**7535-01-U**

**NATIONAL CREDIT UNION ADMINISTRATION**

**12 CFR Part 701**

**Federal Credit Union Bylaws**

**AGENCY:** National Credit Union Administration (NCUA).

**ACTION:** Final rule.

**SUMMARY:** NCUA is issuing a rule reincorporating the Federal Credit
Union (FCU) Bylaws into NCUA regulations. This change clarifies NCUA's
ability to use a range of enforcement authorities, in appropriate cases,
to enforce the FCU Bylaws. In addition, NCUA is adding a bylaw provision
on director succession, an issue it has previously addressed in legal
opinions, and is revising the introduction to the Bylaws to conform it
to these changes.

**DATES:** This rule is effective November 30, 2007.

**FOR FURTHER INFORMATION CONTACT:** Elizabeth Wirick, Staff Attorney,
Office of General Counsel, National Credit Union Administration, 1775
Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703)
518-6540.

**SUPPLEMENTARY INFORMATION:**

**A. Background**

On May 24, 2007, the Board issued a Notice and Request for comments on
the proposed reincorporation of the Federal Credit Union Bylaws
(proposal). 72 FR 30984 (June 5, 2007). The proposal also included bylaw
provisions on director succession, an expedited approval process for
bylaw amendments previously approved for other FCUs, and revisions to
the Introduction to the FCU Bylaws to reflect these changes.
[Id]{.underline}. On July 2, 2007, the Board extended the original
comment period an additional two weeks. 72 FR 37122 (July 9, 2007).

NCUA is reincorporating the FCU Bylaws into NCUA regulations to clarify
NCUA's authority to use a range of administrative actions to enforce
bylaw violations in the rare cases where bylaw disputes cannot be
resolved within an FCU. As discussed in the proposal, NCUA removed the
Bylaws from its regulations in the 1980\'s.  72 FR 30984, 30985 (June 5,
2007). NCUA is concerned that the policy of requiring members to enforce
rights granted in the Bylaws in state courts has resulted in members
being unable to enforce rights granted in the Bylaws. The proposal
limits NCUA intervention to cases where a fundamental, material member
right is at issue and outlines a dispute resolution process.

The [Federal Register]{.underline} requires the FCU Bylaws to be
published as an Appendix to Part 701 rather than being incorporated by
reference in the regulatory text. Accordingly, § 701.2 of the final rule
has been revised from the proposal and specifically reincorporates the
FCU Bylaws into NCUA's regulations as an Appendix.

**B. Comments**

[General]{.underline}

NCUA received 32 comment letters in response to the proposal. Nine
credit union members, nine state credit union leagues, eight federal
credit unions, two national credit union trade organizations, one law
firm, one consultant, and two other organizations submitted comments.
Sixteen commenters supported reincorporating the Bylaws into NCUA
regulations and 16 commenters opposed reincorporation. Both supporters
and opponents of reincorporation sought changes to the revised
Introduction to the FCU Bylaws, the standards for limiting NCUA's
involvement, and the dispute resolution process. Many commenters also
discussed the proposed bylaw provisions on director succession and the
expedited approval process for certain bylaw amendments; the comments on
these provisions overwhelmingly favored the proposal. Finally, several
commenters asked NCUA to increase the cap on the number of members
required to call a special meeting. The comments on each subject are
discussed below.

[Reincorporation of FCU Bylaws into NCUA Regulation, Standards for NCUA
Involvement, and Dispute Resolution Process]{.underline}

Most commenters opposing reincorporation cited concerns over increased
regulation and oversight. The NCUA Board reiterates its position that
reincorporating the Bylaws into NCUA's regulations imposes no new
regulatory burden, as all FCUs are already required to have
NCUA-approved bylaws. NCUA publishes form bylaw language and all FCUs
have adopted some version of the form language. Further, as the preamble
to the proposal stated, under the risk-based examination system in use
for FCUs, examiners do not currently, nor will they once the Bylaws are
incorporated in the regulations, inquire into an FCU's bylaws unless
management raises the issue.

In contrast, commenters supporting reincorporation cited the lack of
other realistic options for bylaw enforcement and the potential for
credit union boards to violate bylaws with impunity. The most common
theme was dissatisfaction with NCUA's policy of requiring members to
enforce bylaws under state contract law. Commenters cited the expense
and time required to bring suit as well as the possibility courts will
find members lack standing to litigate bylaw disputes.

The commenters were split on the issue of whether NCUA needs to
reincorporate the FCU Bylaws to clarify its ability to use its full
range of enforcement actions. Five commenters expressed the view that
NCUA already has authority to use its full range of enforcement actions
to enforce the Bylaws. Three commenters stated the FCU Act gives no
authority to NCUA to enforce bylaw violations other than by charter
suspension or revocation. Based on its analysis of the FCU Act, the
Board concludes reincorporating the Bylaws is necessary to provide clear
authority for NCUA to use its full range of enforcement actions for
Bylaw violations.

NCUA does not agree with the commenters who assert its authority to
enforce the Bylaws using the full range of administrative actions is
clear under the current system. The FCU Act gives NCUA explicit
authority to suspend or revoke the charter of any FCU, or place the FCU
into involuntary liquidation, for a violation of any provision of its
bylaws. 12 U.S.C. 1766(b)(1). A charter revocation or suspension,
however, is a very extreme remedy and is unlikely to be an appropriate
remedy for any bylaw violation. The resultant loss of credit union
service would likely result in far more harm to members than the FCU's
failure to follow its bylaws. The FCU Act also allows NCUA to place FCUs
into conservatorship for reasons including protection of members'
interests. 12 U.S.C. 1786(h)(1). Conservatorship, like charter
suspension or liquidation, is an extreme remedy NCUA would prefer not to
use if other enforcement options are available. The FCU Act, however,
does not explicitly provide for such other options.

In contrast, the FCU Act explicitly provides NCUA authority to take
other, less severe administrative actions for other types of violations.
A cease and desist order, for example, identifies the violation, gives
the credit union a deadline to come into compliance, and may prescribe
procedures to come into compliance. NCUA may issue cease and desist
orders for violations of "a law, rule, or regulation." 12 U.S.C.
1786(e)(1). Before promulgating its proposed regulation, NCUA considered
whether the authority to issue cease and desist orders extended to bylaw
violations that did not also violate a statutory or regulatory
requirement or pose a threat to the safety and soundness of the FCU. As
discussed in the proposal, previous Board actions removed the Bylaws
from NCUA regulations. 72 FR 30984, 30985 (June 5, 2007). 

As a result, NCUA has concluded it should now reincorporate the Bylaws
to give it clear authority to act if a bylaw violation threatens a
fundamental, material credit union member right.

Some commenters suggested NCUA simply change its policy on enforcement
of Bylaws violations not involving another violation or a safety and
soundness threat without adopting a regulation. Agencies are entitled to
change their positions, as long as they explain the new position and the
reasons necessitating the change. [Motor Vehicle Manufacturers Ass'n v.
State Farm Ins. Co., 463 U.S. 29, 41-42 (1983).]{.underline} Courts take
a dim view of reversals of agency positions adopted without public
notice, such as agency interpretations adopted in the course of
litigation. [Bowen v. Georgetown University Hosp.]{.underline}, 488 U.S.
204, 212 (1988). NCUA believes an abrupt reversal of prior policy, could
leave any enforcement action taken for a Bylaw violation not involving
an issue of safety and soundness or violations of other regulations
vulnerable to challenge. Instead, the Board is using the rulemaking
process to adopt its revised policy \-- which is actually a return to
the Bylaws' original status as a regulation \-- to allow for public
notice and input.

In summary, the FCU Act's explicit provisions for enforcing Bylaw
violations include only limited and drastic options, and the Act's
provisions for other, less severe remedies do not explicitly cover Bylaw
violations. The Board has concluded that its authority in this area is
not clear unless the Bylaws are again incorporated in NCUA regulations.
Because the reincorporation of the Bylaws changes NCUA's most recent
policy regarding Bylaws enforcement and returns the Bylaws to their
original status as regulation, the Board is adopting the change using
the rulemaking process.

One commenter who argued NCUA's existing authority would allow the use
of the full range of actions for bylaw violations suggested that if, in
fact, the Act provided authority only to liquidate or conserve FCUs for
bylaw violations, NCUA could not create authority to use other actions
by adopting the Bylaws as a regulation. Several other commenters
generally questioned NCUA's authority to adopt this rule reincorporating
the Bylaws. NCUA disagrees with these comments, as the FCU Act provides
separate authority for it to adopt regulations. Section 120 of the FCU
Act gives the NCUA Board broad, general authority to "prescribe rules
and regulations for the administration of \[the FCU Act\]." 12 U.S.C.
1766. This authority is in no way limited by the separate authority to
suspend or revoke an FCU's charter or place an FCU into conservatorship
for failing to follow its bylaws. Moreover, several provisions of the
FCU Act clearly contemplate that FCUs will follow their bylaws. The FCU
Act's references to bylaws include the following requirements:

-   FCUs must adopt bylaws prescribed by NCUA. 12 U.S.C. 1758.

-   FCUs may impose late charges as permitted by their bylaws. 12 U.S.C.
    1757(10).

-   FCUs must hold their annual meetings at the time and place
    prescribed by their bylaws. 12 U.S.C. 1760.

-   An FCU's bylaws must prescribe the number of and the procedures for
    electing directors, and may provide for a credit committee. 12
    U.S.C. 1761; 1761c(a), (b).

-   An FCU's bylaws must specify the number of board officers and
    identify the compensated officer, if any. 12 U.S.C. 1761a.

-   An FCU's board of directors must follow bylaw provisions allowing
    for an elected or appointed credit committee, the appointment of
    loan officers, the hiring and compensation of officers and
    employees, the appointment of an executive committee, and
    information it is required to review at monthly meetings. 12 U.S.C.
    1761b(4), (5), (10), (11), (13), (15).

-   An FCU's supervisory committee may call a special meeting of the
    members to consider a bylaw violation. 12 U.S.C. 1761d.

-   The amount to be refunded to expelled members is to be determined
    according to the bylaws. 12 U.S.C. 1764(c).

-   Shares issued to minors are subject to conditions prescribed in the
    bylaws. 12 U.S.C. 1765.

The FCU Act provisions noted above require an FCU's bylaws to provide
procedures and rules for an FCU's structure and operation, at the time
of chartering and going forward. Under its general rulemaking authority
NCUA is charged with administering the FCU Act. This authority is not
restricted by the separate authority for charter revocation or
suspension, or conservatorship, for bylaw violations. The FCU Act's many
references to the FCU Bylaws demonstrate the Act requires FCUs to follow
their bylaws. As the FCU Act allows NCUA authority to administer its
provisions, and the FCU Act requires FCUs to have and follow bylaws, the
NCUA Board finds reincorporating the FCU Bylaws into NCUA regulations
will assist in its administration of the FCU Act.

Accordingly, the NCUA Board concludes reincorporating the Bylaws will
clarify its authority without imposing any new regulatory burden on
FCUs, and the final rule reincorporates the FCU Bylaws into NCUA
regulations as an Appendix to Part 701.

