23
Exhibits and
Forms
Microsoft Word versions of the following exemplars—provided for general guidance only—are
available for your individual use within your credit union:
Go to http://www.cues.org/mergersmanual/. The username is mergerman08 and the password
is sw&mexemplars.
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8 Exemplar Notice of Merger and Conversion of Insurance Status
Exhibit 9 Exemplar Notice of Merger and Termination of Federal Insurance
Please note that all documents and agreements pertaining to your credit union’s merger should be
drafted specifically
for your
transaction withratio
the advice
assistance of your
credit union’s
Probable
asset/share
—and
continuing
credit
union
attorneys.
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
DeDuCTIONS
$0
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
This CONFIDENTIALITY AGREEMENT (the “Agreement”) is entered into by and
between ___________________________ Credit Union, (“CCU”) and
___________________________ Credit Union (“MCU”).
A. This Agreement is based upon the following considerations and conditions:
1
The board of directors of each respective credit union wishes to explore the feasibility of a merger with
the other credit union party to this Agreement.
2
The board of directors of each respective credit union wishes to engage in open and candid discussions
and share information about their credit union with the representatives of the other credit union party to this
Agreement.
3
The parties intend that the discussions and information shared between them pursuant to this Agreement
are to be treated as Confidential Information.
B. The parties also agree as follows:
1
For the purposes of this Agreement, “Confidential Information” shall mean any and all of the
information received by any representative of a party to this Agreement from any representative of the other
party to this Agreement (including any and all documentation and discussions about, or related to, a merger
between the CCU and the MCU), other than that information which is stated in Section 7, below. The parties
further agree that Confidential Information shall include the fact that the parties to this Agreement are discussing
the feasibility of a merger.
2
The parties agree that any Confidential Information disclosed in the context of the merger discussions
shall be used only for the purpose of evaluating and discussing the feasibility of a merger of the CCU and MCU.
3
Confidential Information may only be disclosed to authorized third parties, such as, for example,
attorneys or accountants assisting the CCU or the MCU. Such disclosure may be made only on a limited “need
to know” basis and only pursuant to the limitations of this Agreement.
4
Confidential Information obtained as a result of the merger discussions between the parties shall not be
used by either credit union to compete with the other.
5
[Define security measures to be implemented, including access limitations, warnings to persons with
access, and destruction upon termination, as well as any other provisions desired by the parties.]
6.
The provisions of this Agreement shall remain in effect on an ongoing basis unless otherwise
agreed to in writing by the parties, or the information is not Confidential Information as set forth in Section
7.
7.
The following information is not considered Confidential Information for the purposes of this
Agreement:
7.1
Information lawfully available to the credit union in possession of such information by means
independent of the disclosure of such information by the other credit union party to this Agreement;
7.2
Information which is or becomes publicly available through no act or default of the credit
union obtaining the information in the context of this Agreement; and
7.3
Information required to be disclosed by law or the order of any court or regulatory agency
[insert procedures by which parties will be informed if information is required to be disclosed pursuant
to a court or agency order].
8.
[Insert choice of law
provisions.]
9.
[Insert severability
clauses.]This Agreement constitutes the entire agreement between the parties with regard to the subject
10.
matter and may only be amended in writing signed by each of the parties.
11.
[Insert any non-assignment clauses.]
12.
No waiver of any breach of any term shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term of this Agreement.
13.
[Insert indemnity
clauses.]
14.
[Insert any limitations of liability, attorneys’ fees provisions, arbitration clauses, or other
dispute resolution clauses desired by the parties.]
Continuing Credit Union
________________________________Credit Union
By: ________________________________________
Title: ______________________________________
Date: ______________________________________
Merging Credit Union
________________________________Credit Union
By: ________________________________________
Title: ______________________________________
Date: ______________________________________
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
[Date] Members of the Board of
Directors (Merging Credit Union)
[Address]
Members of the Board of Directors
(Continuing Credit Union) [Address]
Re: Letter of Intent Regarding Merger
Dear Members of the Board:
The purpose of this letter is to outline significant terms of a Merger of ______________ Credit Union (“MCU”)
into ___________________ Credit Union (“CCU”). Among other things, the purpose of the Merger will be to
combine the energies and resources of the two credit unions for the betterment of the members of the two credit
unions.
The following are the significant “dealpoints” of the Merger:
1
The contemplated date for consummation (close) of the Merger is anticipated to be _________________,
200__.
2
[Provisions relating to the branch and ATM presence of the CCU in the areas currently served by the MCU.
These provisions may also include plans to expand service in field of membership areas not currently served by the
MCU into which the MCU would like to expand.]
3
[Provision addressing for employment offered to MCU employees by the CCU, along with benefits and pay
adjustment provisions.]
4
[Provisions related to the composition of the board of the combined credit union post-merger. These may
include nominating committees, advisory boards, division of director positions, size of the continuing board, and other
matters.]
5
As of the Merger Date, the MCU’s members shall have immediate access to the full range of the CCU’s
products and services (subject of course to the CCU’s terms and conditions for such products and services). As of and
after the Merger, the CCU agrees to provide its products and services to all of the MCU’s members in the same fashion
as the CCU treats any other CCU member.
1
Each party shall immediately allow the other through its designees (which may include employees, third party
auditors, and other appointed representatives) to have access to the party’s books and records for the purpose of
conducting a confidential due diligence review. Each party and its appointed representatives reaffirm their agreement to
maintain the confidentiality of the other’s confidential information that becomes available due to such access.
2
[Provisions related to the division of costs of the merger and the proportions to be paid by the CCU and MCU.
These may also include contingencies for the possibility that the members of the MCU will not vote to approve the
merger. The parties should also include provisions setting forth the conditions on which and the effects of a termination
of the merger process.]
3
The MCU shall not, directly or indirectly, accept, entertain or solicit offers or proposals from potential merger
candidates other than the merger into CCU contemplated under this letter of intent. Both Credit Unions agree that the
terms of this letter, any financial information and proprietary information provided by, or on behalf of one or the other,
prior to, contemporaneously with, or subsequent to, this letter are confidential.
4
With the above terms in mind, it is also agreed that a mutually agreeable Supplemental Merger Agreement will
be prepared for approval by the Board of Directors of the CCU and the MCU.
The parties by having their Chairperson execute a counterpart of this letter agree to move forward in good faith
to consummate this Merger.
Sincerely,
[Authorized Signer]
Read and agreed:
Read and agreed:
Chairperson of the Board of Directors of Chairperson of the Board of Directors of
___________________________ (“MCU”) ___________________________ (“CCU”)
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
SUPPLEMENTAL MERGER AGREEMENT
THIS SUPPLEMENTAL MERGER AGREEMENT (“Agreement”) is made and entered into and is effective this
____ day of ________________, 200____, by and between _____________ CREDIT UNION, a [State Chartered]
[Federally Chartered] Credit Union (herein “Continuing Credit Union”), and __________________ CREDIT
UNION, a [State Chartered] [Federally Chartered] Credit Union (herein “Merging Credit Union”).
RECITALS:
WHEREAS, Continuing Credit Union and Merging Credit Union are each engaged in the business of the lawful
activities of a credit union;
WHEREAS, Continuing Credit Union and Merging Credit Union desire to set forth their intention to merge upon
approval of the [National Credit Union Administration (“NCUA”)] [and/or name of state credit union regulator]
and the members of Merging Credit Union;
WHEREAS, Continuing Credit Union is committed to continuing to provide a competitive line of quality financial
products and services to the members and potential members of the Merging Credit Union;
WHEREAS, the parties hereto wish to set forth certain agreements, terms and conditions, hereinafter set forth, for
such Merger which are in addition to the merger forms required by the [NCUA] [and/or name of state credit union
regulator];
WHEREAS, each party desires that the other party continue its operations subject to the terms of this Agreement in
its normal course of business until the Merger Date, which for purposes of this Agreement shall mean the date
which both parties consummate the Merger under the [NCUA] [and/ or name of state credit union regulator] Merger
Agreement, Form [6304] (“Merger Date”);
WHEREAS, the parties have set _________, 200_ as a target Merger Date; and WHEREAS, the terms and
conditions set forth herein are supplemental to the contemplated regulatory merger documents; NOW,
THEREFORE, in consideration of the mutual covenants contained herein and with the intention of being legally
bound hereby, the parties hereto agree as follows:
1.
Intention to Merge. On the basis of the representations and warranties and subject to the terms and
conditions hereinafter set forth, Continuing Credit Union and Merging Credit Union hereby agree that they
intend Merging Credit Union to merge into Continuing Credit Union based upon fulfillment of the terms and
conditions of this Agreement and approval of the [NCUA] [and/or name of state credit union regulator], the
members of Merging Credit Union and/ or any other required approvals as well as the execution of the merger
forms required by the [NCUA] [and/or name of state credit union regulator] (the “Merger Agreement”).
2.
Representations and Warranties of Merging Credit Union. Merging Credit Union represents and
warrants to Continuing Credit Union, subject to the Merging Credit Union’s Disclosure Schedule to be
provided within ten (10) days of the date of this Agreement and set forth in the attached Appendix “A,” as
follows:
2.1
Due Organization.
2.1.1
To the best of Merging Credit Union’s knowledge it is a credit union duly organized, validly
existing and in good standing under the [Federal Credit Union Act] [laws of the State of
____________], and is qualified to do business and has full power and authority, corporate and
otherwise, to carry on its business in the jurisdictions and in the manner in which such business has
been and is now being conducted.
2.1.2
To the best of Merging Credit Union’s knowledge: (a) all corporate and other proceedings
required to be taken by or on the part of Merging Credit Union and its Board of Directors to
authorize and execute this Agreement and to carry out the terms of this Agreement have been or
will be taken on or before the date this Agreement is executed; and (b) this Agreement is a valid and
binding obligation of Merging Credit Union enforceable in accordance with its terms.
2.2
Subsidiaries. [Relate any information necessary and as agreed by the parties with relation to
subsidiaries of the Merging Credit Union.]
2.3
Real Property, Tangible Personal Property and Corporate Name.
2.3.1
To the best of Merging Credit Union’s knowledge, on the Merger Date it will have good
and marketable title to all of its real and personal property, subject to no mortgage, lien, claim,
security agreement, encumbrance or charge whatsoever other than those in existence as of the date
of this Agreement. [Include any additional provisions on any title insurance or other guarantees of
ownership required by the Continuing Credit Union, as applicable.]
2.3.2
To the best of Merging Credit Union’s knowledge, it has full right, title and ownership of
its corporate name and such corporate name is not being infringed upon or claimed by any other
person or entity.
2.4
Governmental Authority. [Include warranties regarding Merging Credit Union’s status regarding
permits, statutes and regulations, and notices from governmental authorities, for example: “To the best of
Merging Credit Union’s knowledge, it possesses valid and current permits, licenses and/or franchises from
whatever governmental agencies require the same and have jurisdiction over its business. To the best of
Merging Credit Union’s knowledge, Merging Credit Union has complied with all statutes, regulations,
rules and other orders of all governmental departments or agencies having jurisdiction over it or its
business. To the best of Merging Credit Union’s knowledge, Merging Credit Union has not received any
notice from any governmental authority or agency which would in any way adversely affect its business.”]
2.5
Contracts and Agreements. Merging Credit Union agrees to make available upon Continuing
Credit Union’s [give notice period, if applicable] request, copies of any and all material contracts, or other
documents, if any, to which Merging Credit Union is, as of the date of this Agreement, a party. To the
best of Merging Credit Union’s knowledge, such contracts are valid and binding obligations of the parties
thereto in accordance with their respective terms and to the best of Merging Credit Union’s knowledge
there are no liabilities arising from any default by Merging Credit Union heretofore in any of such
contracts. [State any warranties or the efforts to be made by the Merging Credit Union to ensure that any
contracts or agreements will not interfere with the merger.]
2.6
Access to Books, Records and Information. Merging Credit Union has and will continue to
permit Continuing Credit Union and its authorized representatives to have full access to the books and
records of Merging Credit Union and will make available to Continuing Credit Union and its authorized
representatives such financial and operating data and other information as Continuing Credit Union shall
reasonably request prior to the Merger
Date. Merging Credit Union hereby authorizes representatives of Continuing Credit Union to
investigate the assets of Merging Credit Union. Merging Credit Union agrees that any investigation or
inquiry made by Continuing Credit Union pursuant to this Agreement shall not in any way affect or
lessen the representations and warranties made by Merging Credit Union in this Agreement; provided,
however, that Continuing Credit Union will advise Merging Credit Union if such investigation or
inquiry reveals any violation of this Agreement.
2.7
Labor, Benefit, Employment Agreements. Unless notice is otherwise provided no later than the
date of this Agreement by Merging Credit Union in writing to the contrary, there are no collective
bargaining agreements or other labor agreements to which Merging Credit Union is a party. Merging Credit
Union will provide Continuing Credit Union with access to its records with regard to any pension plans or
other employment, profit sharing, deferred compensation, bonus, stock option, stock purchase, retainer,
consultant, retirement, welfare or incentive plans or contracts or other “fringe benefits” for employees, as
permitted by law.
2.8
Litigation and Disputed Items.
2.8.1
To the best of Merging Credit Union’s knowledge, neither the Merging Credit Union nor any
of its current officers or directors are engaged in any pending litigation or other proceedings, nor are
any of them subject to any existing judgment, order or decree, other governmental action (other than
[list any LUAs, DORs, judgments, or other decrees] already provided to Continuing Credit Union) or
proceedings, or are aware of any other circumstance which would materially and adversely affect the
operation of the properties or business of Merging Credit Union or which would prevent, hamper or
make illegal the transactions contemplated by this Agreement. Merging Credit Union agrees to
provide full disclosure to Continuing Credit Union of any litigation, disputed items or other
circumstances which subsequently arise or come to its attention after the date of this Agreement
which would materially and adversely affect the operation of the properties or business of Merging
Credit Union or which would prevent, hamper or make illegal the transactions contemplated by this
Agreement. If such disclosure is made subsequent to the date of this Agreement, notwithstanding
anything else herein, Continuing Credit Union, in its sole discretion, may terminate this Agreement.
2.8.2
To the best of Merging Credit Union’s knowledge, there are no creditors of Merging Credit
Union to whom Merging Credit Union has assigned such assets as would constitute a “Bulk Sale”
under the [name of State] Uniform Commercial Code, Section _____ et seq.
2.9
Taxes. To the best of Merging Credit Union’s knowledge, it is not delinquent in the payment of
any withholding taxes, other taxes, penalties, interest, assessments or other governmental charge.
2.10 Violation of Other Instruments. To the best of Merging Credit Union’s knowledge, the
consummation of the transactions contemplated by this Agreement will not result in a breach of any term
or provision of or constitute a default under any contract, agreement, mortgage or note or the Charter or
Bylaws of Merging Credit Union which breach or default would have any effect on Continuing Credit
Union. Further, to the best of Merging Credit Union’s knowledge the consummation of the anticipated
Merger contemplated by this Agreement will not result in a breach of any agreement, instrument or
understanding to which Merging Credit Union is a party or by which it is bound, which breach or default
would have any effect on Continuing Credit Union.
