Proposed Rule2024-16227
Succession Planning
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 25, 2024
Issuing agencies
National Credit Union Administration
Abstract
On February 3, 2022, the NCUA Board (Board) published a proposed rule to require Federal credit union (FCU) boards of directors to establish processes for succession planning for key positions. Based on the public comments received in response to the proposal, and upon further consideration of the issues involved, the Board is publishing this second proposed rule addressing succession planning. The new proposal is based on the earlier proposed rule but includes several changes that the Board believes will further strengthen succession planning efforts for both consumer FCUs and consumer federally insured, State-chartered credit unions (FISCUs).
Full Text
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<title>Federal Register, Volume 89 Issue 143 (Thursday, July 25, 2024)</title>
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[Federal Register Volume 89, Number 143 (Thursday, July 25, 2024)]
[Proposed Rules]
[Pages 60329-60336]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-16227]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 89, No. 143 / Thursday, July 25, 2024 /
Proposed Rules
[[Page 60329]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701 and 741
[NCUA-2024-0037]
RIN 3133-AF42
Succession Planning
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: On February 3, 2022, the NCUA Board (Board) published a
proposed rule to require Federal credit union (FCU) boards of directors
to establish processes for succession planning for key positions. Based
on the public comments received in response to the proposal, and upon
further consideration of the issues involved, the Board is publishing
this second proposed rule addressing succession planning. The new
proposal is based on the earlier proposed rule but includes several
changes that the Board believes will further strengthen succession
planning efforts for both consumer FCUs and consumer federally insured,
State-chartered credit unions (FISCUs).
DATES: Comments must be received on or before September 23, 2024.
ADDRESSES: You may submit written comments, identified by RIN 3133-
AF42, by any of the following methods (Please send comments by one
method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2024-0037. Follow the
instructions for submitting comments. A plain language summary of the
proposed rule is also available on the docket website.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mailing address.
<bullet> Public inspection: You may view all public comments on the
Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, as
submitted, except for those we cannot post for technical reasons. The
NCUA will not edit or remove any identifying or contact information
from the public comments submitted. If you are unable to access public
comments on the internet, you may contact the NCUA for alternative
access by calling (703) 518-6540 or emailing <a href="/cdn-cgi/l/email-protection#f8b7bfbbb5999194b8969b8d99d69f978e"><span class="__cf_email__" data-cfemail="1a555d59577b73765a74796f7b347d756c">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Office of Examination and Insurance:
John Berry, Policy Officer, at (703) 664-3909 or at 1775 Duke Street,
Alexandria, VA 22314. Office of General Counsel: Ariel Pereira, Senior
Attorney, Office of General Counsel, at (703) 548-2778 or at the above
address.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. Succession Planning
B. Increased Relevance of Succession Planning
C. NCUA Efforts To Strengthen FICU Succession Planning Efforts
II. The Board's February 3, 2022, Proposed Rule
III. Legal Authority
IV. This Proposed Rule
A. Applicability of Proposed Rule
B. Succession Plan Requirements
C. Available Resources
D. Small FICU Considerations
V. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
D. Executive Order 13132 on Federalism
E. Assessment of Federal Regulations and Policies on Families
I. Background
A. Succession Planning
Board members play a key role in a federally insured credit union's
(FICU) success.\1\ The Federal Credit Union Act (FCU Act) vests the
general direction and control of an FCU in its board.\2\ The managerial
structure for FISCUs is governed by State law; however, in general, the
operational oversight of FISCUs is under a board of directors or
comparable body.\3\ FICU boards are faced with a multitude of
complicated challenges, such as meeting evolving member needs,
fostering employee loyalty and trust, retaining, and developing
necessary skills, and keeping pace with technological and industry
changes. Among this list of issues, succession planning is one of the
most critical.
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\1\ The term FICU encompasses both FCUs and FISCUs.
\2\ 12 U.S.C. 1761, 1761b; 12 CFR701.4, and Article VI, section
6 of the FCU Bylaws codified in appendix A of 12 CFR part 701.
\3\ The FCU Act, at 12 U.S.C. 1790a reflects the general
proposition that a board of directors governs a FICU (providing that
an ``insured credit union shall notify the Board of the proposed
addition of any individual to the board of directors'' and that an
``insured credit union may not add any individual to the board of
directors'' under certain conditions.) This is also reflected in the
NCUA regulations. For example, see 12 CFR 701.14(a), which provides
that 12 U.S.C. 1790a ``sets forth conditions under which a credit
union must notify NCUA in writing of any proposed changes in its
board of directors.'' See also, 12 CFR 741.3(a)(2) (providing that a
FISCU ``board of directors may authorize'' the designation of
certain dividends on nonconforming investments as undivided
earnings) and 12 CFR 747.2001(b) (referring to the service of credit
union notices, directives, and decisions on appeal to ``a dismissed
director or officer thereof'' of a FISCU).
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Succession planning is the process through which an organization
helps identify, develop, and retain key personnel to ensure its
viability and continued effective performance. It also allows an
organization to prepare for the unexpected, including the sudden
departure of key staff. Succession planning is recognized as vital to
the success of any institution, including FICUs. One of the variables
over which a FICU board has control is the hiring of the organization's
senior management.
Succession planning is a critical component of a FICU's overall
strategic plan. It helps ensure that the appropriate personnel are
available to execute the FICU's strategic plan and mission. There are
two elements to a FICU board's succession planning strategy. First, the
FICU's board should develop a pool of talented candidates to
potentially stand for election to the board, to fill temporary board
and committee vacancies by appointment, and to fill appointed
positions, such as to the FICU's supervisory committee (or equivalent
body under State law). The NCUA Board recognizes the importance of the
election process in FICU governance and emphasizes that the proposed
rule is meant to complement and not supplant the vital role member-
owners play in FICU governance. Second, in furtherance of the board's
responsibility to oversee the operations of the FICU, it must consider
how best
[[Page 60330]]
to fill vacancies in senior management positions held by employees,
such as the chief executive officer and the chief financial officer.\4\
This includes establishing an order of succession among existing
employees for temporarily filling senior management roles in the event
of a vacancy, as well as the development of strategies to identify,
develop, and retain employees capable of filling these senior
positions.
