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Date
Rule
801.10
Staff
Michael Verne
Response/Comments

Agree - not reportable.

Question

From: (Redacted)
Sent: Friday, July 15, 2011 1:55 PM
To: Verne,B. Michael
Subject: RE: Request for Confirmation
Attachments: 5310 lnstructions.pdf

Mike,

Thank you for taking thismuch time with this matter. I have attached the 2011 NCUA 5310 Call ReportInstructions for your review, but will walk though several points.

On the "Cash andBalances Due" section, totaling $153,183,785, and which is detailed onSchedule A-1, for (redacted) that figure breaks down into:

Cash in banks - $2,366
Federal Reserve Banks - $152,915,669
Other Cash - $4,804
Uncollected Funds from Federal Reserve Banks - $162,892
Other Items due - $98,054

On the "Cash"items, the instruction for Schedule A-I indicates that the "FederalReserve Banks" entry (p. 6) is the "month-end balance of deposits inFederal Reserve Banks." That is, it is the cash of the corporate creditunion that is not held at the credit union itself (petty cash, etc.), or cashheld in bank deposit accounts, but cash of the corporate credit union held at aFederal Reserve Bank.

On the "BalancesDue" items, (redacted) has a total of $260,946 in Total BalancesDue. The instructions (p. 7) break those items down into "UncollectedFunds from Federal Reserve Banks" ("month end cash items in processof collection from Federal Reserve Banks"), which for (redacted) totals$162,892, and "Other Items Due" totaling $98,054.

I also may be able tohead off a question about one of (redacted) major "investment"items indentified in line 4 of Schedule A-3A, the U.S. Central BridgeObligations of $74,090,590 (the major component of Line 1(f) on page 1 of theSchedule SFC "Total Non-FASB 115 Investments"). You may be familiarwith the letter dated November 16, 1999, from (redacted) to Thomas Hancock confirming the PNO's positionregarding credit union mergers. That letter, on page 2, under the heading"Investment Accounts," specifically refers to the limited investmentauthority of a corporate credit union set out in 12 CFR 704.5(c), and notesthat the types of investment accounts a corporate credit union is authorized tohave are exempt. Those investments include "capital accounts in the (redacted)was chartered and formed to assume the operations of (redacted) after it was placed into conservatorship by the NCUA in or aroundOctober 2010. So, it should stand to reason that the exemption referring to (redacted) in the 1999 letter should apply to investments in"(redacted)."

Again, thank you for thetime you are taking with this matter. Please let me know if you have anyfurther questions.

From: Verne, B. Michael [mailto:MVERNE@ftc.gov]
Sent: Thursday, July 14, 201111:56AM
To: (Redacted)
Subject: RE: Request for Confirmation

We have not opined onwhat is excluded from a NCUA 5310 Call Report. It does not appear to break downthe items in as much detail as the 5300 Report. What exactly are "balancesdue"?

From: (Redacted)
Sent: Wednesday, July 13, 2011 4:23PM
To: Verne,B. Michael
Subject: RE: Request for Confirmation

Mike,

It does not."Natural person" credit unions file a NCUA 5300 Call Report. (redacted) is a "Corporate" creditunion. Corporate credit unions do not file a 5300 Call Report, and theirequivalent report is the 5310 Call Report.

A natural person credit union is one that you or I could join. A corporate credit union providesservices to natural person credit unions, and a corporate credit union'smembers are the credit unions that do business with it.

The following link is tothe NCUA site from where corporate credit union 5310 Call Reports can beaccessed (note that only "corporate" credit unions are on this page).http://www.ncua.gov/DataServices/Data/531O/5310rpt.aspx.

From: Verne, B. Michael [mailto:MVERNE@ftc.gov]
Sent: Wednesday, July 13, 2011 2:52PM
To: (Redacted)
Subject: RE: Request for Confirmation

Does (Redacted)file a NCUA 5300 call report? That is what you should be using.

From: (Redacted)
Sent: Wednesday, July 13, 2011 10:13AM
To: Verne,B. Michael
Subject: Request for Confirmation

Dear Mr. Verne,

I have attached aletter and an exhibit in hopes that you can confirm that the referenced mergerinvolving credit unions is not a reportable transaction.

July 13, 2011

B. Michael Verne
Federal Trade Commission
Bureau of Competition
600 Pennsylvania Avenue, NW Room 303
Washington, D.C. 20580

Re: Acquisition of (redacted)by(redacted)under supervision of National Credit Union Administration

Dear Mr. Verne:

This firm represents (redacted),a (redacted)-chartered corporate credit union, in a proposed acquisitionthrough merger of (redacted) into (redacted).

We are writing to you foryour concurrence with our analysis of the application of the size oftransaction thresholds to the proposed merger under the Hart-Scott-Rodinopremerger notification provisions of 15 U.S.C. 18a(a)(2).

As of its most recentNCUA 5310 Report, dated April 2011, (redacted)had assets of$251,810,105. For the purposes of this analysis, it is assumed that the assetsreported in the NCUA 5310 Report will not be materially different from thecredit union's most recent regularly prepared financial statements.

In calculating whetherthe merger meets the Size of the Transaction test under 15 U.S.C. 18a(a)(2)(B)(i), we believe that the assets listed below are properly excludedin determining the size of the transaction. We are basing our analysis, inpart, on prior staff informal interpretations regarding similar transactionsinvolving credit unions.

(Redacted) Assets as of April 2011= $251,810,105

Assets that we believe areexcluded in the calculation of the Size of the Transaction would includespecifically the following items shown on (Redacted) April 2011 NCUA5310 Report, a copy of which we have attached:

1. Cash & Balances Due $153,183,785 (Line 1(a) - ScheduleCode A-1)

2. Total Investments $93,693,441 (Line 1(h) - ScheduleCode A-3)

Total Exclusions $246,877,226

Based on the foregoing, (Redacted)reflectsa total asset value of $251,810,105 on its April 2011 NCUA 5310 Report. Thetotal excluded assets included in that amount are $246,877,226. The totalassets, less the excluded assets, therefore, are $4,932,879, which is below thetransaction threshold of $66,000,000 set forth in 15 U.S.C. 18a(a)(2)(B)(i).Accordingly, the merging parties are not required to file a premergernotification under 15 U.S.C. 18a.

Please contact medirectly as to whether you agree with our conclusion with respect to thistransaction. Your assistance is greatly appreciated.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.