2.11 Membership Vote. The vote of Merging Credit Union’s members on the Merger proposal will be
true and accurate to the best of Merging Credit Union’s knowledge such that Merging Credit Union can
proceed with the Merger if approved by its members. In addition, Continuing Credit Union shall have
the right to participate and/or supervise the vote of Merging Credit Union’s members on the Merger
proposal.
2.12 Correctness of Representations and Warranties. The representations and warranties of Merging
Credit Union herein contained shall be true and correct on and as of the date of this Agreement and
Merging Credit Union shall give notice in writing to Continuing Credit Union if any of the
representations and warranties under this Agreement become untrue between the date of this Agreement
and the Merger Date.
2.13 Additional Commitments of Merging Credit Union. Merging Credit Union agrees to exercise its best
efforts to satisfy any [NCUA] [and/or name of state credit union regulator] requirements to assure that
Merging Credit Union’s Field of Membership includes persons or entities currently served by Merging
Credit Union prior to the Merger Date.
3.
Representations and Warranties of Continuing Credit Union. Continuing Credit Union
represents and warrants, subject to the Continuing Credit Union’s Disclosure Schedule to be provided
within ten (10) days of the date of this Agreement and set forth in the attached Appendix “B” as follows:
3.1
Due Organization of Continuing Credit Union.
3.1.1
To the best of Continuing Credit Union’s knowledge, it is a credit union duly organized,
validly existing and in good standing under the laws of the State of [name of state] and has full
power and authority to carry on its business as it exists at the present time and as it will exist as a
result of the transactions herein contemplated.
3.1.2
To the best of Continuing Credit Union’s knowledge, all corporate and other proceedings
required to be taken by or on the part of Continuing Credit Union and its Board of Directors to
authorize and execute this Agreement and to carry out the terms of this Agreement have been or
will be taken on or before the date this Agreement is executed. This Agreement is a valid and
binding obligation of Continuing Credit Union enforceable in accordance with its terms.
3.2
Subsidiaries. [Relate any information necessary and as agreed by the parties with relation to
subsidiaries of the Continuing Credit Union.]
3.3
Real Property, Tangible Personal Property and Corporate Name.
3.3.1
To the best of Continuing Credit Union’s knowledge, on the Merger Date it will have good
and marketable title to all of its real and personal property, subject to no mortgage, lien, claim,
security agreement, encumbrance or charge whatsoever other than those in existence as of the date
of this Agreement. [Include any additional provisions on any title insurance or other guarantees of
ownership required by the Merging Credit Union, as applicable.]
3.3.2
To the best of Continuing Credit Union’s knowledge, it has full right, title and
ownership of its corporate name and that of any subsidiary and such corporate name(s) is not
being infringed upon or claimed by any other person or entity.
3.4
Governmental Authority. [Include warranties regarding Merging Credit Union’s status regarding
permits, statutes and regulations, and notices from governmental authorities, for example: “To the best of
Continuing Credit Union’s knowledge, it possesses valid and current permits, licenses and/or franchises
from whatever governmental agencies require the same and have jurisdiction over its business. To the best
of Continuing Credit Union’s knowledge, Continuing Credit Union has complied with all statutes,
regulations, rules and other orders of all governmental departments or agencies having jurisdiction over it or
its business. To the best of Continuing Credit Union’s knowledge, Continuing Credit Union has not
received any notice from any governmental authority or agency which would in any way adversely affect its
business.”]
3.5
Violation of Other Instruments. To the best of Continuing Credit Union’s knowledge, the
consummation of the transactions contemplated by this Agreement will not result in a breach of any term or
provision of or constitute a default under any contract, agreement, mortgage or note or the Charter or
Bylaws of Continuing Credit Union which breach or default would have any effect on Merging Credit
Union. Further, to the best of Continuing Credit Union’s knowledge the consummation of the anticipated
Merger contemplated by this Agreement will not result in a breach of any agreement, instrument or
understanding to
which Continuing Credit Union is a party or by which it is bound, which breach or default would
have any effect on Merging Credit Union.
3.6
Correctness of Representations and Warranties. The representations and warranties of Continuing
Credit Union herein contained shall be true and correct on and as of the date of this Agreement and
Continuing Credit Union shall give notice in writing to Merging Credit Union if any of the representations
and warranties under this Agreement become untrue between the date of this Agreement and the Merger
Date.
3.7
Additional Commitments of Continuing Credit Union.
3.7.1
Continuing Credit Union agrees to prepare a required “Merger Plan” as mandated by
NCUA [and/or name of state credit union regulator].
3.7.2
At a time mutually agreeable, Merging Credit Union and Continuing Credit Union shall
jointly prepare a letter to be addressed to all Merging Credit Union employees in a form substantially
similar to that set forth at Appendix “C.”
3.7.3
Merging Credit Union and Continuing Credit Union shall jointly prepare for release at a
mutually agreed upon time a formal public announcement of their intent to merge in a form
substantially similar to that set forth at Appendix “D.”
3.7.4
Continuing Credit Union agrees upon execution of this Agreement to provide such “on
sight” management as it deems appropriate to maintain and enhance Merging Credit Union’s
business during the pendency of the Merger.
3.7.5
[Include any additional commitments as appropriate.]
4. Consummation of the Merger.
4.1
Transfer of Assets and Assumption of Liabilities. Merging Credit Union will deliver to Continuing
Credit Union all documents or instruments and take all such other actions as may reasonably be required in
order to fully vest in Continuing Credit Union and perfect its title in and to all of the tangible and intangible
properties, assets, business, legal rights, legal claims and/or causes of action owned by Merging Credit
Union including, but not limited to, any right to recovery owned by Merging Credit Union under any
insurance policy and/or bond. Moreover, upon the Merger Date, Continuing Credit Union agrees to assume
the liabilities of Merging Credit Union, including but not limited to the liabilities of Merging Credit Union’s
current Board of Directors and officers and all Merging Credit Union’s employees to the fullest extent
permitted by [applicable state law].
4.2
Further Documents. Merging Credit Union agrees with Continuing Credit Union, and
Continuing Credit Union agrees with Merging Credit Union that they will make, execute, acknowledge
and deliver, or cause to be done, made, executed, acknowledged and delivered, all such further acts,
assignments, transfers or other documents which may be required or appropriate to consummate the
Merger.
4.3
Employees of Merging Credit Union. All employees of Merging Credit Union shall be terminated
from employment on the Merger Date. Continuing Credit Union shall indemnify Merging Credit Union to
hold it harmless from any liability arising from such termination, including, but not limited to, liability
with respect to discrimination, wrongful termination, or vacation or other benefits. Continuing Credit
Union shall consider and employ such employees of Merging Credit Union who apply and agree to
Continuing Credit Union’s terms, conditions and benefits.
4.4
Merger Transition Committee. As of the Merger Date, the Merging Credit Union Strategic
Planning Committee shall have the right to appoint [_____] (__) to [_____] (__) qualified candidates, if
available, with the concurrence of Continuing Credit Union to serve as an [______] Committee to assist
Continuing Credit Union in the Merger for a period of [_____] (__) months. Except as set forth above and
effective upon the Merger Date, the Board of Directors and Supervisory Committee Members of Merging
Credit Union shall resign.
4.5
Purchase of “Directors & Officers” Coverage. The Continuing Credit Union shall purchase and
provide proof of continuing “Directors & Officers” or “DVE” coverage from [name of insurance carrier]
at the current coverage limits available for all current elected officials of Merging Credit Union’s Board of
Directors and Supervisory Committee.
4.6
Membership Approval. Continuing Credit Union and Merging Credit Union agree that
approval of the Merger shall be obtained from Merging Credit Union’s membership in compliance
with laws and regulations and Merging Credit Union’s Bylaws.
5.
Covenants and Agreements.
5.1
Conduct Pending Merger. From and after the date of this Agreement, until the Merger Date,
Merging Credit Union agrees that it will:
(a)
[Specify duties to carry on business in substantially the same manner as before the
agreement.]
(b)
[Specify efforts to be taken to maintain and preserve the business.]
(c)
Pay all of its current taxes, assessments, liabilities and obligations as the same shall
become due.
(d)
Not incur any material obligation or liability other than current liabilities and obligations
incurred in the ordinary and usual course of business as heretofore conducted or as contemplated by
this Agreement, nor enter into any transaction or execute any agreement or other obligation relating
to the business of Merging Credit Union other than in the ordinary course of business as heretofore
conducted or as contemplated by this Agreement unless Merging Credit Union has obtained the
Continuing Credit Union’s prior written consent or as otherwise provided for in this Agreement.
[List events to be interpreted as not in the ordinary course of business.]
5.2
Confidential Information. [The parties should ensure that this provision takes into account and
mandates compliance with any applicable rules on safekeeping, destruction, and/ or disclosure in the
Federal Trade Commission standards, other federal standards, or any applicable state rules.]
5.2.1
Confidentiality of Continuing Credit Union. Continuing Credit Union agrees in the event
of a termination of this Agreement that Continuing Credit Union will keep confidential and not use
for any purpose any information (unless readily ascertainable from public or published information
or trade sources) obtained from Merging Credit Union concerning the business of Merging Credit
Union and will return to Merging Credit Union any statements, documents or other written
information obtained from Merging Credit Union in connection therewith, and destroy any copies
in Continuing Credit Union’s possession.
5.2.2
Confidentiality of Merging Credit Union. Merging Credit Union agrees that in the event of a
termination of this Agreement, that Merging Credit Union will keep confidential and not use for any
purpose any information (unless readily ascertainable from public or published information or trade
sources) obtained from Continuing Credit Union concerning the business of Continuing Credit Union
and will return to Continuing Credit Union any statements, documents, or other written information
obtained from Continuing Credit Union in connection therewith, and destroy any copies in Merging
Credit Union’s possession.
6.
Conditions Precedent to the Obligations of Continuing Credit Union. The obligations of
Continuing Credit Union under this Agreement are made expressly subject to the satisfaction on or prior to the
Merger Date of all of the above conditions and those conditions set forth hereinafter, compliance with which or
the occurrence of which may be waived in whole or in part by Continuing Credit Union in writing. If any one
or more of such conditions are not so satisfied, Continuing Credit Union may elect in writing to terminate its
obligations under this Agreement other than paragraph 5.2.1; and in the event of such termination, this
Agreement shall forthwith terminate and be of no further force and effect, and Continuing Credit Union shall
not be liable to Merging Credit Union by reason of this Agreement, its negotiations or its said termination,
whether for costs, expenses, damages or otherwise.
6.1
Accuracy of Representations and Warranties.
6.1.1
All representations, warranties, covenants and agreements of Merging Credit Union or its
employees, officers, directors and/or agents contained in this Agreement
shall, in all material respects and to the best of their knowledge, be true and correct,
performed and satisfied on and as of the date of this Agreement and shall, in all material
respects and to the best of their knowledge, be true and correct on and as of the Merger Date
with the same force and effect as though such representations and warranties had been made
on and as of the Merger Date.
6.1.2
Continuing Credit Union shall not have discovered any material error, misstatement, or
omission in a schedule, representation or warranty or material failure to perform or satisfy any such
covenant or condition.
6.1.3
There shall have been delivered to Continuing Credit Union on the Merger Date such other
certificates and other documents with respect to the foregoing as Continuing Credit Union, consistent
with the terms of this Agreement, may reasonably request, such certificates to be executed by the
officers and directors of Merging Credit Union certifying compliance with the covenants and
conditions contained herein.
6.2
Destruction or Loss. Between the date of this Agreement and the Merger Date, there shall not
have occurred any material damage, destruction or loss (whether or not covered by insurance) materially
and adversely affecting any of the properties or business of Merging Credit Union.
6.3.
Approval of Merger by Governmental Authorities. The Merger shall have been approved by the
[NCUA] [and/or name of state credit union regulator] and/or any other government agency required to
approve the Merger, and that all required documents and resolutions have been duly executed, with fully
executed copies exchanged by all parties, and approved by the respective Boards of each party as of the
Merger Date.
7.
Conditions Precedent to the Obligations of Merging Credit Union. The obligations of Merging
Credit Union under this Agreement are made expressly subject to the satisfaction on or prior to the Merger
Date of all of the above conditions and those conditions set forth hereinafter, compliance with which or the
occurrence of which may be waived in whole or in part by Merging Credit Union in writing. If any one or more
of such conditions are not so satisfied, Merging Credit Union may elect in writing to terminate its obligations
under this Agreement other than paragraph 5.2.2; and in the event of such termination, this Agreement shall
forthwith terminate and be of no further force and effect, and Merging Credit Union shall not be liable to
Continuing Credit Union by reason of this Agreement, its negotiations or its said termination, whether for costs,
expenses, damages or otherwise.
7.1
Accuracy of Representations and Warranties.
7.1.1
All representations, warranties, covenants and agreements of Continuing Credit Union or its
employees, officers, directors and/or agents contained in this Agreement shall, in all material respects
and to the best of their knowledge, be true and correct, performed and satisfied on and as of the date
of this Agreement and shall, in all material respects and to the best of their knowledge, be true and
correct on and as of the Merger Date with the same force and effect as though such representations
and warranties had been made on and as of the Merger Date.
7.1.2
Merging Credit Union shall not have discovered any material error, misstatement, or
omission in a schedule, representation or warranty or material failure to perform or satisfy any such
covenant or condition.
7.1.3
There shall have been delivered to Merging Credit Union on the Merger Date such other
certificates and other documents with respect to the foregoing as Merging Credit Union, consistent
with the foregoing terms of this Agreement, may reasonably request, such certificates to be executed
by the officers and directors of Continuing Credit Union certifying compliance with the covenants
and conditions contained herein.
7.2
Destruction or Loss. Between the date of this Agreement and the Merger Date, there shall not have
occurred any material damage, destruction or loss (whether or not covered by insurance) materially and
adversely affecting any of the properties or business of Continuing Credit Union.
7.3.
Approval of Merger by Governmental Authorities. The Merger shall have been approved by the
[NCUA] [and/or name of state credit union regulator] and/or any other government agency required to
approve the Merger, and that all required documents and resolutions
have been duly executed, with fully executed copies exchanged by all parties, and approved by the
respective Boards of each party as of the Merger Date.
1
Incorporation By Reference. Any appendices hereto shall be attached on or before the Merger Date and at
such time shall become a part of this Agreement and shall be incorporated herein as if attached on the date of this
Agreement.
2
Nonsurvival of Representations and Warranties. The representations and warranties made herein shall
not survive beyond the Merger Date or any lawful termination of this Agreement.
10. Termination.
10.1.1 Except as otherwise provided herein, this Agreement may be terminated only by mutual
agreement in writing of the parties hereto.
10.1.2 [Specify who will bear costs of the merger if not consummated by a specified date.]
10.1.3 Either party may terminate this Agreement for substantial or material cause, which shall
include, but not be limited to, [list examples of material cause], by giving written notice of breach to
the other party. [Allocate costs of the merger in the event of termination for cause.]
10.1.4 The Continuing Credit Union shall have ______ (__) days from the date of this Agreement to
complete its “due diligence.” Continuing Credit Union shall have the right to terminate this
Agreement and the merger upon written notice at any time during such due diligence period. In such
event, each Party to this Agreement shall be responsible for its own costs and expenses.