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\4\ The NCUA regulation at 12 CFR 701.14 defines the term
``senior executive officer'' to include ``the chief executive
officer (typically this individual holds the title of president or
treasurer/manager), any assistant chief executive officer (e.g., any
assistant president, any vice president or any assistant treasurer/
manager) and the chief financial officer (controller).''
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A board's failure to plan for vacancies in elected and appointed
positions, as well as the transition of its management, could come with
high costs. The FICU runs the risk of creating a leadership vacuum,
disrupting operations and potentially jeopardizing the FICU's ability
to adequately manage liquidity risk, address cybersecurity threats, or
ensure continued compliance with consumer protection, bank secrecy, and
other critical responsibilities. The FICU may also incur higher costs
or be unable to recruit and retain new leadership and top talent than
would be the case if it had an established succession plan. Failure to
plan for succession can also negatively impact the FICU's ability to
maintain relationships with members and suppliers and to secure future
business opportunities. Accordingly, the failure to adequately plan for
changes in leadership can jeopardize the continued viability of a FICU,
potentially resulting in the unplanned merger of the FICU or other
disruptions to safe and sound operations upon the departure of key
personnel.
For the above reasons, the Board finds that a compelling safety and
soundness case exists for rulemaking in this area. The failure of FICUs
to adequately plan for succession poses a risk not only to individual
FICUs and their member-owners, but to the credit union system as a
whole and to the National Credit Share Insurance Fund (NCUSIF). The
proposed regulatory changes are designed to mitigate this risk and are
consistent with the Board's statutory duty to ensure a safe and sound
system of cooperative credit for its member-owners. Board action is
also consistent with the guidance issued by the other banking agencies
to address succession planning.\5\
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\5\ See e.g., Federal Reserve Board, Supervisory Guidance on
Board of Directors' Effectiveness (Feb. 26, 2021); also, the
guidelines of the Office of the Comptroller of the Currency (OCC) at
12 CFR part 30, appendix D, captioned ``OCC Guidelines Establishing
Heightened Standards for Certain Large Insured National Banks,
Insured Federal Savings Associations, and Insured Federal
Branches.''
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B. Increased Relevance of Succession Planning
Several factors have contributed to the increased relevance of
succession planning for FICU boards. In 2000, the credit union system
had 10,316 FICUs.\6\ The total number of FICUs declined to 4,645 by the
third quarter of 2023.\7\ This decline is largely attributable to the
long-running trend of consolidation across all depository
institutions.\8\ This trend has remained relatively constant across all
economic cycles for more than three decades. In 1999, the NCUA approved
431 FICU consolidations.\9\ The number of annual consolidations has
decreased since that time but remains steady. For example, in 2022, the
Board approved 181 FICU consolidations.\10\ In 2023, the number of
approved consolidations was only slightly lower at 145.\11\
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\6\ NCUA, Historical Timeline, https://ncua.gov/about/
historical-timeline#:~:text=2000,more%20than%2077%20million%20members
.
\7\ NCUA, Quarterly Credit Union Data Summary 2023 Q3, <a href="https://ncua.gov/files/publications/analysis/quarterly-data-summary-2023-Q3.pdf">https://ncua.gov/files/publications/analysis/quarterly-data-summary-2023-Q3.pdf</a>.
\8\ Id.
\9\ NCUA, NCUA 2000 Annual Report, <a href="https://ncua.gov/files/annual-reports/2000AR.pdf">https://ncua.gov/files/annual-reports/2000AR.pdf</a>.
\10\ NCUA, Merger and Insurance Reports, <a href="https://ncua.gov/analysis/chartering-mergers/merger-activity-insurance-report">https://ncua.gov/analysis/chartering-mergers/merger-activity-insurance-report</a>.
\11\ Id.
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Data suggests that smaller FICUs may be more likely to merge. The
decline in the total number of FICUs has been particularly steep among
the smallest FICUs with less than $10 million in assets. At the close
of 2015, there were 1,816 FICUs with less than $10 million in
assets.\12\ By the third quarter of 2023, the number of these smallest
FICUs was 938.\13\ This figure represents a decrease from 975 FICUs the
previous year.\14\ By comparison, during the same period, the number of
FICUs with assets of at least $1 billion increased to 424 from 414.\15\
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\12\ NCUA, Quarterly Credit Union Data Summary 2015 Q4, <a href="https://ncua.gov/files/publications/analysis/PACA-Facts-2015-12.pdf">https://ncua.gov/files/publications/analysis/PACA-Facts-2015-12.pdf</a>.
\13\ Supra, note 7.
\14\ Id.
\15\ Id.
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The available data does not differentiate between those smaller
FICUs that consolidated or were liquidated, versus those that expanded
into a larger asset category. However, the sharper decline of FICUs in
the smaller asset categories, combined with the ongoing industry trend
of consolidation, suggests that mergers may be more prevalent among
smaller FICUs.
Voluntary mergers can be used to create economies of scale to offer
more or better products and services to FICU members. However, the
Board is also aware of numerous instances in recent years where FICUs
merged because of a lack of succession planning. An NCUA analysis found
that poor succession planning was either a primary or secondary reason
for almost a third (32 percent) of FICU consolidations.\16\ This data
has been corroborated by industry participants.\17\ The Board is
interested in helping FICUs reduce the number of mergers resulting from
the lack of succession planning.
