General Merger Frequently Asked Questions

The forms for a merger of a federally insured credit union into another federally insured credit union are included in 12 C.F.R § 708b.304. The NCUA has created fillable forms posted on our website. Additional information on what is required in a merger package can be found in 12 C.F.R. §§ 708b.103 and 708b.104.

No, the Federal Credit Union Act’s field-of-membership provisions continue to apply unless the merger is an emergency. The fields of membership must be compatible as described in the Chartering and Field of Membership Manual unless the NCUA authorizes an emergency merger when applicable statutory criteria are met.

Credit unions may contact the Office of Credit Union Resources and Expansion’s Division of Consumer Access at 703.518.1150 or DCAMail@NCUA.GOV.

The NCUA only has authority over federal credit unions on how to distribute a special or merger dividend. For federal credit unions, a special dividend cannot be based per capita or on length of membership. In addition, any dividend payment for any federally insured credit union that meets the definition of a “merger-related financial arrangement” under 12 C.F.R. § 708b.2 must be disclosed on the member notice. Federally insured, state-chartered credit unions should contact their state supervisory authority.

There is no prohibition for gifts to the board. Any gift that meets the definition of a “merger-related financial arrangement” under 12 C.F.R. § 708b.2 must be disclosed in the member notice.

Under 12 U.S.C. § 1785(h), the NCUA may authorize an emergency merger between federally insured credit unions, without regard to field of membership or other usual legal restraints, if the credit union to be merged is either insolvent or in danger of insolvency and the NCUA determines that:

• An emergency requiring expeditious action exists with respect to the insured credit union;
• Other alternatives are not reasonably available; and
• The public interest would best be served by approval of such merger, consolidation, purchase, or assumption.

Under 12 C.F.R. § 700.2, a credit union will be determined to be insolvent when the total amount of its shares exceeds the present cash value of its assets after providing for liabilities unless:

• It is determined by the NCUA that the facts that caused the deficient share-asset ratio no longer exist;
• The likelihood of further depreciation of the share-asset ratio is not probable;
• The return of the share-asset ratio to its normal limits within a reasonable time for the credit union concerned is probable; and
• The probability of a further potential loss to the insurance fund is negligible.

In making the determination that a particular credit union is in danger of insolvency, the NCUA will establish that the credit union falls into one or more of the following categories:

• The credit union's net worth is declining at a rate that will render it insolvent within 30 months. In projecting future net worth, the NCUA may rely on data in addition to Call Report data. The trend must be supported by at least 12 months of historic data.
• The credit union's net worth is declining at a rate that will take it under 2 percent net worth within 18 months. In projecting future net worth, the NCUA may rely on data in addition to Call Report data. The trend must be supported by at least 12 months of historic data.
• The credit union's net worth, as self-reported on its Call Report, is significantly undercapitalized, and the NCUA determines that there is no reasonable prospect of the credit union becoming adequately capitalized in the succeeding 36 months. In making its determination on the prospect of achieving adequate capitalization, the NCUA will assume that, if adverse economic conditions are affecting the value of the credit union's assets and liabilities, including property values and loan delinquencies related to unemployment, these adverse conditions will not further deteriorate.

The credit union has been granted or received assistance under Section 208 of the Federal Credit Union Act, 12 U.S.C. § 1788, in the 15 months prior to the regional office’s determination that the credit union is in danger of insolvency.