Proposed Rule2026-02763
Bank Conversions and Mergers, Subpart A-Conversion of Insured Credit Unions to Mutual Savings Banks
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Published
February 11, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) is proposing to amend its regulations governing the conversion of insured credit unions into banks. The NCUA Board proposes to eliminate certain prescriptive procedural, disclosure, and communication requirements. This action reduces unnecessary regulatory burdens and provides credit union boards of directors with greater flexibility to exercise their business judgment. The intended effect of these changes is to simplify compliance for credit unions, reduce administrative costs, and modernize the conversion process, while ensuring members receive clear and effective disclosures.
Full Text
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<title>Federal Register, Volume 91 Issue 28 (Wednesday, February 11, 2026)</title>
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[Federal Register Volume 91, Number 28 (Wednesday, February 11, 2026)]
[Proposed Rules]
[Pages 6141-6144]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02763]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 708a
RIN 3133-AG01
Bank Conversions and Mergers, Subpart A--Conversion of Insured
Credit Unions to Mutual Savings Banks
AGENCY: National Credit Union Administration (NCUA)
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) is proposing to amend its regulations
governing the conversion of insured credit unions into banks. The NCUA
Board proposes to eliminate certain prescriptive procedural,
disclosure, and communication requirements. This action reduces
unnecessary regulatory burdens and provides credit union boards of
directors with greater flexibility to exercise their business judgment.
The intended effect of these changes is to simplify compliance for
credit unions, reduce administrative costs, and modernize the
conversion process, while ensuring members receive clear and effective
disclosures.
DATES: Comments must be received on or before April 13, 2026.
ADDRESSES: Comments may be submitted in one of the following ways.
(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-2026-0266. Follow the
``Submit a comment'' instructions. If you are reading this document on
<a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
<a href="http://regulations.gov">regulations.gov</a> docket. 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.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public comments. Do not include any
personally identifiable information (such as name, address, or other
contact information) or confidential business information that you do
not want publicly disclosed. All comments are public records; they are
publicly displayed exactly as received and will not be deleted,
modified, or redacted. Comments may be submitted anonymously. 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#5e11191d133f37321e303d2b3f70393128"><span class="__cf_email__" data-cfemail="eca3abafa18d8580ac828f998dc28b839a">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Woodard-Stephens, Staff
Attorney, Office of General Counsel, National Credit Union
Administration, at 1775 Duke Street, Alexandria, Virginia, 22314 or by
telephone at (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Board proposes to amend its regulations at subpart A of 12 CFR
part 708a, which governs bank conversions and mergers. The primary
purpose of this proposed rule is to partially or wholly eliminate
several sections within subpart A ``Conversion of Insured Credit Unions
to Mutual Savings Banks''. Under the authority of the Federal Credit
Union Act (FCU Act), the regulations at part 708a establish a
procedural framework for transactions that fundamentally alter a credit
union's charter or structure.
A. Background
The Board established regulations at 12 CFR part 708a, subpart A,
in a final rule published in the Federal Register on December 22, 2006.
71 FR 77167. The original purpose of this subpart was to govern the
process by which a federally insured credit union may convert to a
mutual savings bank. Section 708a.101 provides the definitions for this
part, including the term ``clear and conspicuous'', a term used as a
standard for the subsequent notice requirements in both subpart A and
subpart C. Section 708a.103 provides credit union boards with specific
media to use for notice requirements before voting on a proposal to
convert. Section 708a.104 imposes specific disclosure requirements that
a credit union board must follow after complying with Sec. 708a.103.
Finally, Sec. 708a.113 provides a set of non-binding voting guidelines
to assist credit unions in conducting a fair and legal member vote,
with suggestions covering state law applicability, member eligibility,
and the use of voting incentives.
B. Legal Authority
The FCU Act grants the Board a broad mandate to issue regulations
governing both federal credit unions and federally insured state-
chartered credit unions. Section 120 of the FCU Act is a general grant
of regulatory authority, and it authorizes the Board to prescribe rules
and regulations for the administration of the FCU Act. Section 209 of
the FCU Act is a plenary grant of regulatory authority to the NCUA to
issue regulations necessary or appropriate to carry out its role as
share insurer for all insured credit unions. Finally, the Board is
required to issue regulations regarding the conversion of insured
credit unions to mutual savings banks. 12 U.S.C. 1785(b)(2)(G).