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\16\ NCUA, Truth in Mergers: A Guide for Merging Credit Unions,
page 9, <a href="https://www.ncua.gov/files/publications/Truth-In-Mergers.pdf">https://www.ncua.gov/files/publications/Truth-In-Mergers.pdf</a>.
\17\ See, for example, <a href="http://CUtoday.info">CUtoday.info</a>, A Look at What Members,
Mgmt. Get in Mergers (November 16, 2021) (``Credit unions merging
out of existence, nearly all of them smaller, shared reasons for
merging that included inability to invest in technology (even though
some had very high capital levels), inability to find volunteers and
staff and, a common theme, a lack of any succession planning and a
retiring CEO''), available at: <a href="https://www.cutoday.info/THE-feature/A-Look-at-What-Members-Mgmt.-Get-in-Mergers">https://www.cutoday.info/THE-feature/A-Look-at-What-Members-Mgmt.-Get-in-Mergers</a>.
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The Board finds that this goal is consistent with the FCU Act,
which contains provisions that disfavor consolidation, implying a
presumption that the public is better served with a greater number of
credit unions. For example, the statute imposes added limitations on
the addition of larger groups to multiple common-bond credit unions,
prompting the Board to consider the feasibility of formation of a
separate credit union.\18\ Further, the FCU Act provides that the Board
shall ``encourage the formation of separately chartered credit unions
instead of approving an application to include an additional group
within the field of membership of an existing credit union whenever
practicable and consistent with reasonable standards for the safe and
sound operation of the credit union.'' \19\
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\18\ 12 U.S.C. 1759(d)(1).
\19\ 12 U.S.C. 1759(f).
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Another reason for a heightened focus on succession planning is the
ongoing retirements of the ``Baby Boomer'' generation (individuals born
between 1946 and 1964). According to the U.S. Census Bureau, there are
approximately 73 million Baby Boomers, the second-largest age group
after ``Millennials'' (those born between 1982 and 2000).\20\ By 2030,
all Baby Boomers will have reached age 65 and be eligible for
retirement.\21\ The COVID-19 pandemic
[[Page 60331]]
accelerated the pace of retirements among this generational cohort.\22\
These retirements include credit union board members and executives.
According to some sources, approximately 10 percent of credit union
chief executive officers were expected to retire between 2019 and
2021.\23\ Succession planning is critical to the continued operation of
those credit unions with board members and executives that are part of
this retirement wave.
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\20\ U.S. Census Bureau, By 2030, All Baby Boomers Will Be Age
65 or Older, (December 10, 2019), <a href="https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html">https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html</a>.
\21\ Id.
\22\ Kevin McCarthy, ``Just Tired:'' Why So Many Bank, Credit
Union CEOs Are Calling it Quits, American Banker (December 7, 2021),
<a href="https://www.americanbanker.com/creditunions/news/just-tired-why-so-many-bank-credit-union-ceos-are-calling-it-quits">https://www.americanbanker.com/creditunions/news/just-tired-why-so-many-bank-credit-union-ceos-are-calling-it-quits</a>; and Richard Fry,
The Pace of Boomer Retirements Has Accelerated in the Past Year, Pew
Research Center (November 9, 2020), <a href="https://www.pewresearch.org/fact-tank/2020/11/09/the-pace-of-boomer-retirements-has-accelerated-in-the-past-year/">https://www.pewresearch.org/fact-tank/2020/11/09/the-pace-of-boomer-retirements-has-accelerated-in-the-past-year/</a>.
\23\ <a href="http://CUtoday.info">CUtoday.info</a>, CUNA ACUC Coverage: What's Happening in
Executive Compensation (June 19, 2019), <a href="https://www.cutoday.info/Fresh-Today/CUNA-ACUC-Coverage-What-s-Happening-in-Executive-Compensation">https://www.cutoday.info/Fresh-Today/CUNA-ACUC-Coverage-What-s-Happening-in-Executive-Compensation</a>.
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C. NCUA Efforts To Strengthen FICU Succession Planning Efforts
Given the increased importance of the topic, the NCUA has taken
several steps to strengthen current succession planning efforts being
taken by FICUs, and to encourage others that have not yet done so to
commence their succession planning process.
In March 2022, the NCUA issued Letter to Credit Unions 22-CU-05,
CAMELS Rating System, which provides that ``succession planning for key
management positions'' is a key factor considered when assessing the
management of a credit union.\24\ The Letter to Credit Unions 23-CU-01
included succession planning as one of the NCUA's supervisory
priorities for 2023.\25\
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\24\ NCUA, Letter to Credit Unions 22-CU-05, CAMELS Rating
System (March 2022), <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/camels-rating-system">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/camels-rating-system</a>. CAMELS is
the acronym for the rating system used by the NCUA to assess a
FICU's performance and risk profile derived from the six critical
elements of a FICU's operations: Capital adequacy, Asset quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk.
\25\ NCUA, Letter to Credit Unions 23-CU-01, NCUA's 2023
Supervisory Priorities (January 2023), <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/ncuas-2023-supervisory-priorities">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/ncuas-2023-supervisory-priorities</a>.
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Several factors have highlighted the need for rulemaking in this
area. While the NCUA does assess succession planning as part of the
CAMELS Management component, there is no NCUA regulation requiring
FICUs to implement a formal, written succession plan. As a result, the
NCUA lacks a full complement of regulatory tools to help address
deficiencies in a FICU's succession planning process. For example,
Letter to Credit Unions 23-CU-01 makes clear that NCUA examiners are
precluded from evaluating ``any formal or informal succession plans
developed by credit unions beyond what would normally be considered in
assigning the Management component of the CAMELS rating.'' \26\
Moreover, examiners may ``not issue an Examiner's Finding or Document
of Resolution if the credit union has not conducted succession
planning, or the planning is not adequate, unless the credit union is
in violation of its own policy for conducting succession planning or
administering any such plan(s).'' \27\ The absence of specific
regulations on this topic also means there are no requirements as to
what constitutes an acceptable succession plan. A regulation would
therefore establish a needed, clearly articulated, and consistently
enforceable set of succession planning standards.