11. Miscellaneous Provisions.
11.1 Notices. Any notice or demand required or permitted to be given hereunder shall be in writing and
shall be deemed effective forty-eight (48) hours after having been deposited in the United States mail,
postage prepaid, registered or certified, return receipt requested, and addressed as to each party in the
following manner:
Continuing Credit Union
_________________________________________ Credit Union [Address]
Attn: _______________________________________________
Merging Credit Union
_________________________________________ Credit Union [Address]
Attn: _______________________________________________
Any party may change the address to which such notices are to be addressed by giving the other party notice in
the manner set forth herein.
11.2 Counterparts. This Agreement may be executed in counterparts, each of which is hereby declared to
be an original; all, however, shall constitute but one and the same Agreement.
11.3 Governing Law. This Agreement is being executed and delivered and is intended to be performed in
the State of [name of state], and all rights and duties in connection therewith shall be construed, enforced
and governed by the laws of said state, except to the extent that federal laws and/or regulations may apply.
11.4 Number. Throughout this Agreement, wherever the context so requires, the singular shall include the
plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.
[Optional Provision - 11.5
the parties.]
Include any cost allocation or attorneys’ fees provisions as desired by
11.6 Severability. In the event that any provision in this Agreement shall be held invalid or unenforceable,
such provision shall be severable from, and such invalidity or unenforceability shall not be construed to
have any effect on the remaining provisions of this Agreement.
11.7 Modification. All such representations of the parties hereto to each other are contained in this
Agreement, and no claims shall be made by any of the parties hereto upon any representations not
contained herein; it being the intention of the parties to incorporate within this Agreement their full and
complete understanding. This Agreement may not be modified or amended, except by a writing signed
by all of the parties hereto.
11.8 Captions. The title or headings of the various sections, articles and paragraphs hereof are intended
solely for convenience of reference and are not intended and shall not be deemed for any purpose whatever
to modify or explain or place any construction upon any of the provisions of this Agreement.
11.9 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto,
their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
________________________, 20___.
Continuing Credit Union _________________________________________ Credit Union
By: _________________________________________________
___________________________________________, Chairman
By: _________________________________________________
___________________________________________, Treasurer
Merging Credit Union _________________________________________ Credit Union
By: _________________________________________________
___________________________________________, Chairman
By: _________________________________________________
___________________________________________, Treasurer
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms listed in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
THIS AGREEMENT is made this _____ day of ______________________, 200_, by and between
__________________ Credit Union (the “Managing Credit Union”) and ____________________ Credit Union
(the “Managed Credit Union”) (collectively referred to as “the Parties”).
In consideration of the promises and mutual covenants contained herein, the Parties hereto agree as follows:
1. Management of Managed Credit Union.
1.1
Managing Credit Union will manage the day-to-day business of Managed Credit Union, subject
to: (1) the approval of Managed Credit Union’s Board of Directors for material changes in the operations
of Managed Credit Union; and (2) applicable federal and state laws and regulations and the policies of
Managed Credit Union. [The parties may wish to add more detail regarding specific deal-points or
arrangements.]
2. Conduct During Term of Agreement.
2.1 From and after the date this Agreement is executed, until this Agreement is terminated, Managed
Credit Union’s Board of Directors and other officials agree that they will:
(i)
Carry on their business in substantially the same manner as heretofore conducted.
(ii)
Permit Managing Credit Union full access to: (1) the books and records of Managed Credit
Union; (2) all financial and operating data, records and agreements concerning employees and
employee benefit plans and all other contracts and agreements of Managed Credit Union; (3) all
information concerning any pending or threatened litigation or other proceedings and any contingent
liabilities or obligations of Managed Credit Union; (4) all existing judgments, orders and any
governmental action or proceedings which would materially and adversely affect Managed Credit
Union; and (5) any other information or documents as Managing Credit Union shall reasonably
request.
2.2
During the term of this Agreement, Managing Credit Union shall be permitted to conduct such due
diligence as deemed appropriate while also providing the day-to-day management of Managed Credit
Union.
2.3
[Any other limitations, terms or conditions]
3. Separate Entities.
3.1
During the term of this Agreement, the Managing and Managed Credit Unions will be
maintained as separate entities, with separate Boards of Directors, separate accounting records, separate
audits, separate insurance policies, separate examinations, separate memberships, and so forth.
3.2
During the term of this Agreement, Managed Credit Union shall continue to maintain its corporate
existence and shall continue to perform any and all obligations required of Managed Credit Union in order
to remain a credit union duly organized, validly existing and in good standing under the laws of the [United
States of America][State of ___], and qualified to do business with full power and authority, corporate and
otherwise, to carry on its business in the jurisdictions and in the manner in which such business has been
and is now being conducted.
4.
Agents of Managed Credit Union.
4.1
Managing Credit Union’s designated agents shall be construed as agents of Managed Credit
Union or such other designations as is necessary to preserve adequate insurance coverage for the Managed
Credit Union and Managing Credit Union’s designated agents. Managing Credit Union shall ensure that
all designated agents continue to meet insurance and bondability requirements as stated in the applicable
policies or agreements of the parties.
5.
Intention of Managed Credit Union to Merge with Managing Credit Union.
5.1
It is the intention of Managed Credit Union to merge with Managing Credit Union
subject to:
(i)
Final negotiation and execution of a Supplemental Merger Agreement;
(ii)
The completion of due diligence by Managing Credit Union no later than the date set
forth in the Supplemental Merger Agreement;
(iii)
Approval of the [National Credit Union Administration (“NCUA”)] [and/or name of
state credit union regulator]; and
(iv)
An affirmative vote of the members of Managed Credit Union pursuant to the requirements
of [NCUA Regulations] [and/or name of state credit union regulations].
6.
Confidential Information. [The parties should ensure that this provision takes into account and
mandates compliance with any applicable rules on safekeeping, destruction, and/or disclosure in the Federal
Trade Commission standards, other federal standards, or any applicable state rules.]
6.1
Confidentiality of Managed Credit Union Confidential Information. Managing Credit Union
agrees that throughout the term of this Agreement and in the event of a termination of this Agreement it
will keep confidential any information, unless readily ascertainable from public or published information
or trade sources, obtained from Managed Credit Union concerning the business of Managed Credit Union
and/or Managed Credit Union’s members (“Confidential Information”).
6.2
Confidentiality of Managing Credit Union Confidential Information. Managed Credit Union
agrees that throughout the term of this Agreement and in the event of a termination of this Agreement
Managed Credit Union and its directors, volunteers, employees and agents will keep confidential any
information, unless readily ascertainable from public or published information or trade sources, obtained
from Managing Credit Union concerning the business and/or members of Managing Credit Union
(“Confidential Information”).
7.
Indemnification.
7.1
Indemnification by Managed Credit Union. Managed Credit Union hereby agrees, to defend,
indemnify and hold harmless Managing Credit Union, including directors, volunteers, employees and
agents (the “Indemnified Parties” for purposes of this Paragraph 7.1) from and against any and all
claims, damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees and costs)
due to the negligence of Managed Credit Union or breach of this Agreement by Managed Credit Union
(except to the extent such negligence or breach is due to the gross negligence or intentional misconduct
of the Indemnified Parties).
7.2
Indemnification by Managing Credit Union. Managing Credit Union hereby agrees, to defend,
indemnify and hold harmless Managed Credit Union from and against any and all claims, damages, losses,
liabilities, costs and expenses (including reasonable attorneys’ fees and costs) due to the negligence or
breach of this Agreement by Managing Credit Union
(except to the extent such negligence or breach is due to the gross negligence or intentional
misconduct of Managed Credit Union or any of its directors, volunteers or employees).
1
Nature and Survival of this Agreement. This Agreement is intended to be and shall be construed to
control the conduct of the Parties. This Agreement will be superseded by the Supplemental Merger Agreement to the
extent this Agreement is inconsistent with such Supplemental Merger Agreement. If the Parties do not merge or
otherwise terminate this Agreement, the following sections will survive termination of this Agreement for any
reason: 6, 7, 9 and 10.
2
Term, Renewal, Termination and Expenses. [The parties should carefully consider the issues of the term
and termination of the agreement, particularly the effect of termination of services on the Managed Credit Union.
Termination of management services can have significant safety and soundness implications for the Managed Credit
Union.]
9.1.1 Term. The term of this Agreement shall be continuous unless terminated pursuant to Section
9.1.2 below.
9.1.2 Termination. This Agreement may only be terminated as follows:
(a)
upon not less than sixty (60) days written notice to Managed Credit Union by
Managing Credit Union of its intention to terminate this Agreement;
(b)
(c)
upon mutual agreement in writing signed by the Parties hereto;
if, at any time, Managed Credit Union and Managing Credit Union consummate a merger;
(d)
by Managing Credit Union if Managed Credit Union breaches a material term of this
Agreement and no cure or reasonable effort to cure has been effectuated within thirty (30) days after
written notice of the breach to Managed Credit Union from Managing Credit Union. For purposes of
this Section 9.1.2(d), a “breach of a material term of this Agreement” by Managed Credit Union shall
include, but not be limited to, the: (1) failure of the Board of Directors of Managed Credit Union to
approve a merger with Managing Credit Union; or (2) failure of Managed Credit Union to act in a
timely manner in carrying out its obligations under this Agreement or the Supplemental Merger
Agreement; and/or
(e)
by Managed Credit Union if Managing Credit Union breaches a material term of this
Agreement and no cure or reasonable effort to cure has been effectuated within thirty (30) days after
written notice of the breach to Managing Credit Union from Managed Credit Union.
9.1.3 Duties Upon Termination. In the event of termination of this Agreement pursuant to Section 9.1.2(a),
(b), (c) or (e), Managed Credit Union shall not be charged for the services to be provided by Managing
Credit Union under this Agreement.
If Managing Credit Union terminates this Agreement pursuant to Section 9.1.2(d), Managed Credit Union shall
reimburse Managing Credit Union’s for the direct [and indirect] costs and expenses reasonably incurred in
having Managing Credit Union carry out its obligations under the terms of this Agreement. [The parties should
agree on and this agreement should clearly identify which party will bear the costs of termination of the
agreement in both for-cause and not-for-cause terminations.]
10. Miscellaneous Provisions.
10.1 Counterparts. This Agreement may be executed in counterparts, each of which is hereby declared to
be an original; all, however, shall constitute but one and the same Agreement.
10.2 Governing Law. This Agreement is being executed and delivered and is intended to be performed
in accordance with the laws of the State of ___________________.
10.3 Attorneys’ Fees and Costs. [The parties should determine whether they wish to allocate attorneys’
fees and costs for any breach or termination of the agreement.]
10.4 Severability. In the event that any provision in this Agreement shall be held invalid or
unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not
be construed to have any effect on the remaining provisions of this Agreement.
10.5 Modification. All such representations of the Parties to each other are contained in this Agreement,
and no claims shall be made by any of the Parties upon any representations not contained herein; it being
the intention of the Parties to incorporate within this Agreement their full and complete understanding.
This Agreement may not be modified or amended, except by a writing signed by all of the Parties.
10.6 Assignment. This Agreement shall not be assigned without the prior written consent of the other
Parties, which shall not be unreasonably withheld.
“Managing Credit Union” _________________________________________ Credit Union
By: _________________________________________________ Its:
Chairman of the Board of Directors
“Managed Credit Union” _________________________________________ Credit Union
By: _________________________________________________ Its:
Chairman of the Board of Directors
[NOTE TO CREDIT UNION: Included within Exhibit 5 are copies of all NCUA forms that may be required in a merger. (As you
examine the following list, you may notice that there is not an NCUA Form 6307 or 6310. This is because it appears that these
forms do not, as of this Manual, exist.) While we have provided these forms with care, it is recommended that you review them
with counsel prior to submission to the NCUA and take appropriate steps to ensure that you are using the appropriate, current
NCUA Forms as these forms may change.]
A. NCUA Form 6301:
Merger Package Checklist
B. NCUA Form 6302:
Merger Resolution (CCU)
C. NCUA Form 6303:
Merger Resolution (MCU)
D. NCUA Form 6304:
Merger Agreement
E. NCUA Form 6305A: Notice of Special Meeting of the Members on Proposal to Merge
F.
NCUA Form 6305B: Notice of Special Meeting on Proposal to Merge and Convert to
Nonfederally Insured Status
G.
NCUA Form 6305C: Notice of Special Meeting on Proposal to Merge and Terminate Federal
Insurance
H. NCUA Form 6306A: Ballot for Merger Proposal
I.
Status
NCUA Form 6306B: Ballot for Merger Proposal and Conversion to Nonfederally Insured
J. NCUA Form 6306C:
Ballot for Merger Proposal and Termination of Federal Insurance
K. NCUA Form 6308A: Certification of Vote on Merger Proposal
L.
NCUA Form 6308B: Certification of Vote on Merger Proposal and Conversion to
Nonfederally Insured Status
M.
NCUA Form 6308C: Certification of Vote on Merger Proposal and Termination of Federal
Insurance
N. NCUA Form 6309:
Certification of Completion of Merger
O. NCUA Form 6311:
Probable Asset/Share Ratio – CCU
P. NCUA Form 6312:
Probable Asset/Share Ratio - MCU
Contents of the Merger Package
_______ Detailed explanation of the reason for the merger. _______ Proposed effective date of the merger.
_______ Current financial statements for both credit unions. _______ Current delinquent loan summary for both
credit unions. _______ Current analysis of the adequacy of the Allowance for Loan and Lease Losses for both
credit unions. _______ Consolidated financial statement, including an assessment of the net worth of each credit
union before the merger and the net worth of the continuing credit union after the merger.
_______
Explanation of any proposed share adjustment.
_______
Explanation of any provisions for reserves, undivided earnings, or dividends.
_______
Provisions for notifying and paying creditors.
_______
Explanation of any changes to insurance, such as life savings and insurance of member accounts.
_______
Copies of the merging and continuing credit unions’ fields of membership.
_______
Information on where the members will be served. The location of the continuing credit union
office(s) and/or plans to serve the members through the merging credit union’s existing office(s).
_______
If the merging credit union has $50 million or more in assets on its latest call report, a
statement about whether the two credit unions intend to make a Hart-Scott-Rodino Act premerger
notification filing with the Federal Trade Commission and, if not, why not.
_______
One primary contact person at both the merging and continuing credit unions and their
mailing addresses, e-mail addresses, and phone numbers (for questions or notification of merger decisions).
_______
If the merging credit union is state-chartered and the continuing credit union is federally
chartered, evidence that all assets and liabilities meet requirements of the Federal Credit
Union Act.
_______
_______
If applicable, evidence your State Supervisory Authority approves of the proposed merger.
If the continuing credit union is nonfederally insured, proof that the accounts of the merging
credit union will be accepted for coverage by the nonfederal insurer.
_______
If the continuing credit union is nonfederally insured or uninsured, a written statement from
the continuing credit union that it “will fully comply with the requirements of 12.U.S.C. Part 1831t(b), including
all notification and acknowledgment requirements.”
