Proposed Rule2026-02764
Mergers of Insured Credit Unions Into Other Credit Unions; Voluntary Termination or Conversion of Insured Status
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
February 11, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) proposes to amend its regulations governing the voluntary termination of federal share insurance to streamline member communication requirements. This action is necessary to reduce regulatory burden by eliminating overly prescriptive formatting rules for the mandatory disclosure statement that credit unions must provide to members. The intended effect is to simplify compliance and provide credit unions with greater flexibility in designing effective communications, while still ensuring that members receive clear and prominent notice of a proposed termination of federal insurance.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 28 (Wednesday, February 11, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 28 (Wednesday, February 11, 2026)]
[Proposed Rules]
[Pages 6144-6147]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02764]
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 708b
RIN 3133-AG03
Mergers of Insured Credit Unions Into Other Credit Unions;
Voluntary Termination or Conversion of Insured Status
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) proposes to amend its regulations
governing the voluntary termination of federal share insurance to
streamline member communication requirements. This action is necessary
to reduce regulatory burden by eliminating overly prescriptive
formatting rules for the mandatory disclosure statement that credit
unions must provide to members. The intended effect is to simplify
compliance and provide credit unions with greater flexibility in
designing effective communications, while still ensuring that members
receive clear and prominent notice of a proposed termination of federal
insurance.
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-2026-0267. 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#ace3ebefe1cdc5c0ecc2cfd9cd82cbc3da"><span class="__cf_email__" data-cfemail="a2ede5e1efc3cbcee2ccc1d7c38cc5cdd4">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Woodard-Stephens, Staff
Attorney, Office of General Counsel, National Credit Union
Administration, at (703) 518-6540 or at 1775 Duke Street, Alexandria,
Virginia 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
Under its authority in the Federal Credit Union Act (FCU Act), 12
U.S.C. 1766, the Board issues regulations governing mergers and changes
in insured status. NCUA regulations part 708b governs mergers of
insured credit unions and the voluntary termination or conversion of
insured status, and is comprised of subparts A and B. Subpart A
prescribes the process for merging one or more credit unions, while
subpart B prescribes the procedures and detailed notice requirements
for a federally insured credit union (FICU) to voluntarily terminate
its federal share insurance or convert to nonfederal insurance.
The primary purpose of these subparts was to ensure credit union
members are fully and accurately informed ahead of proposed mergers and
before voting on whether to convert from federal insurance to
nonfederal insurance. The regulations are intended to provide members
with adequate notice and time to respond to proposed mergers and the
necessary protections and disclosures to make an informed decision
about their insured funds. The Board is proposing targeted amendments
to its regulations at Sec. Sec. 708b.106(d)-(e), 708b.206(b)(2), and
708b.206(c)(2), which govern member-to-member (MTM) communications and
share insurance communications to streamline requirements while
maintaining essential member protections.
B. Legal Authority
The FCU Act grants the Board a broad mandate to issue regulations
governing
[[Page 6145]]
both insured federal and 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 the regulations
necessary or appropriate to carry out its role as share insurer for all
insured credit unions.
II. Proposed Rule
A. Sec. 708b.106
Section 708b.106 requires notice of the vote on a proposed merger
at least 45 calendar days before the member meeting takes place, and
describes what the member communication package must include. Paragraph
(d) established a mechanism for MTM communications. These requirements
are meant to ensure reasonable MTM communication in advance of a
proposed merger. The Board believes the goal of ensuring reasonable
member notice of mergers is achieved through the provisions of
paragraphs (a) through (c) and seeks to remove requirements in
paragraphs (d) and (e). These two provisions define a mechanism for
members to submit comments to the NCUA about the merger, and for the
NCUA to post member comments received in response to the member
notification on a website accessible to credit union members. In 2024,
only 34 of the 143 mergers received a comment.\1\ Given its infrequent
public use, the Board proposes to discontinue the requirement as
described in Sec. 708b.106(d) and (e).