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\26\ Id.
\27\ Id.
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II. The Board's February 3, 2022, Proposed Rule
At its January 27, 2022, meeting, the Board approved a proposed
rule to establish succession planning requirements for FCUs. The
proposed rule was published in the Federal Register on February 3,
2022.\28\ The proposed rule would have required FCU boards of directors
to establish succession plans for key positions, such as officers of
the board, management officials, executive committee members,
supervisory committee members, and (where provided for in the FCU's
bylaws) the members of the credit committee. Directors would have been
required to have a working familiarity with the succession plan. The
board of directors would also have been required to review the
succession plan in accordance with a schedule established by the board,
but no less than annually. While the proposed rule would have applied
only to consumer FCUs (excluding corporate FCUs), the preamble noted
that the Board's purpose was to encourage and strengthen succession
planning for all FICUs. The preamble of the February 3, 2022, proposed
rule provides additional details regarding the proposed regulatory
amendments.
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\28\ 87 FR 6078 (Feb. 3, 2022).
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The preamble to the proposed rule presented nine questions on which
the Board specifically sought public input. The proposed rule provided
for a 60-day comment period, which closed on April 4, 2022. The Board
received 26 public comments on the proposal.\29\ Comments were received
from individual credit unions, individuals, a law firm, and from
national, State, and regional organizations representing credit unions.
All of the public comments received by the Board are available for
public review on the <a href="http://Regulations.gov">Regulations.gov</a> web portal, at: <a href="https://www.regulations.gov/document/NCUA-2022-0016-0002/comment">https://www.regulations.gov/document/NCUA-2022-0016-0002/comment</a>.
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\29\ Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520), the Board also published a separate notice soliciting
comments for a period of 60 days on the information collection
requirements contained in the 2022 proposed rule. (87 FR 7502, Feb.
9, 2022.) The Board did not receive comments specifically in
response to the February 9, 2022, notice.
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Most commenters opted to provide general comments rather than
address the specific questions posed in the preamble. Most commenters
acknowledged the importance of succession planning but questioned the
need for succession planning regulations and raised concerns about the
specifics of the proposed regulatory amendments.
Based on the comments received in response to the 2022 proposed
rule, and upon further consideration of the issues involved, the Board
is publishing this second proposed rule addressing succession planning.
The new proposal is based on the earlier proposed rule but includes
several changes that the Board believes will further strengthen
succession planning efforts for all FICUs. This proposed rule would
require that consumer FICUs have succession plans to proactively
address key positions, such as officers of the board and management
officials. The succession plans will also aid FICU efforts to foster a
culture of growth and development.
III. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act. The proposed rule would establish succession
planning requirements for an FCU. Section 113 of the FCU Act provides
that an FCU's board of directors shall have the general direction and
control of the affairs of the FCU.\30\ The board of directors must
oversee the credit union's operations to ensure the credit union
operates in a safe and sound manner. For example, the board must be
kept informed about the credit union's operating environment, hire and
retain competent management, and ensure that the credit union has a
risk management structure
[[Page 60332]]
and process suitable for the credit union's size and activities.
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\30\ 12 U.S.C. 1716b.
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Further, under the FCU Act, the NCUA is the chartering and
supervisory authority for FCUs and the Federal supervisory authority
for FICUs.\31\ The FCU Act grants the NCUA a broad mandate to issue
regulations governing both FCUs and all FICUs. Section 120 of the FCU
Act is a general grant of regulatory authority and authorizes the Board
to prescribe rules and regulations for the administration of the FCU
Act.\32\ Section 207 of the FCU Act is a specific grant of authority
over share insurance coverage, conservatorships, and liquidations.\33\
Section 209 of the FCU Act is a plenary grant of regulatory authority
to the Board to issue rules and regulations necessary or appropriate to
carry out its role as share insurer for all FICUs.\34\ Accordingly, the
FCU Act grants the Board broad rulemaking authority to ensure that the
credit union industry and the NCUSIF remain safe and sound.
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\31\ 12 U.S.C. 1752-1775.
\32\ 12 U.S.C. 1766(a).
\33\ 12 U.S.C. 1787(b)(1).
\34\ 12 U.S.C. 1789(a)(11).
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IV. This Proposed Rule
While the data discussed previously, on their own, support the need
for this rulemaking, the Board finds the need for succession planning
as a sound governance practice equally compelling. As noted, succession
planning is a vital element of a FICU's long-term strategic plan. This
rulemaking will further strengthen FICU succession planning efforts.
The following presents an overview of the proposed regulatory changes.
A. Applicability of Proposed Rule
These proposed regulatory amendments would apply to all consumer
FICUs. The Board recognizes the importance of State law in FISCUs'
internal governance and that some FISCUs may already be subject to
State-specific succession planning requirements.\35\ However, as
discussed, the Board finds the proposed rule is appropriate to protect
the NCUSIF from undue risk associated with mergers that may cause a
loss to the NCUSIF or negatively affect the credit union industry's
overall health. The Board also recognizes that under its statutory
authorities relating to unsafe or unsound practices, the NCUA may act
to address such practices in all FICUs.\36\ However, to the extent that
a FISCU is subject to a State statutory or regulatory requirement that
conflicts with the proposed rule, the NCUA will defer to the State
requirement.
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\35\ The Board recognizes that State law also plays a role in
FCUs' governance, as the model FCU bylaws reflect in several
instances; however, the Board performs a significant role in this
process in preparing the form of the bylaws under 12 U.S.C. 1758.
\36\ See 12 U.S.C. 1786(e), (k).
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The Board specifically invites public comment on the inclusion of
FISCUs within the scope of the regulatory amendments.