Commenters were also split on whether the proposal adequately defined
and limited the situations in which NCUA has discretion to take action.
Seven commenters found the standard adequate or supported limiting NCUA
intervention to disputes involving fundamental, material member rights,
as described in the preamble to the proposal. Eight other commenters
found the standard too broad and expressed concern NCUA would start to
intervene in all bylaw disputes. The NCUA Board reiterates the agency
will limit its involvement to bylaw disputes involving a fundamental,
material credit union member right, including the right to: maintain a
share account; maintain credit union membership; have access to credit
union facilities; participate in the director election process; attend
annual and special meetings; and petition for removal of directors and
committee members. The proposal added language to the Introduction to
the Bylaws explaining NCUA's discretion to intervene in disputes
involving fundamental, material credit union member rights; the final
rule includes minor revisions to this language to further clarify the
Board's intent.

The preamble to the proposal explained FCUs and FCU members should
continue to attempt to resolve bylaw disputes within the credit union,
and contact the regional office with jurisdiction for the FCU if a bylaw
dispute cannot be resolved internally. 72 FR 30984, 30986 (June 5,
2007). Six commenters \-- both supporters and opponents of
reincorporation -- sought additional details regarding the resolution of
bylaw disputes.

Four commenters requested additional information on the internal
procedures FCUs and their members should use to resolve bylaw disputes.
FCUs and FCU members should attempt to resolve bylaw disputes with the
usual procedures for addressing member complaints, such as requesting
review by the supervisory committee. Every FCU must have a supervisory
committee, appointed from among its members. 12 U.S.C. 1761(b). One of
the supervisory committee's roles is reviewing member complaints, and
the Board believes the supervisory committee is well-suited to address
bylaw disputes, since it has substantial experience in investigating and
resolving member complaints.

Several commenters also raised questions about how NCUA will determine
when to take an enforcement action related to a bylaw dispute. The NCUA
Board reiterates NCUA's regional offices will analyze disputes to see if
they affect a fundamental, material credit union member right. A
determination that a fundamental, material member right may be affected
allows NCUA the discretion to intervene, but does not require
intervention. As noted previously in this preamble and in the preamble
to the proposal, the Board's view is the agency will only become
involved in bylaw disputes that involve fundamental, material credit
union member rights. In considering whether to initiate formal
administrative action, the agency will consider various factors, as it
would with any regulatory violation, including the specific facts and
circumstances in a case; alternatives, such as a supervisory letter; the
willingness of the parties to cure a violation; and the seriousness of
the violation.

Two commenters sought clarification about who may report bylaw disputes
to NCUA. As is presently the case, any FCU member or FCU official may
report a bylaw dispute within an FCU. Likewise, any FCU, member, or
official may report a bylaw dispute to NCUA.

One commenter asked if FCU members must seek to enforce an FCU's bylaws
as a contract, in court, before requesting NCUA intervention. The
preamble to the proposal noted FCU members still have the right to seek
enforcement of the Bylaws in court. 72 FR 30984, 30985 (June 5, 2007).
The NCUA Board clarifies FCU members do not need to seek judicial relief
before reporting a bylaw dispute to NCUA.

Two commenters asked if regional directors' decisions on bylaw disputes
may be appealed to the NCUA Board. The right to appeal a regional
director's decision and to what forum will depend on the nature of the
decision, namely, whether a regional director's decision involves formal
administrative action. For example, if the agency takes formal
administrative action by issuing an immediate cease and desist order
directing an FCU to cease activity that violates the Bylaws or directing
an FCU to undertake specific actions to cure a violation, then an FCU
will have a right to challenge the order in federal court. 12 U.S.C.
1786(e), (f).

The preamble to the proposal stated NCUA's intent that FCUs and their
members continue to attempt to resolve bylaw disputes internally. 72 FR
30984, 30986 (June 5, 2007). Several commenters asked for a similar
statement to be added to the Introduction to the Bylaws or the text of §
701.2. The Board agrees this would be helpful and the final rule revises
the Introduction accordingly.

[Director Succession Amendments]{.underline}

The only changes the proposal made to the FCU Bylaws were amendments on
director succession; the amendments essentially incorporated NCUA legal
opinions. The proposal added a new Section to Article IX to clarify the
supervisory committee's responsibilities if an FCU has no remaining
directors. If an entire board of directors resigns, is removed
simultaneously, or for whatever circumstance is unable to serve, the
supervisory committee has the responsibility to act as a board of
directors until the members elect new directors. The proposal also
cross-references this new language in Article XVI, Section 3, addressing
removal of directors by members, and Article VI, Section 4, addressing
board of director vacancies.

Seven of eight commenters on this subject generally approved of the new
language. Two commenters sought clarifications in the process and one of
these commenters suggested alternative language for the amendment to
Article IX. The commenter's alternative language would give the
supervisory committee acting as the board the option of holding a
special meeting to elect directors if the FCU's annual meeting is
already scheduled or would usually occur within the next 45 days. The
proposal had required the supervisory committee to serve as the board
until the next annual meeting if the annual meeting were scheduled, or
would usually occur, within the next 45 days. The final rule adopts the
commenter's alternative, as NCUA agrees FCUs in this rare situation
should have the option of formally electing directors as soon as
possible, even if the next annual meeting will occur shortly.

In addition, the final rule includes certain grammatical changes to the
proposal. The proposal used the term "temporary board" to refer to the
supervisory committee acting as the board and "interim board" to refer
to the new directors elected at the special meeting. A commenter's
suggested alternative deletes the references to "temporary" and
"interim" boards in Article IX, and instead uses the terms "supervisory
committee acting as the board" and "board." The NCUA Board finds these
suggestions improve the bylaw and has adopted them.

The proposal prohibited the supervisory committee acting as the board
from acting on policy matters. 72 FR 30984, 30987 (June 5, 2007). The
intent of this prohibition was to ensure that an elected board makes
decisions affecting the direction and future of an FCU. One commenter
sought more explanation of permissible actions by the supervisory
committee acting as the board, and another commenter requested the
prohibition on acting on policy matters be modified to allow for policy
action in exigent circumstances. Generally, the Board's view is the
supervisory committee acting as the board should maintain the status quo
and defer major decisions, such as opening new branches or launching new
products, until the FCU's members elect a new board of directors. NCUA
believes an exception for exigent circumstances is unnecessary given the
short period of service that is likely and the fact that the limitation
is only on policy matters. Also, an FCU where the supervisory committee
is acting as the board will likely be in contact with its examiner and
can seek advice on whether matters should be left to the elected board.

NCUA also clarifies that newly chartered FCUs and FCUs defined as
"troubled" under § 701.14 of NCUA's regulations must follow the
procedures under § 701.14 and notify NCUA of changes in their boards.
NCUA recognizes these bylaw provisions may not afford sufficient time to
notify NCUA 30 days before the effective date of the change in board
members as required by § 701.14, but the supervisory committee acting as
the board should notify the Regional Office of the change as soon as
possible. The regulation also provides a waiver of the prior notice
requirement for board members elected at a members' meeting, if the
Regional Office receives notice within 48 hours of the election. 12 CFR
701.14(c)(2)(i). A newly chartered or troubled FCU that loses all its
directors will likely be in contact with its examiner and can seek
further advice on compliance with § 701.14.

The sole commenter opposing these provisions argued NCUA lacks authority
to adopt them because they are inconsistent with the FCU Act's
requirement for FCUs to be governed by a board of directors and for
vacancies on the board to be filled by the remaining directors. NCUA
believes the commenter misunderstood the proposal and its intent. The
bylaw applies only in the rare circumstance of an FCU losing all its
directors simultaneously and does not conflict with the FCU Act's
requirement for director vacancies to be filled by other directors. The
FCU Act is silent about how to proceed when an FCU has no remaining
directors, leaving NCUA discretion to address this matter through
regulation.

[Expedited Approval Process for Previously Approved Bylaw
Amendments]{.underline}

The proposed rule also outlined an expedited review process for bylaw
amendments previously approved for other FCUs, which NCUA is adopting as
proposed. NCUA will post the actual language of bylaw amendments
approved since the last major revision of the FCU Bylaws in April 2006
on its website. Other FCUs seeking to adopt identical language will
receive a response from NCUA's regional offices within 15 business days.
All seven commenters on this topic endorsed the proposal.

One commenter also suggested NCUA post the language for all previously
approved bylaw amendments that remain consistent with current NCUA
guidance, not only amendments approved since April 2006. Because NCUA's
Office of General Counsel staff has received only a handful of requests
for bylaw amendment language predating the 2006 revisions, the Board has
determined posting actual language for all bylaw amendments would not be
the most productive use of staff resources. Further, FCUs seeking exact
language for an approved bylaw amendment that predates 2006 can access
the Opinion Letters on NCUA's website and contact their regional office
or the Office of General Counsel to obtain the exact language of any
approved amendments.

[Number of Members Required to Call a Special Meeting]{.underline}

Although the proposal did not explicitly ask for comments on the
750-member cap on the number of members required to call a special
meeting, it noted the NCUA Board has decided it may consider individual
FCUs' requests to increase this number through the bylaw amendment
process outlined in the Introduction to the FCU Bylaws. 72 FR 30984,
30986 (June 5, 2007). Six of the eight commenters on this subject urged
NCUA to adopt amendments to the FCU Bylaws increasing the cap to either
a percentage of members, regardless of size, or a higher maximum number
for larger credit unions. One commenter opposing an increase noted,
although some increase in the cap may be appropriate for very large
credit unions, setting the cap too high would disenfranchise members
just as much as an FCU board ignoring the members' request for a special
meeting.

The NCUA Board understands concerns some commenters expressed about the
potential for a relatively small number of members to make disruptive
requests for special meetings. NCUA also agrees with the commenter who
expressed concern about the potential for disenfranchisement of FCU
members resulting from a higher cap. The cap recently increased from 500
to 750 members. 71 FR 24551, 24554 (April 26, 2006). More time is needed
to assess the appropriateness of this figure for large FCUs. Obtaining
750 signatures to request a special meeting is a significant
undertaking, and NCUA is not aware of any actual instances since 2006
where members obtained this number of signatures to require a board of
directors to hold a special meeting for a frivolous reason. NCUA repeats
any necessary changes in this area should be handled through the bylaw
amendment process explained in the introduction to the Bylaws. Any FCU
requesting such an amendment should have documented, verifiable reasons
why an increase in the cap is necessary, such as a history of members'
abuse of the special meeting request process at that particular FCU.

**C. Specific Changes to the FCU Bylaws**

The Federal Credit Union Bylaws, as amended by this final rule, are
reprinted in their entirety as Appendix A to Part 701. The final rule
made very few changes to the text of the FCU Bylaws, and these changes
are listed below.

\(1\) The following paragraph was added to the end of Section 3 of
Article IX:

If all director positions become vacant simultaneously, the supervisory
committee immediately assumes the role of the board of directors. The
supervisory committee acting as the board must generally call and hold a
special meeting to elect a board that will serve until the next annual
meeting. The special meeting must occur at least 7 but no more than 14
days after all director positions became vacant, and candidates for the
board at the special meeting may be nominated by petition or from the
floor. However, if the next annual meeting has been scheduled and will
occur within 45 days after all the director positions become vacant, the
supervisory committee may decide to forego the special meeting and
continue serving as the board until the election of new directors at the
annual meeting.

If the next annual meeting has not been scheduled, but the month and day
of the previous year's meeting plus 7 days falls within 45 days after
all the director positions become vacant, the supervisory committee
acting as the board may decide to forego the special meeting to elect
new directors. In this case, the supervisory committee must schedule the
annual meeting within 7 days before or after the month and day of the
previous annual meeting and continue to serve as the board until
directors are elected at the annual meeting.

