NCUA issues letter explaining merger rule

Oct. 1, 2018 -- NCUA issued a letter to credit unions outlining the various provisions of the recently revised merger rule for federally insured credit unions (including state-chartered federally insured credit unions). The changes are effective October 1, 2018 and apply to proposed merger applications received by NCUA or state credit union regulator.

The new rule requires federally insured credit unions to share member-to-member (MTM) communications when proposing a merger. The letter provides and overview of the MTM communication process.
The letter also details the bylaw updates that merging federal credit unions must make prior to a merger. State-chartered federally insured credit unions must consult with their state regulators to determine if bylaw changes are necessary. 

The following merger revisions and clarifications are summarized in the letter as well.

  1. Requirement for the merging credit union to disclose certain merger-related financial arrangements for covered persons in its member notice.
  2. Requirement for the merging and continuing credit unions to submit any respective board minutes to the NCUA that reference the merger during the 24 months prior to the boards of directors of the credit unions approving the merger plan.
  3. Requirement that the merging and continuing credit unions certify (Board Presiding Officer and CEO) that there are no other merger-related financial arrangements other than those disclosed in the notice to the members of the proposed merging credit union.
  4. Elimination of the NCUA’s Merger Manual since all associated forms are incorporated in the rule.

LINK:

NCUA LTCU 18-CU-03: voluntary mergers of federally insured credit unions

NASCUS Summary: NCUA final rule, Part 701 & 708b – FCU Bylaws and Voluntary Mergers of Federally Insured Credit Unions