Consistent with the prior proposal, this proposed rule would not
amend the regulations in 12 CFR part 704, which establish requirements
applicable to federally insured corporate credit unions. These
regulations contain provisions that address succession planning. For
example, Sec. 704.13(c)(1) requires that the corporate's board of
directors must ensure that ``[s]enior managers . . . are capable of
identifying, hiring, and retaining qualified staff.'' Further,
paragraph (c)(2) of the section requires that the corporate's board of
directors ensure that ``[q]ualified personnel are employed or under
contract for all line support and audit areas, and designated back-up
personnel or resources with adequate cross-training are in place.''
While the scope of the proposed rule does not include corporate credit
unions, the Board welcomes public comment on whether changes to the
wording of Sec. 704.13 are necessary to effectuate the purposes of the
proposed regulatory amendments.
Additionally, while the proposed rule does not add any specific
requirements for Minority Depository Institutions (MDI), the Board
encourages MDIs to consider how their succession plans will affect
their MDI designation status. Recently the Board voted to update its
policy to preserve MDI institutions. To that end, we encourage
federally insured credit unions to the greatest extent possible, to
develop a succession plan that maintains the board and senior
leadership composition to maintain MDI eligibility. The Board also
invites public comment on how the NCUA can support this effort and any
unique barriers MDIs may face when developing succession plans.
B. Succession Plan Requirements
The Board proposes to establish the new succession planning
requirements by amending part 701 of its regulations, which govern the
organization and operation of FCUs. Specifically, the proposed rule
would add a new paragraph (e) to Sec. 701.4, which sets forth the
general duties and responsibilities of FCU directors. The proposed rule
would make these amendments applicable to FISCUs through an amendment
to 12 CFR part 741, subpart B, which sets forth regulations codified
elsewhere in the NCUA's regulations as applying to FCUs that also apply
to FISCUs. The Board proposes to add a new Sec. 741.228 that addresses
succession planning.
The proposal would require that a FICU board of directors establish
a written succession plan that addresses specified positions and
contains certain information. In addition, the board of directors would
be required to review the succession plan in accordance with a schedule
it establishes, but no less than annually. The Board recognizes that
circumstances might necessitate deviations from the plan in filling
specific vacancies. The proposed regulatory text accommodates such
exigencies but, as with substantive deviations in budgets and strategic
plans, it would be expected the board would be informed of changes and
rationale and document them in its meeting minutes.
The Board invites comments on the proposed board responsibilities
in the development of succession plans. Would the succession planning
process be better served by restricting or prohibiting deviations from
the succession plan in between the mandated regular review period?
Additionally, the Board invites comments on how the NCUA can provide
better support to credit unions in developing succession plans, and
attracting new talent to the credit union system? The Board is also
interested in comments on the timetable for regular review of the plans
and whether the final rule should provide for a different timeframe or
grant boards additional flexibility in establishing the review period.
In specifying the officials covered by the succession plan, the
Board has relied on the language of the FCU Act, which provides that
``[t]he management of a Federal credit union shall be by a board of
directors, a supervisory committee, and where the bylaws so provide, a
credit committee.'' \37\ The model FCU bylaws codified in appendix A of
12 CFR part 701 expand the list of senior FCU officials to include
management officials, assistant management officials, and loan
officers. In addition, the NCUA regulation at 12 CFR 701.14 defines the
term ``senior executive officer'' to include the FICU's chief executive
officer (typically this individual holds the title of president or
treasurer/manager), any assistant chief executive officer (for example,
any assistant president, any vice president,
[[Page 60333]]
or any assistant treasurer/manager) and the chief financial officer
(controller).\38\
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\37\ 12 U.S.C. 1761.
\38\ This provision applies to all FICUs. See also 12 CFR
741.205 (Reporting requirements for credit unions that are newly
chartered or in troubled condition). In the preamble to the 1990
final rule establishing the definition of ``senior executive
officer,'' the Board clarified the intended scope: ``By definition,
a vice president or assistant manager holds a senior position,
ranking immediately below the president or manager, serves as a
deputy or assistant in carrying out management functions, and is
empowered, among other things, to assume the duties of president or
manager in that individual's absence'' 55 FR 43084, 43085 (Oct. 26,
1990).
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Accordingly, under the proposed rule, the written succession plan
must, at a minimum, cover the following FICU positions, or their
equivalent if the FICU has adopted different position titles:
<bullet> Members of the board of directors;
<bullet> Members of the supervisory committee;
<bullet> Members of the credit committee, where such a committee is
provided for in the FICU's bylaws and is involved daily in the review
of loans;
<bullet> Loan officers, where provided for in the FICU's bylaws in
lieu of a credit committee and the loan officers are involved daily in
the review of loans;
<bullet> Management officials and assistant management officials,
as those terms are defined in the model FCU bylaws, if the FICU has
provided for such positions in its bylaws; and
<bullet> The FICU's ``senior executive officers'' as defined in 12
CFR 701.14 and any other FICU personnel the board of directors deems
critical given the FICU's size, complexity, or risk of operations. This
includes new positions that may be required due to planned changes in
operations, supervisory landscape, or corporate structure.
As noted, the succession plans would be required to address credit
committee members and loan officers only if such personnel are involved
on a daily basis in the review of loans. The succession plans are
intended to cover senior leadership positions responsible for the
oversight of the FICU or its day-to-day management. Accordingly, the
NCUA believes credit committee members and loan officers may not merit
inclusion if their duties are limited to the review of periodic,
specific lending decisions or other ``as-needed'' basis. However, the
Board invites public comments on the inclusion of credit committee
members and loan officers.
The proposed rule would also establish certain required contents
for a written succession plan. First, the succession plan would be
required to identify the title of the incumbent for each covered
position, the expiration of the incumbent's term (if serving in a term-
limited capacity) or other anticipated vacancy date (such as the
incumbent's retirement eligibility date or announced departure date).