The supervisory committee acting as the board may not act on policy
matters. However, directors elected at a special meeting have the same
powers as directors elected at the annual meeting.

\(2\) The following sentence was added to the end of Section 3 of
Article XVI:

If member votes at a special meeting result in the removal of all
directors, the supervisory committee immediately becomes the temporary
board of directors and must follow the procedures in Article IX, Section
3.

\(3\) The following sentence was inserted after the first sentence of
Section 4 of Article VI:

If all director positions become vacant simultaneously, the supervisory
committee immediately becomes the temporary board of directors and must
follow the procedures in Article IX, Section 3.

\(4\) The sixth paragraph of the Introduction was deleted and replaced
with the following paragraph:

Federal credit unions considering an amendment may find it useful to
review the bylaws section of the agency website, which includes Office
of General Counsel opinions about proposed bylaw amendments. Opinions
issued after April 2006 will include the language of approved
amendments. Even if an amendment has been previously approved, the
credit union must submit a proposed amendment to NCUA for review under
the procedure listed above to ensure the amendment is identical. Credit
unions requesting previously approved amendments will receive notice of
the regional office's decision within 15 business days of the receipt of
the request.

\(5\) The last paragraph of the Introduction was deleted and replaced
with the following two paragraphs:

NCUA expects federal credit unions and their members will make every
effort to resolve bylaw disputes using the credit union's internal
member complaint resolution process. If a bylaw dispute cannot be
resolved internally, however, credit union officials or members should
contact the regional office with jurisdiction for the credit union for
assistance in resolving the dispute.

NCUA has discretion to take administrative actions when a credit union
is not in compliance with its bylaws. If a potential violation is
identified, NCUA will carefully consider all of the facts and
circumstances in deciding whether to take enforcement action. NCUA will
not take action against minor or technical violations, but emphasizes
that it retains discretion to enforce the bylaws in appropriate cases,
such as safety and soundness concerns or threats to fundamental,
material credit union member rights.

\(6\) The first paragraph of the Introduction was replaced with the
following paragraph:

[Effective date]{.underline}: After consideration of public comment, the
National Credit Union Administration (NCUA) Board adopted these Bylaws
and incorporated them as Appendix A to Part 701 of NCUA's regulations on
November 30, 2007. Unless a federal credit union has adopted bylaws
before November 30, 2007 it must adopt these revised Bylaws.

**REGULATORY PROCEDURES**

## 

## [Regulatory Flexibility Act]{.underline}

The Regulatory Flexibility Act requires NCUA to prepare an analysis to
describe any significant economic impact a rule may have on a
substantial number of small credit unions, defined as those under ten
million dollars in assets. This rule incorporates the Bylaws into NCUA's
regulations without imposing any regulatory burden, since the FCU Act
requires FCUs to adopt NCUA-approved bylaws. The rule will not have a
significant economic impact on a substantial number of small credit
unions, and, therefore, a regulatory flexibility analysis is not
required.

## 

## [Paperwork Reduction Act]{.underline}

NCUA has determined the rule would not increase paperwork requirements
under the Paperwork Reduction Act of 1995 and regulations of the Office
of Management and Budget. 44 U.S.C. 3501 [et seq]{.underline}.; 5 CFR
part 1320.

## [Executive Order 13132]{.underline}

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The rule would not have substantial direct
effects on the states, on the connection between the national government
and the states, or on the distribution of power and responsibilities
among the various levels of government. NCUA has determined that this
rule does not constitute a policy that has federalism implications for
purposes of the executive order.

## [The Treasury and General Government Appropriations Act, 1999 -- Assessment]{.underline} 

## [of Federal Regulations and Policies on Families]{.underline}

NCUA has determined the rule would not affect family well-being within
the meaning of § 654 of the Treasury and General Government
Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

[Small Business Regulatory Enforcement Fairness Act]{.underline}

The Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L.
104-121 (SBREFA), provides generally for congressional review of agency
rules. A reporting requirement is triggered in instances where NCUA
issues a final rule as defined by Section 551 of the APA. 5 U.S.C. 551.
The Office of Management

and Budget has determined that this rule is not a major rule for
purposes of SBREFA. As required by SBREFA, NCUA will file the
appropriate reports with Congress and the General Accounting Office so
that the final rule may be reviewed.

# List of Subjects 

# 

# 12 CFR Part 701

Credit unions.

By the National Credit Union Administration Board on October 25, 2007.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Mary F. Rupp

Secretary of the Board

Accordingly, NCUA amends 12 CFR part 701 as follows:

**PART 701 --- ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS**

1\. The authority citation for part 701 is revised to read as follows:

Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a,
1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 701.6 is also
authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15
U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. Section 701.35 is
also authorized by 42 U.S.C. 4311-4312.

2\. Part 701 is amended by adding § 701.2 to read as follows:

701.2 Federal Credit Union Bylaws

\(a\) Federal credit unions must operate in accordance with their
approved bylaws. The Federal Credit Union Bylaws are hereby published as
Appendix A to Part 701 pursuant to 5 U.S.C. 552(a)(1) and accompanying
regulations. Federal credit unions may adopt amendments to their bylaws
as provided in the Bylaws, with the approval of the Board.\
\
(b) Copies of the Federal Credit Union Bylaws may be obtained at
[www.ncua.gov](http://www.ncua.gov/) or by request addressed to
<ogc-mail@ncua.gov> or National Credit Union Administration, 1775 Duke
Street, Alexandria, VA 22314.\
\
(c) The National Credit Union Administration may issue revisions or
amendments of the Federal Credit Union Bylaws from time to time. An
historic file of amendments or revisions is maintained and made
available for inspection at the National Credit Union Administration,
1775 Duke Street, Alexandria, VA 22314.

3\. Appendix A to 12 CFR Part 701 is added to read as follows:

Appendix A to Part 701 \-- Federal Credit Union Bylaws

INTRODUCTION

[A. Effective date]{.underline}. After consideration of public comment,
the National Credit Union Administration (NCUA) Board adopted these
Bylaws and incorporated them as Appendix A to Part 701 of NCUA's
regulations on November 30, 2007. Unless a federal credit union has
adopted bylaws before November 30, 2007, it must adopt these revised
bylaws.

[B. Adoption of all or part of these bylaws]{.underline}. Although
federal credit unions may retain any previously approved version of the
bylaws, the NCUA Board encourages federal credit unions to adopt the
revised bylaws because it believes they provide greater clarity and
flexibility for credit unions and their officials and members. Federal
credit unions may also adopt portions of the revised bylaws and retain
the remainder of previously approved bylaws, but the NCUA Board cautions
federal credit unions to be extremely careful. Federal credit unions
must be careful because they run the risk of having inconsistent or
conflicting provisions because of the various options the revised bylaws
provide as well as other revisions in the text.

[C. Bylaw amendments]{.underline}. 1. The FCU Bylaws contain several
provisions allowing FCU boards to select from an option or range of
options and fill in a blank. Changes to "fill-in-the-blank" provisions
are, in fact, changes to the FCU's bylaws and require a two-thirds vote
of the board. As long as the FCU selects from the permissible options
for completing the blank, the FCU need not submit the change for NCUA
approval using the process outlined below.

2\. Federal credit unions continue to have the flexibility to request
other bylaw amendments if the need arises. NCUA must approve any bylaw
amendments; federal credit unions may no longer adopt amendments from
the "Standard Bylaw Amendments" booklet because the 1999 revisions to
the bylaws included sufficient flexibility to make the separate list of
standard bylaw amendments superfluous. Thus, NCUA no longer
differentiates between "standard" and "nonstandard" bylaw amendments.

3\. The procedure for approval of bylaw amendments is as follows:

> a\. The federal credit union wishing to adopt a bylaw amendment must
> file a request with its regional director.
>
> b\. The request must include the section of the bylaws to be amended;
> the reason for or purpose of the amendment, including an explanation
> of why the amendment is desirable and what it will accomplish for the
> credit union; and the specific, proposed wording of the amendment.
>
> c\. After review by the regional director and consultation within the
> agency, the regional director will advise the credit union if a
> proposed amendment is approved.

4\. Federal credit unions considering an amendment may find it useful to
review the bylaws section of the agency website, which includes Office
of General Counsel opinions about proposed bylaw amendments. Opinions
issued after April 2006 will include the language of approved
amendments. Even if an amendment has been previously approved, the
credit union must submit a proposed amendment to NCUA for review under
the procedure listed above to ensure the amendment is identical. Credit
unions requesting previously approved amendments will receive notice of
the regional office's decision within 15 business days of the receipt of
the request.

[D. The nature of the bylaws]{.underline}. 1. The Federal Credit Union
Act requires the NCUA Board to prepare bylaws for federal credit unions.
12 U.S.C. §1758. The bylaws address a broad range of matters concerning
a credit union's organization and governance, the relationship of the
credit union to its members, and the procedures and rules a credit union
follows. The bylaws supplement the broad provisions of: a federal credit
union's charter, which establishes the existence of a federal credit
union; the Federal Credit Union Act, which establishes the powers of
federal credit unions; and NCUA regulations, which implement the Federal
Credit Union Act. As a legal matter, a federal credit union's bylaws
must conform to and cannot be inconsistent with any provision of its
charter, the Federal Credit Union Act, NCUA regulations or other laws or
regulations applicable to its operations.

2\. NCUA expects federal credit unions and their members will make every
effort to resolve bylaw disputes using the credit union's internal
member complaint resolution process. If a bylaw dispute cannot be
resolved internally, however, credit union officials or members should
contact the regional office with jurisdiction for the credit union for
assistance in resolving the dispute.

3\. NCUA has discretion to take administrative actions when a credit
union is not in compliance with its bylaws. If a potential violation is
identified, NCUA will carefully consider all of the facts and
circumstances in deciding whether to take enforcement action. NCUA will
not take action against minor or technical violations, but emphasizes
that it retains discretion to enforce the bylaws in appropriate cases,
such as safety and soundness concerns or threats to fundamental,
material credit union member rights.

TABLE OF CONTENTS

#  [Page]{.underline} 

# Article I. Name -- Purposes 

# Article II. Qualifications for Membership 

# Article III. Shares of Members 

# Article IV. Meetings of Members 

# Article V. Elections 

# Article VI. Board of Directors 

# Article VII. Board Officers, Management Officials and Executive Committee 

# Article VIII. Credit Committee or Loan Officers 

# Article IX. Supervisory Committee 

# Article X. Organization Meeting 

# Article XI. Loans and Lines of Credit to Members 

# Article XII. Dividends 

# Article XIII. RESERVED 

# Article XIV. Expulsion and Withdrawal 

# Article XV. Minors 

# Article XVI. General 

# Article XVII. Amendments of Bylaws and Charter 

# Article XVIII. Definitions 

# BYLAWS

**Federal Credit Union, Charter
No.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

(A corporation chartered under the laws of the United States)

# Article I. Name - Purposes 

# 

Section 1. **Name.** The name of this credit union is as stated in
Section 1 of the charter (approved organization certificate) of this
credit union.

Section 2. **Purposes.** This credit union is a member-owned,
democratically operated, not-for-profit organization managed by a
volunteer board of directors, with the specified mission of meeting the
credit and savings needs of consumers, especially persons of modest
means.  The purpose of this credit union is to promote thrift among its
members by affording them an opportunity to accumulate their savings and
to create for them a source of credit for provident or productive
purposes. *The credit union may add business as one of its purposes by
placing a comma after \"provident\" and inserting \"business.\"*

# 

# [Article II. Qualifications for Membership]{.underline} 

Section 1. [Field of membership.]{.underline} The field of membership of
this credit union is limited to that stated in Section 5 of its charter.

