NATIONAL CREDIT UNION ADMINISTRATION

NCUA

CHARTERING AND

 FIELD OF MEMBERSHIP

MANUAL
1

NCUA

CHARTERING

AND

FIELD OF MEMBERSHIP

MANUAL 7/94

National Credit Union Administration

NCUA 8007/M6001 (Revised 7-94)

NCUA-FM - PREFACE 7/94

This manual sets forth the National Credit Union Administration's (NCUA)

current policies and procedures for granting and permitting change to a

federal credit union charter. Chapters 1 through 3, and Appendices A

through F were adopted by the National Credit Union Administration Board

on May 12, 1994, as Interpretive Ruling and Policy Statement (IRPS) 94-

1. This version of the manual replaces the December 1989 version, which

was based on the NCUA Board's prior policy statement on chartering and

field of membership, IRPS 89-1. We hope it will be of help whether you

are learning about credit unions for the first time or have long been

part of the credit union community.

In setting the policies and procedures contained in this manual, we have

been guided by three goals:

• To provide a flexible regulatory environment to facilitate credit

union development consistent with the Federal Credit Union Act and

ensuring credit union safety and soundness;

• To implement internal policies and procedures that will enable

NCUA staff to respond quickly, flexibly, effectively and

consistently to chartering and charter amendment requests; and

• To make quality credit union service available to all eligible

groups who wish to have it.

The manual has an introductory section, three chapters and six

appendices. The Introduction, designed primarily for those who are

unfamiliar with credit unions, outlines the history of these unique

financial cooperatives and the development of the state and federal

systems that charter, regulate and supervise them, and that insure their

members' "shares," or deposits.

Chapter 1, "Federal Credit Union Chartering," sets forth what

characteristics a group must have and what the group must do to obtain a

federal credit union charter. In the course of taking a group step-bystep through the chartering process, this chapter defines the different

kinds of credit unions Congress has provided for and how they fit

together to form a single community.

Chapter 2, "Amendments to the Field of Membership," describes how an

existing federal credit union may make what has become the most common

change in its charter - an amendment to Section 5, which specifies the

field of membership it is authorized to serve. The chapter discusses

each of the three main ways such a change occurs: (1) addition of a

group which is seeking credit union service; (2) merger of existing

credit unions; and (3) acquisition of certain assets, liabilities and

shares of a liquidated credit union.
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Chartering and Field of Membership Manual

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Chapter 3, "Charter Conversions," shows how a credit union can convert

to and from a federal charter. There is a dual system of chartering in

the United States; nearly all the states offer a state-regulated

alternative to a federal credit union charter. NCUA firmly supports this

dual system, and strives to make conversions as simple as possible,

consistent with the Federal Credit Union Act.

The manual also includes six appendices. Appendix A is a glossary of key

terms used in this manual. Appendix B is a sample Letter of

Understanding and Agreement entered into with a newly chartered credit

union. Appendix C is a list of NCUA regional offices to which inquiries

may be directed. Appendix D comprises the forms referred to in the

manual -- the forms for a new federal charter application; for federalto-state and state-to-federal charter conversions; and for requesting a

field of membership or other charter amendment. Appendix E is a

discussion of controls which should be placed on agents outside the

credit union's organization which solicit field of membership

amendments. Appendix F is a list of some of the main credit union trade

organizations which are available to assist groups in obtaining a

federal credit union charter and to help existing federal credit unions

in expanding their fields of membership. This list is not exhaustive; it

is intended only as a starting point.

NORMAN E. D'AMOURS Chairman, NCUA Board

SHIRLEE BOWNE Vice Chairman, NCUA Board

YOLANDA TOWNSEND WHEAT Board Member
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Chartering and Field of Membership Manual

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NCUA-FM - INTRODUCTION 7/94

A credit union is a member-owned, member-controlled, not-for-profit

cooperative financial institution formed to permit groups of persons to

save, borrow, and obtain related financial services and to participate

in its management. Member ownership and control are what make credit

unions unique.

The cooperative movement in financial institutions was born in Europe

during the mid-1800s. The first credit union was organized in Belgium in

1848 during a period of severe economic depression. At the same time,

cooperative credit societies were being developed in Germany to provide

a self-help vehicle for the shopkeepers, urban workers, and farmers who

had been forced to pay usurious rates charged by the area money lenders.

In all cases, these cooperative institutions were democratically

controlled, were open to voluntary membership, and had all capital

coming from the savings of the participants.

By 1900, the financial cooperative idea had spread to Canada, and in

1909, the first credit union was organized in the United States. By

1935, 38 states and the District of Columbia had laws permitting the

establishment of credit unions, and over 3,000 were in existence.

In 1934, Congress passed the Federal Credit Union Act "to establish a

Federal Credit Union System, to establish a further market for

securities of the United States and to make more available to people of

small means, credit for provident purposes through a national system of

cooperative credit, thereby helping to stabilize the credit structure of

the United States." That Act set the basic structure which governs

federal credit unions today:

• Each credit union is funded by shares purchased by its members.

The purchase of a share allows the member to become an owner with

the right to vote.

• Membership is limited to groups, each defined in the credit

union's charter, who share a common bond of occupation or

association, or are located within a well-defined neighborhood,

community, or rural district.

• Member control is democratically exercised regardless of the

number of shares held. No member has more than one vote.

• Management is placed in the hands of volunteers. Only one board

officer may be compensated. No other member of the board of

directors or any other committee member shall, as such, be

compensated.

• Loans, which are the primary investment for credit unions, are

made exclusively to members.

The passage of the Federal Credit Union Act established an

administrative structure within the federal government for the

supervision of federal credit unions. This structure was administered by

a succession of federal agencies over the years until Public Law 91-206

was enacted in 1970. This law formed the National Credit Union

Administration (NCUA) as an independent agency with responsibility for

regulating and chartering federal credit unions.

Also in that year, Congress established the National Credit Union Share

Insurance Fund within NCUA to insure the shares of all federal credit

unions and participating state credit unions. The Fund is backed by the

full faith and credit of the U.S. Government.
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In 1978, the Federal Credit Union Act was amended to establish a three

member board, appointed by the President, to head NCUA.

Today, most groups seeking to form or participate in a financial

cooperative have a choice between state and federal regulators. The

result has been unparalleled growth in the credit union movement and a

rich tapestry of credit unions successfully serving the needs of their

members -- from a small cooperative serving employees in a factory or

members of a church, maintained in one of the members' homes, to a

multi-billion dollar cooperative providing members around the world with

a full complement of financial services.

This growth and diversity has required flexibility on NCUA's part to

ensure that federal credit unions are able to meet the demands of the

changing environment in which they operate. As credit unions and the

financial world evolve, NCUA will continue to update its chartering

policies to ensure that federal credit unions have the tools to fully

serve their members.
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NCUA-FM - CHAPTER 1 -- FEDERAL CREDIT UNION CHARTERING 7/94

NCUA-FM - I -- GOALS OF NCUA CHARTERING POLICY 7/94

NCUA's chartering policies are directed toward achieving three goals:

• to uphold the provisions of the Federal Credit Union Act

concerning granting federal charters;

• to promote credit union safety and soundness; and

• to make quality credit union service available to all eligible

groups who wish to have it.

NCUA may grant a charter to any group or combination of groups desiring

credit union service where it finds:

• the group or groups possess an appropriate common bond;

• the subscribers are of good character and are fit to represent the

group; and

• establishment of the credit union is economically advisable -

i.e., it will be a viable institution and its chartering will not

materially affect the interests of other credit unions or the

credit union system.