The succession plan must also describe the FICU's general plan or
strategy for temporarily and permanently filling vacancies for each of
the positions, including vacancies due to unexpected circumstances.
For example, the plan could provide an order or succession among
the FICU's senior executive officers for temporarily assuming the role
of chief executive officer in the event of vacancy until such time as a
permanent hiring decision is made. Similarly, the plan might establish
an order of succession within individual components of the FICU for
temporarily filling specific senior executive positions (for example,
the deputy chief financial officer temporarily filling the role of
chief financial officer). Likewise, to the extent provided in the
bylaws, certain board members might be designated to assume specific
duties until the selection of a permanent successor (for example, a
specified board member temporarily assuming the duties of a vacated
position on the investment committee). Also, a smaller credit union
could establish a relationship with a larger credit union to help
manage the credit union during the time it takes to recruit and fill a
senior executive vacancy.
There is no expectation the plan specify particular successors,
only how the FICU will go about appointing interim replacements and
recruiting for a permanent replacement. The FICU's bylaws may establish
procedures for filling vacancies on the board of directors and certain
other positions. The succession plan should be consistent with any such
provisions of the bylaws. Further, FICUs must continue to comply with
all applicable employment or personnel laws and other requirements in
making hiring decisions.
In addition, the succession plan would be required to address the
FICU's strategy for recruiting candidates with the potential to assume
each of the positions. This could include, for example, the
availability of associate director positions on the FICU's board,
mentorship programs, educational opportunities offered by the FICU,
internships, staff development plans, and other similar efforts. The
strategy must consider how the selection and diversity among the
employees covered by the succession plan collectively and individually
promotes the safe and sound operation of the FICU. The board of
directors should also consider budgetary impacts in the development of
its succession plans. For example, the plan should consider the
compensation that will be required to attract talented candidates,
given such factors as the necessary education and skills, or the market
for comparable positions at other FICUs. The decision regarding the
compensation for one position may impact the FICU's ability to budget
for other staffing needs. Accordingly, FICUs should account for these
future needs in financial planning to strengthen their ability to plan
for future personnel needs.
The Board emphasizes that succession plans should provide
sufficient detail and use language that is reasonably understandable to
the FICU's member owners in describing its strategies for filling
vacancies and for recruiting, developing, and retaining employees. A
FICU is owned by its members, who elect the board and to whom the
directors are ultimately answerable. Accordingly, the Board believes it
is vital that succession plans be clearly and concisely written, use
everyday language to the extent possible, and avoid ambiguous phrasing
open to differing interpretations.
The Board welcomes comment on the list of covered positions and the
other proposed contents of the succession plan, and whether the final
rule should require FICUs to address additional or different
information in the plans. Depending on the comments and its continued
consideration of this issue, in finalizing the proposed rule, the Board
may adopt minor changes or additions to these requirements to meet the
proposal's goal of promoting thorough succession planning.
The proposed rule would also amend Sec. 701.4(b)(3), which sets
forth certain education requirements for FCU directors, to require that
directors have a working familiarity with the FCU's succession plan no
later than 6 months after appointment. In making this change, the Board
also proposes to reorganize the current contents of paragraph (b)(3)
for clarity and grammar. No additional substantive changes are proposed
to the current requirements of Sec. 701.4(b)(3). These amendments
would be made applicable to FISCUs through proposed new Sec. 741.228.
The expectation is for a FICU to develop a succession plan that is
consistent with its size and complexity. Therefore, smaller FICUs are
more likely to have a simple succession plan that only addresses a few
key leadership positions. Larger and more sophisticated FICUs are
expected to have more detailed plans. For example, smaller FICUs may
have fewer board members, or have fewer staff that would qualify
[[Page 60334]]
for the positions listed in the proposed rule for inclusion in the
succession plan. Likewise, smaller FICUs are likely to have less
expansive employee recruitment, development, and retention strategies.
In evaluating whether a succession plan meets the requirements of the
rule, the NCUA will consider the size of the FICU, as well as the
complexity and risk of its operations.
The Board emphasizes that succession plans should include an
estimate of the budgetary impacts of executing the succession plan,
including costs associated with new hires, such as the hiring of
recruitment firms and increased compensation packages for new hires. It
is not required for credit unions to have an exact figure but at a
minimum consider an estimate to allow for better planning.
C. Available Resources
The NCUA offers training and other resources to aid FICUs in
developing their succession plans. For example, the NCUA has posted a
video series on succession planning on the internet.\39\ In addition,
the Board's 2019 final rule on FCU bylaws promoted succession planning
efforts by providing guidance to FCUs on associate director
positions.\40\ The final rule clarified, through staff commentary, that
these positions may be thought of as apprenticeships in which the
incumbent receives training and knowledge about the business of the
board, with the expectation that the experience will prepare the
individual to serve as a director if elected for such a position by the
membership or appointed on an interim basis in an exigent
circumstance.\41\ FISCUs may wish to provide for similar positions if
consistent with applicable State law and regulation, and applicable
credit union bylaws.
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\39\ NCUA, Succession Planning (2021), <a href="https://ncua.csod.com/LMS/catalog/Welcome.aspx?tab_page_id=-67&tab_id=221000382">https://ncua.csod.com/LMS/catalog/Welcome.aspx?tab_page_id=-67&tab_id=221000382</a>.
\40\ 84 FR 53278 (Oct. 4, 2019).
\41\ Id. at 53301.
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In addition, credit union trade associations may also provide
training and have guidance available to assist credit unions in the
development of their succession plan. FICUs with a low-income
designation may be able to apply for technical assistance grants to
support succession planning or offset training costs through the
Community Development Revolving Loan Fund. FICUs are encouraged to make
use of these and other available resources in complying with the
proposed rule.