Section 2. [Membership application procedures.]{.underline} Applications
for membership from persons eligible for membership under Section 5 of
the charter must be signed by the applicant on forms approved by the
board. The applicant is admitted to membership after approval of an
application by a majority of the directors, a majority of the members of
a duly authorized executive committee, or by a membership officer, and
after subscription to at least one share of this credit union and the
payment of the initial installment, and the payment of a uniform
entrance fee if required by the board. If a person whose membership
application is denied makes a written request, the credit union must
explain the reasons for the denial in writing.

Section 3. [Maintenance of membership share required.]{.underline} A
member who withdraws all shareholdings or fails to comply with the time
requirements for restoring his or her account balance to par value in
Article III, Section 3, ceases to be a member. By resolution, the board
may require persons readmitted to membership to pay another entrance
fee.

Section 4. [Continuation of membership.]{.underline} Once a member
becomes a member that person may remain a member until the person or
organization chooses to withdraw or is expelled in accordance with the
Act and Article XIV of these bylaws. A member who is disruptive to
credit union operations may be subject to limitations on services and
access to credit union facilities. *A credit union that wishes to
restrict services to members no longer within the field of membership
should specify the restrictions in this section.*

Staff commentary on qualifications for membership:

[Entrance fee]{.underline} -- FCUs may not vary the entrance fee among
different classes of members because the Act requires a uniform fee.
FCUs may, however, eliminate the entrance fee for all applicants.

# 

# [Article III. Shares of Members]{.underline} 

Section 1. [Par value.]{.underline} The par value of each share will be
\$\_\_\_\_\_. Subscriptions to shares are payable at the time of
subscription, or in installments of at least \$\_\_\_\_\_ per month.

Section 2. [Cap on shares held by one person.]{.underline} The board may
establish, by resolution, the maximum amount of shares that any one
member may hold.

Section 3. [Time periods for payment and maintenance of membership
share.]{.underline} A member who fails to complete payment of one share
within \_\_\_\_\_ of admission to membership, or within \_\_\_\_\_ from
the increase in the par value of shares, or a member who reduces the
share balance below the par value of one share and does not increase the
balance to at least the par value of one share within \_\_\_\_\_ of the
reduction will be terminated from membership.

Section 4. [Transferability.]{.underline} Shares may only be transferred
from one member to another by an instrument in a form as the board may
prescribe. Shares that accrue credits for unpaid dividends retain those
credits when transferred.

Section 5. [Withdrawals.]{.underline} Money paid in on shares or
installments of shares may be withdrawn as provided in these bylaws or
regulation on any day when payment on shares may be made, provided,
however, that

\(a\) The board has the right, at any time, to require members to give
up to 60 days written notice of intention to withdraw the whole or any
part of the amounts paid in by them.

\(b\) Reserved.

\(c\) No member may withdraw any shareholdings below the amount of the
member\'s primary or contingent liability to the credit union if the
member is delinquent as a borrower, or if borrowers for whom the member
is comaker, endorser, or guarantor are delinquent, without the written
approval of the credit committee or loan officer. Coverage of overdrafts
under an overdraft protection policy does not constitute delinquency for
purposes of this paragraph. Shares issued in an irrevocable trust as
provided in Section 6 of this article are not subject to withdrawal
restrictions except as stated in the trust agreement.

\(d\) The share account of a deceased member (other than one held in
joint tenancy with another member) may be continued until the close of
the dividend period in which the administration of the deceased\'s
estate is completed.

\(e\) The board will have the right, at any time, to impose a fee for
excessive share withdrawals from regular share accounts. The number of
withdrawals not subject to a fee and the amount of the fee will be
established by board resolution and will be subject to regulations
applicable to the advertising and disclosure of terms and conditions on
member accounts.

Section 6. [Trusts.]{.underline} Shares may be issued in a revocable or
irrevocable trust, subject to the following:

When shares are issued in a revocable trust, the settlor must be a
member of this credit union in his or her own right. When shares are
issued in an irrevocable trust, either the settlor or the beneficiary
must be a member of this credit union. The name of the beneficiary must
be stated in both a revocable and irrevocable trust. For purposes of
this section, shares issued pursuant to a pension plan authorized by the
rules and regulations will be treated as an irrevocable trust unless
otherwise indicated in the rules and regulations.

Section 7. [Joint accounts and membership requirements. Select one
option and check the box corresponding to that option.]{.underline}

**\_\_** [Option A - Separate account not required to establish
membership]{.underline}

Owners of a joint account may both be members of the credit union
without opening separate accounts. For joint membership, both owners are
required to fulfill all of the membership requirements including each
member purchasing and maintaining at least one share in the account.

**\_\_** [Option B - Separate account required to establish
membership]{.underline}

Each member must purchase and maintain at least one share in a share
account that names the member as the sole or primary owner. Being named
as a joint owner of a joint account is insufficient to establish
membership.

Staff commentary on shares:

[i. Installments]{.underline} -- FCUs may insert zero for the number of
installments. The FCU Act allows membership upon the payment of the
initial installment of a membership share, but NCUA no longer views this
provision as requiring FCUs to offer the option of paying for the
membership share in installments.

[ii. Par value]{.underline} -- FCUs may establish differing par values
for different classes of members or types of accounts, provided this
action does not violate any federal, state or local antidiscrimination
laws. For example, an FCU may want to establish a higher par value for
recent credit union members, without requiring long-time members to
bring their accounts up to the new par value. A differing par value may
also be permissible for different types of accounts, such as requiring a
higher par value for a member with only a share draft account. If a
credit union adopts differing par values, all of the possible par values
should be stated in Section 1.

[iii. Reduction in share balance below par value]{.underline} -- When a
member's account balance falls below the par value, Section 3 requires
FCUs to allow members a minimum time period to restore their account
balance to the par value before membership is terminated. FCUs may not
delete this requirement or delete references to this requirement in
Article II, Section 3.

# 

# [Article IV. Meetings of Members]{.underline}

Section 1. [Annual meeting.]{.underline} The annual meeting of the
members must be held \[insert time for annual meeting, for example,
"during the month of March/on the third Saturday of April/ no later than
March 31"\]**,** in the county in which any office of the credit union
is located or within a radius of 100 miles of an office, at the time and
place as the board determines and announces in the notice of the annual
meeting.

Section 2. [Notice of meetings required.]{.underline} a. At least 30 but
no more than 75 days before the date of any annual meeting or at least 7
days before the date of any special meeting of the members, the
secretary must give written notice to each member. Notice may be by
written notice delivered in person or by mail to the member's address,
or, for members who have opted to receive statements and notices
electronically, by electronic mail. Notice of the annual meeting may be
given by posting the notice in a conspicuous place in the office of this
credit union where it may be read by the members, at least 30 days
before the meeting, if the annual meeting is to be held during the same
month as that of the previous annual meeting and if this credit union
maintains an office that is readily accessible to members where regular
business hours are maintained. Any meeting of the members, whether
annual or special, may be held without prior notice, at any place or
time, if all the members entitled to vote, who are not present at the
meeting, waive notice in writing, before, during, or after the meeting.

b\. Notice of any special meeting must state the purpose for which it is
to be held, and no business other than that related to this purpose may
be transacted at the meeting.

Section 3. [Special meetings.]{.underline} a. Special meetings of the
members may be called by the chair or the board of directors upon a
majority vote, or by the supervisory committee as provided in these
bylaws. The chair must call a special meeting, meaning the meeting must
be held, within 30 days of the receipt of a written request of 25
members or 5% of the members as of the date of the request, whichever
number is larger. However, a request of no more than 750 members may be
required to call a special meeting.

b\. The notice of a special meeting must be given as provided in Section
2 of this article. Special meetings may be held at any location
permitted for the annual meeting.

Section 4. [Items of business for annual meeting and rules of order for
annual and special meetings.]{.underline} The suggested order of
business at annual meetings of members is\--

\(a\) Ascertainment that a quorum is present.

\(b\) Reading and approval or correction of the minutes of the last
meeting.

\(c\) Report of directors, if there is one. For credit unions
participating in the Community Development Revolving Loan Program, the
directors must report on the credit union's progress on providing needed
community services, if required by NCUA Regulations.

\(d\) Report of the financial officer or the chief management official.

\(e\) Report of the credit committee, if there is one.

\(f\) Report of the supervisory committee, as required by Section 115 of
the Act.

\(g\) Unfinished business.

\(h\) New business other than elections.

\(i\) Elections, as required by Section 111 of the Act.

\(j\) Adjournment.

k\. To the extent consistent with these bylaws, all meetings of the
members will be conducted according to
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. The order of business
for the annual meeting may vary from the suggested order, provided it
includes all required items and complies with the rules of procedure
adopted by the credit union.

*The credit union must fill in the blank with one of the following
authorities, noting the edition to be used*: *Democratic Rules of
Order*, *The Modern Rules of Order, Robert's Rules of Order, or Sturgis'
Standard Code of Parliamentary Procedure.*

Section 5. [Quorum.]{.underline} Except as otherwise provided, 15
members constitute a quorum at annual or special meetings. If no quorum
is present, an adjournment may be taken to a date at least 7 but not
more than 14 days thereafter. The members present at any adjourned
meeting will constitute a quorum, regardless of the number of members
present. The same notice must be given for the adjourned meeting as is
prescribed in Section 2 of this article for the original meeting, except
that the notice must be given at least 5 days before the date of the
meeting as fixed in the adjournment.

# 

# [Article V. Elections]{.underline}

*The Credit Union must select one of the four voting options. This may
be done by printing the credit union's bylaws with the option selected
or retaining this copy and checking the box of the option selected. All
options continue with Section 3 of this article.*

  **\_\_    **[Option A1 - In-person elections; nominating committee and
nominations from floor]{.underline}

Section 1. [Nomination procedures.]{.underline} At least 30 days before
each annual meeting, the chair will appoint a nominating committee of
three or more members. It is the duty of the nominating committee to
nominate at least one member for each vacancy, including any unexpired
term vacancy, for which elections are being held, and to determine that
the members nominated are agreeable to the placing of their names in
nomination and will accept office if elected.

Section 2. [Election procedures.]{.underline} After the nominations of
the nominating committee have been placed before the members, the chair
calls for nominations from the floor. When nominations are closed, the
chair appoints the tellers, ballots are distributed, the vote is taken
and tallied by the tellers, and the results announced. All elections are
determined by plurality vote and will be by ballot except where there is
only one nominee for the office.