---------------------------------------------------------------------------
\1\ See <a href="https://ncua.gov/support-services/credit-union-resources-expansion/credit-union-merger-resources/comments-proposed-credit-union-mergers">https://ncua.gov/support-services/credit-union-resources-expansion/credit-union-merger-resources/comments-proposed-credit-union-mergers</a>.
---------------------------------------------------------------------------
As the Board proposes to remove its requirement to post member
comments, criteria for the posting of said comments in paragraph (e)
are no longer necessary and would also be removed. The Board requests
public comments on these proposed changes.
B. Sec. 708b.206
On December 28, 2010, the Board issued a final rule that, among
other things, amended certain procedures applicable to share insurance
conversions to better protect the integrity of the member voting
process.\2\ The NCUA regulations at Sec. 708b.206 set forth specific
provisions governing member communications about any impending vote.
The Board revised the specific disclosure language required by section
708b.206(b) to ensure members received a more explicit warning about
the loss of the federal guarantee. To ensure members receive clear and
accurate information, sections 708b.206(b) and (c) mandate that every
communication concerning an insurance conversion or termination,
respectively, must contain a conspicuous statement.
---------------------------------------------------------------------------
\2\ 75 FR 81378.
---------------------------------------------------------------------------
This required statement informs members that their accounts are
currently insured by the NCUA, a federal agency, and that this
insurance is backed by the full faith and credit of the United States
government. The statement further clarifies that, if the credit union
converts to private insurance or terminates its federal insurance and
then fails, the federal government does not guarantee the member will
get its money back. The regulations require this disclosure to be
prominent, mandating that it appear on the first page of the
communication and be printed in capital letters, bolded, offset by a
border, and in a font size at least one size larger than other text.
This proposal focuses on eliminating overly prescriptive formatting
mandates that may impose unnecessary burdens on credit unions. Section
206 of the FCU Act \3\ requires credit unions to provide members with
``prompt and reasonable notice'' of a vote on insurance termination.
The Board has preliminarily determined that the prescriptive provisions
within this part are unnecessarily burdensome. By removing these
prescriptive elements, the regulation will be better aligned with the
statutory focus on the substantive goal of effective notice. The
requirement for a ``conspicuous'' statement is a sufficient guideline
for credit unions to follow, ensuring critical information reaches
members without imposing excessive and statutorily unsupported
formatting rules. The Board invites public comment on this proposed
change. Specifically, the Board seeks feedback on whether the remaining
requirement for the disclosure to be ``conspicuous'' and earlier
clarification that the conspicuous statement must appear on the first
page of the communication where conversion is discussed are sufficient
to ensure members receive prominent and effective notice regarding the
termination of federal insurance. Commenters are also invited to
suggest alternative approaches that could achieve this objective
without being overly prescriptive.
---------------------------------------------------------------------------
\3\ 12 U.S.C. 1786.
---------------------------------------------------------------------------
The Board also proposes to amend Sec. 708b.206(c)(2) by removing
the specific formatting requirements for the mandatory disclosure
statement in communications about the termination of federal share
insurance. Currently, this provision requires the disclosure to be in
capital letters, bolded, offset by a border, and at least one font size
larger than other text. While the Board remains committed to ensuring
members receive clear and prominent notice about the significant
consequences of terminating federal insurance, it has preliminarily
determined that these rigid formatting rules are unnecessarily
prescriptive.
The Board believes that the core goal of this provision is ensuring
the disclosure is genuinely conspicuous and effectively communicates
the loss of the federal guarantee, rather than adherence to a specific
typographical checklist. The Board believes removing these prescriptive
requirements and earlier clarification that the statement must appear
on the first page of the communication where conversion is discussed
does not undermine member protection but will lift undue operational
burdens, including on communication design. The Board invites public
comment on this proposed change. Specifically, the Board seeks feedback
on whether the remaining requirement for the disclosure to be
``conspicuous'' is sufficient to ensure members receive prominent and
effective notice when federal insurance will be terminated. Commenters
are also invited to suggest alternative approaches that could achieve
this objective without being overly prescriptive.