FICUs are also encouraged to use already existing information in
preparing their plans. For example, under the NCUA guidelines codified
in 12 CFR part 749, appendix B, all FICUs are encouraged to develop a
program to prepare for a catastrophic act. The codified guidelines
suggest that the program address several elements that are also
relevant to succession planning. These suggested elements include a
``business impact analysis to evaluate potential threats,'' the
determination of ``critical systems and necessary resources,'' and the
identification of the ``[p]ersons with authority to enact the plan.''
D. Small FICU Considerations
As discussed previously, smaller FICUs may be more likely to merge,
and data indicates the lack of succession planning is a significant
cause of mergers.\42\ Accordingly, smaller FICUs may be the most likely
to benefit from the proposed rule. The Board recognizes, however, that
these FICUs may lack the resources or expertise to develop succession
plans. Accordingly, smaller FICUs may especially benefit from the
existing resources identified above. The NCUA's Small Credit Union
Support Program is another available resource through which FICUs with
less than $100 million in total assets may seek assistance in a variety
of areas, including succession planning. In addition, the Board has
developed a sample template for a succession plan that may be
appropriate for some smaller FICUs, though all FICUs may benefit from
it. FISCUs electing to use the template should consult applicable State
requirements to ensure their succession plans are consistent with any
such requirements. The proposed template is available for review and
comment within the <a href="http://Regulations.gov">Regulations.gov</a> docket for this notice of proposed
rulemaking.
---------------------------------------------------------------------------
\42\ Supra, note 16.
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Smaller FICUs may also benefit from seeking the assistance of
larger and more sophisticated FICUs in developing and implementing
their succession plans. For example, a larger FICU may provide
technical expertise in the drafting of the plan or may detail personnel
to temporarily fill a critical vacancy in a smaller credit union until
such time as it is permanently filled. In general, a FICU may engage
outside parties to assist in compliance, so long as the FICU's board
retains authority and is cognizant that it is responsible for
compliance.
The Board specifically invites comment from smaller credit unions
on the proposed template, as well as other suggestions, to improve
succession planning and reduce any burden associated with the proposal.
V. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) (Act) requires that a notice of proposed rulemaking
include the internet address of a summary of not more than 100 words in
length of a proposed rule, in plain language, that shall be posted on
the internet website under section 206(d) of the E-Government Act of
2002 (44 U.S.C. 3501 note) (commonly known as regulations.gov). The
Act, under its terms, applies to notices of proposed rulemaking and
does not expressly include other types of documents that the Board
publishes voluntarily for public comment, such as notices and interim-
final rules that request comment despite invoking ``good cause'' to
forgo such notice and public procedure. The Board, however, has elected
to address the Act's requirement in these types of documents in the
interests of administrative consistency and transparency.
In summary, the proposed rule would require that FICU boards of
directors establish succession plans to proactively address any
vacancies that may occur for key positions. The proposal is based on a
prior February 3, 2022, proposed rule but includes several changes that
the Board believes will further strengthen FICU succession planning.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act \43\ generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
shall publish the certification at the time of publication of either
the proposed rule or the final rule, along with a statement providing
the factual basis for such certification.\44\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\45\ The Board fully considered the
potential economic impacts of the
[[Page 60335]]
regulatory amendments on small credit unions.
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\43\ 5 U.S.C. 601 et seq.
\44\ 5 U.S.C. 605(b).
\45\ 80 FR 57512 (Sept. 24, 2015).
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The proposed rule would require that FICU board of directors
establish, and comply with, a written succession plan that addresses
certain specified positions and contains specified elements. In
addition, the board of directors would be required to review the
succession plan no less than annually. These requirements may impose
some cost on FICUs. However, the NCUA believes several factors mitigate
the potential costs, especially for small FICUs with assets of less
than $100 million.
First, the preamble makes clear that an FICU is expected to develop
a succession plan that is consistent with its size and complexity.
Therefore, small FICUs may have a simple succession plan that is less
costly to prepare than would be the case for larger and more complex
FICUs. Further, in recognition that smaller FICUs may lack the
resources or expertise to develop succession plans, the Board is
providing a sample template for a simple succession plan that may be
appropriate for these FICUs.
The Board is also aware that many FICUs, including small FICUs,
have already adopted succession plans. Many of these existing plans
should already address, either partially or in their entirety, the
elements that would be required by the proposed rule. This could
minimize the burden of complying with the new requirements. The NCUA
also offers training and other resources to aid credit unions in
developing their succession plans. For example, the NCUA has posted a
video series on succession planning on the internet. Smaller FICUs are
encouraged to seek assistance from larger or more sophisticated FICUs
in the development of the required succession plans. FICUs are also
encouraged to use already existing information in preparing their
plans, such as the data used to develop the recommended program to
prepare for a catastrophic act. These resources should further reduce
the costs of preparing the succession plans.
Accordingly, the NCUA certifies the proposed rule would not have a
significant economic impact on a substantial number of small credit
unions.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemaking in
which an agency creates a new or amends existing information collection
requirements.\46\ For purposes of the PRA, an information collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The NCUA may not conduct or
sponsor, and the respondent is not required to respond to, an
information collection unless it displays a valid Office of Management
and Budget (OMB) control number. The proposed changes to part 701 would
establish new information collections in the form of succession
policies and plans. These revisions will be submitted for approval by
the Office of Information and Regulatory Affairs at OMB. Persons
interested in submitting comments with respect to the information
collection aspects and the estimated burden of the proposed rule should
submit them via email or to OMB as noted below.
---------------------------------------------------------------------------
\46\ 44 U.S.C. 3501-3520; 5 CFR part 1320.
---------------------------------------------------------------------------
Estimated PRA Burden
The NCUA estimates a total annual burden of 46,750 hours as
follows:
<bullet> OMB Control Number: 3133-NEW.
<bullet> Title of Information Collection: Succession Planning.
<bullet> Estimated number of respondents: 4,675.