II. Proposed Rule
A. Proposed Amendments To Reduce Regulatory Burden
The Board is proposing several amendments to subpart A of 12 CFR
part 708a to reduce unnecessary regulatory burdens.
The Board proposes to eliminate several provisions that are overly
prescriptive and impose burdens on a credit union's board of directors
during the initial phases of conversions. These changes are intended to
restore the board's role in exercising its fiduciary duties and
business judgment while still ensuring that members receive clear and
effective disclosures to make informed decisions.
The Board proposes to remove Sec. 708a.101's ``clear and
conspicuous'' definition. This definition mandates specific formatting,
such as bold type and a minimum 12-point font size. The Board believes
this overly prescriptive definition is unnecessary and can hinder
effective communication. It locks credit unions into a rigid standard
that may not be optimal across different media, such as print and
digital formats, and prevents them from using design principles that
could more effectively draw member attention to key disclosures. While
the FCU Act requires member notice, it is silent on specific
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formatting. Removing this definition will allow credit unions the
flexibility to design disclosures that are effective and clear for
their members. The Board preliminarily believes this definition may be
unnecessary and burdensome but requests public comment on this
determination.
Section 708a.103(a)(1) requires newspaper notice of the proposed
conversion, and that the notice be posted in the lobby of the credit
union's home office and on the home page of the website in a ``clear
and conspicuous'' fashion. The Board proposes to revise the
subparagraph (a)(1) requirements. The requirement to publish notice in
a newspaper may no longer be one of the more effective tools for
communicating with members in the digital age and may impose
unnecessary costs. The Board preliminarily believes these requirements
are unduly burdensome and overly prescriptive. The Board requests
public comment on these changes.
Section 708a.104 governs disclosures and communications to members
following the credit union board of director vote on a proposed
conversion. Subparagraph (d)(2) and paragraph (e) both provide
prescriptive and detailed requirements that the Board now believes may
be unduly burdensome. Subparagraph (d)(2) defines typographical
requirements, which the Board proposes to remove. Subparagraph (e)
currently requires communications to be written ``in a manner that is
simple and easy to understand. Simple and easy to understand means the
communications are written in plain language . . .'' This proposal
would remove the last sentence providing examples. The definition of
``plain language'' provides a sufficient description. The Board
requests public comment on these changes to reserve communication
requirements for the discretion of credit union boards of directors.
Under Sec. 708a.104(f), a member may ask a converting credit
union's board to mail or email conversion-related materials to other
members who are eligible to vote on the conversion. The credit union
board must send the materials if the request is timely and the
materials meet criteria specified in the regulation. The Board proposes
to remove subparagraph (f)(5) regarding submission of member materials
to the Regional Director within 7 days of receipt of the member request
if the credit union believes the member request to be improper. The
Board believes credit union management officials can determine when to
consult a Regional Director, again reserving communication requirements
for the discretion of credit union boards of directors. The Board
requests public comment on its proposal to remove this direction from
subparagraph (f). Similarly, in subparagraph (f)(8), the Board proposes
to remove direction for credit unions to send improper member materials
to regional directors, the Board believes credit union management
officials can determine improper submissions. The Board requests
comments on these proposed changes.
B. Elimination of Non-Regulatory Guidance in Conversions
The Board's last proposal in this rulemaking is to remove non-
regulatory guidance from Sec. 708a.113's ``Voting Guidelines'' as it
is non-binding and likely better suited as non-regulatory guidance.
This section does not establish any mandatory requirements; rather, it
explicitly states that its contents are ``guidelines as suggestions to
help a credit union obtain a fair and legal vote.'' It offers advice on
matters such as the applicability of state law, determining voter
eligibility, and scheduling meetings. While such guidance can be
helpful, including it within the Code of Federal Regulations is
inconsistent with the principles of good regulatory practice.
Regulations should contain binding legal obligations, not suggestions.
Credit unions will still be required to conduct votes on
conversions consistent with appliable law and regulation. However, the
presence of non-binding guidance within a body of mandatory rules
creates confusion for regulated entities, blurring the line between
what is required and what is merely recommended. Removing this section
will streamline the regulatory text and help credit unions to
understand their legal duties. This action is supported by the fact
that the provision itself acknowledges its advisory nature and, as
such, it is not statutorily required to be included in the regulation.
