Credit Unions Ask NCUA to Streamline Merger Process, Defer to States

NAFCU and NASCUS submitted comments to the NCUA calling for a streamlined process and deferral to state regulations on credit union mergers. Learn why.

David Baumann


Aug 19



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David Baumann

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David Baumann

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NAFCU and NASCUS both submitted comments to the NCUA calling for updated regulations surrounding credit union mergers.

The NCUA should streamline its merger process and defer to state officials, when appropriate, credit union groups told the agency this week.

When two federally insured, state-chartered credit unions (FISCUs) merge, the NCUA should simply study whether the deal would pose a risk to the Share Insurance Fund (NCUSIF), asserted Sarah Stevenson, vice president of regulatory affairs at the National Association of State Credit Union Supervisors (NASCUS).

“In the absence of any clear and compelling connection between the activity being regulated and risk to the NCUSIF, NCUA should always defer to laws applicable to each state,” she said.

Stevenson’s comments were among those submitted to the NCUA as part of its annual regulatory review. Each year, the agency solicits comments on one-third of its rules, with this year’s submissions due on August 16.

NASCUS Questions NCUA Oversight

Stevenson wrote that when a merger occurs and the surviving credit union is safe and sound, the motive behind the merger should be irrelevant to the NCUA. She added that it is state regulators’ responsibility to decide whether a board of directors were improperly influenced to merge.

She noted further that there is “abundant transparency” in the state credit union system when it comes to compensation, writing, “NASCUS believes in transparency, but in this instance, disclosure of the compensation to the membership is, again, a governance matter for state law. And, in the case of FISCUs, more compensation data is already publicly available.”


Stevenson said also that the NCUA’s requirement for member-to-member communications about a merger is overly burdensome and additionally that many states have their own statutory requirements about such communication.

NAFCU Calls For Streamlined Approach

NAFCU Vice President of Regulatory Affairs Ann Petros said that when a credit union merges with a bank, the NCUA should establish a streamlined process, accompanied by a clear timeline for approval of the deal. She added that the agency also should be flexible with field of membership requirements when such mergers take place.

“Such flexibility would afford credit unions opportunities to better serve underserved communities by keeping branches open and offering access to safe, affordable financial products and services,” she stated.

Petros added the agency should establish a six-month approval deadline for credit union-bank mergers, with the potential for several one-month extensions.

“NAFCU recognizes that all combination transactions are not the same, and that each transaction may face different obstacles and require different timelines,” she wrote.

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Credit union-bank mergers are a controversial issue in the financial services industry. Banking trade groups have accused the credit union industry of capitalizing on its tax-exempt status to finance such deals.

But Petros said that NAFCU members also have complained about the process required when one credit union merges with another credit union. She noted further that the NCUA prohibits a community credit union from merging into a multi-select employee group (SEG) credit union. When such a deal is contemplated the community credit union must convert its charter to a SEG charter in order to merge.

“This process can be quite extensive and time-consuming, sometimes delaying the merger unnecessarily,” the letter stated.

She added, “NAFCU asks the NCUA to reevaluate the sequence of its regulatory requirements for credit union-credit union mergers to ease the burden associated with NCUA merger applications and transaction approvals.”

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