Generally, these are the only criteria NCUA will look to. In unusual

circumstances, however, NCUA may consider other factors, such as other

federal law or public policy, in deciding if a charter should be

approved.

NCUA-FM - II -- COMMON BOND 7/94

Congress, in the Federal Credit Union Act, has recognized three types of

federal credit union common bonds -- occupational, associational, and

community. A federal credit union may also consist of a combination of

occupational, associational, and, in certain limited circumstances,

community groups. For example, NCUA may charter a federal credit union

consisting of employees of a local school district and members of a

church group.

The Federal Credit Union Act and NCUA recognize that individual groups

have their own common bond. All of the groups belonging to one

particular credit union included in Section 5 of the credit union's

charter make up the credit union's field of membership. If the charter

is granted, the federal credit union will only be able to grant loans

and provide services to persons within the groups defined in the field

of membership.

If a federal credit union later wishes to add persons to its field of

membership, it must comply with the procedures set forth in Chapter 2.

NCUA-FM - II.A -- Occupational Common Bonds 7/94

II.A.1 -- General

A federal credit union may include in a single occupational common bond,

regardless of location, any and all persons who share that common bond.

NCUA permits a person's membership in an occupational common bond to be

established in a number of ways:

• Employment (or a long-term contractual relationship equivalent to

employment) in a single corporation or other legal entity makes

that person part of an occupational common bond of employees of

the entity.
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• Employment in a corporation or other legal entity with an

ownership interest in or by another legal entity makes that person

part of an occupational common bond of employees of the two

entities.

• Employment in a corporation or other legal entity which is related

to another legal entity (such as a company under contract and

possessing a strong dependency relationship with another company)

makes that person part of an occupational common bond of employees

of the two entities.

A proposed federal credit union must supply documentation from as many

authorized representatives as are needed to establish that all persons

to be included in a single occupational common bond are in fact linked

in one of the ways described above.

An occupational common bond must include a geographic definition, e.g.,

"employees, officials, and persons who work regularly under contract in

Miami, Florida for ABC Corporation or any of these majority-owned

subsidiaries...." Other acceptable geographic definitions are:

"employees of ... who are paid from..." or "employees of ... who are

supervised from...." To the maximum extent possible, setting geographic

definitions by changeable corporate or division boundary - e.g.,

"employees of Federal Reserve District 6" - is to be avoided.

So that NCUA can monitor any potential field of membership overlaps,

each group to be served (e.g., employees of subsidiaries, franchisees,

and contractors) may be separately listed.

The employer may also be included in this common bond - e.g., "ABC

Corporation and its subsidiaries." The employer group will be defined in

the last clause describing the field of membership.

II.A.2 -- Sample Occupational Fields of Membership

Some examples of occupational group definitions are:

• "Employees of the Scott Manufacturing Company who work in Chester,

Pennsylvania..." (common bond - same employer)

• "Employees and elected and appointed officials of the municipal

government in Parma, Ohio..." (common bond - same employer)

• "Employees of Johnson Soap Company and its majority-owned

subsidiary, Johnson Toothpaste Company, who work in Augusta and

Portland, Maine..." (common bond - parent and majority-owned

subsidiary company)

• "Personnel of fleet units of the U.S. Navy home ported at Mayport,

Florida..." (common bond - same employer)

• "Department of Defense civilian and U.S. Army personnel who work

or are stationed at, or are attached or assigned to Fort Belvoir,

Virginia, or those who are retired from, or their dependents or

dependent survivors who are eligible by law or regulation to

receive and are receiving benefits or services from, that military

installation..." (common bond - same employer)

• "Employees of those contractors who work regularly at U.S. Naval

Shipyard in Bremerton, Washington..." (common bond - employees of

contractors)

• "Employees, doctors, medical staff, technicians, medical and

nursing students who work at Boston Medical Center at the

locations stated..." (common bond - same employer)
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• "Employees and teachers who work for the School District Number 3

in Austin, Texas..." (common bond - same employer)

• "Employees of the JKL Employee Leasing Company who are paid from

Lake Charles, Louisiana..." (common bond - same employer)

• "Employees of JKL, Inc. and STU, Inc. working for the XYZ Joint

Venture Company in Los Gatos, California..."

Some examples of insufficiently defined occupational groups are:

• "Employees of engineering firms in Seattle, Washington." (Not the

same occupational common bond, since various firms compete against

one another; names of firms must be stated; however, may be the

basis for a multiple group charter.)

• "Persons employed or working in Chicago, Illinois." (No common

bond; names of firms must be stated.)

• "Persons working in the entertainment industry in California." (No

occupational common bond, since firms compete against one another;

names of firms must be stated.)

NCUA-FM - II.B -- Associational Common Bonds 7/94

II.B.1 -- General

A federal credit union may include in its field of membership,

regardless of location, all members of a recognized association.

NCUA limits this common bond to groups consisting primarily of

individuals (natural persons) who participate in activities developing

common loyalties, mutual benefits, and mutual interests. Except for

student, church, and similar groups, all associational common bonds will

include a definition of the group that may be served based on the

effective date of the association's charter and bylaws and a geographic

limitation. Therefore, with the exceptions noted above, applicants for

an associationally-based federal credit union charter must provide a

copy of the association's charter and bylaws.

Qualifying associational groups must hold meetings open to all natural

person members at least once a year, must sponsor other activities which

clearly demonstrate that the members of the group meet and interact

regularly to accomplish the objectives of the association, and must have

an authoritative definition of who is eligible for membership - usually,

this will be the association's charter and bylaws.

In determining whether a group satisfies the common bond requirement for

a federal credit union charter, NCUA will consider the totality of the

circumstances -- such as whether members pay dues, have voting rights,

and hold office, whether the group maintains a membership list, the

clarity of the associational group's definition and compactness of its

membership, and the frequency of meetings and the interaction of

members. A support group, whose members are continually changing, may

not meet the criteria.

NCUA's focus with respect to chartering associational federal credit

unions will be on the group's natural person members. In certain

instances, however, NCUA will also allow nonnatural persons (e.g.,

corporate sponsors, entities participating in programs to alleviate

poverty and distress, or organizations of members) to be eligible for

membership. It is not necessary that every nonnatural person member of

the group be a recognized legal entity; NCUA will consider such groups

on a case-by-case basis.
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Student groups -- for example, parent-teacher organizations, alumni

associations, and students in a trade school or other curriculum -- and

church groups constitute associational common bonds and may qualify for

a federal credit union charter. Since such groups usually do not have a

formal association charter, there is no requirement for these groups to

provide a charter or bylaws.

Homeowner associations, tenant groups, electric co-ops, consumer groups

and other groups of persons having an "interest in" a particular cause

and certain consumer cooperatives may be eligible to receive a federal

charter. However, they must make a strong showing of common activities

which clearly demonstrate that the group meets and interacts regularly

to accomplish the objectives of the association. Furthermore, they must

provide clear evidence of economic viability.

Newly-organized associations must make a similar strong showing of

common activities. Experience has shown that a new group's efforts are

best focused on solidifying member interest before attempting to offer

credit union service.

The associational sponsor itself may also be included in the field of

membership - e.g., "ABC Association" - and will be shown in the last

clause of the field of membership.