145
Required Forms—Federal and State Chartered Credit Unions
_______ NCUA 6302, Merger Resolution: Continuing Credit Union. _______ NCUA 6303, Merger Resolution:
Merging Credit Union. _______ NCUA 6304, Merger Agreement – submit the proposed merger agreement
addressing any share
adjustments with the initial application. Submit an executed copy which is signed, dated, and notarized, after the
effective date of the merger. Merging and Continuing Credit Unions. _______ NCUA 6311, Probable Asset/Share
Ratio Computation: Continuing Credit Union. _______ NCUA 6312, Probable Asset/Share Ratio Computation:
Merging Credit Union.
Additional Required Forms—Merging Federal Credit Unions
For Federal credit unions merging into a federally insured credit union: _______ NCUA
6305A, Notice of Special Meeting of the Members on Proposal to Merge. _______ NCUA 6306A,
Ballot for Merger Proposal.
For Federal credit unions merging into a nonfederally insured credit union: _______ NCUA 6305B,
Notice of Special Meeting on Proposal to Merge and Convert to Nonfederally Insured Status. _______ NCUA
6306B, Ballot for Merger Proposal and Conversion to Nonfederally Insured Status.
For Federal credit unions merging into a credit union with no deposit insurance: _______ NCUA
6305C, Notice of Special Meeting on Proposal to Merge and Terminate Federal Insurance. _______ NCUA
6306C, Ballot for Merger Proposal and Termination of Federal Insurance.
Instructions for NCUA 6302: The continuing credit union’s board of directors must complete this form after it votes to merge with
the merging credit union. This form is required for a complete merger package.
Merger Resolution
___________________________________________ Credit Union
(Continuing)
Resolution
The Board of Directors believes our credit union should merge with ___________________ Credit Union (merging
credit union).
Our credit union will assume the merging credit union’s shares and liabilities. The merging credit union will
transfer to our credit union all of its assets, rights, and property. All members of the merging credit union will
receive shares in our credit union, which will stay in business under its present charter.
Certification
We, the Board Presiding Officer and Secretary of this credit union, are authorized to:
•
Seek National Credit Union Administration Regional Director approval of the merger.
•
Execute and deliver the merger agreement on the effective date of the merger.
•
Execute all agreements and other papers required to complete the merger.
We certify to the National Credit Union Administration that the foregoing is a full, true, and correct copy of a
resolution adopted by the Board of Directors of our credit union at a meeting held under our bylaws on
________________________, 20_____. A quorum was present and voted. The resolution is duly recorded in the
minutes of the meeting and is still in full force and effect.
Board Presiding Officer Date
Secretary Date
147
Instructions for NCUA 6303: The merging credit union’s board of directors must complete this form after it votes to merge with
the continuing credit union. This form is required for a complete merger package.
Merger Resolution
___________________________________________ Credit Union
(Merging)
Resolution
The Board of Directors believes our credit union should merge with ___________________ Credit Union
(continuing credit union).
The continuing credit union will assume the shares and liabilities of our credit union. Our credit union will
transfer to the continuing credit union all of our assets, rights, and property. All members of our credit union will
receive shares in the continuing credit union, which will stay in business under its present charter.
Certification
We, the Board Presiding Officer and Secretary of this credit union, are authorized to:
•
Seek National Credit Union Administration Regional Director approval of the merger.
•
Execute and deliver the merger agreement on the effective date of the merger.
•
Execute all agreements and other papers required to complete the merger.
We certify to the National Credit Union Administration that the foregoing is a full, true, and correct copy of a
resolution adopted by the Board of Directors of our credit union at a meeting held under our bylaws on on
________________________, 20_____. A quorum was present and voted. The resolution is duly recorded in the
minutes of the meeting and is still in full force and effect.
Board Presiding Officer Date
Secretary Date
149
Instructions for NCUA 6304: You must submit a proposed Merger Agreement to the NCUA Regional Director with the initial
merger package addressing Item 2, when applicable. Do not sign, date, or notarize the proposed agreement.
At the completion of the merger, officials of the merging and continuing credit unions must complete this agreement, have it
notarized, and the continuing credit union should retain the original document. Send one copy of the executed form to the NCUA
Regional Director (see Form NCUA 6309). The date you sign this document is the effective date of the merger.
Merger Agreement
This agreement, made and entered into this _____________________ day of _____________________, 20______,
by and between _______________________________ Credit Union (continuing credit union) and
_______________________________ Credit Union (merging credit union).
The continuing credit union and the merging credit union agree to the following terms:
1. The merging credit union will transfer to the continuing credit union all of its assets, rights, and property.
2. The continuing credit union will assume and pay all liabilities of the merging credit union. In addition, the
continuing credit union will issue all members of the merging credit union the same amount of shares they currently
own in the merging credit union, subject to the following share adjustments (if any):
___________________________________________ (continuing) Credit Union
by: ___________________________________________ ___________________________________________
Board Presiding Officer Treasurer
___________________________________________ (merging) Credit Union
by: ___________________________________________ ___________________________________________
Board Presiding Officer Treasurer
State of ________________________________ County of ______________________________
Before me a Notary Public (or other authorized officer) appeared the above named ____________________ and ____________________,
Board Presiding Officer and Treasurer of ____________________ Credit Union, who being personally known to me as (or proved by the oath
of credible witnesses to be) the persons who executed the annexed instrument acknowledged the same to be their free act and deed and in their
respective capacities the free act and deed of said credit union.
(SEAL)
Notary Public My commission expires _________________, 20____. State of
___________________________ County of _________________________
Before me a Notary Public (or other authorized officer) appeared the above named ____________________ and ____________________,
Board Presiding Officer and Treasurer of ____________________ Credit Union, who being personally known to me as (or proved by the oath
of credible witnesses to be) the persons who executed the annexed instrument acknowledged the same to be their free act and deed and in their
respective capacities the free act and deed of said credit union.
SEAL)
Notary Public My commission expires _________________, 20____. State of
___________________________ County of _________________________
150
Instructions for NCUA 6305A: Not more than 30 or less than 7 days before the date of the vote, the merging federal credit
union must provide its members (a) advance notice of a special meeting to vote on a proposed merger and (b) a copy of the
merger ballot. When you distribute the notice and ballot to your members, you also should send a copy to the NCUA Regional
Director. The merging federal credit union should conduct the membership vote only after the NCUA Regional Director
approves the proposed merger.
USE THIS FORM ONLY IF THE CONTINUING CREDIT UNION IS FEDERALLY INSURED.
Notice of Special Meeting of the Members on Proposal to Merge
___________________________________________ Credit Union
(Merging) On ___________________ (insert date), the Board of Directors of your
credit union approved a proposition to merge with ___________________ Credit Union. You are encouraged to
attend a special meeting of your credit union at ______________________________________ (insert address) on
___________________, 20____, at ______________________________________ (insert date and time).
Purpose of the Meeting
The meeting has two purposes:
1. To consider and act upon a proposal to merge our credit union with ___________________ Credit Union, the
continuing credit union.
2. To approve the action of the Board of Directors of our credit union in authorizing the officers of the credit
union, subject to member approval, to carry out the proposed merger.
If this merger is approved, our credit union will transfer all its assets and liabilities to the continuing credit union. As
a member of our credit union, you will become a member of the continuing credit union. On the effective date of the
merger, you will receive shares in the continuing credit union for the shares you own now in our credit union.
Other Information Related to the Proposed Merger
The directors of the participating credit unions carefully analyzed the assets and liabilities of the participating credit
unions and appraised each credit union’s share values. The appraisal of the share values appears on the attached
individual and consolidated financial statements of the participating credit unions.
The directors of the participating credit unions have concluded that the proposed merger is desirable for the
following reasons:
The Board of Directors of our credit union believes that the merger should include/not include an adjustment
in shares for the following reasons:
The main office of the continuing credit union will be as follows:
The branch office(s) of the continuing credit union will be as follows:
151
The merger must have the approval of a majority of members of the credit union who vote on the proposal.
Enclosed with this Notice of Special Meeting is a Ballot for Merger Proposal. If you cannot attend the meeting,
please complete the ballot and return it to the credit union office at ___________________ by no later than
___________________ on ___________________, 20____ (insert time and date). To be counted, your ballot must
reach us by the date and time announced for the meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
Board Presiding Officer Date
Instructions for NCUA 6305B: Not more than 30 nor less than 7 days before the date of the vote, the merging federal credit union
must provide its members (a) advance notice of a special meeting to vote on a proposed merger and
(b) a copy of the merger ballot. When you distribute the notice and ballot to your members, you also should send a copy to the
NCUA Regional Director. The merging federal credit union should conduct the membership vote only after the NCUA Regional
Director approves the proposed merger.
Notice of Special Meeting on Proposal to Merge and
Convert to Nonfederally Insured Status
(insert name of merging credit union)
On ___________________ (insert date), the Board of Directors of your credit union approved a proposition to merge
with ______________________________________ (insert name of continuing credit union) and to convert from
federal share (deposit) insurance to private insurance. You are encouraged to attend a special meeting of our credit
union at ______________________________________ (insert address) on ___________________, 20____, at
_____________ ____.m. (insert date and time).
Purpose of the Meeting
The meeting has two purposes:
1. To consider and act upon a proposal to merge our credit union with ____________________________
__________ (insert name of continuing credit union), the continuing credit union.
2. To approve the action of the Board of Directors of our credit union in authorizing the officers of the credit
union, subject to member approval, to carry out the proposed merger.
If this merger is approved, our credit union will transfer all its assets and liabilities to the continuing credit union. As
a member of our credit union, you will become a member of the continuing credit union. On the effective date of the
merger, you will receive shares in the continuing credit union for the shares you own in our credit union.
Insurance Conversion
Currently, your accounts have share insurance provided by the National Credit Union Administration, an agency of
the federal government. The basic federal coverage is up to $100,000, but accounts may be structured in different
ways, such as joint accounts, payable-on-death accounts, or IRA accounts, to achieve federal coverage of much more
than $100,000. If the merger is approved, your federal insurance will terminate on the effective date of the merger.
Instead, your accounts in the credit union will be insured up to $_________________ (insert dollar amount) by
______________________________________ (insert name of insurer), a corporation chartered by the State of
___________________ (insert name of state). The federal insurance provided by the National Credit Union
Administration is backed by the full faith and credit of the United States government. The private insurance you will
receive from __________________ ____________________ (insert name of insurer), however, is not guaranteed by
the federal or any state or local government.
153
IF THIS MERGER IS APPROVED, AND THE ______________________________________ (insert name of
continuing credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL
GET YOUR MONEY BACK.
Also, because this merger, if approved, would result in the loss of federal share insurance, the ______
________________________________ (insert name of merging credit union) will, at any time between approval of
the merger and the effective date of merger and upon request of the member, permit all members who have share
certificates or other term accounts to close the federally-insured portion of those accounts without an early
withdrawal penalty. (This is an optional sentence. It may be deleted without the approval of the Regional Director.
The members must be informed about this right, however, as described in 12 C.F.R. §708b.204(c).)
Other Information Related to the Proposed Merger
The directors of the participating credit unions carefully analyzed the assets and liabilities of the participating credit
unions and appraised each credit union’s share values. The appraisal of the share values appears on the attached
individual and consolidated financial statements of the participating credit unions.
The directors of the participating credit unions have concluded that the proposed merger is desirable for the
following reasons:
(insert reasons)
The Board of Directors of our credit union believes the merger should include/not include an adjustment in shares
for the following reasons:
(insert reasons)
The main office of the continuing credit union will be as follows: (insert
reasons)
The branch office(s) of the continuing credit union will be as follows: (insert
reasons)
The merger must have the approval of a majority of members who vote on the proposal, provided at least 20
percent of the total membership participates in the voting.
Enclosed with this Notice of Special Meeting is a Ballot for Merger Proposal and Conversion to Nonfederally
Insured Status. If you cannot attend the meeting, please complete the ballot and return it to
______________________________________ (insert name of independent entity conducting vote) at
______________________________________ (insert mailing address) by no later than ___________________
on ___________________, 20____ (insert date and time). To be counted, your ballot must reach
___________________ (insert name of independent entity conducting vote) by the date and time announced for
the meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
Board Presiding Officer (signature of Board Presiding Officer) Date
(insert name and title of Board Presiding Officer (insert date)
Instructions for NCUA 6305C: Not more than 30 or less than 7 days before the date of the vote, the merging federal credit union
must provide its members (a) advance notice of a special meeting to vote on a proposed merger and
(b) a copy of the merger ballot. When you distribute the notice and ballot to your members, you must also send a copy to the
NCUA Regional Director. The merging federal credit union should conduct the membership vote only after the NCUA Regional
Director approves the proposed merger.
Notice of Special Meeting on Proposal to Merge and
Terminate Federal Insurance
___________________________________________ Credit Union
(Merging)
On ___________________ (insert date), the Board of Directors of your credit union approved a proposition to
merge with ______________________________________ Credit Union and convert from federal share (deposit)
insurance to nonfederal insurance. You are encouraged to attend a special meeting of our credit union at
______________________________________ (insert address) on ___________________, 20____, at
___________________ (insert date and time).
Purpose of the Meeting
The meeting has two purposes:
1. To consider and act upon a proposal to merge our credit union with ___________________ Credit Union, the
continuing credit union.
2. To approve the action of the Board of Directors of our credit union in authorizing the officers of the credit
union to carry out the proposed merger.
If the merger is approved, our credit union will transfer all its assets and liabilities to the continuing credit union. As
a member of our credit union, you will become a member of the continuing credit union. On the effective date of the
merger, you will receive shares in the continuing credit union for the shares you own now in our credit union.
Insurance Termination
Currently, your accounts have share insurance provided by the National Credit Union Administration, an agency of
the federal government. The basic federal coverage is up to $100,000, but accounts may be structured in different
ways, such as joint accounts, payable-on-death accounts, or IRA accounts, to achieve federal coverage of much
more than $100,000. If the merger is approved, your insurance will be affected as follows:
• After the effective date of the merger, any deposits you make to any new or existing account won’t
be insured by the National Credit Union Administration or any other entity.
• Your accounts in the merging credit union on the date of the merger, up to a maximum of $100,000
for each member, will remain insured, as provided in the Federal Credit Union Act, for one year after the close
of business on the date of the merger.
• If you make any withdrawal after the close of business on the date of the merger, the one-year
insurance coverage will be reduced by the amount of the withdrawal.
155
IF THIS MERGER IS APPROVED, AND THE ______________________________________ (insert name of
continuing credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL
GET YOUR MONEY BACK.
The directors of the participating credit unions carefully analyzed the assets and liabilities of the participating credit
unions and appraised each credit union’s share values. The appraisal of the share values appears on the attached
individual and consolidated financial statements of the participating credit unions.
The directors of the participating credit unions have concluded that the proposed merger is desirable for the
following reasons:
The Board of Directors of our credit union believes the merger should include/not include an adjustment in shares
for the following reasons:
The main office of the continuing credit union will be as follows:
The branch office(s) of the continuing credit union will be as follows:
The merger must have the approval of a majority of our total membership.
Enclosed with this Notice of Special Meeting is a Ballot for Merger Proposal and Termination of Federal Insurance.