<bullet> Estimated number of responses per respondent: 1.
<bullet> Estimated total annual responses: 4,675.
<bullet> Estimated total annual burden hours per response: 10.
<bullet> Estimated total annual burden hours: 46,750.
The NCUA invites comments on (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology; and (e) estimates of capital or
start-up costs and cost of operation, maintenance, and purchase of
services to provide information.
All comments are a matter of public record. Interested persons are
invited to submit written comments via email to (1)
<a href="/cdn-cgi/l/email-protection#43131102002c2e2e262d3730032d2036226d242c35"><span class="__cf_email__" data-cfemail="72222033311d1f1f171c0601321c1107135c151d04">[email protected]</span></a> or (2) visit <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>
(find this particular information collection by selecting the tab
titled ``Information Collection Review'' and click on to the section
titled ``Currently under Review--Open for Public comment'').
D. Executive Order 13132 on Federalism
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. This proposed rule applies to FCUs and, if
adopted, will also apply to FISCUs. By law, FISCUs are already subject
to numerous provisions of NCUA's rules, based on the agency's role as
the insurer of member share accounts and the significant interest NCUA
has in the safety and soundness of their operations. The rulemaking
may, therefore, have an occasional direct effect on the States, the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. The Board specifically requests comment on ways to
eliminate, or at least minimize, potential conflicts in this area.
Based on the comments received, the final rule may modify the
application of the succession planning requirements to FISCUs as
necessary to carry out the purposes of this rulemaking and the intent
of the Executive order.
E. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999.\47\ The proposed
regulatory requirements are exclusively concerned with succession
planning policies of FICUs for replacing vacancies among board members
and other key management officials. While the proposed rule is intended
to maintain access to quality credit union services by reducing
unplanned or forced consolidations, the potential positive effect on
family well-being, including financial well-being is, at most,
indirect.
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\47\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
[[Page 60336]]
12 CFR Part 741
Bank deposit insurance, Credit, Credit unions, Reporting and
recordkeeping requirements.
By the National Credit Union Administration Board, this 18th day
of July 2024.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board proposes to
amend 12 CFR parts 701 and 741 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNION
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, 1785, 1786, 1787, 1788, 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. Amend Sec. 701.4 by revising paragraph (b)(3) and adding paragraph
(e) to read as follows:
Sec. 701.4 General authorities and duties of Federal credit union
directors.
* * * * *
(b) * * *
(3) At the time of election or appointment, or within a reasonable
time thereafter, not to exceed six months, have at least a working
familiarity with, and to ask, as appropriate, substantive questions of
management and the internal and external auditors of:
(i) Basic finance and accounting practices, including the ability
to read and understand the Federal credit union's balance sheet and
income statement; and
(ii) The Federal credit union's succession plan established
pursuant to paragraph (e) of this section.
* * * * *
(e) Succession planning requirements--(1) General. A Federal credit
union must establish a written succession plan as provided in this
paragraph that is approved by the board of directors and consistent
with the credit union's size and complexity. In evaluating whether a
succession plan meets the requirements of this paragraph, the NCUA will
consider the size of the Federal credit union, as well as the
complexity and risk of its operations.
(2) Covered positions. The succession plan shall, at a minimum,
cover the following positions, or their equivalent if the Federal
credit union has adopted different position titles:
(i) Members of the board of directors;
(ii) Members of the supervisory committee;
(iii) Members of the credit committee, where such a committee is
provided for in the Federal credit union's bylaws and is involved daily
in the review of loans;
(iv) Loan officers, where provided for in the Federal credit
union's bylaws in lieu of a credit committee and the loan officers are
involved daily in the review of loans;
(v) Management officials and assistant management officials, as
those terms are defined in appendix A, if provided for in the Federal
credit union's bylaws; and
(vi) The Federal credit union's chief executive officer (typically
this individual holds the title of president or treasurer/manager), any
assistant chief executive officer (for example, any assistant
president, any vice president, or any assistant treasurer/manager), the
chief financial officer (controller), and any other personnel the board
of directors deems critical given the Federal credit union's size,
complexity, or risk of operations. This includes new positions that may
be required due to planned changes in operations, supervisory
landscape, or corporate structure.
(3) Contents of succession plan. The succession plan must, at
minimum, contain the following information regarding each of the
positions covered under paragraph (e)(2) of this section:
(i) The title for each covered position and the expiration of the
incumbent's term (if serving in a term-limited capacity) or other
anticipated vacancy date (such as the incumbent's retirement
eligibility date or announced departure date).
(ii) The Federal credit union's plan for temporarily and
permanently filling vacancies for each of the positions, including
vacancies due to unexpected circumstances.
(iii) The Federal credit union's strategy for recruiting candidates
with the potential to assume each of the positions. The strategy must
consider how the selection and diversity among the employees covered by
the succession plan collectively and individually promotes the safe and
sound operation of the Federal credit union.
(4) Board responsibilities. The board of directors must:
(i) Approve a written succession plan that meets the requirements
of paragraphs (e)(2) and (3) of this section; and
(ii) Review, and update as necessary, the succession plan in
accordance with a schedule established by the board of directors but no
less than annually.
(5) Adherence to plan. The board of directors shall approve and
document in its meeting minutes the rationale for substantive
deviations from its approved succession plan.
PART 741--REQUIREMENTS FOR INSURANCE
0
3. The authority citation for part 741 continues to read as follows:
Authority: 12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31
U.S.C. 3717.
0
4. Add Sec. 741.228 to read as follows:
Sec. 741.228 Succession planning.
Any credit union that is insured pursuant to title II of the Act
must adhere to the requirements in Sec. 701.4(b)(3) and (e) of this
chapter, to the extent these regulatory provisions do not conflict with
an applicable State requirement.
[FR Doc. 2024-16227 Filed 7-24-24; 8:45 am]
BILLING CODE 7535-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.