II.B.2 -- Subsequent Changes to Association's Bylaws

If the association's membership or geographical definition in its

charter and bylaws is changed subsequent to the effective date stated in

the field of membership, the credit union must submit the revised

charter or bylaws for NCUA's consideration prior to serving members of

the association added as a result of the change. This type of field of

membership amendment will require following the select group amendment

procedures discussed in Chapter 2.

II.B.3 -- Widely Dispersed Associational Charters

NCUA policy is to charter associational federal credit unions at the

lowest organizational level which is economically feasible. NCUA will

grant associational charters with widely dispersed memberships only

where clearly demonstrated to be in the best interests of the

association's members and the credit union community, and only after

scrutinizing the adequacy of the applicant's common bond and the

economic advisability of a more compact field of membership. NCUA, in

its discretion, may require that the proposed field of membership be

narrowed before granting a new charter. Amendment to include a larger

portion of the association's members may be allowed at a later time, if

appropriate.

Also, as with any widely dispersed group, overlap issues are likely to

arise, either at the time of or subsequent to chartering. NCUA will

consider the effect that granting a charter with such a group in its

field of membership would have on any number of existing credit unions.

In addition, an associational credit union with a widely dispersed

membership may expect overlaps, particularly at the local level, to be

granted to other credit unions in the future.

In recognition of these unique circumstances, NCUA follows a separate

internal procedure for associational charter applications for

associations with proposed fields of membership of 500 or more persons

which cross NCUA regional boundaries. NCUA's Director of Examination and

Insurance and all NCUA regional directors with any of the association's

members located in their region must vote on the charter application. A

majority vote is required for approvals. Tie votes are referred directly

to the NCUA Board for decision.
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II.B.4 -- Limits of Associational Common Bond

Except for retiree clubs and low-income groups (discussed below),

associations formed primarily to obtain a federal credit union charter

do not have a sufficient associational common bond. Similarly,

associations based on a client-customer relationship - for example, an

insurance company and its customers or a buyer's club and its members -

do not have a sufficient associational common bond.

The common bond extends only to the association's members. The employees

of a member of a local chamber of commerce, for example, do not have a

sufficiently close tie to the association to be included. A proposal to

include these persons among those to be served by the federal credit

union may be considered as a multiple-group charter application. In such

cases, letters of support and request for service must be provided from

each separate entity.

II.B.5 -- Sample Associational Fields of Membership

Some examples of associational group definitions are:

• "Regular members of Locals 10 and 13, IBEW, Miami, Florida, who

qualify for membership in accordance with their charter and bylaws

in effect on May 20, 1994."

• "Members of the Hoosier Farm Bureau who live or work in Grant,

Logan, or Lee Counties of Indiana, who qualify for membership in

accordance with its charter and bylaws in effect on March 7,

1994."

• "Members of the First Baptist Church in Topeka, Kansas."

• "Members of the Shalom Congregation in Chevy Chase, Maryland."

• "Regular members of the Corporate Executives Association, located

in Westchester, New York, who live or work in Westchester,

Rockland, and Suffolk Counties in New York, who qualify for

membership in accordance with its charter and bylaws in effect on

December 1, 1994."

• "Members of the Northern Michigan Electric Co-op located in

Marquette, Michigan."

• "Members of the ABC Association living or working in New York, New

York, who qualify for membership in accordance with its charter

and bylaws in effect on January 21, 1994."

Some examples of insufficiently defined associational group definitions

are:

• "Members of military service clubs in the State of New Mexico."

(No single associational tie; specific clubs and locations must be

named; may be considered as multiple group.)

• "Veterans of U.S. military service." (Group is too broadly

defined; no formal association of all members of the group.)

Some examples of unacceptable associational common bonds are:

• "Members of ABC Buyer's Club." (An interest in purchasing does not

meet associational standards.)

• "Customers of ABC Insurance Company." (Policyholders or

customer/client relationships do not meet associational

standards.)

NCUA-FM - II.C -- Community Common Bonds 7/94
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II.C.1 -- General

Congress requires that a credit union charter, based on a tie to a

specific geographic location, be limited to "a well-defined

neighborhood, community, or rural district." NCUA policy is to limit the

community to a single, geographically, well-defined area where residents

interact.

NCUA recognizes three types of affinity on which a community common bond

can be based -- persons who live in, persons who worship in, and persons

who work in the community. Businesses and other legal entities within

the community boundaries may also qualify for membership. Given the

diversity of community characteristics throughout the country and NCUA's

goal of making credit union service available to all eligible groups who

wish to have it, NCUA has established the following common bond

requirements for community charters:

• The geographic area's boundaries must be clearly defined; and

• The charter applicant must establish that the area is recognized

as a distinct "neighborhood, community, or rural district."

II.C.2 -- Special Documentation Requirements

Information to support that the area chosen represents one well-defined

area, distinguishable from the immediate surrounding areas, includes:

• political jurisdictions;

• major trade areas (shopping patterns);

• traffic flows;

• shared/common facilities (for example, educational, medical,

police and fire protection, school district, water, etc.);

• organizations/clubs whose membership is made up exclusively of

persons within the area;

• newspapers or other periodicals published for and about the area;

• census tracts;

• common characteristics and background of residents (for example,

income, religious beliefs, primary ethnic groups, similarity of

occupations, household types, primary age group, etc.);

• history of area; and

• in general, what causes the chosen area and its residents to be

distinguishable from the immediate surrounding areas and residents

-- some examples are old, well-established ethnic neighborhoods,

planned communities, and small/rural towns.

The following information must be provided to support a need for a

community credit union:

• a list of credit unions presently in the area; and

• a list of other financial institutions (for example, banks,

savings and loan associations) that service the area.

Necessary written documentation (for example, letters, surveys, studies,

pledges, petitions) reflecting support for the application for or the

conversion to a community credit union is as follows:

• For the residents of the area:
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• approximate number contacted

• number in favor of the credit union

• number against the credit union

• number who will join the credit union

• number who have pledged initial and/or systematic savings and

amount of pledges.

• For the employers:

• number of area employers and number of employees

• number contacted

• number in favor of the credit union

• number against the credit union.

• number willing to provide payroll deductions to the credit

union.

• number willing to provide other type(s) of support to the ÀÄÙ

credit union.

• For organizations (including churches):

• number in areas and number of members

• number contacted.

• number in favor of the credit union.

• number against the credit union.

• number willing to provide some type of support to the credit

union, i.e., advertising, facilities, etc.

• letters of support from area civic leaders. ÀÄÙ

If the community is also a recognized legal entity, it may comprise or

be included in the field of membership -- for example, "DEF Township,

Kansas" or "GHI County, Minnesota."

II.C.3 -- Community Service Area

The service area of a community federal credit union is the area defined

in its charter, usually with north, east, south, and west boundaries.

II.C.4 -- Sample Community Fields of Membership

Some examples of community common bond definitions are:

• "Persons who live or work in, and businesses located in the area

of XYZ City bounded by Fern Street on the north, Long Street on

the east, Fourth Street on the south, and Elm Avenue on the west."

• "Persons who live or work in Green County, Maine..."

• "Persons who live, worship or work in businesses and other legal

entities located in Independent School District No. 1, DuPage

County, Illinois..."

• "Persons who live or work within a 20-mile radius of the main post

office in Walnut, Illinois..." (Rural areas only.)

Some examples of insufficiently defined community common bond

definitions are:
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• "Persons who live or work within, and businesses located within a

10-mile radius of Washington, D.C." (Not a recognized

neighborhood, community, or rural district.)

• "Persons who live or work in the industrial section of New York,

New York." (Not a recognized neighborhood, community, or rural

district.)