If you cannot attend the meeting, please complete the ballot and return it to _____________
_________________________ (insert name of the independent entity conducting the vote) at ________
______________________________ no later than ___________________, 20____. To be counted, your ballot
must reach ______________________________________ (insert name of the independent entity) by the date and
time announced for the meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
Board Presiding Officer (signature of Board Presiding Officer) Date
Instructions for NCUA 6306A: Not more than 30 or less than 7 days before the date of the vote, the merging federal credit union
must provide its members (a) advance notice of a special meeting to vote on a proposed merger and
(b) a copy of the merger ballot. When you distribute the notice and ballot to your members, you also should send a copy to the
NCUA Regional Director. The merging federal credit union should conduct the membership vote only after the NCUA Regional
Director approves the proposed merger.
USE THIS FORM ONLY IF THE CONTINUING CREDIT UNION IS FEDERALLY INSURED.
Ballot for Merger Proposal
Name of Member: ______________________________________ Account Number: ________________
Your credit union must receive this ballot by ___________________ (date for vote). Please mail or bring it to:
(insert credit union address)
I have read the Notice of Special Meeting for the members of _________________________________ Credit
Union. The meeting will be held on the above date to consider and act upon the merger proposal described in the
notice. I vote on the proposal as follows (check one box):
[]
Approve the proposed merger and authorize the Board of Directors to take all necessary action to
accomplish the merger.
[]
Do not approve the proposed merger.
Signed: _____________________________________________________________________________________
Member’s Name
Date: ____________________________________________
157
Instructions for NCUA 6306B: Not more than 30 nor less than 7 days before the date of the vote, the merging federal credit union
must provide its members (a) advance notice of a special meeting to vote on a proposed merger and (b) a copy of the merger ballot.
When you distribute the notice and ballot to your members, you must also send a copy to the NCUA Regional Director.
Ballot for Merger Proposal and Conversion to
Nonfederally Insured Status
Name of Member: ______________________________________ Account Number: ________________ (insert name)
(insert account number)
The credit union must receive this ballot by ___________________ (insert date and time for vote). Please mail or
bring it to:
(insert name of independent entity and address)
I understand if the merger of the _________________________________ (insert name of merging credit union) into
the _________________________________ (insert name of continuing credit union) is approved, the National
Credit Union Administration share (deposit) insurance I now have, up to $100,000, or possibly more if I use
different account structures, will terminate upon the effective date of the merger. Instead, my shares in the
_________________________________ (insert name of continuing credit union) will be insured up to
$___________________ (insert dollar amount) by _________________ ________________ (insert name of
insurer), a corporation chartered by the State of ________________ (insert name of state). The federal insurance
provided by the National Credit Union Administration is backed by the full faith and credit of the United States
Government. The private insurance provided by _________________________________ (insert name of insurer) is
not.
I FURTHER UNDERSTAND THAT IF THIS MERGER IS APPROVED, AND THE _____________
_________________________ (insert name of continuing credit union) FAILS, THE FEDERAL
GOVERNMENT DOES NOT GUARANTEE THAT I WILL GET MY MONEY BACK.
I vote on the proposal as follows (check one box):
[]
Approve merger and conversion to private insurance and authorize the Board of Directors to take all
necessary action to accomplish the merger and conversion.
[] Do not approve merger and conversion to private insurance.
Signed: _____________________________________________________ Date: ________________________
(insert printed member’s name)
158
Instructions for NCUA 6306C: Not more than 30 or less than 7 days before the date of the vote, the merging federal credit union
must provide its members (a) advance notice of a special meeting to vote on a proposed merger and
(b) a copy of the merger ballot. When you distribute the notice and ballot to your members, you also should send a copy to the
NCUA regional director.
Ballot for Merger Proposal and Termination of Federal Insurance
Name of Member: ______________________________________ Account Number: ________________
We must receive this ballot by ___________________ (date for vote). Please mail or bring it to:
(insert name and address of independent entity conducting the vote)
I understand if the merger of the ______________________________________ (merging) Credit Union into the
______________________________________ (continuing) Credit Union is approved, any new deposits or
additions to my existing accounts won’t be insured by the National Credit Union Administration, an agency of
the federal government.
I also understand that my accounts in the continuing credit union on the date of the merger, up to a maximum of
$100,000, will be insured for one year after the merger date but that any withdrawals after the merger date will
reduce the insurance coverage by the amount of the withdrawal.
I FURTHER UNDERSTAND THAT IF THIS MERGER IS APPROVED, AND THE _____________
_________________________ (insert name of continuing credit union) FAILS, THE FEDERAL
GOVERNMENT DOES NOT GUARANTEE THAT I WILL GET MY MONEY BACK EXCEPT AS
DESCRIBED ABOVE.
I vote on the proposal as follows (check one box):
[]
Approve merger and termination of insurance and authorize the Board of Directors to take all
necessary action to accomplish the merger and termination.
[]
Do not approve merger and termination of insurance.
Signed: _____________________________________________________
Date:
________________________
(insert printed member’s name)
159
Instructions for NCUA 6308A: Within 10 days after the membership vote, the merging federal credit union must complete this
form and mail it to the NCUA Regional Director.
USE THIS FORM ONLY IF THE CONTINUING CREDIT UNION IS FEDERALLY INSURED.
Certification of Vote on Merger Proposal of the
___________________________________________
Credit Union
(Merging)
We, the undersigned officers of the ______________________________________ Credit Union, certify the
completion of the following actions:
1. At a meeting on ___________________, 20____, the Board of Directors adopted a resolution approving the
merger of our credit union with ______________________________________ Credit Union (continuing credit
union).
2. Not more than 30 or less than 7 days before the date of the vote, copies of the notice of special meeting and the
ballot, as approved by the National Credit Union Administration, and a copy of the merger plan announced in the
notice, were mailed to our members.
3. The credit union arranged for a special meeting of our credit union members at the time and place announced
in the Notice to consider and act upon the proposed merger.
4. At the special meeting, the credit union arranged for an explanation of the merger proposal and any changes in
federally insured status to the members present at the special meeting.
5. Conducted the membership vote at the special meeting. A majority of the voting members of our credit
union voted in favor of the merger as follows: _____ Number of members present at the special meeting _____
Number of members present who voted in favor of the merger _____ Number of members present who voted
against the merger
_____ Number of additional written ballots in favor of the merger _____
Number of additional written ballots opposed to the merger
The action of the members at the special meeting was recorded in the minutes.
This certification signed the ___________________ day of ___________________ 20____.
Board Presiding Officer Secretary
160
Instructions for NCUA 6308B: Within 10 days after the membership vote, the merging federal credit union must complete this
form and mail it to the NCUA Regional Director.
Certification of Vote on Merger Proposal and Conversion to
Nonfederally Insured Status of the
___________________________________________ Credit Union
(Merging)
We, the undersigned officers of the ______________________________________ (insert name of merging
credit union), certify the completion of the following actions:
1. At a meeting on (insert date) ___________________, 20____, the Board of Directors adopted a resolution
approving the merger of our credit union with ______________________________________ (insert name of
continuing credit union).
2. Not more than 30 or less than 7 days before the date of the vote, copies of the notice of special meeting and the
ballot, as approved by the National Credit Union Administration, and a copy of the merger plan announced in the
notice, were mailed to our members.
3. The credit union arranged for the conduct of a special meeting of our members at the time and place announced in
the notice to consider and act upon the proposed merger.
4. At the special meeting, the credit union arranged for an explanation of the merger proposal and any changes in
federally insured status to the members present at the special meeting.
5. The ______________________________________ (insert name of independent entity), an entity independent of
the credit union, conducted the membership vote at the special meeting. At least 20 percent of our total membership
voted and a majority of voting members favor the merger as follows: _____ Number of total members
_____ Number of members present at the special meeting _____ Number of
members present who voted in favor of the merger _____ Number of
members present who voted against the merger _____ Number of additional
written ballots in favor of the merger _____ Number of additional written
ballots opposed to the merger
6. The action of the members at the special meeting was recorded in the minutes.
161
This certification signed the (insert date) ___________________ day of ___________________ 20____.
Board Presiding Officer Secretary (signature of Board Presiding Officer) (signature of Board Secretary)
(insert typed name and title) (insert typed name and title)
I ______________________________________ (insert name), an officer of the _____________________
_________________ (insert name of independent entity that conducted the vote), hereby certify that the information
recorded in paragraph 5 above is accurate.
This certification signed the (insert date) ___________________ day of ___________________ 20____.
Signature Title Phone Number (signature of officer of independent entity) (typed name, title, and phone number)
Instructions for NCUA 6308C: Within 10 days after the membership vote, the merging federal credit union must complete this
form and mail it to the NCUA Regional Director.
Certification of Vote on Merger Proposal and Termination of
Federal Insurance of the
___________________________________________ Credit Union
(Merging)
We, the undersigned officers of the ______________________________________ Credit Union, certify the
completion of the following actions:
1. At a meeting on ___________________, 20____, the Board of Directors adopted a resolution approving the
merger of our credit union with ______________________________________ Credit Union (continuing credit
union).
2. Not more than 30 or less than 7 days before the date of the vote, copies of the notice of special meeting and the
ballot, as approved by the National Credit Union Administration, and a copy of the merger plan announced in the
notice, were mailed to our members.
3. The credit union arranged for the conduct of a special meeting of our members at the time and place announced in
the notice to consider and act upon the proposed merger.
4. At the special meeting, the credit union arranged for an explanation of the merger proposal and any changes in
federally insured status to the members present at the special meeting.
5. The ______________________________________ (insert name of independent entity), an entity
independent of the credit union, conducted the membership vote at the special meeting. A majority of the
members of our credit union voted to approve the merger as follows: _____ Number of total membership
_____ Number of members present who voted in favor of the merger _____
Number of members present who voted against the merger _____ Number of
additional written ballots in favor of the merger _____ Number of additional
written ballots opposed to the merger
6. The action of the members at the special meeting was recorded in the minutes.
163
This certification signed the ___________________ day of ___________________ 20____.
Board Presiding Officer Secretary
I ______________________________________ (insert name), an officer of the _____________________
_________________ (insert name of independent entity that conducted the vote), hereby certify that the information
recorded in paragraph 5 above is accurate.
This certification signed the ___________________ day of ___________________ 20____.
Signature Title Phone Number
Instructions for NCUA 6309: Within 30 days after the effective date of the merger, the continuing credit union must complete this
form and mail it to the NCUA Regional Director with the documents requested on the form.
Certification of Completion of Merger into
___________________________________________ Credit Union
(Continuing)
We, the undersigned officers of the above-named credit union, certify to the National Credit Union
Administration as follows:
1. The merger of our credit union with ______________________________________ Credit Union was
completed as of ___________________, 20____ (date of the executed merger agreement) according to the terms
and plan approved by this Board of Directors by a resolution adopted at the meeting held on
___________________, 20____. We previously provided a certified copy of the resolution to the National Credit
Union Administration.
2. We completed all required steps for the merger and transferred the merging credit union’s assets. Attached to
this certification are the following documents:
1. Financial reports for each credit union immediately before the completion of the merger.
2. A consolidated financial report for the continuing credit union immediately after the completion of the merger.
3. The charter of the merging federal credit union (if available).
4. The insurance certificate for the merging federally insured credit union (if available).
5. A copy of the executed merger agreement, Form NCUA 6304. This certification signed the
___________________ day of ___________________, 20____.
Board Presiding Officer Secretary
165
Instructions for NCUA Forms 6311 and 6312: These probable asset/share ratio computations are required for a complete merger
package (not applicable to corporate credit unions).
Probable Asset/Share Ratio Computation Instructions
The Probable Asset/Share Ratio (PAS) reflects the relative worth of $1 of shares in the credit union, assuming it
will be an on-going concern. The ratio is computed by dividing the net value of assets by the credit union’s total
shares.
ADDITIONS:
•
Cash is valued at book less any known potential losses.
•
Loans are valued at book net of probable estimated loan losses (ALLL).
•
Investments are valued at book value less any known losses. However, if a long-term investment is
likely to be liquidated prior to maturity, it is valued at current market value.
• Fixed Assets are valued at book, except when major fixed assets are not in use or are in the process
of being sold. In these instances, the asset is valued at its probable market value.
• Other Assets are valued at the most realistic value to the credit union, usually not to exceed book value.
DEDUCTIONS:
•
Notes Payable are valued at book.
•
Accounts Payable are valued at book.
•
Other Liabilities are valued at book.
•
Contingent and/or Unrecorded Liabilities are valued at the most realistic known value. This item
should include any unrecorded dividends not accrued for the accounting period.
•
•
Subsidiary Ledger Differences are deducted if the credit union is likely to suffer a loss due to the problem.
Other Losses includes any other known losses. Do not include deficits in undivided earnings or net
losses because they have already reduced assets if properly recorded.
166
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8
Exhibit 9
Exemplar Notice of Merger and Conversion of Insurance Status
Exemplar Notice of Merger and Termination of Federal Insurance
Probable asset/share ratio — continuing credit union
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
DeDuCTIONS
$0
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
167
Net Value of Assests (A-B)
Total Shares
Probable Asset/Share Ratio
$0
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8
Exhibit 9
Exemplar Notice of Merger and Conversion of Insurance Status
Exemplar Notice of Merger and Termination of Federal Insurance
Probable asset/share ratio — continuing credit union
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
$0
DeDuCTIONS
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
Net Value of Assests (A-B)
$0
Total Shares
Probable Asset/Share Ratio
G1
Cell:
Comment:
The Probable Asset/Share Ratio (PAS) reflects the relative worth of $1 of shares in the
credit union, assuming it will be an on-going concern.
Cell:
Comment:
A6
Cash is valued at book less any known potential losses.
Cell:
Comment:
A7
Loans are valued at book net of probable estimated loan losses (ALLL).
Cell:
Comment:
B8
Investments are valued at book value less any known losses. However, if a long-term
investment is likely to be liquidated prior to maturity, it should be valued at its current
market value.
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8
Exhibit 9
Exemplar Notice of Merger and Conversion of Insurance Status
Exemplar Notice of Merger and Termination of Federal Insurance
Probable asset/share ratio — continuing credit union
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
DeDuCTIONS
$0
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
Net Value of Assests (A-B)
$0
Total Shares
Probable Asset/Share Ratio
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8
Exhibit 9
Exemplar Notice of Merger and Conversion of Insurance Status
Exemplar Notice of Merger and Termination of Federal Insurance
Probable asset/share ratio — continuing credit union
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
$0
DeDuCTIONS
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
Net Value of Assests (A-B)
$0
Total Shares
Probable Asset/Share Ratio
G1
Cell:
Comment:
The Probable Asset/Share Ratio (PAS) reflects the relative worth of $1 of shares in the
credit union, assuming it will be an on-going concern.
Cell:
Comment:
A6
Cash is valued at book less any known potential losses.
Cell:
Comment:
A7
Loans are valued at book net of probable estimated loan losses (ALLL).
Cell:
Comment:
B8
Investments are valued at book value less any known losses. However, if a long-term
investment is likely to be liquidated prior to maturity, it should be valued at its current
market value.
NCUA IC1
Instructions for NCUA IC1: The converting credit union must provide this letter to the NCUA Regional Director at least 14 days
before the credit union notifies its members of the proposed conversion and solicits their vote on the conversion and at least 90
days before the proposed conversion date.
