Proposed Rule2026-07806
Bank Conversions and Mergers, Subpart C-Merger of Insured Credit Unions Into Banks
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Published
April 22, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) is proposing to amend its regulations governing the merger of insured credit unions into banks. 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 ensure members receive clear and effective disclosures while simplifying compliance for credit unions, reducing administrative costs, and modernizing the conversion process.
Full Text
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<title>Federal Register, Volume 91 Issue 77 (Wednesday, April 22, 2026)</title>
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[Federal Register Volume 91, Number 77 (Wednesday, April 22, 2026)]
[Proposed Rules]
[Pages 21391-21394]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07806]
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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. 91, No. 77 / Wednesday, April 22, 2026 /
Proposed Rules
[[Page 21391]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 708a
RIN 3133-AG02
Bank Conversions and Mergers, Subpart C--Merger of Insured Credit
Unions Into 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 merger of insured credit unions into banks. 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 ensure members receive clear
and effective disclosures while simplifying compliance for credit
unions, reducing administrative costs, and modernizing the conversion
process.
DATES: Comments must be received on or before June 22, 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-2026-0982. 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#4b040c08062a22270b25283e2a652c243d"><span class="__cf_email__" data-cfemail="f0bfb7b3bd91999cb09e938591de979f86">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Woodard-Stephens, Staff
Attorney, National Credit Union Administration, at 1775 Duke Street,
Alexandria, Virginia 22314 or by telephone at (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
The Board proposes to amend its regulations at 12 CFR part 708a,
subpart C, which governs the merger of insured credit unions into
banks. The regulations at part 708a were established under the
authority of the Federal Credit Union Act (FCU Act) to provide a
procedural framework for transactions that fundamentally alter a credit
union's charter or structure. On December 28, 2010, the Board
established the regulations at 12 CFR part 708a, subpart C.\1\ The
primary objective of subpart C was to establish specific procedural and
substantive requirements to protect the interests of credit union
members during such mergers. Key provisions included the mandatory
determination of the credit union's ``merger value,'' comprehensive
disclosure requirements to members, and a structured voting process,
all under the NCUA's oversight to ensure the transaction serves the
convenience and needs of the members.
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\1\ 75 FR 81387 (Dec. 28, 2010).
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Section 708a.301 provides definitions for key terms used throughout
the subpart, such as Bank, Merger, Merger value, and Qualified
appraisal entity, which establish the specific meaning and scope of the
rule's provisions. Section 708a.303 outlines the initial duties of a
credit union's board of directors, requiring it to determine the merger
value of the credit union through an auction or appraisal and to
provide advance notice to members for comment before the board votes to
approve a merger proposal. Section 708a.304 details the process for
notifying the NCUA of an intended merger by submitting a ``Notice of
its Intent to Merge and Request for NCUA Authorization'' (NIMRA), which
includes the merger plan, director certifications, and due diligence
materials for agency review. Section 708a.305 mandates specific
disclosures that must be provided to all eligible members at 90-day and
30-day intervals before a vote, ensuring they are informed about the
loss of ownership interests, changes to voting rights, and any
compensation arrangements for directors or senior management. Finally,
Sec. 708a.312 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 provides the Board a broad mandate to issue regulations
governing both insured 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 rules and 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.\2\
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\2\ 12 U.S.C. 1785.
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[[Page 21392]]
II. Proposed Rule
The Board is proposing several amendments to subpart C 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 merger deliberations. These changes are intended to restore the
board's role in exercising its fiduciary duties and business judgment,
gravitating away from a rigid, agency-defined process. These proposed
changes are intended to ensure members receive clear and effective
disclosures to support informed decisions while providing credit union
boards of directors with greater flexibility to exercise their business
judgment.
A. Streamlining Board of Directors' Duties and Pre-Voting Procedures in
Mergers
In subpart C, the Board proposes to remove the definition of
``clear and conspicuous'' from Sec. 708a.301, which is repeated from
Sec. 708a.101 in subpart A. This definition mandates specific
formatting, such as bold type and a minimum 12-point font size. The
Board believes this level of prescription 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, they are silent on specific
formatting. This definition creates a legal test that is not based on
the best reading of the statute. Removing this definition will allow
credit unions the flexibility to design disclosures that are effective
and clear for their members.
The Board also proposes to revise the pre-board-vote notice
requirements contained in Sec. 708a.303(b)(1), which mandates credit
unions to publish a notice in a general circulation newspaper. The
requirement to publish notice in a newspaper may no longer be one of
the more effective methods for communicating with members in the
digital age, while imposing unnecessary costs. The proposal would
require the notice to appear on the member home banking landing page,
if the credit union has one.
Finally, the Board proposes a minor revision to the due diligence
reporting requirements in Sec. 708a.304(d). The proposal would remove
the requirement for the board to describe how the board located the
merger partner and negotiated the merger agreement in its submission to
the NCUA. The Board believes that requiring a narrative on these
specific internal processes is overly intrusive and micromanages the
board's deliberative functions. The critical regulatory objective is to
ensure the board has conducted sufficient due diligence to conclude
that a merger serves the members' best interests. The focus of the
Board's review should be on the justification for that conclusion, not
the step-by-step procedural history of the negotiations. This change
streamlines the reporting requirements, focusing on the substantive
outcome of the board's decision-making process.
The Board invites public comment on these proposed changes.