NCUA-FM - II.D -- Multiple Occupational/Associational Common Bonds 7/94

II.D.1 -- General

NCUA may charter a federal credit union to serve a combination of

distinct, definable occupational and/or associational common bonds. For

a common bond which will constitute a majority of the federal credit

union's field of membership, the requirements for occupational and

associational fields of membership apply. Any other group constituting

an occupational or associational common bond to be included within the

federal credit union's field of membership must be within what will be

the credit union's operational area.

A proposed federal credit union's operational area is the area which, as

determined by NCUA in its sole discretion, may reasonably be served by

the service facilities that will be accessible by the groups to be

included in the field of membership when the credit union begins

operation. A credit union's service facility is a place where, also as

determined by NCUA in its sole discretion: (1) shares are accepted for

members' accounts; (2) loan applications are accepted and/or loans are

disbursed; (3) a member can deal directly with a credit union

representative; and (4) the service provided is clearly associated with

that particular credit union. An automated teller machine or similar

device is not a federal credit union service facility. Similarly, a

branch or service center shared by a number of credit unions is not a

service facility for purposes of this chapter.

Any members of a group who will have access to one of a proposed federal

credit union's service facilities may be included in the field of

membership. In addition, the group as a whole will be considered to be

within a proposed credit union's operational area when:

• A majority of the group's members live, work, or gather regularly

within the operational area;

• The group's headquarters is located within the operational area;

or

• The group's "paid from" or "supervised from" location is within

the operational area.

The following special additional requirements pertaining to multiple

group applications must be satisfied before NCUA will grant such a

charter:

• Each group to be included in the proposed field of membership of

the federal credit union must have its own occupational or

associational common bond.

• Except for employee groups in the same industrial park, shopping

center or similar facility, each group must individually request

inclusion in the proposed federal credit union's charter.

• The proposed federal credit union's business plan must show that

the credit union will possess the financial resources and

management capability to provide quality credit union service to

each group.
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• The proposed federal credit union must show that, when it begins

operations, each group to be added will be within the operational

area of a service facility to which the group will have access.

II.D.2 -- Sample Multiple Group Field of Membership

An example of a multiple group field of membership is:

"The field of membership of this federal credit union shall be limited

to the following:

1. Employees of DuPont Corporation who work in Wilmington, Delaware;

2. Partners and employees of Smith & Jones, Attorneys at Law, who

work in Wilmington, Delaware; and

3. Members of the GHI Association who live in Wilmington, Delaware,

and qualify for membership in accordance with its charter and

bylaws in effect on December 31, 1994.

II.D.3 -- Additional Documentation

For multiple group charters, NCUA will need the following, in addition

to what is required for new charters generally:

• For each group seeking to be included in the proposed federal

credit union's field of membership, the credit union must, provide

a letter from the group, on the group's letterhead stationery and

signed by an official representative of the group wherever

possible, or if that is not possible, such other documentation or

certification as the regional director may, in his or her

discretion, deem appropriate, containing this information:

• the fact that the group wants to obtain service from the ÀÄÙ

proposed federal credit union, the kind of service it desires

and the credit union has agreed to provide, and the extent to

which the group supports the credit union -- e.g., by providing

access to its employees or members via payroll deduction, by

permitting use of employee or members' newsletter, etc.

• the number of employees or members in the group. ÀÄÙ

• the proximity to the proposed federal credit union's closest

ÀÄÙ service facility.

• the name of any credit union to which the group currently has

ÀÄÙ access.

• the group's headquarters location and all other work locations

ÀÄÙ the credit union is proposing to serve.

• If the group is eligible for membership in another credit union,

documentation must be provided to support inclusion of the group

under the standards set forth in the "Overlaps" section of this

chapter.

NCUA-FM - II.E -- Other Persons Sharing Common Bonds 7/94

A number of persons by virtue of their close relationship to a common

bond group may be included, at the charter applicant's option, in the

field of membership. These include the following:

• spouses of persons who died while within the field of membership

of this credit union."

• "employees of this credit union."
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• "persons retired as pensioners or annuitants from the above

employment."

• "members of their immediate families."

• "volunteers."

• "organizations of such persons."

"Members of their immediate families" may be generally defined as deemed

appropriate by a federal credit union when including this group among

those to be served. To be made effective, however, the federal credit

union's board of directors must approve the definition by resolution,

and include it in Article XVIII, Section 2 of its bylaws. NCUA approval

is not necessary.

Volunteers, by virtue of their close relationship with a sponsor group,

may be included. Examples include volunteers working at a hospital or

church.

Under Article II, Section 5 of NCUA's Standard Bylaws, if a member

leaves the field of membership, standard member services are terminated.

However, the board of directors may, by resolution, set forth the

circumstances under which a member may maintain membership. This option

is commonly referred to as the "once a member, always a member" bylaw

provision. NCUA approval of this provision is not necessary.

NCUA-FM - III -- SUBSCRIBERS 7/94

Federal credit unions are organized by persons who donate time and

resources and are responsible for determining the interest, commitment,

and advisability of forming a federal credit union. Organizing a federal

credit union takes considerable planning and dedication in order to

ensure the success of the new credit union.

Persons interested in organizing a federal credit union should contact

the NCUA regional office serving the state in which the credit union

will be organized or one of the trade associations. Lists of NCUA

offices and trade associations are shown in the appendices. NCUA will

provide information to groups interested in pursuing a federal charter

and will assist them in contacting an organizer.

credit union organizer may be a trade association representative or a

person with training and experience in chartering new federal credit

unions. The functions of the organizer are to provide direction,

guidance, and advice on the chartering process. The organizer also

provides the group with information about a credit union's functions and

purpose, as well as technical assistance in preparing and submitting the

charter application. Close communication and cooperation between the

organizer and the group members are critical to the chartering process.

The Federal Credit Union Act requires that seven or more natural persons

-- the "subscribers" -- must present to NCUA for approval a sworn

organization certificate stating at a minimum:

• the name of the proposed federal credit union.

• the location of the proposed federal credit union and the

territory in which it will operate.

• the names and addresses of the subscribers to the certificate and

the number of shares subscribed by each.

• the initial par value of the shares.

• the detailed proposed field of membership.
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• the term of the existence of the corporation, which may be

perpetual.

• the fact that the certificate is made to enable such persons to

avail themselves of the advantages of the Federal Credit Union

Act.

False statements on the organization certificate may be grounds for

federal criminal prosecution.

NCUA-FM - IV -- ECONOMIC ADVISABILITY 7/94

NCUA-FM - lV.A -- Viability 7/94

IV.A.1 -- General

Before chartering a federal credit union, NCUA must be assured that the

institution will be viable and that it will not materially affect

existing state or federal credit unions. This economic advisability

inquiry has become especially important since 1970, when Congress

assigned NCUA the obligation to establish a fund insuring credit union

members' shares and to preserve that fund.

NCUA will conduct an independent, on-site investigation of each charter

application to assure itself that the proposed credit union can be

successful. In general, the success of any credit union depends on: (a)

the character and fitness of management; (b) the depth of the members'

support; and (c) present and projected market conditions.

IV.A.2 -- Proposed Management's Character and Fitness

The Federal Credit Union Act requires NCUA to satisfy itself as to the

"general character and fitness" of the subscribers. In addition,

prospective officials and employees will be the subject of credit and

background investigations. The investigation reports must demonstrate

their ability to effectively handle financial matters.