Notice to NCUA of Intent to Convert to State Charter and to Nonfederal
(Private) Share Insurance and Request for NCUA Approval
__________________________________________________________ (insert name), NCUA Regional Director
______________________________________________________ (insert address of NCUA Regional Director)
Re: Notice of Intent to Convert to State Charter and Private Share Insurance
Dear Director (insert name): ____________________________________________________________________
In accordance with federal law at Title 12, United States Code Section 1785(b)(1)(D), I request the National Credit
Union Administration approve the conversion of ___________________ (insert name of federal credit union) to a
state charter in ___________________ (insert name of state) and from federal share insurance to private primary
share insurance with ______________________________________ (insert name of private insurance company).
On ___________________ (insert date), the board of directors of ___________________ (insert name of credit
union) resolved to pursue the charter conversion and the conversion from federal insurance to private insurance. A
copy of the resolution is enclosed.
On ___________________ (insert date), the credit union plans to solicit the vote of our members on the
conversion. The credit union will employ ___________________ (insert name, address, and telephone number of
independent entity) to conduct the vote. The credit union will use the form notice and ballot required by NCUA
regulations, and will certify the results to NCUA as required by NCUA regulations.
Aside from the notice and ballot, the credit union (does)(does not) intend to provide our members with additional
written information about the conversion. I understand that NCUA regulations forbid any communications to
members, including communications about NCUA insurance or private insurance, that are inaccurate or deceptive.
I have enclosed a copy of a letter from ______________________________________________________ (insert
name and title of state regulator) indicating approval of our conversion to a state charter.
171
___________________ (Insert name of state) allows credit unions to obtain primary share insurance from
______________________________________ (insert name of private insurance company). I have enclosed a
copy of a letter from ___________________ (insert name and title of state regulator) establishing that
___________________ (insert name of private insurer) has the authority to provide ___________________
(insert name of credit union), after conversion to a state charter, with primary share insurance.
I have enclosed a copy of a letter from ___________________ (insert name of private insurer) indicating it has
accepted ___________________ (insert name of credit union) for primary share insurance and will insure the credit
union immediately upon the date that it loses its federal share insurance.
I am aware of the requirements of 12 U.S.C. §1831t(b), including all notification and acknowledgment
requirements.
Enclosed you will also find other information required by NCUA’s Chartering and Field of Membership Manual,
Chapter 4, §III.C.
The point of contact for conversion matters is __________________________________________ (insert name
and title of credit union employee), who can be reached at ___________________ (insert telephone number).
Sincerely,
(signature)
Chief Executive Officer
Enclosures
NCUA IC2
Instructions for NCUA IC2: The converting federal credit union must notify its members of a special meeting to vote on the
conversion and provide its members a copy of the conversion ballot. The notice and ballot must be given to members (a) at least 14
days after the credit union notifies NCUA of its intent to convert and (b) not more than 30 nor less than 7 days before the date of
the special meeting. When the converting credit union distributes this notice to its members it should also send a copy to the NCUA
Regional Director, if it has not already done so.
Notice of Proposal to Convert to a State Charter and to Nonfederally Insured
Status and Special Meeting of Members
(insert name of converting credit union)
On ___________________ (insert date), the board of directors of your credit union approved a proposition to
convert from federal share (deposit) insurance to private insurance and to convert from a federal credit union to a
state-chartered credit union. You are encouraged to attend a special meeting of our credit union at
______________________________________ (insert address) on ___________________, 20____, at
______________________________________ (insert date and time) to address this proposition.
Purpose of Meeting
The meeting has two purposes:
1. To consider and act upon a proposal to convert your credit union from a federal charter to a state charter and
your account insurance from federal insurance to private insurance.
2. To approve the action of the Board of Directors in authorizing the officers of the credit union to carry out the
proposed conversion.
Insurance Conversion
Currently, your accounts have share insurance provided by the National Credit Union Administration, an agency
of the federal government. The basic federal coverage is up to $100,000, but accounts may be structured in
different ways, such as joint accounts, payable-on-death accounts, or IRA accounts, to achieve federal coverage of
much more than $100,000. If the conversion is approved, your federal insurance will terminate on the effective
date of the conversion. Instead, your accounts in the credit union will be insured up to $___________________
(insert dollar amount) by _________ _____________________________ (insert name of insurer), a corporation
chartered by the State of ___________________ (insert name of state). The federal insurance provided by the
National Credit Union Administration is backed by the full faith and credit of the United States government. The
private insurance you will receive from ___________________ (insert name of insurer), however, is not
guaranteed by the federal or any state or local government.
IF THIS CONVERSION IS APPROVED, AND THE______________________________________ (insert
name of credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL
GET YOUR MONEY BACK.
173
Also, because this conversion, if approved, would result in the loss of federal share insurance, the credit union will,
at any time between the approval of the conversion and the effective date of conversion and upon request of the
member, permit all members who have share certificates or other term accounts to close the federally-insured portion
of those accounts without an early withdrawal penalty. (This is an optional sentence. It may be deleted without the
approval of the Regional Director. The members must be informed about this right, however, as described in 12
C.F.R. §708b.204(c).)
The board of directors has concluded that the proposed conversion is desirable for the following reasons: (This is an
optional paragraph. It may be deleted without the prior approval of the Regional Director.)
The proposed conversion will result in the following one-time costs associated with the conversion: (List the total
estimated dollar amount, including (1) the cost of conducting the vote, (2) the cost of changing the credit union’s
name and insurance logo, and (3) attorney and consultant fees.)
The conversion must have the approval of a majority of members who vote on the proposal, provided at least 20
percent of the total membership participates in the voting.
Enclosed with this Notice of Special Meeting is a ballot. If you cannot attend the meeting, please complete the
ballot and return it to ___________________ (insert name and address of independent entity conducting the vote)
by no later than ___________________ on ___________________, 20____ (insert time and date). To be
counted, your ballot must reach us by that date and time.
BY ORDER OF THE BOARD OF DIRECTORS:
Board Presiding Officer Date (insert title)
NCUA IC3
Instructions for NCUA IC3: The converting federal credit union must notify its members of a special meeting to vote on the
conversion and provide its members a copy of the conversion ballot. The notice and ballot must be given to members (a) at least 14
days after the credit union notifies the NCUA Regional Director of its intent to convert and (b) not more than 30 nor less than 7
days before the date of the special meeting. When the converting credit union distributes this notice to its members it should also
send a copy to the NCUA Regional Director, if it has not already done so.
Ballot for Conversion to State Charter and
Nonfederally Insured Status
_________________________________________________________ (insert name of converting credit union)
Name of Member: ________________________ (insert name) Account Number: ___________________ (insert
account number)
The credit union must receive this ballot by ___________________ (insert date and time for vote). Please
mail or bring it to:
______________________________________ (Insert name of independent entity and address)
I understand if the conversion of ______________________________________ (insert name of credit union) is
approved, the National Credit Union Administration share (deposit) insurance I now have, up to $100,000, or
possibly more if I use different account structures, will terminate upon the effective date of the conversion. Instead,
my shares in the ___________________ (insert name of credit union) will be insured up to $___________________
(insert dollar amount) by ____________________________ (insert name of insurer), a corporation chartered by the
State of ___________________ (insert name of state). The federal insurance provided by the National Credit Union
Administration is backed by the full faith and credit of the United States Government. The private insurance
provided by ________________ ______________________ (insert name of insurer) is not.
I FURTHER UNDERSTAND THAT IF THIS CONVERSION IS APPROVED, AND THE _____________
_________________________ (insert name of credit union) FAILS, THE FEDERAL GOVERNMENT
DOES NOT GUARANTEE THAT I WILL GET MY MONEY BACK.
I vote on the proposal as follows (check one box):
[]
Approve the conversion of charter and conversion to private insurance and authorize the Board of Directors
to take all necessary action to accomplish the conversion.
[]
Do not approve the conversion of charter and the conversion to private insurance.
Signed: _____________________________________________________
Date:
________________________
(insert printed member’s name)
175
NCUA IC4
Instructions for NCUA IC4: Within 10 days after the membership vote, the converting credit union must complete this form and
mail it to the NCUA Regional Director.
Certification of Vote on Conversion to State Charter
and Nonfederally Insured Status
We, the undersigned officers of the ______________________________________ (insert name of
converting credit union), certify the completion of the following actions:
1. At a meeting on ___________________ (insert date), the Board of Directors adopted a resolution to seek the
conversion of our credit union to a state charter and the conversion of our primary share insurance coverage from
NCUA to ______________________________________ (insert name of private insurer).
2. Not more than 30 or less than 7 days before the date of the vote, copies of the notice of special meeting and
ballot, as approved by the NCUA, were mailed to our members.
3. The credit union arranged for the conduct of a special meeting of our members at the time and place announced in
the Notice to consider and act upon the proposed conversion.
4. At the special meeting, the credit union arranged for an explanation of the conversion to the members present at
the special meeting.
5. The ______________________________________ (insert name), an entity independent of the credit union,
conducted the membership vote at the special meeting. The members voted as follows: _____ (insert) Number of
total members
_____ (insert) Number of members present at the special meeting _____ (insert) Number
of members present who voted in favor of the conversion _____ (insert) Number of
members present who voted against the conversion _____ (insert) Number of additional
written ballots in favor of the conversion _____ (insert) Number of additional written
ballots opposed to the conversion
(Insert “20% or more”) OR (Insert “Less than 20%”) of the total membership voted. Of those who voted, a majority
voted (Insert “in favor of”) OR (Insert “against”) conversion.
The action of the members at the special meeting was recorded in the minutes.
177
This certification signed the ___________________ day of ___________________ 20____.
Board Presiding Officer Secretary (insert typed name and title) (insert typed name and title_)
I ______________________________________ (insert name), an officer of the ___________________
___________________ (insert name of independent entity that conducted the vote), hereby certify that the
information recorded in paragraph 5 above is accurate.
This certification signed the ___________________ day of ___________________ 20____.
Signature Title Phone Number (insert signature of officer of independent entity) ( insert typed name, title, and phone number)
NCUA IC5
Instructions for NCUA IC5: The converting state chartered credit union must provide this letter to the NCUA Regional Director at
least 14 days before the credit union notifies its members of the proposed conversion and solicits their vote on the conversion and
at least 90 days before the proposed conversion date.
Notice to NCUA of Intent to Convert to Nonfederal (Private)
Share Insurance and Request for NCUA Approval
_________________________________________________________ (insert name), NCUA Regional Director)
______________________________________________________ (insert address of NCUA Regional Director)
Re: Notice of Intent to Convert to Private Share Insurance
Dear Director ______________________________________ (insert name):
In accordance with federal law at Title 12, United States Code Section 1785(b)(1)(D), I request the National Credit
Union Administration approve the conversion of _________________________________ (insert name of credit
union) from federal share insurance to private primary share insurance with
______________________________________ (insert name of private insurance company).
On ___________________ (insert date), the board of directors of _______________________________ (insert
name of credit union) resolved to pursue the conversion from federal insurance to private insurance. A copy of the
resolution is enclosed.
On ___________________ (insert date), the credit union plans to solicit the vote of our members on the conversion.
The credit union will employ ______________________________________ (insert name, address, and telephone
number of independent entity) to conduct the member vote. The credit union will use the form notice and ballot
required by NCUA regulations, and will certify the results to NCUA as required by NCUA regulations.
Aside from the notice and ballot, the credit union (does)(does not) intend to provide its members with additional
written information about the conversion. I understand that NCUA regulations forbid any communications to
members, including communications about NCUA insurance or private insurance, that are inaccurate or
deceptive.
______________________________________ (Insert name of state) allows credit unions to obtain primary share
insurance from ______________________________________ (insert name of private insurance company). I have
enclosed a copy of a letter from ___________________________________ (insert name and title of state regulator)
establishing that ______________________________________
179
(insert name of private insurer) has the authority to provide ____________________________________ (insert
name of credit union) with primary share insurance.
I have enclosed a copy of a letter from ______________________________________ (insert name of private
insurer) indicating it has accepted ______________________________________ (insert name of credit union) for
primary share insurance and will insure the credit union immediately upon the date that it loses its federal share
insurance.
I am aware of the requirements of 12 U.S.C. §1831t(b), including all notification and acknowledgment
requirements. The point of contact for conversion matters is ______________________________________ (insert
name and title of credit union employee), who can be reached at ___________________ (insert telephone number).
Sincerely,
(signature)
Chief Executive Officer Enclosures
NCUA IC6
Instructions for NCUA IC6: The converting state-chartered credit union must notify its members of a special meeting to vote on
the conversion and provide its members a copy of the conversion ballot. The notice and ballot must be given to members (a) at
least 14 days after the credit union notifies the NCUA Regional Director of its intent to convert and (b) not more than 30 nor less
than 7 days before the date of the special meeting. When the converting credit union distributes this notice to its members it should
also send a copy to the NCUA Regional Director, if it has not already done so.
Notice of Proposal to Convert to Nonfederally Insured Status and
Special Meeting of Members
_________________________________________________________ (insert name of converting credit union)
On___________________ (insert date), the board of directors of your credit union approved a proposition to convert
from federal share (deposit) insurance to private insurance. You are encouraged to attend a special meeting of our
credit union at ______________________________________ (insert address) on _
_____________________________________ , (insert time and date) to address this proposition.
Purpose of Meeting
The meeting has two purposes:
1. To consider and act upon a proposal to convert your account insurance from federal insurance to private
insurance.
2. To approve the action of the Board of Directors in authorizing the officers of the credit union to carry out the
proposed conversion.
Insurance Conversion
Currently, your accounts have share insurance provided by the National Credit Union Administration, an agency of
the Federal Government. The basic federal coverage is up to $100,000, but accounts may be structured in different
ways, such as joint accounts, payable-on-death accounts, or IRA accounts, to achieve federal coverage of much more
than $100,000. If the conversion is approved, your federal insurance will terminate on the effective date of the
conversion. Instead, your accounts in the continuing credit union will be insured up to $___________________
(insert dollar amount) by ___________ ___________________________ (insert name of insurer), a corporation
chartered by the State of ___________________ (insert name of the state). The federal insurance provided by the
National Credit Union Administration is backed by the full faith and credit of the United States government. The
private insurance you will receive from ______________________________________ (insert name of insurer) is
not guaranteed by the federal or any state or local government.
IF THIS CONVERSION IS APPROVED, AND THE ______________________________________ (insert
name of credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT GUARANTEE YOU WILL
GET YOUR MONEY BACK.
Also, because this conversion, if approved, would result in the loss of federal share insurance, the credit union will,
at any time between the approval of the conversion and the effective date of conversion and
CUES Complete Guide to Mergers
181
upon request by the member, permit all members who have share certificates or other term accounts to close the
federally-insured portion of those accounts without an early withdrawal penalty. (This is an optional sentence. It
may be deleted without the approval of the Regional Director. The members must be informed about this right,
however, as described in 12 C.F.R. §708b.204(c).)
The board of directors has concluded that the proposed conversion is desirable for the following reasons: (insert
reasons) (This is an optional paragraph. It may be deleted without the prior approval of the Regional Director.)
The proposed conversion will result in the following one-time costs associated with the conversion (List the total
estimated dollar amount, including (1) the cost of conducting the vote, (2) the cost of changing the credit union’s
name and insurance logo, and (3) attorney and consultant fees.)