III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 \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 \5\ (commonly
known as <a href="http://regulations.gov">regulations.gov</a>).
---------------------------------------------------------------------------
\4\ 5 U.S.C. 553(b)(4).
\5\ 44 U.S.C. 3501 note.
---------------------------------------------------------------------------
In summary, this rule proposes to amend regulations governing the
voluntary termination of federal share insurance to streamline member
communication requirements. The intended effect is to simplify
compliance and provide credit unions with greater flexibility in
designing effective communications, while still ensuring that members
receive clear and
[[Page 6146]]
prominent notice of a proposed termination of federal insurance.
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
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.\6\ 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.\7\
---------------------------------------------------------------------------
\6\ 58 FR 51735 (Oct. 4, 1993).
\7\ 76 FR 3821 (Jan.21, 2011).
---------------------------------------------------------------------------
OMB has determined that this proposed rule is not a ``significant
regulatory action'' as defined in section 3(f)(1) of Executive Order
12866.
Analysis by the NCUA indicates these proposed changes collectively
do not qualify as a ``significant regulatory action'' under Executive
Order 12866. This rule proposes to amend two regulations that govern
communication about pending credit-union mergers, specifically (i) a
directive requiring the NCUA to post merger-related comments received
from members of participating FICUs and (ii) a mandate prescribing the
content/style of every FICU communication with members about the loss
of federal insurance. Both amendments are designed to relax these
dictates to trim merger costs.
A majority of voting members must approve a voluntary credit-union
merger. Before that vote, any member (or collection of members) of a
merging FICU may send comments to the NCUA. Section 708b.106(d) in
Subpart A requires the agency to post these comments on a website
accessible to all members.\8\ However, since adoption of this rule in
October 2018, comment volume has been low. In 2024, for example, the
NCUA received member feedback on only 24 percent of mergers.\9\ The
paucity of comments strongly suggests affected parties have put little
value on agency efforts to circulate their views. Accordingly, the
proposed rule eliminates all mention of such posting in Sec. 708.106.
---------------------------------------------------------------------------
\8\ Section 708b.106(e) gives the NCUA discretion to refrain
from publishing certain types of comments such as those that
misrepresent/omit key facts, involve personal claims/grievances,
address matters unrelated to the merger, etc.
\9\ As part of regulatory reform efforts begun in 2017 (and
consistent with the spirit of Executive Order 14219), the NCUA is
working to identify redundant, confusing, outdated, low value, or
unnecessarily onerous regulations. This review flagged both Sections
708b.106 and 206 for amendment.
---------------------------------------------------------------------------
The Board expects this proposed rule, if adopted, would marginally
reduce the transactions costs of mergers for both the agency and
participating FICUs. That said, in recent years, the annual number of
unassisted mergers involving at least one FICU has been relatively low.
In 2024, there were 138; from 2020 through 2024 that number ranged from
138 to 162.\10\ Moreover, mergers between privately insured credit
unions and FICUs are rare--particularly ones that threaten some members
with loss of federal coverage. Indeed, fewer than 130 U.S. credit
unions currently operate with private insurance. For this reason, the
NCUA expects the proposed rule to produce only modest cost savings (at
best). Finally, the aggregate impact on the credit-union sector, market
for depository-institution services, and macro-economy should prove
modest as well.
---------------------------------------------------------------------------
\10\ For perspective, the number of FICUs at year-end 2024 was
4,455.
---------------------------------------------------------------------------
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.\11\ This proposed rule, if finalized as proposed, is not
expected to be a deregulatory action for purposes of Executive Order
14192.
---------------------------------------------------------------------------
\11\ 90 FR 9065 (Feb. 6, 2025).
---------------------------------------------------------------------------
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) 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.\12\ 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.\13\ For
purposes of this analysis, the NCUA considers small credit unions to be
those having under $100 million in assets.\14\ The Board fully
considered the potential economic impacts of the regulatory amendments
on small credit unions. Small credit unions should enjoy a small
benefit in mergers because of their limited resources for communicating
with members. Ultimately, analysis by the NCUA indicates the proposed
amendments to modernize the conversion process should not adversely or
disproportionately affect small credit unions.