NCUA also needs assurance that the management team will have the

requisite skills - particularly in leadership and accounting - and the

commitment to dedicate the time and effort needed to make the proposed

federal credit union a success.

IV.A.3 -- Member Support

While NCUA has not set a minimum size field of membership for chartering

a federal credit union, experience has shown that a credit union with

under 500 potential members is generally unlikely to succeed. Therefore,

a charter applicant with a proposed field of membership of under 500

will have to demonstrate convincing support for the credit union. For

example, a small occupational group must demonstrate a commitment for

significant long-term support from the employer.

The group's size is meaningful only if members participate in the credit

union. The charter applicant must show that a substantial percentage of

the group's members will join the credit union and use its services.

Survey results must be based, at a minimum, on a sampling of 250

potential members. In particular instances, especially where the common

bond is broadly defined or newly established, NCUA may require a larger

sampling.

IV.A.4 -- Present and Future Market Conditions - Business Plan

IV.A.4.a -- General

The ability to compete in the marketplace and to adapt to changing

market conditions is key to the survival of any enterprise, and a
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crucial part of that is the ability to plan well. NCUA, therefore,

requires an applicant to submit a business plan based on realistic and

supportable projections and assumptions, including, as a minimum, these

elements:

• Mission statement;

• analysis of market conditions - economic prospects for the group,

availability of financial services from other credit unions,

banks, and savings and loans;

• summary of survey results;

• financial services needed/desired;

• financial services to be provided;

• how/when services are to be implemented;

• staffing of credit union and credentials of key employees;

• physical facility - office, equipment;

• type of record keeping system, including consideration of a data

processing system;

• budget for 1st and 2nd year;

• semiannual pro forma financial statements for 1st and 2nd year,

including assumptions - e.g., loan and dividend rates;

• goals for number of members;

• goals for operating independently;

• source of funds to pay expenses during initial months of

operation;

• written policies (shares, lending, investments, funds management,

capital accumulation, dividends);

• goals for shares and loans;

• plan for continuity - directors, committee members; and

• evidence of sponsor commitment if subsidies are critical to

success of the federal credit union - evidence may be in the form

of letters, contracts, or any other such document on which the

proposed federal credit union can substantiate its projections.

NCUA expects that the subscribers and proposed officials will understand

and support the business plan submitted.

IV.A.4.b -- Special Requirements for Community Credit Unions

Community credit unions are frequently more susceptible to competition

from other local financial institutions and generally do not have

substantial support from any single sponsoring company or association.

Also, the lack of payroll deduction creates special challenges in the

development of savings promotion programs and in the collection of

loans. Therefore, it is essential for the group to develop a detailed

and practical business plan for at least the first 3 years of operation.

The business plan should contain, but not necessarily be limited to, the

following:

• Analysis of market area -- geographic, demographic, employment,

income, housing, and economic data.
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• Service/market strategy -- financial and other services to be

provided, new member/share/loan promotion policies and procedures,

and income generation strategy.

• Organizational/management plan -- qualification and planned

training of officials/employees, operating facilities to include

office space/equipment and supplies, accounting system,

safeguarding of assets, insurance coverage, etc.

• Financial plan -- sources and application of funds statements and

proforma balance sheet and income/expense statements and

assumptions.

NCUA-FM - IV.B -- Effects on Other Credit Unions -- Overlaps 7/94

(This discussion pertains to new and existing charters.)

IV.B.1 -- Overlaps In General

An overlap exists when a group of persons is eligible for membership in

two or more credit unions, including state charters. General policy

requires that every reasonable effort be made to avoid an overlap.

Ideally, a group of persons should be included in the field of

membership of only one credit union.

New credit unions are obligated to investigate the possibility of an

overlap prior to submitting an application for a new charter by

surveying the prospective field of membership.

When a potential overlap situation does arise, officials of the involved

credit unions must attempt to work the problem out between or among

themselves. In the case of a new federal credit union applying for or

converting to a community field of membership, the applicant will

generally be required to contact only those credit unions with a service

facility within the community boundary. Other credit unions serving

select groups within the proposed area will not ordinarily be contacted

or afforded overlap protection unless a significant portion of their

field of membership is affected. If the matter is resolved informally,

the applicant must submit a letter to that effect from the credit union

whose field of membership already includes the subject group.

If no resolution is possible, an application for a new charter may still

be submitted, but must also include information regarding the overlap

and document attempts at informal resolution. Documentation on the

interests of the group, such as a petition signed by a majority of the

group's members, will be strongly considered.

When resolution of the issue is not possible, and other circumstances

warrant, an overlap may be permitted. Among the circumstances which may

justify an overlap are:

• failure of the original credit union to provide quality service;

• limited participation by members or employees of the group in the

original credit union after the expiration of a reasonable period

of time; and

• incidental overlap -- the group of persons in question is so small

as to have no material effect on the original credit union.

In reviewing the overlap, the regional director will consider the nature

of the issue, efforts made to resolve the matter, financial effect on

the overlapped credit union, the desires of the group(s), the desire of

the sponsor organization, the opinion of the state credit union
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supervisor and other interested parties, as applicable, and the best

interests of the affected group and the credit union members involved.

Potential overlaps of a state credit union's field of membership by a

federal credit union will generally be analyzed in the same way as if

two federal credit unions were involved. However, where a state credit

union's field of membership is so general as to include virtually

everyone in a wide area, NCUA may exclude any state credit union from

overlap protection altogether just as it would with a federal credit

union with a broadly defined field of membership. Prior to making that

decision, the regional director will consult the credit union and the

state regulator. Any decision by the regional director will be provided

in writing to the credit union and the state regulator.

Generally, NCUA will permit federal credit unions serving occupational

groups to overlap associational and community charters. However, should

the proposed overlap pose significant safety and soundness concerns,

NCUA may provide overlap protection for any type charter. For example,

labor union groups constitute an associational common bond, and while

some labor unions serve members who work regularly for several

employers, others have members who work for only one employer. In these

latter cases, overlap protection may be provided if a substantial

portion of the company's employees are served by the credit union.

Some situations may not justify approval of a requested overlap. For

example, if the requesting credit union offers certain specialized

services not offered by the original credit union (such as credit cards,

ATMs, and IRAs), the extra services alone may not justify the overlap.

Also, proximity, by itself, may not warrant approval of an overlap. A

federal credit union in Chicago, Illinois, may not have a convincing

argument, based on geography alone, that a select group also located in

Chicago would be better served by it than by the select group's

headquarters credit union located in Dallas, Texas.

From an overlap prevention perspective, new charter applicants and every

occupational or associational group which comes before the regional

director for affiliation with an existing federal credit union must

advise in writing whether the group is included within the field of

membership of any other credit union. This requirement will alert the

regional director to possible overlap situations before they occur.

Most potential field of membership conflicts can be avoided in this way.

If cases do arise where the assurance given to a regional director

concerning unavailability of credit union service turns out later to be

inaccurate, the misinformation is grounds for removal of the group from

the federal credit union's charter.

IV.B.2 -- Overlap Issues as a Result of Organizational Restructuring

A federal credit union's field of membership will always be governed by

the group descriptions contained in Section 5 of its charter. Where a

sponsor organization expands its operations internally, by acquisition

or otherwise, the credit union may serve these new entrants to its field

of membership if they are part of a group described in Section 5. Where

acquisitions are made which add a new wholly-owned or majority-owned

subsidiary, the group cannot be served until the subsidiary is included

in the field of membership.