Specifically, the Board seeks comment on whether the elimination of
these provisions provides boards with appropriate flexibility while
still protecting member interests. The Board also seeks comment about
whether the credit union's Supervisory Committee should supplement the
review of the merger to ensure the members' best interests are served.
B. Modernizing and Simplifying Member Communications and Disclosures in
Mergers
The Board is proposing several amendments to modernize regulations
governing communications and disclosures to members, eliminating overly
prescriptive, inflexible, and unnecessary requirements.
The Board proposes to remove the highly prescriptive formatting
requirements in Sec. 708a.305(e)(2). This provision dictates that
certain text must be placed in a box on the front of a single,
otherwise blank piece of paper and placed at a specific point in the
notice package. Such prescriptive measures will not necessarily result
in better member comprehension, and the Board believes that eliminating
these specific formatting rules will reduce administrative burden.
The Board also proposes to make a minor technical amendment to
Sec. 708a.305(f) by removing redundant language. The rule 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 specific plain language requirements. This change improves
the clarity and conciseness of the regulation.
The Board invites public comment on these proposed changes. The
Board is particularly interested in comments on whether removing the
prescriptive definitions and formatting requirements would allow credit
unions to provide more effective disclosures to members.
C. Elimination of Non-Regulatory Guidance in Mergers
Finally, the Board proposes to improve the clarity and function of
its regulations by removing another section that only provides non-
binding guidance. The Board proposes to eliminate Sec. 708a.312,
``Voting guidelines,'' in its entirety.
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. The provision itself acknowledges
its advisory nature and, while such guidance can be helpful, the
presence of non-binding guidance within a body of mandatory rules can
create confusion for regulated entities, blurring the line between what
is required and what is merely recommended. Removing this section will
streamline the regulatory text, making it clearer for credit unions to
understand their legal duties.
The Board seeks public comment on the proposed removal of Sec.
708a.312. Specifically, the Board asks whether removing these non-
binding guidelines from the regulation would improve clarity and
whether this information would be more effectively communicated through
other, non-regulatory channels.
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 is proposing to amend its regulations
governing the merger of insured credit unions into banks. This proposed
rule would eliminate certain prescriptive procedural, disclosure, and
communication requirements. This action is necessary to reduce
unnecessary regulatory burdens and
[[Page 21393]]
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 merger process, while ensuring members receive
clear and effective disclosures.
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.\3\ 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.\4\ OMB has determined that this proposed rule is
not a ``significant regulatory action'' as defined in section 3(f) of
Executive Order 12866. The NCUA expects the proposed rule to produce
modest cost savings and, if finalized as proposed, is expected to be a
deregulatory action for the purposes of Executive Order 14192.
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\3\ 58 FR 51735 (Oct. 4, 1993).
\4\ 76 FR 3821 (Jan. 21, 2011).
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C. The Regulatory Flexibility Act
The Regulatory Flexibility Act \5\ generally requires preparation
of an initial regulatory flexibility analysis and a final regulatory
flexibility analysis for any rule that by law must be proposed for
public comment, unless the agency certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. The NCUA reviewed this regulation
under the provisions of the Regulatory Flexibility Act. This rule is
narrow in scope and purely deregulatory. Therefore, the NCUA certifies
that this rule, if finalized, would not have a ``significant economic
impact on a substantial number of small entities.''
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\5\ 5 U.S.C. 601 et seq.
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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 (OMB) control number. The PRA applies to
rulemakings in which an agency creates a new or amends 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. OMB Control
Number 3133-0182 is the collection assigned for merger transactions.
The NCUA has determined that the changes described in this notice do
not revise the information collection as defined by the PRA.
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 merging federally insured credit unions,
including federally insured, state-chartered credit unions. 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.
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 section 654 of the Treasury and General
Government Appropriations Act.\5\ 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.
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 20th day
of April 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons set forth in the preamble, the 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.301 [Amended]
0
2. Revise Sec. 708a.301 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.303 [Amended]
0
3. Revise Sec. 708a.303(b)(1) to read as follows:
(b) * * *
(1) No later than 30 days before a board of directors votes on a
proposal to merge, it must post 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, visible on a
standard monitor without scrolling, to the notice.
0
4. Revise and republish Sec. 708a.304(d) to read as follows:
Sec. 708a.304 Notice to NCUA and request to proceed with member vote.
* * * * *
(d) Due diligence. The NIMRA must include a description of all the
credit union's due diligence in determining that the merger satisfies
the factors contained in section 205(c) of the Act. In particular, the
NIMRA must describe how the board determined that this merger was in
the best interests of the credit union's members. The description must
include all information relied upon by the credit union in determining
the merger value of the credit union, the amount of any payment to be
made by the bank to the credit union's members (the ``merger
payment''), and, if that merger payment is less than the merger value
of the credit union, an explanation why the merger and the merger
partner selected is in the best interests of the members. The
description must include an explanation of the distribution formula by
which the
[[Page 21394]]
merger payment will be distributed among the credit union's members.
* * * * *
0
5. Amend Sec. 708a.305 by:
0
a. Removing and reserving subparagraph (e)(2); and
0
b. Revising subparagraph (f).
The revisions read as follows:
Sec. 708a.305 Disclosures and communications to members.
* * * * *
(e)
(1) * * *
(2) [Removed and reserved]
(f) All written communications from a merging credit union to its
members regarding the merger 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 uses clear and concise sentences.
* * * * *
Sec. 708a.312 [Removed]
0
6. Remove Sec. 708a.312.
[FR Doc. 2026-07806 Filed 4-21-26; 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.