The conversion must have the approval of a majority of members who vote on the proposal, provided at least 20
percent of the total membership participates in the voting.
Enclosed with this Notice of Special Meeting is a ballot. If you cannot attend the meeting, please complete the
ballot and return it to ___________________ (insert name and address of independent entity conducting the
vote) by no later than ___________________ (insert time and date). To be counted, your ballot must reach us by
that date and time.
BY ORDER OF THE BOARD OF DIRECTORS:
Board Presiding Officer Date (insert title)
NCUA IC7
Instructions for NCUA IC7: The converting state-chartered credit union must notify its members of a special meeting to vote on
the conversion and provide its members a copy of the conversion ballot. The notice and ballot must be given to members (a) at
least 14 days after the credit union notifies NCUA of its intent to convert and (b) not more than 30 nor less than 7 days before the
date of the special meeting. When the converting credit union distributes this notice to its members it should also send a copy to the
NCUA Regional Director, if it has not already done so.
Ballot for Conversion to Nonfederally Insured Status
_________________________________________________________ (insert name of converting credit union)
Name of Member: ______________________________________ Account Number: ________________ (insert
account number)
The credit union must receive this ballot by ___________________ (insert date and time for vote). Please mail or
bring it to: ___________________ (Insert name and address of independent entity and address)
I understand if the conversion of the ___________________ (insert name of credit union) is approved, the National
Credit Union Administration share (deposit) insurance I now have, up to $100,000, or possibly more if I use
different account structures, will terminate upon the effective date of the conversion. Instead, my shares in the
___________________ (insert name of credit union) will be insured up to $___________________ (insert dollar
amount) by ___________________ (insert name of insurer), a corporation chartered by the State of
___________________ (insert name of state). The federal insurance provided by the National Credit Union
Administration is backed by the full faith and credit of the United States Government. The private insurance
provided by ___________________ (insert name of insurer) is not.
I FURTHER UNDERSTAND THAT IF THIS CONVERSION IS APPROVED, AND THE
___________________ (insert name of credit union) FAILS, THE FEDERAL GOVERNMENT DOES NOT
GUARANTEE THAT I WILL GET MY MONEY BACK.
I vote on the proposal as follows (check one box):
[]
Approve the conversion to private insurance and authorize the Board of Directors to take all
necessary action to accomplish the conversion.
[]
Do not approve the conversion to private insurance.
Signed: _____________________________________________________ Date: ________________________ (insert
printed member’s name)
183
NCUA IC8
Instructions for NCUA IC8: Within 10 days after the membership vote, the converting credit union must complete this form and
mail it to the NCUA Regional Director.
Certification of Vote on Conversion to Nonfederally Insured Status
We, the undersigned officers of the ______________________________________ (insert name of
converting credit union), certify the completion of the following actions:
1. At a meeting on ___________________ (insert date), the Board of Directors adopted a resolution to seek the
conversion of our primary share insurance coverage from NCUA to _____________________ _________________
(insert name of private insurer).
2. Not more than 30 or less than 7 days before the date of the vote, copies of the notice of special meeting and the
ballot, as approved by the National Credit Union Administration, were mailed to our members.
3. The credit union arranged for the conduct of a special meeting of our members at the time and place announced in
the Notice to consider and act upon the proposed conversion.
4. At the special meeting, the credit union arranged for an explanation of the conversion to the members
present at the special meeting.
5. The ______________________________________ (Insert name), an entity independent of the credit union,
conducted the membership vote at the special meeting. The members voted as follows: _____ (insert) Number of
total members
_____ (insert) Number of members present at the special meeting _____ (insert) Number
of members present who voted in favor of the conversion _____ (insert) Number of
members present who voted against the conversion _____ (insert) Number of additional
written ballots in favor of the conversion _____ (insert) Number of additional written
ballots opposed to the conversion
(Insert “20% or more”) OR (Insert “Less than 20%”) of the total membership voted. Of those who voted, a majority
voted (Insert “in favor of”) OR (Insert “against”) conversion.
The action of the members at the special meeting was recorded in the minutes.
This certification signed the ___________________ day of ___________________ 20____.
185
Board Presiding Officer Secretary (insert typed name and title) (insert typed name and title_)
I ______________________________________ (insert name), an officer of the ___________________
___________________ (insert name of independent entity that conducted the vote), hereby certify that the
information recorded in paragraph 5 above is accurate.
This certification signed the ___________________ day of ___________________ 20____.
Signature Title Phone Number (insert signature of officer of independent entity) ( insert typed name, title, and phone number)
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
The following is a non-exhaustive checklist designed to aid credit unions in the due diligence stage of the merger
journey:
I.
FINANCIAL ANALYSIS
A.
1
2
3
4
Obtain Copies of the Following for the Past Two (2) Years:
National Credit Union Administration (“NCUA”) Exam Reports.
Exam Reports from state regulatory agencies, as applicable.
CPA Exam Reports (including work papers).
Bonding Company Risk Management Audits, (if any).
1
2
Analysis By Third Party CPA or Other Qualified Advisor
Financial Review.
Compliance Review.
B.
C.
Perform Financial Valuation Analysis
D.
E.
Conduct “Key Ratio” Analysis
Consider Financial Effect of Merger on Continuing Credit Union (“CCU”)
II.
FIELD OF MEMBERSHIP: DEMOGRAPHIC AND SERVICE USAGE
A. Obtain Bylaws of Merging Credit Union (“MCU”) and Obtain Field of Membership (“FOM”)
of MCU
1
2
3
B.
Breakdown of members by sponsor groups;
Breakdown of members by SEG Group;
Evaluate geographical areas of service.
Evaluate MCU’s FOM under state/federal laws and regulations
1
2
3
Consider possible deletions/limitations to MCU’s FOM;
Evaluate whether or not MCU’s FOM “overlaps” with other credit unions;
Evaluate Standards of Approval of Merger as it pertains to FOM by Regulators:
a.
State law (if
applicable);
b.
Federal law (if
applicable):
(1)
12 USC Section
1750;
(2)
NCUA
Regulations;
(3)
NCUA Chartering and Field of Membership Manual.
c.
Regulator’s Knowledge and Opinion (are they in favor or do they have an issue
regarding the MCU’s FOM?).
III.
LOAN PORTFOLIO ANALYSIS
A.
Major Areas to Evaluate Underwriting and Compliance (these are set forth in more
detail below):
1
Consumer Loans;
2
Real Estate Loans;
3
Business Loans.
B.
Loan Policy Evaluation
1.
Evaluate completeness and compatibility of MCU’s policies with CCU’s policies; evaluate
underwriting.
Judgmental; credit scoring; or combined underwriting system?
If credit scoring, determine whether scoring is an absolute (strictly observed) or a “guideline.”
Determine when variances are permitted. Example: how are loans which exceed debt/income guidelines
handled?
If judgmental, determine whether creditworthiness is evaluated on: ability to repay; debt/income;
assets; home/other asset ownership; credit history; work/residence stability; net worth.
Does the MCU use a risk based lending (underwriting)?
Does the MCU use risk based pricing?
Determine the use of co-applicants/co-borrowers and MCU policies.
Determine the maximum loan limit to one borrower for unsecured loans; secured loans; and total
loans. Compare to limits under NCUA Rules and/or state law, as appropriate.
2.
3.
Evaluate Underwriting Standards.
Too strict; too loose?
Reasonably complete?
Evaluate compliance with federal and state laws and regulations.
a.
NCUA Regulations, where
applicable.
b.
Regulations of state regulators and whether there are any variances (written copies of
variances should be provided to the CCU).
c.
4.
C.
1.
Federal and state Consumer Protection laws (list exceptions). For example:
(1)
Regulation “B” (ECOA);
and
(2)
Regulation
“Z.”
Location of files (centralized or branch)?
Lending Programs
Consumer Loans
a.
Obtain consumer loan policies; identify variances (written copies of variables should be
provided to CCU).
b.
c.
Obtain location of consumer loan records and files (Centralized or Branch).
Determine what percentage of consumer loans are:
(1)
Secured; unsecured; provide types of security (auto, shares, etc.).
(2)
Closed-end; open-end (for open-end obtain maximum credit limits, minimum
periodic payments and disclosed late charge).
(3)
Fixed rate; variable
rate. (i)
If variable, review index used, margin, frequency of interest changes, frequency of
periodic payments and changes in periodic payments.
(4)
Credit Cards (Visa,
MasterCard).
(5)
Other loans (Government Guaranteed Loans; Student loans; etc.).
d.
Loan Portfolio
Analysis.
(1) Test underwriting compliance.
(2) Test collateral secured loans to evaluate perfected liens.
(3) Evaluate loan forms, determine differences in Note structure between CCU and MCU.
e. Evaluate experience of personnel.
2. Real Estate Lending
Exhibit 1
Exhibit 2
Exemplar Confidentiality Agreement
Exemplar Letter of Intent Regarding Merger
Exhibit 3
Exemplar Supplemental Merger Agreement
Exhibit 4
Exemplar Credit Union Management Services Agreement
Exhibit 5
Exemplar NCUA Forms
Exhibit 6
Exhibit 7
Exemplar Due Diligence Checklist
Exemplar Letter to Members entitled, “Merging…What It Could Mean
For You and Your Credit Union” and Frequently Asked Questions Sheet
Exhibit 8
Exhibit 9
Exemplar Notice of Merger and Conversion of Insurance Status
Exemplar Notice of Merger and Termination of Federal Insurance
Probable asset/share ratio — continuing credit union
ADDITIONS
BOOk VAlue
MArkeT VAlue
Cash
Loans
Investments
Fixed Assests
Other Assets
Total (A)
$0
DeDuCTIONS
BOOk VAlue
MArkeT VAlue
Notes Payable
Accounts Payable
Other Recorded Liabilities
Contingent and/or Unrecorded
Liabilities
Subsidiary Ledger Differences (Losses)
Other Losses
Total (B)
$0
Net Value of Assests (A-B)
$0
Total Shares
Probable Asset/Share Ratio
G1
Cell:
Comment:
The Probable Asset/Share Ratio (PAS) reflects the relative worth of $1 of shares in the
credit union, assuming it will be an on-going concern.
Cell:
Comment:
A6
Cash is valued at book less any known potential losses.
Cell:
Comment:
A7
Loans are valued at book net of probable estimated loan losses (ALLL).
m.
Third Party
Investors
(1)
Copies of all master agreements.
(2)
Are “Bailee” Agreements
used?
n.
Compliance
Issues
(1)
Regulation “B”
(ECOA);
(2)
Regulation
“Z”;
(3)
Regulation “X”
(RESPA);
(4)
Fair
Lending;
(5)
HMDA;
and
(6)
Flood
Act. Litigation. (Also refer to “Pending Litigation/Contingent Liabilities”).
o. Pending
(1) Repurchase Commitments Under Investor Master Agreements.
p.
(1) Foreclosures/RE
List number; dollar
O’s amount.
(2)
Provide
status.
q.
Delinquent Loans (Also refer to “Delinquency/Allowance for Loan Losses” See Section
IV.) (1)
Obtain credit union policy on charge-offs.
(2)
(3)
status.
(4)
3.
Obtain list of number and dollar amounts of delinquent loans.
Obtain
r.
Review charge-offs for compliance with charge-off policy.
Origination Delivery (Branch; Centralized; Telemarketing).
s.
Hardware; Software (Origination, Production, Servicing).
(1)
Applicatio
(2)
ns;
Documentati
(3)
on;
BusinessStatemen
Loans
ts.
a.
Review MCU’s Business Loan
Policy;
b.
Compliance with NCUA Rule 723 or state equivalent;
c.
Terms and
conditions;
d.
Loan Portfolio
Analysis:
(1)
Test underwriting
compliance;
(2)
Test collateral secured loans to evaluate perfected liens;
(3)
Evaluate loan forms, determine differences in Note structure between CCU and MCU;
e.
IV.
Evaluate experience of personnel.
DELINQUENCY/ALLOWANCE FOR LOAN LOSSES
A.
Obtain copy of MCU’s Policy re delinquency; allowance for loan loss calculation
B.
Obtain calculation of allowance for loan loss:
1
2
At most current month end; of each of last four (4) quarters; at last two (2) audits.
Disclose special loan loss reserves for high risk loans.
C. Obtain Delinquency (Non-Performing Loan) Reports for Standard Delinquency Categories
1
2
0 – 2 months; 2 – 6 months; 6 – 12 months; and 12 months or greater.
Identify by dollar and loan type in each category specified above.
3.
Obtain two (2) year history; obtain net charge-off/average loans ratio on a three (3) month
moving average for each month over last twelve (12) months; determine whether the ratio is decreasing or
increasing; determine areas attributed to increase/decrease.
4.
Obtain two (2) year history; obtain delinquency/total loan ratio on a three (3) month moving
average for each month over last twelve (12) months; determine whether the ratio is increasing or
decreasing; determine areas attributed to increase/decrease.
5.
Determine whether the current turn ratio (number and dollars) is positive or negative in all
standard delinquent categories:
0 - 2 months;
2 - 6 months;
6 - 12 months; and
12 months or more.
6.
Determine net charge-offs/average loans/year for each of the last three (3) years for each major
loan category: credit card; unsecured; auto; real estate (by category); stock secured; share secured; other.
D.
1
2
3
4
5
6
7
8
V.
Evaluate On A Test Basis Over Last Two (2) Years
Whether collection efforts are clearly and timely documented;
Use of refinance/extensions on delinquent loans;
Indications of delayed initiation of collection activity;
Recurring delinquency in previously “cured” accounts;
Number of rewrites of “cured” accounts;
Collateral loans delinquent sixty (60) days without repossession;
Delayed initiation of legal activity on unsecured loans; and
Delayed or irregular charge-off of bad loans.
INVESTMENTS
A.
CCU should have access to all MCU books and records and should be provided with a copy of
MCU’s Investment Policy.
B.
Obtain a list of all non-conforming assets: assets that do not comply with state law and/ or
NCUA limits and assets that do not comply with credit union policy.
C.
Obtain a list of all investments and borrowings by category (i.e. interest bearing deposit;
investment security listing) together with the following:
1
Purchase date;
2
Maturity;
3
Term, held for sale or to maturity;
4
Fair market value; and
5
Unrealized gains/losses.
D.
Obtain a list of any losses on transactions in the current and prior year involving current and
former senior employees; include amount, date, realized and unrealized losses as well as any claims
pending.
VI.
LEASES AND CONTRACTS
A.
Obtain copies of all office/real estate leases together with a summary of each indicating the
following:
1
Term; option periods;
2
Lease per square foot;
3
Maturity date;
4
Any limitations on assignment (i.e. is the merger of MCU an instance of default?);
1
Trigger notice dates;
2
Analysis of cost of early termination;
3
Obtain any consultant or engineering reports and communications from any other consultants or third
party (including, but not limited to prior owners and/or tenants as well as any governmental entity) regarding
“hazardous” or “toxic” materials (including, but not limited to asbestos) on or about property that the Credit
Union owns, leases or otherwise occupies or uses; and
4
Evaluate NCUA 5% “Fixed Asset” Rule, if applicable.
B.
List of all Real Property Owned By MCU.
1.