**\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--**

**[\_\_]{.underline}    **[Option A2 - In-person elections; nominating
committee and nominations by petition]{.underline}

Section 1. [Nomination procedures.]{.underline} a. At least 120 days
before each annual meeting the chair will appoint a nominating committee
of three or more members. It is the duty of the nominating committee to
nominate at least one member for each vacancy, including any unexpired
term vacancy, for which elections are being held, and to determine that
the members nominated are agreeable to the placing of their names in
nomination and will accept office if elected.

b\. The nominating committee files its nominations with the secretary of
the credit union at least 90 days before the annual meeting, and the
secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also
be made by petition signed by 1% of the members with a minimum of 20 and
a maximum of 500. The secretary may use electronic mail to notify
members who have opted to receive notices or statements electronically.

c\. The written notice must indicate that the election will not be
conducted by ballot and there will be no nominations from the floor when
the number of nominees equals the number of positions to be filled. A
brief statement of qualifications and biographical data in a form
approved by the board of directors will be included for each nominee
submitted by the nominating committee with the written notice to all
eligible members. Each nominee by petition must submit a similar
statement of qualifications and biographical data with the petition. The
written notice must state the closing date for receiving nominations by
petition. In all cases, the period for receiving nominations by petition
must extend at least 30 days from the date that the petition requirement
and the list of nominating committee\'s nominees are mailed to all
members. To be effective, nominations by petition must be accompanied by
a signed certificate from the nominee or nominees stating that they are
agreeable to nomination and will serve if elected to office. Nominations
by petition must be filed with the secretary of the credit union at
least 40 days before the annual meeting and the secretary will ensure
that nominations by petition**,** along with those of the nominating
committee**,** are posted in a conspicuous place in each credit union
office at least 35 days before the annual meeting.

Section 2. [Election procedures]{.underline}. a. All persons nominated
by either the nominating committee or by petition must be placed before
the members. When nominations are closed, the chair appoints the
tellers, ballots are distributed, the vote is taken and tallied by the
tellers, and the results announced. All elections are determined by
plurality vote and will be by ballot except where there is only one
nominee for each position to be filled.

b\. If sufficient nominations are made by the nominating committee or by
petition to provide at least as many nominees as positions to be filled,
nominations cannot be made from the floor. In the event nominations from
the floor are permitted and result in more nominees than positions to be
filled, when nominations have been closed, the chair appoints the
tellers, ballots are distributed, the vote is taken and tallied by the
tellers, and the results announced. When the number of nominees equals
the number of positions to be filled, the chair may take a voice vote or
declare each nominee elected by general consent or acclamation at the
annual meeting.

**\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--**

**\_\_** [Option A3 - Election by ballot boxes or voting machine;
nominating committee and nomination by petition]{.underline}

Section 1. [Nomination procedures]{.underline}. a. At least 120 days
before each annual meeting, the chair will appoint a nominating
committee of three or more members. It is the duty of the nominating
committee to nominate at least one member for each vacancy, including
any unexpired term vacancy, for which elections are being held, and to
determine that the members nominated are agreeable to the placing of
their names in nomination and will accept office if elected.

b\. The nominating committee files its nominations with the secretary of
the credit union at least 90 days before the annual meeting, and the
secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also
be made by petition signed by 1% of the members with a minimum of 20 and
a maximum of 500. The secretary may use electronic mail to notify
members who have opted to receive notices or statements electronically.

c\. The written notice must indicate that the election will not be
conducted by ballot and there will be no nominations from the floor when
the number of nominees equals the number of positions to be filled. A
brief statement of qualifications and biographical data in a form
approved by the board of directors will be included for each nominee
submitted by the nominating committee with the written notice to all
eligible members. Each nominee by petition must submit a similar
statement of qualifications and biographical data with the petition. The
written notice must state the closing date for receiving nominations by
petition. In all cases, the period for receiving nominations by petition
must extend at least 30 days from the date of the petition requirement
and the list of nominating committee\'s nominees are mailed to all
members. To be effective, nominations by petition must be accompanied by
a signed certificate from the nominee or nominees stating that they are
agreeable to nomination and will serve if elected to office. Nominations
by petition must be filed with the secretary of the credit union at
least 40 days before the annual meeting and the secretary will ensure
that nominations by petition along with those of the nominating
committee are posted in a conspicuous place in each credit union office
at least 35 days before the annual meeting.

Section 2. [Election procedures]{.underline}. All elections are
determined by plurality vote. The election will be conducted by ballot
boxes or voting machines, subject to the following conditions:

\(a\) The board of directors will appoint the election tellers;

\(b\) If sufficient nominations are made by the nominating committee or
by petition to provide more nominees than positions to be filled, the
secretary, at least 10 days before the annual meeting, will cause ballot
boxes and printed ballots, or voting machines, to be placed in
conspicuous locations, as determined by the board of directors with the
names of the candidates posted near the boxes or voting machines. The
name of each candidate will be followed by a brief statement of
qualifications and biographical data in a form approved by the board of
directors;

\(c\) After the members have been given 24 hours to vote at conspicuous
locations as determined by the board of directors, the ballot boxes or
voting machines will be opened, the vote tallied by the tellers, the
tallies placed in the ballot boxes, and the ballot boxes resealed. The
tellers are responsible at all times for the ballot boxes or voting
machines and the integrity of the vote. A record must be kept of all
persons voting and the tellers must assure themselves that each person
voting is entitled to vote; and

\(d\) The tellers will take the ballot boxes to the annual meeting. At
the annual meeting, printed ballots will be distributed to those in
attendance who have not voted and their votes will be deposited in the
ballot boxes placed by the tellers, before the beginning of the meeting,
in conspicuous locations with the names of the candidates posted near
them. After those members have been given an opportunity to vote at the
annual meeting, balloting will be closed, the ballot boxes opened, the
vote tallied by the tellers and added to the previous count, and the
chair will announce the result of the vote.

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

**\_\_** [Option A4 - Election by electronic device (including but not
limited to telephone and electronic mail) or mail ballot; nominating
committee and nominations by petition]{.underline}

Section 1. [Nomination procedures]{.underline}. a. At least 120 days
before each annual meeting, the chair will appoint a nominating
committee of three or more members. It is the duty of the nominating
committee to nominate at least one member for each vacancy, including
any unexpired term vacancy, for which elections are being held, and to
determine that the members nominated are agreeable to the placing of
their names in nomination and will accept office if elected.

b\. The nominating committee files its nominations with the secretary of
the credit union at least 90 days before the annual meeting, and the
secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also
be made by petition signed by 1% of the members with a minimum of 20 and
a maximum of 500. The secretary may use electronic mail to notify
members who have opted to receive notices or statements electronically.

c\. The notice must indicate that the election will not be conducted by
ballot and there will be no nominations from the floor when the number
of nominees equals the number of positions to be filled. A brief
statement of qualifications and biographical data in a form approved by
the board of directors will be included for each nominee submitted by
the nominating committee with the notice to all eligible members. Each
nominee by petition must submit a similar statement of qualifications
and biographical data with the petition. The notice must state the
closing date for receiving nominations by petition. In all cases, the
period for receiving nominations by petition must extend at least 30
days from the date of the petition requirement and the list of
nominating committee\'s nominees are mailed to all members. To be
effective, nominations by petition must be accompanied by a signed
certificate from the nominee or nominees stating that they are agreeable
to nomination and will serve if elected to office. Nominations by
petition must be filed with the secretary of the credit union at least
40 days before the annual meeting and the secretary will ensure that
nominations by petition**,** along with those of the nominating
committee**,** are posted in a conspicuous place in each credit union
office at least 35 days before the annual meeting.

Section 2. [Election procedures]{.underline}. All elections are
determined by plurality vote. All elections will be by electronic device
or mail ballot, subject to the following conditions:

\(a\) The board of directors will appoint the election tellers;

\(b\) If sufficient nominations are made by the nominating committee or
by petition to provide more nominees than positions to be filled, the
secretary, at least 30 days before the annual meeting, will cause either
a printed ballot or notice of ballot to be mailed to all members
eligible to vote. Electronic mail may be used to provide the notice of
ballot to members who have opted to receive notices or statements
electronically;

\(c\) If the credit union is conducting its elections electronically,
the secretary will cause the following materials to be transmitted to
each eligible voter and the following procedures will be followed:

\(1\) One notice of balloting stating the names of the candidates for
the board of directors and the candidates for other separately
identified offices or committees. The name of each candidate must be
followed by a brief statement of qualifications and biographical data in
a form approved by the board of directors. Electronic mail may be used
to provide the notice of ballot to members who have opted to receive
notices or statements electronically.

\(2\) One mail ballot that conforms to Section 2(d) of this article and
one instruction sheet stating specific instructions for the electronic
election procedure, including how to access and use the system, and the
period of time in which votes will be taken. The instruction will state
that members without the requisite electronic device necessary to vote
on the system may vote by submitting the enclosed mail ballot and
specify the date the mail ballot must be received by the credit union.
For members who have opted to receive notices or statements
electronically, the mail ballot is not required and electronic mail may
be used to provide the instructions for the electronic election
procedure.

\(3\) It is the duty of the tellers of election to verify, or cause to
be verified the name of the voter and the credit union account number as
they are registered in the electronic balloting system. It is the duty
of the teller to test the integrity of the balloting system at regular
intervals during the election period.

\(4\) Ballots must be received no later than midnight**,** 5 calendar
days before the annual meeting.

\(5\) The vote will be tallied by the tellers. The result must be
verified at the annual meeting and the chair will make the result of the
vote public at the annual meeting.

\(6\) In the event of malfunction of the electronic balloting system,
the board of directors may in its discretion order elections be held by
mail ballot only. The mail ballots must conform to Section 2(d) of this
article and must be mailed once more to all eligible members 30 days
before the annual meeting. The board may make reasonable adjustments to
the voting time frames above, or postpone the annual meeting when
necessary, to complete the elections before the annual meeting.

\(d\) If the credit union is conducting its election by mail ballot, the
secretary will cause the following materials to be mailed to each member
and the following procedures will be followed:

\(1\) One ballot, clearly identified as the ballot on which the names of
the candidates for the board of directors and the candidates for other
separately identified offices or committees are printed in random order.
The name of each candidate will be followed by a brief statement of
qualifications and biographical data in a form approved by the board of
directors;

\(2\) One ballot envelope clearly marked with instructions that the
completed ballot must be placed in that envelope and sealed;

\(3\) One identification form to be completed so as to include the name,
address, signature and credit union account number of the voter;

\(4\) One mailing envelope in which the voter, following instructions
provided with the mailing envelope, must insert the sealed ballot
envelope and the identification form, and which must have postage
prepaid and be preaddressed for return to the tellers;

\(5\) When properly designed with features that preserve the secrecy of
the ballot, one form can be printed that represents a combined ballot
and identification form, and postage prepaid and preaddressed return
envelope;

\(6\) It is the duty of the tellers to verify, or cause to be verified,
the name and credit union account number of the voter as appearing on
the identification form; to place the verified identification form and
the sealed ballot envelope in a place of safekeeping pending the count
of the vote; in the case of a questionable or challenged identification
form, to retain the identification form and sealed ballot envelope
together until the verification or challenge has been resolved;

\(7\) Ballots mailed to the tellers must be received by the tellers no
later than midnight 5 days before the date of the annual meeting;

\(8\) The vote will be tallied by the tellers. The result will be
verified at the annual meeting and the chair will make the result of the
vote public at the annual meeting.

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

***All options continue here.***

Section 3. [Order of nominations]{.underline}. Nominations may be in the
following order:

\(a\) Nominations for directors.

\(b\) Nominations for credit committee members, if applicable. Elections
may be by separate ballots following the same order as the above
nominations or, if preferred, may be by one ballot for all offices.

Section 4. [Proxy and agent voting]{.underline}. Members cannot vote by
proxy. A member other than a natural person may vote through an agent
designated in writing for the purpose.

Section 5. [One vote per member]{.underline}. Irrespective of the number
of shares, no member has more than one vote.

Section 6. [Submission of information regarding credit union officials
to NCUA]{.underline}. The names and addresses of members of the board,
board officers, executive committee, and members of the credit
committee, if applicable, and supervisory committees must be forwarded
to the Administration in accordance with the Act and regulations in the
manner as may be required by the Administration.

