------------------------------
                                     Book Value          Market Value
------------------------------------------------------------------------
ADDITIONS:
    Cash......................  ...................  ...................
    Loans.....................  ...................  ...................
    Investments...............  ...................  ...................
    Fixed Assets..............  ...................  ...................
    Other Assets..............  ...................  ...................
                               -----------------------------------------
        Total (A).............  ...................  ...................
                               -----------------------------------------
DEDUCTIONS:                     ...................  ...................
    Notes Payable.............  ...................  ...................
    Accounts Payable..........  ...................  ...................
    Other Recorded Liabilities  ...................  ...................
    Contingent and/or           ...................  ...................
     Unrecorded Liabilities.
    Subsidiary Ledger           ...................  ...................
     Differences (Losses)
     Other Losses.
                               -----------------------------------------
        Total (B).............  ...................  ...................
                               -----------------------------------------
            Net Value of        ...................  ...................
             Assets (A-B).
Total Shares..................  ...................  ...................
Probable Asset/Share Ratio....  ...................  ...................
------------------------------------------------------------------------


    (i) Certification of no non-disclosed merger-related financial 
arrangements. The merger package required by Sec.  708b.104 must 
include the following certification.

Certification of No Non-Disclosed Merger-Related Financial Arrangements

    We, the undersigned officials of [name of merging credit union] 
and [name of continuing credit union], certify to the National 
Credit Union Administration (NCUA) as follows:
    1. The information provided to the NCUA in the merger 
application, and the proposed disclosure to the members of [name of 
merging credit union] includes a complete, true and accurate 
statement about all merger-related financial arrangements, if any, 
provided to covered persons, as those terms are defined in Part 708b 
of the NCUA's regulations.
    2. We understand that we have an affirmative duty to revise our 
merger application and the notice to the members of [name of merging 
credit union] if merger-related financial arrangements are added or 
increased after our application is submitted.

This certification signed [month and day], 20__.

[name of continuing credit union]

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Board Presiding Officer

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CEO

[name of merging credit union]

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Board Presiding Officer

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CEO

[FR Doc. 2018-13867 Filed 6-27-18; 8:45 am]
 BILLING CODE 7535-01-P