List and briefly describe each property as follows:
Include most recent FMV appraisal of real property and improvements to property;
Copies of Purchase and Sale Agreement for each property;
List monthly costs (i.e. maintenance, taxes);
Obtain any consultant or engineering reports and communications from any other consultants or
third party (including, but not limited to prior owners and/or tenants as well as any governmental entity)
regarding “hazardous” or “toxic” materials (including, but not limited to asbestos) on or about property that
the Credit Union owns, leases or otherwise occupies or uses; and
Evaluate NCUA 5% “Fixed Asset” Rule, if applicable.
C.
Obtain Copies of Computer Agreements; Hardware/Software Service Maintenance
Contracts and Note the Following for Each:
1
Term;
2
Continuing monthly costs (lease costs, if any); and hardware/software service maintenance charges;
3
Maturity date;
4
Trigger notice dates
5
Any limitations on assignment (i.e. is merger of MCU an instance of default?);
6
Analysis of cost of early termination; and
7
Evaluate NCUA 5% “Fixed Asset” Rule, if applicable.
D.
1
2
3
4
Obtain Copies of All Third Party Contracts and Note the Following for Each:
Term;
Commission/fees;
Maturity date; and
Trigger notice dates.
1
2
3
4
5
6
Obtain Copies of “Alliance” or “Partnership” Agreements (Real Estate):
Mortgage Insurance;
Tax Service;
Flood Service;
Appraisal;
Title Insurance; and
Escrow.
E.
F.
Obtain Copies of Other Vendor Agreements Such as the Following, noting terms,
commissions, maturity dates, trigger notice dates:
1
Credit Life/Credit Disability providers;
2
Collateral Protection Insurance;
3
Broker dealer arrangements;
4
Real Estate Loan Investor Master Agreements;
5
Telephone System Agreement(s); and
6
Item Processing Contracts.
VII. PENDING LITIGATION/CONTINGENT LIABILITIES
A.
List and Explain Pending Litigation. MCU should provide CCU with copies of all attorney
opinion letters provided to outside auditors during the most recent audit. Verify with
MCU that these letters are still accurate.
B.
List and Explain Contingent Liabilities. The MCU should provide the CCU with a list of the
following:
1
NCUA and/or state regulator Document of Resolution/Examiner findings, investigations/
administrative actions;
2
EEOC and state regulator investigations;
3
OFCCP investigations (affirmative action);
4
Wage and hour investigations;
5
Workers Compensation actions; and
6
Any other state and federal administrative actions.
C.
Evaluate Contractual Obligations (including but not limited to termination or “buy-out”
obligations); Cross Reference to Section VI.
D.
Repurchase Obligations With Third Party Real Estate Purchasers/Sellers.
E.
Bond Issues/Insurance Coverage.
1.
MCU should provide CCU with insurance company - (e.g., package of protection, liability
insurance; property insurance; and bond with copies of all endorsements).
a.
Evaluate extension of insurance coverage post merger.
2.
Have MCU list and explain all pending/potential Bond Claims.
a.
Evaluate extension of discovery bond coverage post merger.
VIII. HUMAN RESOURCES
A.
Pending employee lawsuits (e.g. wrongful termination; Workers Compensation); (See
also “Pending Litigation/Contingent Liabilities” Section VII, above).
B.
Current Organization Structure/Reporting Chart
1.
List of current positions; job descriptions and qualifications.
2.
Current salaries (include hourly wage for non-exempt positions).
3.
C.
1
2
3
4
5
D.
Employee status for each position.
Full time;
Part time;
Exempt/non-exempt;
Any leased employees?
Years of service for each
employee;
Copies of contracts for all
employees under contract.
What is Revised Organization Structure to Look Like?
Revised structure;
Determine new reporting relationships;
Determine interim staffing needs for pending projects;
Review existing performance appraisal at MCU;
Evaluate MCU’s employees/match to CCU’s needs.
Reduction In Force
1.
Policy for released employees:
Severance pay;
EDD Notice;
COBRA Notice;
Retirement benefits;
Is a WARN Notice required? (Typically necessary for a very large reduction in force.)
1
2
3
4
5
E.
Timing of Reduction in Force.
Business necessity analysis.
Determine employees to be released.
Consider EEO concerns.
Determine whether severance will be conditioned upon a Confidential Release Agreement.
Retained Staffing
1
Determine conditions for retaining employees;
2
Timing of employment offers;
3
Identify personnel to be transferred between MCU and CCU and identify necessity, if any, of outside
recruiting to fill positions which cannot be filled internally;
4
Evaluate performance appraisal status of MCU employees who are to continue to work at CCU;
5
Acquire and review personnel files of all MCU employees;
6
Establish personnel files for all employees retained by CCU;
7
Arrange training and distribution of personnel handbook to all retained employees. (See needs
assessment and training schedule).
F. Benefits
1
Review and arrange for termination of Employee Benefit Plans at MCU;
2
Enroll employees retained by CCU for Benefit Plans at CCU.
G.
Retirement Plans (Pension/Profit Sharing Programs)
1.
Fully funded? Most recent audit report;
2.
Penalties for plan or participant termination? Will there be additional funding requirement
obligations in the event of termination of the qualified plan?
3.
plans:
Full description of all
Self funded or third party
contracts;
Vendors;
Plan contracts; plan
documents;
Latest Summary Plan
Descriptions;
Latest
5500 IRSonTax
4.
Full
disclosure
self-funded plans that could require continuing financial obligations of
filings; and
employer.
Participant lists.
INFORMATION
IX.
SERVICES
A.
Mainframe hardware, software, peripheral inventory list.
B.
C.
Local area network hardware, software, peripheral inventory list.
PC/MAC hardware, software, peripheral inventory list.
D.
Communications hardware, software, peripheral inventory list.
E.
Third party hardware, software, peripheral inventory list:
一 ATMS;
一 Audio Response; and
一 Optical archiving.
一
F. Copies of all Data Processing Contracts (see “Leases and Contracts” Section VI).
G. Ensure systems accurately interpret and process all time-related data and sequencing.
X.
CENTRAL
SERVICES
A.
ATMS
1.
What is card number relative to account number? What is the maximum number of digits for
each ATM card?
2.
Cards.
3.
Number of active ATM
How are ATM Cards
assigned?
4.
Total number of ATMs
driven.
5.
Process
a. Obtain
copy of third party processor contract, if any.
or:
6.
ATM Networks currently
offered:
a. Obtain copies of all contracts with shared networks.
7.
Number of proprietary machines (list number and manufacturer and type).
B. Item Processing
1.
Number of share drafts processed per day;
2.
What is the card number relative to account number?
3.
Location of
processing;
a.
“in-house” or
4. “outsourced”
Loan payment coupon processing:
a.
“in-house” or “outsourced”
C. Life/Disability Insurance Program
1
Carrier.
2
Contract (see “Leases and Contracts” Section VI).
D. Collateral Protection Insurance
1
Carrier.
2
Contract (See “Leases and Contracts” Section VI).
3
Tracking accountability.
E. Payroll
1
2
3
Total volume.
ACH volume per day.
“In-house” processing or use of third party vendor.
F. Collections
1
“In-house” or vendor supported
2
If vendor supported, obtain contract.
3
Use of collection agencies (provide contract) advise as to number and amount of assigned contracts;
evaluate efficiency of collection efforts (% of dollars referred per month as opposed to dollars collected per
month.)
G. Telephone Center
1
Call volume per day/week/month;
2
Number of employees;
3
Type of audio response system and number of calls per day.
H. Credit Card
1.
Number of
accounts;
2.
“In-house” processing or processing through third party vendor;
3.
Types of credit cards (standard; “Gold”):
What Card:
Visa;
M/C;
Number of Accounts;
Current Processor (provide copy of Agreement);
Product features offered with cards;
What is card number relation to account number?
Both;
XI. MCU’s CUSO
A.
Evaluate standing
1
2
3
4
B.
C.
Formation;
Board Minutes;
Annual Meetings;
Annual Tax Returns.
Evaluate Products
Obtain Copies of all Agreements Between CUSO and all Third Parties (as well as MCU).
XII. SPONSOR RELATIONS
A.
B.
Evaluate Significant Sponsor Groups.
Evaluate Commitments of MCU to Sponsor Groups.
C.
Evaluate Effect of CCU (including, but not limited to the name of the CCU) On Significant
Sponsor Groups.
XIII. MEMBER RELATIONS
A.
Maintaining Service for CCU Members.
B.
Communication Plan for MCU member needs.
Exhibit 7
Letter to Members Entitled, “Merging…What it
Could Mean for You and Your Credit Union” and
Frequently Asked Questions
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
[Date]
[Name]
[Address]
Re: Merging ... What It Could Mean For You And Your Credit Union
Dear ________________ [Member Name]:
Recently your Board of Directors entered into a merger proposal with ____________________ Credit Union
(“_________________”). _________________ is a ________________ based credit union that was originally
formed to serve employees of ______________________ and now includes other select employee groups. Over
the years they have grown to one of the strongest credit unions in the United States with a capital-to-asset ratio of
over __%. _____ has _____ (___) local branches and innovative electronic services such as banking by computer
and twenty-four (24) hour loan service.
As with most industries these days, the financial services industry seems to be changing before our very eyes.
While our Credit Union (“_____________”) is financially sound, with reserves of __%, our asset base and staff
is small, and our resources are limited. Keeping pace with technology and regulatory issues at our size becomes
more challenging with each passing day.
Merging with this larger, full service credit union will enhance your credit union membership in many ways. When
it comes to financial services, we at ___ feel that you deserve the best: the lowest possible loan rates and service
fees, highest possible dividend rates, and convenient access to your money. While _____ is large, it is anything but
impersonal. Member service is their top priority, and a major factor in our recommendation to merge.
For more specific information about your credit union membership and the proposed merger with _____, please
review “Questions About My Credit Union Membership” enclosed with this letter. Also enclosed is a summary of
some of the benefits of _____ membership. If you have any questions, please feel free to call us at (___) ___-____.
We enjoy serving you at ___, and greatly appreciate your membership and support. _____ will maintain the on-site
branch and current employees will continue to serve you. Your vote regarding the ________ merger is very
important. It will enable you and other members to benefit from the increased services, locations, interest and
dividend rates that a larger credit union can offer.
The Board of Directors, staff, and I, wholeheartedly endorse the merger. As a member, the final decision is up to
you. There will be a special meeting on (DATE) at (PLACE) to consider the merger proposal. If you are unable to
attend, please complete the enclosed ballot and return it to _______________’s office at
_____________________________________________________ or drop it off at the office in ______
_______________________________________________, so that it is received no later than (DATE).
Sincerely,
[Name]
[Title]
Questions About My Credit Union Membership
Q:
If there is a merger with __________ Credit Union, what will happen to my deposits?
A:
We will transfer to __________ all money that you have on deposit with us on __________, 200_. Your
Certificates of Deposit will continue to earn the same dividend rate and will mature on the date originally
scheduled. Your savings will be transferred to a __________ Regular Share Savings Account and will earn the
dividend rate currently in effect at __________. Your __________ Credit Union Money Market Account will be
transferred to a __________ Money Market Account and earn the dividend rate currently in effect at __________.
Q:
What will happen to my member number at __________?
A:
Your account number will change as a result of the conversion. You will receive your new number
about 2 weeks prior to the merger.
Q:
Will my checking account remain the same and will my current checks still be valid?
A:
Your checking account will be converted to a __________ Checking Account. You will receive the terms
and conditions on this account prior to conversion. You can continue to use your checks until your supply is
depleted. Upon your next re-order, you will receive __________ checks.
Q:
Will my direct deposit and payroll deduction stay the same?
A:
If you currently have direct deposit of your payroll check or payroll deduction to __________ Credit
Union, it will automatically transfer to your __________ account.
Q:
What should I do about my ATM Card from __________ Credit Union?
A:
Your ATM Card will no longer be valid after (DATE). __________ will mail you a new ATM card
around (DATE). Your Personal Identification Number (PIN) will follow a few days later. (Please note that
__________ terms and conditions regarding ATM cards will then apply.)
Q:
Will my loan balances be automatically transferred to __________?
A:
Yes. We will arrange for any loan balances that you currently have with us to be transferred directly to
__________ at the original terms and rates. You can, as always, prepay any of these loans without penalty.
Q:
What should I do about my __________ Credit Union VISA Card?
A:
You will receive a new __________ VISA card 1 week prior to the merger. Continue to use your
__________ VISA through __________, 200_.
Q:
What will happen to the credit union office at ____________?
A:
It is the intention of __________ to maintain the current branch office to service credit union members.
This branch will be closed on __________, 200_ to allow for the conversion of member files, and will reopen on
__________, 200_.
Q:
How will I know the new terms and conditions, including new fees, at __________?
A:
In __________, you will be mailed a new Disclosure Booklet which describes the terms and
conditions governing your new __________ account.
Q:
How can I get more information on __________?
A:
There will be a special meeting of all __________ members on (DATE). We will be happy to answer any
questions at that time. You may contact ____________________ at:
Mailing
Address:
Telephone:
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
NOTICE OF MERGER AND CONVERSION OF INSURED STATUS
[Date]
1. The merger of [Merging] Credit Union into [Continuing] Credit Union has been approved, effective [Date].
2. As of that date, your shares (deposit) are no longer insured by the National Credit Union Administration.
3.Accounts in [Continuing] Credit Union will be insured up to $__________ by __________________,
a corporation chartered by the State of _________________. [Name of
Credit Union] [Address]
[NOTE TO CREDIT UNION: This exemplar form is illustrative and provided as general guidance only and is not prepared for
any particular transaction. Among other things, this exemplar may refer to covenants, conditions, representations and/or
agreements that may or may not apply to your transaction. Additionally, the terms contained in this form are not exhaustive. All
documents and agreements pertaining to your Credit Union’s merger should be drafted specifically for your transaction with the
advice and assistance of your Credit Union’s attorney.]
NOTICE OF MERGER AND TERMINATION OF FEDERAL INSURANCE
1. The merger of [Merging] Credit Union into [Continuing] Credit Union has been approved, effective [Date].
2. The status of [Merging] Credit Union as an insured credit union under the provisions of the Federal Credit
Union Act will terminate as of the close of business on the _____ day of _______________ (day preceding
merger date).
3. Any deposits made by you after that date, either new deposits or additions to existing accounts, will not be
insured by the National Credit Union Administration.
4. Accounts in the Credit Union on the _____ day of ______________, (day preceding merger date), up to a
maximum of $100,000 for each member, will continue to be insured, as provided by the Federal Credit Union Act,
for one (1) year after close of business on the _____ day of _____________, (day preceding merger date); Provided,
however, that any withdrawals after the close of business on the ____ day of ____________, _______ (day
preceding merger date), will reduce the insurance coverage by the amount of such withdrawals.
[Name of Credit Union]
[Address]
The Credit Union Executives Society is
a Madison, Wisconsin-based
independent membership association
for credit union executives worldwide.
Its mission is to advance the
professional development of credit
union CEOs, senior management and
directors.
P.O. Box 14167, Madison, WI 53708 0167
5510 Research Park Drive, Madison, WI
53711 5377
Tel: 800.252.2664 or Fax: 608.441.3346 608.271.2664
ext. 3400 E mail: cues@cues.org
cues.org