Section 7. [Minimum age requirement]{.underline}. Members must be at
least \_\_\_ years of age by the date of the meeting (or for appointed
offices, the date of appointment) in order to vote at meetings of the
members, hold elective or appointive office, sign nominating petitions,
or sign petitions requesting special meetings.

*The Credit Union's board should adopt a resolution inserting an age no
greater than 18, or the age of majority under the state law applicable
to the credit union, in the blank space.*

*The Credit Union may select the absentee ballot provision in
conjunction with the voting procedure it has selected. This may be done
by printing the credit union\'s bylaws with this provision or by
retaining this copy and checking the box.*

**\_\_** Section 8. [Absentee ballots]{.underline}. The board of
directors may authorize the use of absentee ballots in conjunction with
the other procedures authorized in this article, subject to the
following conditions:

\(a\) The board of directors will appoint the election tellers;

\(b\) If sufficient nominations are made by the nominating committee or
by petition to provide more than one nominee for any position to be
filled, the secretary, at least 30 days before the annual meeting, will
cause printed ballots to be mailed to all members of the credit union
who are eligible to vote and who have submitted a written or electronic
request for an absentee ballot;

\(c\) The secretary will cause the following materials to be mailed to
each eligible voter who has submitted a written or electronic request
for an absentee ballot:

\(1\) One ballot, clearly identified as the ballot on which the names of
the candidates for the board of directors and the candidates for other
separately identified offices or committees are printed in random order.
The name of each candidate will be followed by a brief statement of
qualifications and biographical data in a form approved by the board of
directors;

\(2\) One ballot envelope clearly marked with instructions that the
completed ballot must be placed in that envelope and sealed;

\(3\) One identification form to be completed so as to include the name,
address, signature and credit union account number of the voter;

\(4\) One mailing envelope in which the voter, pursuant to instructions
provided with the envelope, must insert the sealed ballot envelope and
the identification form, and which must have postage prepaid and be
preaddressed for return to the tellers;

\(5\) When properly designed with features that preserve the secrecy of
the ballot, one form can be printed that represents a combined ballot
and identification form, and postage prepaid and preaddressed return
envelope;

\(d\) It is the duty of the election tellers to verify, or cause to be
verified, the name and credit union account number of the voter as
appearing on the identification form; to place the verified
identification and the sealed ballot envelope in a place of safekeeping
pending the count of the vote; in the case of a questionable or
challenged identification form, to retain the identification form and
the sealed ballot envelope together until the verification or challenge
has been resolved; and in the event that more than one voting procedure
is used, to verify that no eligible voter has voted more than one time;

\(e\) Ballots mailed to the tellers must be received by the tellers no
later than midnight 5 days before the date of the annual meeting;

\(f\) Absentee ballots will be deposited in the ballot boxes to be taken
to the annual meeting or included in a precount in accordance with
procedures specified in Article V, Section 2; and

\(g\) If a member has chosen to receive statements and notices
electronically, the credit union may provide notices required in this
section by email and provide instructions for voting via electronic
means instead of mail ballots.

Staff commentary on the election process:

[i. Eligibility Requirements]{.underline}: The Act and the FCU Bylaws
contain the only eligibility requirements for membership on an FCU\'s
board of directors, which are as follows:

a)  the individual must be a member of the FCU before distribution of
    ballots;

b)  the individual cannot have been convicted of a crime involving
    dishonesty or breach of trust unless the NCUA Board has waived the
    prohibition for the conviction; and

c)  the individual meets the minimum age requirement established under
    Article V, Section 7 of the FCU Bylaws.

Anyone meeting the three eligibility requirements may run for a seat on
the board of directors if properly nominated. It is the nominating
committee's duty to ascertain that all nominated candidates, including
those nominated by petition, meet the eligibility requirements.

[ii. Nomination Criteria for Nominating Committee]{.underline}: The FCU
Act and the FCU Bylaws do not prohibit a board of directors from
establishing reasonable criteria, in addition to the eligibility
requirements, for a nominating committee to follow in making its
nominations, such as financial experience, years of membership, or
conflict of interest provisions.  The board's nomination criteria,
however, applies only to individuals nominated by the nominating
committee; they cannot be imposed on individuals who meet the
eligibility requirements and are properly nominated from the floor or by
petition.

[iii. Candidates' Names on Ballots]{.underline}: When producing an
election ballot, the FCU's secretary may order the names of the
candidates on the ballot using any method for selection provided it is
random and used consistently from year to year so as to avoid
manipulation or favoritism.

[iv. Secret Ballots]{.underline}: An FCU must establish an election
process that assures members their votes remain confidential and secret
from all interested parties. If the election process does not separate
the member's identity from the ballot, FCUs should use a third-party
teller that has sole control over completed ballots. If the ballots are
designed so that members' identities remain secret and are not disclosed
on the ballot, FCUs may use election tellers from the FCU. In any case,
FCU employees, officials, and members must not have access to ballots
identifying members or to information that links members' votes to their
identities.

[v. Plurality Voting]{.underline}: At least one nominee must be
nominated for each vacant seat. When there are more nominees than seats
open for election, the nominees who receive the greatest number of votes
are elected to the vacant seats.

[vi. Minimum Age Requirement]{.underline}: The age the board selects may
not be greater than the age of majority under the state law applicable
to the credit union.

# 

# [Article VI. Board of Directors]{.underline} 

Section 1. [Number of members]{.underline}. The board consists of
\_\_\_\_\_ members, all of whom must be members of this credit union.
The number of directors may be changed to an odd number not fewer than 5
nor more than 15 by resolution of the board. No reduction in the number
of directors may be made unless corresponding vacancies exist as a
result of deaths, resignations, expiration of terms of office, or other
actions provided by these bylaws. A copy of the resolution of the board
covering any increase or decrease in the number of directors must be
filed with the official copy of the bylaws of this credit union.

Section 2. [Composition of board]{.underline}. \_\_\_\_\_\_\_(Fill in
the number, which may be zero) directors or committee members may be a
paid employee of the credit union. \_\_\_\_\_\_\_\_(Fill in the number,
which may be zero) immediate family members of a director or committee
member may be a paid employee of the credit union. In no case may
employees, family members, or employees and family members constitute a
majority of the board. The board may appoint a management official who
\_\_\_\_\_\_ (may or may not) be a member of the board and one or more
assistant management officials who \_\_\_\_\_\_(may or may not) be a
member of the board. If the management official or assistant management
official is permitted to serve on the board, he or she may not serve as
the chair.

Section 3. Terms of office. Regular terms of office for directors must
be for periods of either 2 or 3 years as the board determines. All
regular terms must be for the same number of years and until the
election and qualification of successors. Regular terms must be fixed at
the first meeting, or upon any increase or decrease in the number of
directors, so that approximately an equal number of regular terms must
expire at each annual meeting.

Section 4. [Vacancies]{.underline}. Any vacancy on the board, credit
committee, if applicable, or supervisory committee will be filled as
soon as possible by vote of a majority of the directors then holding
office. If all director positions become vacant simultaneously, the
supervisory committee immediately becomes the temporary board of
directors and must follow the procedures in Article IX, Section 3.
Directors and credit committee members appointed to fill a vacancy will
hold office only until the next annual meeting, at which any unexpired
terms will be filled by vote of the members, and until the qualification
of their successors. Members of the supervisory committee appointed to
fill a vacancy will hold office until the first regular meeting of the
board following the next annual meeting of members, at which the regular
term expires, and until the appointment and qualification of their
successors.

Section 5. [Regular and special meetings]{.underline}. A regular meeting
of the board must be held each month at the time and place fixed by
resolution of the board. One regular meeting each calendar year must be
conducted in person. If a quorum is present in person for the annual in
person meeting, the remaining board members may participate using audio
or video teleconference methods. The other regular meetings may be
conducted using audio or video teleconference methods. The chair, or in
the chair\'s absence the ranking vice chair, may call a special meeting
of the board at any time and must do so upon written request of a
majority of the directors then holding office. Unless the board
prescribes otherwise, the chair, or in the chair\'s absence the ranking
vice chair, will fix the time and place of special meetings. Notice of
all meetings will be given in the manner the board may from time to time
by resolution prescribe. Special meetings may be conducted using audio
or video teleconference methods.

Section 6. [Board responsibilities]{.underline}. The board has the
general direction and control of the affairs of this credit union and is
responsible for performing all the duties customarily performed by
boards of directors. This includes but is not limited to the following:

\(a\) Directing the affairs of the credit union in accordance with the
Act, these bylaws, the rules and regulations and sound business
practices.

\(b\) Establishing programs to achieve the purposes of this credit union
as stated in Article I, Section 2, of these bylaws.

\(c\) Establishing a loan collection program and authorizing the
chargeoff of uncollectible loans.

\(d\) Establishing a policy to address training for newly elected and
incumbent directors and volunteer officials, in areas such as ethics and
fiduciary responsibility, regulatory compliance, and accounting and
determining that all persons appointed or elected by this credit union
to any position requiring the receipt, payment or custody of money or
other property of this credit union, or in its custody or control as
collateral or otherwise, are properly bonded in accordance with the Act
and regulations.

\(e\) Performing additional acts and exercising additional powers as may
be required or authorized by applicable law.

*If the credit union has an elected credit committee, you do not need to
check a box. If the credit union has no credit committee check Option 1
and if it has an appointed credit committee check Option 2.*

\_\_ **   ** [Option 1 No Credit Committee]{.underline}.

\(f\) Reviewing denied loan applications of members who file written
requests for review.

\(g\) Appointing one or more loan officers and delegating to those
officers the power to approve or disapprove loans, lines of credit or
advances from lines of credit.

\(h\) In its discretion, appointing a loan review committee to review
loan denials and delegating to the committee the power to overturn
denials of loan applications. The committee will function as a mid-level
appeal committee for the board. Any denial of a loan by the committee
must be reviewed by the board upon written request of the member. The
committee must consist of three members and the regular term of office
of the committee member will be for two years. Not more than one member
of the committee may be appointed as a loan officer.

\_\_ **   **[Option 2 Appointed Credit Committee]{.underline}.

\(f\) Appointing an odd number of credit committee members as provided
in Article VIII of these bylaws.

Section 7. [Quorum]{.underline}. A majority of the number of directors,
including any vacant positions, constitutes a quorum for the transaction
of business at any meeting, except that vacancies may be filled by a
quorum consisting of a majority of the directors holding office as
provided in Section 4 of this article. Fewer than a quorum may adjourn
from time to time until a quorum is in attendance.

Section 8. [Attendance and removal]{.underline}. a. If a director or a
credit committee member, if applicable, fails to attend regular meetings
of the board or credit committee, respectively, for 3 consecutive
months, or 4 meetings within a calendar year, or otherwise fails to
perform any of the duties as a director or a credit committee member,
the office may be declared vacant by the board and the vacancy filled as
provided in the bylaws.

b\. The board may remove any board officer from office for failure to
perform the duties thereof, after giving the officer reasonable notice
and opportunity to be heard.

When any board officer, membership officer, executive committee member
or investment committee member is absent, disqualified, or otherwise
unable to perform the duties of the office, the board may by resolution
designate another member of this credit union to fill the position
temporarily. The board may also, by resolution, designate another member
or members of this credit union to act on the credit committee when
necessary in order to obtain a quorum.