Overlaps may occur as a result of restructuring of the parent

organization. Credit unions affected by organizational restructuring are

required to first attempt to resolve overlap issues among themselves.

Once the affected credit unions reach agreement, they must apply to NCUA
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for a modification of their fields of membership to reflect the groups

each will serve.

In addition, credit unions must submit correspondence from the parent

organization explaining the restructuring and providing information

regarding the new organizational structure to NCUA. To help in future

monitoring of overlaps, the organizational structure should identify

divisions and subsidiaries and the location and number of employees at

each location.

Overlaps may also occur as a result of the parent organization's merger.

NCUA's general policy of avoiding overlaps applies to those resulting

from corporate mergers as well. Affected credit unions must make every

reasonable effort to identify up front and address the overlap issue

raised by parent corporation mergers and must attempt to resolve any

differences among themselves. In those rare cases which require NCUA's

intervention, all attempts to resolve the issues must be fully

documented by the affected credit unions.

Affected credit unions should consider consolidation (merger) of

institutions as a possible alternative to dividing up the field of

membership, particularly if safety and soundness concerns exist or

future viability is in question. A federal credit union which has a

broad based field of membership generally has a better chance of

survival when a sponsor restructures or closes.

While neutral, NCUA will make the final decision regarding field of

membership amendments, taking into account the credit unions'

agreements, safety and soundness concerns, the desires of the members,

the significance of the overlap and other relevant issues.

NCUA will be flexible when working with credit unions affected by parent

corporation mergers and divestitures. Where no other credit union

service is available and the sponsor and its employees desire to

continue service, NCUA may use wording such as the following:

"Employees of XYZ Corporation, formerly a subsidiary of ABC

Incorporated, located in Charleston, South Carolina..."

IV.B.3 -- Overlaps -- Exclusionary Clauses

(This discussion pertains to new and existing charters.)

Where two credit unions agree and/or NCUA has determined that an overlap

should be avoided, this decision may need to be memorialized in a

federal credit union's charter through an exclusionary clause. Examples

of exclusionary wording are:

• persons who work for Hilo Sugar Company, except those who work in

or are paid from or are supervised from San Francisco, California.

• persons who work for the ABC Co., except those employed by the XYZ

Division as of June 30, 1994.

• persons who work for the ABC Co., except those who were members of

the XYZ Federal Credit Union as of June 30, 1994.

Exclusionary clauses are very difficult for credit unions and NCUA to

monitor properly. To minimize this difficulty, NCUA generally does not

require federal credit unions to apply exclusionary clauses to persons

eligible for membership in another credit union simply because they are

one of the "other persons sharing common bond" listed in Section II.E of

this chapter.

Moreover, if phrased improperly or used in situations for which they are

not suited, exclusionary clauses can be ineffective or create obvious
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Chartering and Field of Membership Manual

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inequities -- one spouse may be eligible for membership in a federal

credit union while the other may not; one employee may be eligible for

credit union service while the person working next to him or her may

not. For this reason, exclusionary clauses are rarely if ever

appropriate for inclusion in a community charter's field of membership

as a way to resolve overlap concerns.

One example of an appropriate use of an exclusionary clause may be where

there is a merger of two corporations served by two credit unions which

will continue to serve their groups as they had prior to their sponsors'

consolidation. Addition of an exclusionary clause to the field of

membership of one or both of the credit unions may be the best way to

clarify the division of service responsibility within the new corporate

entity.

When an exclusionary clause is included in a federal credit union's

field of membership, NCUA will strive to define as precisely as

possible:

• the identity of the group to be excluded;

• whether the exclusion is to apply to the entire group or only to

those who are actually members of another credit union; and

• whether the exclusion is to apply only to the current members of

the group or to future members as well.

NCUA-FM - V -- SPECIAL SITUATIONS 7/94

There are some instances where, because of overriding policy, special

common bond rules apply. To ensure quality service to as many low-income

and senior citizens as possible, NCUA has established broader common

bond rules for federal credit unions seeking to serve those groups.

Further, to expedite service to groups in industrial parks, shopping

centers, and similar areas, the documentation requirements for federal

credit unions seeking to serve these groups have been simplified.

Finally, to ensure consistency throughout the credit union movement,

NCUA has centralized decision making for the corporate credit union

program in the Central Office.

NCUA-FM - V.A -- Low-Income Credit Union Groups 7/94

V.A.1 -- General

A low-income credit union is defined in Part 701.32 of the NCUA Rules

and Regulations as one where a majority of its members either earn less

than 80 percent of the average for all wage earners as established by

the Bureau of Labor Statistics, or whose annual income falls at or below

80 percent of the median household income for the nation. In documenting

its low-income membership, a credit union that serves a geographical

area where a majority of residents fall at or below the annual income

standard is presumed to be serving predominantly low-income members.

A credit union designated by NCUA as serving predominantly low-income

members has greater flexibility in accepting nonmember deposits insured

by the National Credit Union Share Insurance Fund. It may also

participate in special funding programs such as the Community

Development Revolving Loan Program for Credit Unions if it is involved

in the stimulation of economic development and community revitalization

efforts. A credit union participating in the revolving loan program is

also eligible for technical assistance. The requirements for

participation in the revolving loan program are set forth in Part 705 of

NCUA's Regulations. Only operating credit unions are eligible for

participation in the revolving loan program.
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A federal credit union charter applicant meeting the definition of a

low-income credit union should forward a separate request for low-income

designation, along with appropriate documentation, at the time the

charter application is submitted. A charter applicant's low-income

designation will be based on its primary field of membership and not on

its actual members as is the practice for operating credit unions. In

most cases, if the credit union qualifies, NCUA will grant the charter

and low-income designation simultaneously.

A low-income federal credit union charter applicant may contract with a

third party to assist in the chartering process. Even after the charter

is granted, a low-income credit union may contract with a third party to

provide necessary management services. Such contracts should be for a

duration of 1 year subject to renewal. However, within 3 years of

commencement of operations, the credit union should no longer require

such services.

V.A.2 -- Special Common Bond Rules for Low-Income Federal Credit Unions

Generally, a low-income credit union is chartered as a community or

associational credit union. A low-income credit union that has a

community common bond may include the following language in its field of

membership:

"Persons who live in [the target area]; persons who regularly work,

worship, perform volunteer services, or participate in associations

headquartered in [the target area]; persons participating in programs to

alleviate poverty or distress which are located in [the target area];

incorporated and unincorporated organizations located in [the target

area] or maintaining a facility in [the target area]; and organizations

of such persons."

In recognition of the special efforts needed to help make credit union

service available to persons in low-income communities, NCUA permits

credit union chartering and field of membership amendments based on

associational groups formed for the sole purpose of making credit union

service available to low-income persons. The association must be defined

so that all its members will meet the low-income definition of Part

701.32 of NCUA's Regulations. The association, in documenting its lowincome membership, may use the same types of documentation as is

currently permitted for determining whether a community is low-income

under Part 701.32 of NCUA's Regulations.

In addition, a proposed low-income community or associationally-based

federal credit union may include in its field of membership, without

regard to location, another group constituting an occupational,

associational, or community common bond. Except for the operational area

requirements, the proposed credit union must meet all the requisites for

including the group in its charter. Moreover, the proposed credit union

must take care to ensure that it will continue to meet the requirements

for low-income status.