---------------------------------------------------------------------------
\12\ 5 U.S.C. 601 et seq.
\13\ 5 U.S.C. 605(b).
\14\ 80 FR 57512 (Sept. 24, 2015).
---------------------------------------------------------------------------
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 Office of
Management and Budget control number.\15\ The PRA applies to
rulemakings in which an agency creates a new or revises existing
information collection requirements. 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 has
determined that the changes addressed in this notice do not create a
new information collection or revise an existing information collection
as defined by the PRA.
---------------------------------------------------------------------------
\15\ 44 U.S.C. 3501-3520; 5 CFR part 1320.
---------------------------------------------------------------------------
E. Executive Order 13132 on Federalism
Executive Order 13132 encourages certain 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. But the
proposal would not change the fundamental requirements of member notice
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.
[[Page 6147]]
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.\16\ 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.
---------------------------------------------------------------------------
\16\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------
List of Subjects in 12 CFR Part 708b
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 stated in the preamble, the NCUA Board proposes to
amend 12 CFR part 708b to read as follows:
PART 708b--MERGERS OF INSURED CREDIT UNIONS INTO OTHER CREDIT
UNIONS; VOLUNTARY TERMINATION OR CONVERSION OF INSURED STATUS
The authority citation for part 708b continues to read as follows:
Authority: 12 U.S.C. 1752(7), 1766, 1785, 1786, 1789.
Sec. 708b.106 [Amended]
0
1. Revise Sec. 708b.106 by:
0
a. Removing the last sentence of paragraph (d);
0
b. Removing paragraph (e); and
0
c. Redesignating paragraphs (f) through (g) as paragraphs (e) through
(f) respectively.
0
2. Revise and republish Sec. 708b.206 to read as follows:
Sec. 708b.206 Share insurance communications to members.
* * * * *
(b) Every share insurance communication must contain the following
conspicuous statement on the first page of the communication where
conversion is discussed: ``IF YOU ARE A MEMBER OF THIS CREDIT UNION,
YOUR ACCOUNTS ARE CURRENTLY INSURED BY THE NATIONAL CREDIT UNION
ADMINISTRATION, A FEDERAL AGENCY. THIS FEDERAL INSURANCE IS BACKED BY
THE FULL FAITH AND CREDIT OF THE UNITED STATES GOVERNMENT. IF THE
CREDIT UNION CONVERTS TO PRIVATE INSURANCE WITH [insert name of private
share insurer] AND THE CREDIT UNION FAILS, THE FEDERAL GOVERNMENT DOES
NOT GUARANTEE THAT YOU WILL GET YOUR MONEY BACK.'' If the communication
is on an internet website posting, the credit union must make
reasonable efforts to make it visible without scrolling.
(c) Every share insurance communication about share insurance
termination must contain the following conspicuous statement on the
first page of the communication where termination is discussed: ``IF
YOU ARE A MEMBER OF THIS CREDIT UNION, YOUR ACCOUNTS ARE CURRENTLY
INSURED BY THE NATIONAL CREDIT UNION ADMINISTRATION, A FEDERAL AGENCY.
THIS FEDERAL INSURANCE IS BACKED BY THE FULL FAITH AND CREDIT OF THE
UNITED STATES GOVERNMENT. IF THE CREDIT UNION TERMINATES ITS FEDERAL
INSURANCE AND THE CREDIT UNION FAILS, THE FEDERAL GOVERNMENT DOES NOT
GUARANTEE THAT YOU WILL GET YOUR MONEY BACK.'' If the communication is
on an internet website posting, the credit union must make reasonable
efforts to make it visible without scrolling.
* * * * *
[FR Doc. 2026-02764 Filed 2-10-26; 8:45 am]
BILLING CODE 7535-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 11, 2026.
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.