Section 9. [Suspension of supervisory committee members]{.underline}.
Any member of the supervisory committee may be suspended by a majority
vote of the board of directors. The members of this credit union will
decide, at a special meeting held not fewer than 7 nor more than 14 days
after any suspension, whether the suspended committee member will be
removed from or restored to the supervisory committee.

# 

# Article VII. Board Officers, Management Officials and Executive Committee 

Section 1. [Board officers]{.underline}. The board officers of this
credit union are comprised of a chair, one or more vice chairs, a
financial officer, and a secretary, all of whom are elected by the board
and from their number. The board determines the title and rank of each
board officer and records them in the addendum to this article. One
board officer, the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, may be
compensated for services as determined by the board. If more than one
vice chair is elected, the board determines their rank as first vice
chair, second vice chair, and so on. The offices of the financial
officer and secretary may be held by the same person. If a management
official or assistant management official is permitted to serve on the
board, he or she may not serve as the chair. Unless removed as provided
in these bylaws, the board officers elected at the first meeting of the
board hold office until the first meeting of the board following the
first annual meeting of the members and until the election and
qualification of their respective successors.

Section 2. [Election and term of office]{.underline}. Board officers
elected at the meeting of the board next following the annual meeting of
the members, which must be held not later than 7 days after the annual
meeting, hold office for a term of 1 year and until the election and
qualification of their respective successors: provided, however, that
any person elected to fill a vacancy caused by the death, resignation,
or removal of an officer is elected by the board to serve only for the
unexpired term of that officer and until a successor is duly elected and
qualified.

Section 3. [Duties of Chair]{.underline}. The chair presides at all
meetings of the members and at all meetings of the board, unless
disqualified through suspension by the supervisory committee. The chair
also performs other duties customarily assigned to the office of the
chair or duties he or she is directed to perform by resolution of the
board not inconsistent with the Act and regulations and these bylaws.

Section 4. [Approval required]{.underline}. The board must approve all
individuals who are authorized to sign all notes of this credit union
and all checks, drafts and other orders for disbursement of credit union
funds.

Section 5. [Vice chair]{.underline}. The ranking vice chair has and may
exercise all the powers, authority, and duties of the chair during the
chair\'s absence or inability to act.

Section 6. [Duties of financial officer]{.underline}. i. The financial
officer manages this credit union under the control and direction of the
board unless the board has appointed a management official to act as
general manager. Subject to limitations, controls and delegations the
board may impose, the financial officer will:

\(a\) Have custody of all funds, securities, valuable papers and other
assets of this credit union.

\(b\) Provide and maintain full and complete records of all the assets
and liabilities of this credit union in accordance with forms and
procedures prescribed in regulations and other guidance approved by the
Administration, including, for small credit unions, the Accounting
Manual for Federal Credit Unions.

\(c\) Within 20 days after the close of each month, ensure that a
financial statement showing the condition of this credit union as of the
end of the month, including a summary of delinquent loans is prepared
and submitted to the board and post a copy of the statement in a
conspicuous place in the office of the credit union where it will remain
until replaced by the financial statement for the next succeeding month.

\(d\) Ensure that financial and other reports the Administration may
require are prepared and sent.

\(e\) Within standards and limitations prescribed by the board, employ
tellers, clerks, bookkeepers, and other office employees, and have the
power to remove these employees.

\(f\) Perform other duties customarily assigned to the office of the
financial officer or duties he or she is directed to perform by
resolution of the board not inconsistent with the Act, regulations and
these bylaws.

ii\. The board may employ one or more assistant financial officers, none
of whom may also hold office as chair or vice chair, and may authorize
them, under the direction of the financial officer, to perform any of
the duties devolving on the financial officer, including the signing of
checks. When designated by the board, any assistant financial officer
may also act as financial officer during the financial officer\'s
temporary absence or temporary inability to act.

Section 7. [Duties of management official and assistant management
official]{.underline}. The board may appoint a management official who
is under the direction and control of the board or of the financial
officer as determined by the board. The management official may be
assigned any or all of the responsibilities of the financial officer
described in Section 6 of this article. The board will determine the
title and rank of each management official and record them in the
addendum to this article. The board may employ one or more assistant
management officials. The board may authorize assistant management
officials under the direction of the management official, to perform any
of the duties devolving on the management official, including the
signing of checks. When designated by the board, any assistant
management official may also act as management official during the
management official\'s temporary absence or temporary inability to act.

Section 8. [Board powers regarding employees]{.underline}. The board
employs, fixes the compensation, and prescribes the duties of employees
as necessary, and has the power to remove employees, unless it has
delegated these powers to the financial officer or management official.
Neither the board, the financial officer, nor the management official
has the power or duty to employ, prescribe the duties of, or remove
necessary clerical and auditing assistance employed or used by the
supervisory committee and, if there is a credit committee, the power or
duty to employ, prescribe the duties of, or remove any loan officer
appointed by the credit committee.

Section 9. [Duties of secretary]{.underline}. The secretary prepares and
maintains full and correct records of all meetings of the members and of
the board, which records will be prepared within 7 days after the
respective meetings. The secretary must promptly inform the
Administration in writing of any change in the address of the office of
this credit union or the location of its principal records. The
secretary will give or cause to be given, in the manner prescribed in
these bylaws, proper notice of all meetings of the members, and perform
other duties he or she may be directed to perform by resolution of the
board not inconsistent with the Act, regulations and these bylaws. The
board may employ one or more assistant secretaries, none of whom may
also hold office as chair, vice chair, or financial officer, and may
authorize them under direction of the secretary to perform any of the
duties assigned to the secretary.

Section 10. [Executive committee]{.underline}. As authorized by the Act,
the board may appoint an executive committee of not fewer than three
directors to serve at its pleasure, to act for it with respect to the
board's specifically delegated functions. When making delegations to the
executive committee, the board must be specific with regard to the
committee's authority and limitations related to the particular
delegation. The board may also authorize any of the following to approve
membership applications under conditions the board and these bylaws may
prescribe: an executive committee; a membership officer(s) appointed by
the board from the membership, other than a board member paid as an
officer; the financial officer; any assistant to the paid officer of the
board or to the financial officer; or any loan officer. No executive
committee member or membership officer may be compensated as such.

Section 11. [Investment committee]{.underline}. The board may appoint an
investment committee composed of not less than two, to serve at its
pleasure to have charge of making investments under rules and procedures
established by the board. No member of the investment committee may be
compensated as such.

Addendum: The board must list the positions of the board officers and
management officials of this credit union. They are as follows:

*Select Option 1 if the credit union has a credit committee and Option 2
if it does not have a credit committee.*

\_\_ **   **[Article VII, Option 1. Credit Committee]{.underline}

Section 1. [Credit committee members]{.underline}. The credit committee
consists of \_\_\_\_\_ members. All the members of the credit committee
must be members of this credit union. The number of members of the
credit committee must be an odd number and may be changed to not fewer
than 3 nor more than 7 by resolution of the board. No reduction in the
number of members may be made unless corresponding vacancies exist as a
result of deaths, resignations, expiration of terms of office, or other
actions provided by these bylaws. A copy of the resolution of the board
covering any increase or decrease in the number of committee members
must be filed with the official copy of the bylaws of this credit union.

Section 2. [Terms of office]{.underline}. Regular terms of office for
elected credit committee members are for periods of either 2 or 3 years
as the board determines: provided, however, that all regular terms are
for the same number of years and until the election and qualification of
successors. The regular terms are fixed at the beginning, or upon any
increase or decrease in the number of committee members, that
approximately an equal number of regular terms expire at each annual
meeting.

Regular terms of office for appointed credit committee members are for
periods as determined by the board and as noted in the board\'s minutes.

Section 3. [Officers of credit committee]{.underline}. The credit
committee chooses from their number a chair and a secretary. The
secretary of the committee prepares and maintains full and correct
records of all actions taken by it, and those records must be prepared
within 3 days after the action. The offices of the chair and secretary
may be held by the same person.

Section 4. [Credit committee powers]{.underline}. The credit committee
may, by majority vote of its members, appoint one or more loan officers
to serve at its pleasure, and delegate to them the power to approve
application for loans or lines of credit, share withdrawals, releases
and substitutions of security, within limits specified by the committee
and within limits of applicable law and regulations. Not more than one
member of the committee may be appointed as a loan officer. Each loan
officer must furnish to the committee a record of each approved or not
approved transaction within 7 days of the date of the filing of the
application or request, and this record becomes a part of the records of
the committee. All applications or requests not approved by a loan
officer must be acted upon by the committee. No individual may disburse
funds of this credit union for any application or share withdrawal which
the individual has approved as a loan officer.

Section 5. [Credit committee meetings]{.underline}. The credit committee
holds meetings as the business of this credit union may require, and not
less frequently than once a month. Notice of meetings will be given to
members of the committee in a manner as the committee may from time to
time, by resolution, prescribe.

Section 6. [Credit committee duties]{.underline}. For each loan or line
of credit, the credit committee or loan officer must inquire into the
character and financial condition of the applicant and the applicant\'s
sureties, if any, to ascertain their ability to repay fully and promptly
the obligations incurred by them and to determine whether the loan or
line of credit will be of probable benefit to the borrower. The credit
committee and its appointed loan officers should endeavor diligently to
assist applicants in solving their financial problems.

Section 7. [Unapproved loans prohibited]{.underline}. No loan or line of
credit may be made unless approved by the committee or a loan officer in
accordance with applicable law and regulations.

Section 8. [Lending procedures]{.underline}. Subject to the limits
imposed by applicable law and regulations, these bylaws, and the general
policies of the board, the credit committee, or a loan officer,
determines the security, if any, required for each application and the
terms of repayment. The security furnished must be adequate in quality
and character and consistent with sound lending practices. When funds
are not available to make all the loans and lines of credit for which
there are applications, preference should be given, in all cases, to the
smaller applications if the need and credit factors are nearly equal.

\_\_ **   **[Article VIII, Option 2. Loan Officers (No Credit
Committee)]{.underline}

Section 1. [Records of loan officer; prohibition on loan officer
disbursing funds]{.underline}. Each loan officer must maintain a record
of each approved or not approved transaction within 7 days of the filing
of the application or request, and that record becomes a part of the
records of the credit union. No individual may disburse funds of this
credit union for any application or share withdrawal which the
individual has approved as a loan officer.

Section 2. [Duties of loan officer]{.underline}. For each loan or line
of credit, the loan officer must inquire into the character and
financial condition of the applicant and the applicant\'s sureties, if
any, to ascertain their ability to repay fully and promptly the
obligations incurred by them and to determine whether the loan or line
of credit will be of probable benefit to the borrower. The loan officers
should endeavor diligently to assist applicants in solving their
financial problems.

Section 3. [Unapproved loans prohibited]{.underline}. No loan or line of
credit may be made unless approved by a loan officer in accordance with
applicable law and regulations.

Section 4. [Lending procedures]{.underline}. Subject to the limits
imposed by law and regulations, these bylaws, and the general policies
of the board, a loan officer determines the security if any required for
each application and the terms of repayment. The security furnished must
be adequate in quality and character and consistent with sound lending
practices. When funds are not available to make all the loans and lines
of credit for which there are applications, preference should be given,
in all cases, to the applications for lesser amounts if the need and
credit factors are nearly equal.