V.A.3 -- Special Common Bond Rules for Other Federal Credit Unions

Seeking to Serve Low-Income Persons

In the interest of making credit union service available to persons in

low-income communities, NCUA also permits any occupational,

associational, multiple group, or community federal credit union to

include in its field of membership, without regard to location,

communities and associational groups satisfying the low-income

definition of Part 701.32 of NCUA's Regulations. The associational group

may be formed for the sole purpose of providing eligibility for federal
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credit union service, but must comprise only persons meeting NCUA's lowincome definition.

The federal credit union adding the low-income community or association

must document that the community or association meets the low income

definition in Part 701.32 of NCUA's Regulations, just as is required for

a designated low-income credit union. A federal credit union adding such

a community or association, however, would not be able to receive the

benefits, such as expanded use of non member deposits and access to the

Community Development Revolving Loan Program for Credit Unions, offered

to low-income credit unions.

A federal credit union that desires to include a low-income community or

association in its field of membership must first develop a business

plan specifying how it will serve the entire low-income community. The

business plan, at a minimum, must identify the credit and depository

needs of the low-income community or association and detail how the

credit union plans to serve those needs. The credit union will be

expected to regularly review the business plan, as well as loan

penetration rates in the community to determine if the community is

being adequately served. NCUA will require periodic service status

reports on its service to the low-income community and may review the

credit union's service to low-income persons during examinations.

NCUA-FM - V.B -- Retiree and Senior Citizen Groups 7/94

Special common bond rules also apply for providing service to retiree

and senior citizen groups. It is NCUA policy to encourage federal credit

unions to bring credit union service to senior citizens (aged 50 and

over) and retired persons. To help in this effort, federal credit unions

may form associations of such persons for the sole purpose of providing

eligibility for credit union service. Except for the minimum age

requirement of 50, the definition of a senior citizen is left to the

credit union's discretion. Moreover, the only documentation requirement

for including such an association in a federal credit union's charter is

a written request from the credit union; no request from the group or

copy of the association's charter or bylaws will be needed. In all other

respects, however, the requirements for including an association in a

federal credit union's field of membership apply, including those

relating to the credit union's operational area.

NCUA-FM - V.C -- Employees at Industrial Parks, Shopping Centers, and

Similar Areas 7/94

A federal charter may include in its field of membership persons working

in a particular industrial park, shopping mall, office complex, or

similar development either through a community or multiple group

charter.

If the multiple group option is selected, NCUA permits the credit union

to satisfy the requirement for a request from each of the groups through

a request by the complex owner, leasing agent, or similar responsible

official. The complex owner, leasing agent or similar official must

provide information regarding credit union service available to any

segment of the proposed select group amendment or proposed federal

credit union. It is up to the applicant credit union to investigate

whether credit union service is already available to any segment of the

select group amendment or proposed charter.

In general, exclusionary clauses will not be used to protect any

overlapped credit union. However, in those cases where each employee

group in the complex has not specifically requested credit union

service, NCUA may exercise broad discretion in addressing overlaps with
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other credit unions and any request from a group to be removed from the

field of membership.

The following or similar wording will be used to define groups added

under this procedure:

"Employees who regularly work in the Plaza Mall, New Orleans, Louisiana"

If the community option is selected, the industrial park, shopping

center, or office complex must meet the standards for community

charters.

NCUA-FM - V.D -- Corporate Federal Credit Unions 7/94

A corporate credit union is defined as one that:

• is operated primarily for the purpose of serving other credit

unions;

• is designated by NCUA as a corporate credit union; and

• limits natural person members to the minimum required by state or

federal law to charter and operate the credit union.

Corporate credit unions operate under and are governed by standards

different from those applicable to natural person credit unions. These

standards are set forth in Part 704 of NCUA's Regulations.

Supervision of corporate credit unions is the responsibility of NCUA's

Office of Examination and Insurance. All applications for federal

corporate charters, as well as requested changes to Section 5 of the

charter of existing corporate federal credit unions should be directed

to that office.

NCUA-FM - VI -- NAME SELECTION 7/94

It is the responsibility of federal credit union organizers to ensure

that the federal credit union applicant's name or federal credit union

name change does not constitute an infringement on the name of any

corporation in their trade area. This responsibility also includes

researching any service marks or trademarks used by any other credit

union in their trade area. NCUA will ensure, to the greatest extent

possible, that the credit union's name:

• is not already being officially used by another federal credit

union;

• will not be confused with NCUA or another federal or state agency,

or with another federal credit union; and

• does not include inappropriate language.

The last three words in the name of every credit union chartered by NCUA

must be "Federal Credit Union."

NCUA-FM - VII -- STEPS TO TAKE TO ORGANIZE A FEDERAL CREDIT UNION 7/94

NCUA-FM - VII.A -- Getting Started 7/94

Following the guidance contained throughout this policy, the organizers

should submit the proposed field of membership to NCUA early in the

process for written tentative approval.

Once the field of membership has been tentatively approved, and the

organizer is satisfied the application has merit, the organizers should

conduct a preliminary organizational meeting to elect seven to ten

persons to serve as subscribers. The subscribers should locate willing

individuals capable of serving on the board of directors, credit
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committee, supervisory committee, and as chief operating officer/manager

of the proposed credit union.

The organizers and subscribers should arrange for any meetings necessary

to develop the business plan discussed in Section IV.A.4 of this chapter

and to complete the documentation for submittal to NCUA. Each of the

required documents is discussed more fully later in this chapter.

The organizers and subscribers must apply for insurance of member

accounts. The Certificate of Resolutions (NCUA 9501) will be executed by

the prospective chief executive officer and recording officer. Following

action on this issue, the prospective chief executive officer and chief

financial officer will execute the Application and Agreements for

Insurance of Accounts (NCUA 9500). These documents should be provided to

NCUA as part of the charter application.

The organizers and subscribers should also complete an NCUA 4012, Report

of Official or Employee, for each prospective board member, credit and

supervisory committee member, and employee. The NCUA 4012s should be

submitted to NCUA as early as possible to enable the necessary credit

reports and background checks to be obtained well in advance of the

anticipated charter date. NCUA will pay the direct costs of acquiring

such credit and background checks.

Subsequent organizational meetings may be held to discuss the progress

of the charter investigation, to announce the proposed slate of

officials, and to respond to any questions posed at the meeting.

If NCUA approves the charter application, the subscribers, as their

final duty, will elect the board of directors and credit committee of

the proposed federal credit union. The new board of directors will then

appoint the supervisory committee.

NCUA-FM - VII.B -- Support for Charter Application 7/94

VII.B.1 -- General

As discussed previously in this chapter, applicants for federal credit

union charters must, at a minimum, provide evidence that:

• the group constitutes a recognized common bond;

• the subscribers, prospective officials and employees are of good

character; and

• the establishment of the credit union is economically feasible.

In addition, the Federal Credit Union Act requires applicants to submit

a sworn organization certificate setting forth seven criteria (see

section entitled "Subscribers" earlier in this chapter). In order to

process the application and capture all required information, NCUA has

developed certain chartering forms to assist organizers. See Appendix D

for the necessary blank forms.