The Board seeks public comment on the proposed removal of Sec.
708a.113. Specifically, the Board asks whether removing these non-
binding guidelines from the regulation would improve clarity and
whether providing this information through other, non-regulatory
channels is necessary. The Board would remind credit unions they are
still required to conduct votes on conversions consistent with
applicable law and regulation.
III. 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)) 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 <a href="http://regulations.gov">regulations.gov</a>). In summary,
the Board proposes to eliminate certain prescriptive procedural,
disclosure, and communication requirements. This action is necessary to
reduce unnecessary regulatory burdens and provide credit union boards
of directors with greater flexibility to exercise their business
judgment. The intended effect of these changes is to simplify
compliance for credit unions, reduce administrative costs, and
modernize the conversion process, while ensuring members receive clear
and effective disclosures. The proposal and the required summary can be
found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
B. Executive Order 12866, 13563, and 14192
Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\1\ This proposed rule, if finalized as proposed, is not
expected to be an Executive Order 14192 regulatory action. Pursuant to
Executive Order 12866 (``Regulatory Planning and Review''), a
determination must be made whether a regulatory action is significant
and therefore subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the executive order.\2\
Executive Order 13563 (``Improving Regulation and Regulatory Review'')
supplements and reaffirms the principles, structures, and definitions
governing contemporary regulatory review established in Executive Order
12866.\3\
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\1\ 90 FR 9065 (Feb. 6, 2025).
\2\ 58 FR 51735 (Oct. 4, 1993)
\3\ 76 FR 3821 (Jan. 21, 2011).
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This proposed rule was drafted and reviewed in accordance with
Executive Order 12866 and Executive Order 13563. Analysis by the NCUA
indicates the proposed amendments to modernize
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the conversion process do not collectively qualify as a ``significant
regulatory action'' under E.O. 12866. The NCUA expects the proposed
rule to produce only modest cost savings (at best). Moreover, the
aggregate impact on the credit-union sector, market for depository-
institution services, and macro-economy should prove modest. Based on
DCE analysis, the NCUA expects this proposed rule, if adopted, to
marginally reduce the transactions costs of conversions. OMB has
determined that this proposed rule is not a ``significant regulatory
action'' as defined in section 3(f) of Executive Order 12866.
C. The Regulatory Flexibility Act
The Regulatory Flexibility Act \4\ 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.\5\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\6\ The Board fully considered the
potential economic impacts of the regulatory amendments on small credit
unions. Analysis by the NCUA indicates that, if finalized, these
proposed amendments will not adversely and disproportionately burden
small FICUs under the RFA.
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\4\ 5 U.S.C. 601 et seq.
\5\ 5 U.S.C. 605(b).
\6\ 80 FR 57512 (Sept. 24, 2015).
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Accordingly, the NCUA certifies the proposed rule would not have a
significant economic impact on a substantial number of small credit
unions.
D. The Paperwork Reduction Act of 1995
The Paperwork Reduction Act of 1995 (PRA) generally provides that
an agency may not conduct or sponsor, and not withstanding any other
provision of law, a person is not required to respond to, a collection
of information, unless it displays a currently valid OMB control
number.\7\ For purposes of the PRA, an information-collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. This rule does not propose to
revise an existing information collection.
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\7\ 44 U.S.C. 3501-3520; 5 CFR part 1320.
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E. Executive Order 13132 on Federalism
Executive Order 13132 encourages certain regulatory agencies to
consider the impact of their actions on state and local interests. The
NCUA, an agency as defined in 44 U.S.C. 3502(5), complies with the
executive order to adhere to fundamental federalism principles. The
proposed 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. The proposed rule would remove targeted
prescriptive requirements that apply to converting federally insured
credit unions, including federally insured, state-chartered credit
unions. The proposal would not change the fundamental requirement to
notify members or impose new requirements on state-chartered credit
unions or state regulatory agencies. The NCUA has therefore determined
that this proposed rule will not constitute a policy that has
federalism implications for purposes of the executive order.
F. 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 Sec. 654 of the Treasury and General
Government Appropriations Act.\8\ The proposed rule would apply to
notices provided to consumers but is not intended to change fundamental
member rights. Therefore, any effect on family well-being, including
financial well-being, is expected to be indirect, at most.
