To our clients and friends:
Acquisitions by credit unions of banks have become much more common over the last few years. As a result, the National Credit Union Administration (the “NCUA”) recently issued a notice of proposed rulemaking (the “Proposed Rule”) to prescribe procedures for reviewing and approving bank acquisitions by federally-insured credit unions (“FICUs”). Specifically, the Proposed Rule: (1) stipulates the information about the bank acquisition transaction that must be provided to the NCUA; (2) provides that all bank acquisition transactions require the prior approval of the NCUA and, for state-chartered FICUs, the prior approval of their state regulators; and (3) ensures that the directors of the FICU proposing a bank acquisition transaction understand the nature and ramifications of the transaction.
Credit unions seeking to acquire banks should understand that there are unique issues involved, such as the manner in which a bank acquisition transaction would be structured and its effects, the regulatory approval process to complete the transaction (including the process applicable to a target bank) and how field of membership issues and impermissible assets and activities of the target bank will be addressed.
Our Alert, which summarizes the key provisions of the Proposed Rule, is available here.