# 

# Article IX. Supervisory Committee 

Section 1. [Appointment and membership]{.underline}. The supervisory
committee is appointed by the board from among the members of this
credit union, one of whom may be a director other than the financial
officer or the compensated officer of the board. The board determines
the number of members on the committee, which may not be fewer than 3
nor more than 5. No member of the credit committee, if applicable, or
any employee of this credit union may be appointed to the committee.
Regular terms of committee members are for periods of 1, 2, or 3 years
as the board determines: provided, however, that all regular terms are
for the same number of years and until the appointment and qualification
of successors. The regular terms are fixed at the beginning, or upon any
increase or decrease in the number of committee members, so that
approximately an equal number of regular terms expires at each annual
meeting.

Section 2. [Officers of supervisory committee]{.underline}. The
supervisory committee members choose from among their number a chair and
a secretary. The secretary of the supervisory committee prepares,
maintains, and has custody of full and correct records of all actions
taken by it. The offices of chair and secretary may be held by the same
person.

Section 3. [Duties of supervisory committee]{.underline}. a. The
supervisory committee makes, or causes to be made, the audits, and
prepares and submits the written reports required by the Act and
regulations. The committee may employ and use clerical and auditing
assistance required to carry out its responsibilities prescribed by this
article, and may request the board to provide compensation for this
assistance. It will prepare and forward to the Administration required
reports.

b\. If all director positions become vacant simultaneously, the
supervisory committee immediately assumes the role of the board of
directors. The supervisory committee acting as the board must generally
call and hold a special meeting to elect a board that will serve until
the next annual meeting. The special meeting must occur at least 7 but
no more than 14 days after all director positions became vacant, and
candidates for the board at the special meeting may be nominated by
petition or from the floor. However, if the next annual meeting has been
scheduled and will occur within 45 days after all the director positions
become vacant, the supervisory committee may decide to forego the
special meeting and continue serving as the board until the election of
new directors at the annual meeting.

c\. If the next annual meeting has not been scheduled, but the month and
day of the previous year's meeting plus 7 days falls within 45 days
after all the director positions become vacant, the supervisory
committee acting as the board may decide to forego the special meeting
to elect new directors. In this case, the supervisory committee must
schedule the annual meeting within 7 days before or after the month and
day of the previous annual meeting and continue to serve as the board
until directors are elected at the annual meeting.

d\. The supervisory committee acting as the board may not act on policy
matters. However, directors elected at a special meeting have the same
powers as directors elected at the annual meeting.

Section 4. [Verification of accounts]{.underline}. The supervisory
committee will cause the verification of the accounts of members with
the records of the financial officer from time to time and not less
frequently than as required by the Act and regulations. The committee
must maintain a record of this verification.

Section 5. [Powers of supervisory committee -- removal of directors and
credit committee members]{.underline}. By unanimous vote, the
supervisory committee may suspend until the next meeting of the members
any director, board officer, or member of the credit committee. In the
event of any suspension, the supervisory committee must call a special
meeting of the members to act on the suspension, which meeting must be
held not fewer than 7 nor more than 14 days after the suspension. The
chair of the committee acts as chair of the meeting unless the members
select another person to act as chair.

Section 6. [Powers of supervisory committee \-- special
meetings]{.underline}. By the affirmative vote of a majority of its
members, the supervisory committee may call a special meeting of the
members to consider any violation of the provisions of the Act, the
regulations, or of the charter or the bylaws of this credit union, or to
consider any practice of this credit union which the committee deems to
be unsafe or unauthorized.

# 

# Article X. Organization Meeting 

Section 1. [Initial meeting]{.underline}. When application is made for a
federal credit union charter, the subscribers to the organization
certificate must meet for the purpose of electing a board of directors
and a credit committee, if applicable. Failure to commence operations
within 60 days following receipt of the approved organization
certificate is cause for revocation of the charter unless a request for
an extension of time has been submitted to and approved by the Regional
Director.

Section 2. [Election of directors and credit committee]{.underline}. The
subscribers elect a chair and a secretary for the meeting. The
subscribers then elect from their number, or from those eligible to
become members of this credit union, a board of directors and a credit
committee, if applicable, all to hold office until the first annual
meeting of the members and until the election and qualification of their
respective successors. If not already a member, every person elected
under this section or appointed under Section 3 of this article, must
qualify within 30 days by becoming a member. If any person elected as a
director or committee member or appointed as a supervisory committee
member does not qualify as a member within 30 days of election or
appointment, the office will automatically become vacant and be filled
by the board.

Section 3. [Election of board officers]{.underline}. Promptly following
the elections held under the provisions of Section 2 of this article,
the board must meet and elect the board officers who will hold office
until the first meeting of the board of directors following the first
annual meeting of the members and until the election and qualification
of their respective successors. The board also appoints a supervisory
committee at this meeting as provided in Article IX, Section 1, of these
bylaws and a credit committee, if applicable. The members so appointed
hold office until the first regular meeting of the board following the
first annual meeting of the members and until the appointment and
qualification of their respective successors.

# 

# [Article XI. Loans and Lines of Credit to Members]{.underline} 

Section 1. [Loan purposes]{.underline}. Loans may only be made to
members and for provident or productive purposes in accordance with
applicable law and regulations.

*The credit union may add business as one of its purposes by placing a
comma after "provident" and inserting "business."*

Section 2. [Delinquency]{.underline}. Any member whose loan is
delinquent may be required to pay a late charge as determined by the
board of directors.

# 

# Article XII. Dividends 

Section 1. [Power of board to declare dividends]{.underline}. The board
establishes dividend periods and declares dividends as permitted by the
Act and applicable regulations.

# 

# [Article XIII. RESERVED]{.underline}

# 

# [Article XIV. Expulsion and Withdrawal]{.underline} 

Section 1. [Expulsion procedure; expulsion or withdrawal does not affect
members' liability or shares]{.underline}. A member may be expelled by a
two-thirds vote of the members present at special meeting called for
that purpose, but only after the member has been given the opportunity
to be heard. A member also may be expelled under a nonparticipation
policy adopted by the board of directors and provided to each member in
accordance with the Act. Expulsion or withdrawal will not operate to
relieve a member of any liability to this credit union. All amounts paid
in on shares by expelled or withdrawing members, before their expulsion
or withdrawal, will be paid to them in the order of their withdrawal or
expulsion, but only as funds become available and only after deducting
any amounts due to this credit union.

# 

# [Article XV. Minors]{.underline} 

Section 1. [Minors permitted to own shares]{.underline}. Shares may be
issued in the name of a minor. State law governs the rights of minors to
transact business with this credit union.

# 

# [Article XVI. General]{.underline} 

Section 1. [Compliance with law and regulation]{.underline}. All power,
authority, duties, and functions of the members, directors, officers,
and employees of this credit union, pursuant to the provisions of these
bylaws, must be exercised in strict conformity with the provisions of
applicable law and regulations, and of the charter and the bylaws of
this credit union.

Section 2. [Confidentiality]{.underline}. The officers, directors,
members of committees and employees of this credit union must hold in
confidence all transactions of this credit union with its members and
all information respecting their personal affairs, except when permitted
by state or federal law.

Section 3. [Removal of directors and committee members]{.underline}.
Notwithstanding any other provisions in these bylaws, any director or
committee member of this credit union may be removed from office by the
affirmative vote of a majority of the members present at a special
meeting called for the purpose, but only after an opportunity has been
given to be heard. If member votes at a special meeting result in the
removal of all directors, the supervisory committee immediately becomes
the temporary board of directors and must follow the procedures in
Article IX, Section 3.

Section 4. [Conflicts of interest prohibited]{.underline}. No director,
committee member, officer, agent, or employee of this credit union may
participate in any manner, directly or indirectly, in the deliberation
upon or the determination of any question affecting his or her pecuniary
or personal interest or the pecuniary interest of any corporation,
partnership, or association (other than this credit union) in which he
or she is directly or indirectly interested. In the event of the
disqualification of any director respecting any matter presented to the
board for deliberation or determination, that director must withdraw
from the deliberation or determination; and if the remaining qualified
directors present at the meeting plus the disqualified director or
directors constitute a quorum, the remaining qualified directors may
exercise with respect to this matter, by majority vote, all the powers
of the board. In the event of the disqualification of any member of the
credit committee, if applicable, or the supervisory committee, that
committee member must withdraw from the deliberation or determination.

Section 5. [Records]{.underline}. Copies of the organization certificate
of this credit union, its bylaws and any amendments to the bylaws, and
any special authorizations by the Administration must be preserved in a
place of safekeeping. Copies of the organization certificate and field
of membership amendments should be attached as an appendix to these
bylaws. Returns of nominations and elections and proceedings of all
regular and special meetings of the members and directors must be
recorded in the minute books of this credit union. The minutes of the
meetings of the members, the board, and the committees must be signed by
their respective chairmen or presiding officers and by the persons who
serve as secretaries of those meetings.

Section 6. [Availability of credit union records]{.underline}. All books
of account and other records of this credit union must be available at
all times to the directors and committee members of this credit union
provided they have a proper purpose for obtaining the records. The
charter and bylaws of this credit union must be made available for
inspection by any member and, if the member requests a copy, it will be
provided for a reasonable fee.

Section 7. [Member contact information]{.underline}. Members must keep
the credit union informed of their current address.

Section 8. [Indemnification]{.underline}. (a) The credit union may elect
to indemnify to the extent authorized by (check one)

\[ \] law of the state of \_\_\_\_\_\_\_\_\_\_:

\[ \] Model Business Corporation Act:

the following individuals from any liability asserted against them and
expenses reasonably incurred by them in connection with judicial or
administrative proceedings to which they are or may become parties by
reason of the performance of their official duties (check as
appropriate).

\[ \] current officials

\[ \] former officials

\[ \] current employees

\[ \] former employees

\(b\) The credit union may purchase and maintain insurance on behalf of
the individuals indicated in (a) above against any liability asserted
against them and expenses reasonably incurred by them in their official
capacities and arising out of the performance of their official duties
to the extent such insurance is permitted by the applicable state law or
the Model Business Corporation Act.

\(c\) The term \"official\" in this bylaw means a person who is a member
of the board of directors, credit committee, supervisory committee,
other volunteer committee (including elected or appointed loan officers
or membership officers), established by the board of directors.

# 

# [Article XVII. Amendments of Bylaws and Charter]{.underline} 

Section 1. [Amendment procedures]{.underline}. Amendments of these
bylaws may be adopted and amendments of the charter requested by the
affirmative vote of two-thirds of the authorized number of members of
the board at any duly held meeting of the board if the members of the
board have been given prior written notice of the meeting and the notice
has contained a copy of the proposed amendment or amendments. No
amendment of these bylaws or of the charter may become effective,
however, until approved in writing by the NCUA Board.

# 

# [Article XVIII. Definitions]{.underline} 

Section 1. [General definitions]{.underline}. When used in these bylaws
the terms:

"Act\" means the Federal Credit Union Act, as amended.

\"Administration\" means the National Credit Union Administration.

\"Applicable law and regulations\" means the Federal Credit Union Act
and rules and regulations issued thereunder or other applicable federal
and state statutes and rules and regulations issued thereunder as the
context indicates (such as The Higher Education Act of 1965).

\"Board\" means board of directors of the federal credit union.

\"Immediate family member\" means spouse, child, sibling, parent,
grandparent, grandchild, stepparents, stepchildren, stepsiblings, and
adoptive relationships.

"NCUA Board\" means the Board of the National Credit Union
Administration.

\"Regulation\" or \"regulations\" means rules and regulations issued by
the NCUA Board.

\"Share\" or \"shares\" means all classes of shares and share
certificates that may be held in accordance with applicable law and
regulations.