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\8\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 708a
Bank deposit insurance, credit unions, Reporting and recordkeeping
requirements.
By the National Credit Union Administration Board, this 9th day
of February, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons set forth in the preamble, the NCUA Board proposes
to amend 12 CFR part 708a as follows:
PART 708a--Bank Conversions and Mergers
0
1. The authority citation for part 708a continues to read as follows:
Authority: 12 U.S.C. 1766, 1785(b), and 1785(c).
Sec. 708a.101. [Amended]
0
2. Amend Sec. 708a.101 by removing ``Clear and conspicuous means text
in bold type in a font size at least one size larger than any other
text used in the document (exclusive of headings), but in no event
smaller than 12 point.''
Sec. 708a.103. [Amended]
0
3. Revise and publish Sec. 708a.103(a)(1) as:
No later than 30 days before a board of directors votes on a
proposal to convert, it must publish a notice in a clear and
conspicuous fashion in the lobby of the credit union's home and branch
offices and on the credit union's website, and a member's home banking
landing page, if it has one. If the notice is not on the home page of
the website, the home page must have a clear and conspicuous link to
the notice, visible on a standard monitor without scrolling, to the
notice.
Sec. 708a.104. [Amended]
0
4. Revise Sec. 708a.104 by:
0
a. Removing and reserving paragraph (d)(2);
0
b. Removing the last sentence of paragraph (e);
0
c. Removing paragraph (f)(5);
0
d. Redesignating subparagraph (f)(6) through (10) as subparagraph
(f)(5) through (9) respectively; and
0
e. In newly redesignated subparagraph (f)(7), delete the third
sentence.
The revisions read as follows:
Sec. 708a.104 Disclosures and communications to members.
* * * * *
(d)
(1) * * *
(2) [Removed and Reserved]
(e) All written communications from a converting credit union to
its members regarding the conversion must be written in a manner that
is simple and easy to understand. Simple and easy to understand means
the communications are written in plain language designed to be
understood by ordinary consumers, and use clear and concise sentences,
paragraphs, and sections.
(f)
(1) * * *
(2) * * *
(3) * * *
(4) * * *
(5) A credit union must ensure that its members receive all
materials that meet the requirements of on or before the date the
members receive the 30-day notice and associated ballot. If a credit
union cannot meet this delivery requirement, it must postpone mailing
the 30-day notice until it can deliver the member materials. If a
credit union postpones
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the mailing of the 30-day notice, it must also postpone the special
meeting by the same number of days. When the credit union has completed
the delivery, it must inform the requesting member that the delivery
was completed and provide the number of recipients.
(6) The term ``appropriate advance payment'' means:
(i) For requests to mail materials to all eligible voters, a
payment in the amount of 150 percent of the first class postage rate
times the number of mailings, and
(ii) For requests to email materials only to members that have
agreed to accept electronic communications, a payment in the amount of
200 dollars.
(7) If a credit union posts conversion-related information or
material on its website, then it must simultaneously make a portion of
its website available free of charge to its members to post and share
their opinions on the conversion. A link to the portion of the website
available to members to post their views on the conversion must be
marked ``Members: Share your views on the proposed conversion and see
other members views'' and the link must also be visible on all pages on
which the credit union posts its own conversion-related information or
material, as well as on the credit union's homepage. The credit union
may also post a content-neutral disclaimer using language similar to
the language in paragraph (f)(3)(i) of this section.
(8) A converting credit union must inform members with the 90-day
notice that if they wish to provide their opinions about the proposed
conversion to other members, they can submit their opinions in writing
to the credit union no later than 35 days from the date of the notice
and the credit union will forward those opinions to other members. The
90-day notice will provide a contact at the credit union for delivery
of communications, will explain that members must agree to reimburse
the credit union's costs of transmitting the communication including
providing an advance payment, and will refer members to this section of
NCUA's regulations for further information about the communication
process. The credit union, at its option, may include additional
factual information about the communication process with its 90-day
notice.
(9) A group of members may make a joint request that the credit
union send its materials to other members. For purposes of paragraphs
(f)(2) and (f)(3) of this section, the credit union will use the name
provided by the group.
Sec. 708a.113 [Removed]
0
5. Remove Sec. 708a.113.
[FR Doc. 2026-02763 Filed 2-10-26; 8:45 am]
BILLING CODE 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.