VII.B.2 -- Federal Credit Union Investigation Report, NCUA 4001

Applications for new federal credit unions will be submitted on NCUA

4001. (State-chartered credit unions applying for conversion to federal

charter will use NCUA 4000. See Chapter 3 for a full discussion.) The

organizer is required to certify the information and recommend approval

or disapproval, based on the investigation of the request. Instructions

and guidance for completing the form are provided on the reverse side of

the form. Associational charter applicants must include a statement of

their membership criteria (normally the group's charter or bylaws) and

current financial statements on the associational sponsor.
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VII.B.3 -- Report of Official and Employee, NCUA 4012

This form documents general background information of each official and

employee of the proposed federal credit union. Each official must

complete and sign this form. The organizers must review each of the NCUA

4012s for elements -- criminal convictions, indictments, etc. -- that

would prevent the prospective official or employee from serving in an

official capacity. Further, such factors as past due credit obligations

and bankruptcies disclosed during credit checks may disqualify an

individual.

VII.B.4 -- Organization Certificate, NCUA 4008

This document establishes the seven criteria required of subscribers by

the Federal Credit Union Act and is signed by the subscribers and

notarized. This document should be executed in duplicate. During his or

her on-site contact, the NCUA staff member assigned to the case will

assist in the proper completion of this document.

VII.B.5 -- Certification of Resolutions, NCUA 9501

This document certifies that the board of directors of the proposed

federal credit union has resolved to apply for insurance of member

accounts and has authorized the chief executive officer and chief

financial officer to execute the Application and Agreements for

Insurance of Accounts. This form must be signed by both the chief

executive officer and recording officer of the proposed federal credit

union.

VII.B.6 -- Application and Agreements for Insurance of Accounts, NCUA

9500

This document contains the agreements with which federal credit unions

must comply in order to obtain National Credit Union Share Insurance

Fund (NCUSIF) coverage of member accounts. The document must be

completed and signed by both the chief executive officer and chief

financial officer. Each prospective federal credit union must qualify

for federal share insurance.

NCUA-FM - VIII -- NCUA REVIEW 7/94

NCUA-FM - VIII.A -- General 7/94

As discussed previously, NCUA may provide tentative approval of the

proposed federal credit union's field of membership. Additionally,

credit and background investigations may be conducted concurrently by

NCUA with other work being performed by the organizers and subscribers

to reduce the likelihood of delays in the chartering process.

Once NCUA receives a complete charter application package, an

acknowledgment of receipt will be sent to the organizers within 10

business days of receipt, and a staff member will be assigned to perform

an on-site contact with the proposed officials and others having an

interest in the proposed federal credit union. NCUA will make every

effort to process the application expeditiously.

The staff member will review the application package and verify its

accuracy and reasonableness. The staff member will inquire into the

financial management experience, suitability and commitment of the

proposed officials and make an assessment of economic advisability. The

staff member will also assist the subscribers in the proper completion

of the Organization Certificate, NCUA 4008. By assisting in the

completion of the Organization Certificate, the staff member may,

without indicating his or her endorsement of the charter application,

expedite the process.
National Credit Union Administration

Chartering and Field of Membership Manual

26

The staff member will thoroughly analyze the prospective credit union's

business plan for realistic projections, attainable goals, and time

commitment. Any concerns will be reviewed with the organizers and

discussed with the prospective credit union's officials.

The staff member will then make a recommendation to the regional

director regarding the charter application. His or her recommendation

may include specific provisions to be included in a Letter of

Understanding and Agreement. In most cases, NCUA will require the

prospective federal credit union's officials to enter into an agreement

not to engage in certain activities. The agreement is for a limited term

-- usually 2 to 4 years. A sample Letter of Understanding and Agreement

is provided in Appendix B.

NCUA-FM - VIII.B -- Regional Director Approval 7/94

Once approved, the board of directors of the newly formed federal credit

union will receive a signed charter and bylaws from the regional

director. Additionally, the officials will be advised of the name and

mailing address of the examiner who has been assigned responsibility for

supervising and examining the credit union.

Generally, the examiner will contact the credit union officials shortly

after approval of the charter in order to arrange for the initial

examination (usually within the first 6 months of operation). Assistance

in commencing operations is generally available through the various

trade organizations listed in Appendix F.

NCUA-FM - VIII.C -- Regional Director Disapproval 7/94

Where a regional director disapproves any application, in whole or in

part, under this chapter, the organizers will be informed in writing of

the specific reasons for the action. Where applicable, the regional

director will provide information concerning options or suggestions that

they could consider for gaining approval or otherwise acquiring credit

union service.

The letter of denial will include the procedure for and other

information on the group's right to appeal the decision.

NCUA-FM - VIII.D -- Appeal of Regional Director's Decision 7/94

The procedures for filing an appeal of any actions taken by NCUA

regional directors will be followed. If not included with the denial

notice, a copy of these procedures may be obtained from the regional

director who made the decision.

The prospective group may submit substantive new and additional

information to the regional director for reconsideration. In these

cases, the request will not be considered as an appeal but as a request

for reconsideration by the regional director. If the request is again

denied, the group may proceed with the appeal process.

NCUA-FM - IX - FUTURE SUPERVISION 7/94

Once NCUA has granted a charter to a new federal credit union, an

examiner will be assigned to supervise the credit union.

The examiner will be responsible for monitoring the progress of the

credit union and ensuring it gets off to a good start. The examiner will

also monitor compliance with the terms of the Letter of Understanding

and Agreement. Typically, the examiner will require copies of monthly

board minutes and financial statements.

Each federal credit union is examined regularly by NCUA to determine

that it remains in compliance with law and regulation, and to determine
National Credit Union Administration

Chartering and Field of Membership Manual

27

that it does not pose undue risk to the National Credit Union Share

Insurance Fund.

The Federal Credit Union Act requires all newly chartered credit unions,

up to 2 years after the charter anniversary date, to obtain NCUA

approval prior to appointment of any board member, any credit or

supervisory committee member, or any senior executive officer. Part

701.14 of the NCUA Regulations sets forth the notice and application

requirements. If NCUA issues a Notice of Disapproval, the newly

chartered credit union is prohibited from making the change. NCUA may

disapprove an individual serving as a director, committee member or

senior executive officer if it finds that the competence, experience,

character, or integrity of the individual would not be in the best

interests of the members of the credit union or of the public to permit

the individual to be employed by or associated with the credit union.
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Chartering and Field of Membership Manual

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NCUA-FM - CHAPTER 2 -- AMENDMENTS TO THE FIELD OF MEMBERSHIP 7/94

NCUA-FM - I -- INTRODUCTION 7/94

As stated in Chapter 1, Section 5 of every federal credit union's

charter defines the groups the credit union is legally entitled to

serve. There are a number of instances in which Section 5 may need to be

changed. On each of these occasions, the federal credit union must

obtain approval from NCUA before amending its charter.

First, a group not included in a federal credit union's charter may wish

to be served by that credit union. This may occur through agreement

between the group and the credit union directly, or through a merger,

purchase and assumption (P&A), or spin-off. Second, a federal credit

union may wish to change its common bond entirely -- from an

occupational to a community credit union, for example, or vice versa.

Third, which is discussed in Chapter 3, a state-chartered credit union

may wish to convert to a federal charter. (The field of membership of a

federal credit union converting to a state charter is determined under

applicable state law, except to the extent that the credit union seeks

to continue to be federally insured and the proposed new field of

membership would adversely affect the safe and sound operation of the

institution.) Finally, a federal credit union may wish to remove a group

from its field of membership -- for example, through agreement with the

group or a spin-off.

NCUA's goals with respect to amendments of federal credit union charters

are the same as for including groups in the charters of new federal

credit unions. The Agency's analysis, therefore, is also similar, though

adapted for the different circumstances in which the issue arises --

primarily the facts that the federal credit union is in existence and

has a history of service that can be evaluated.

The three issues NCUA must evaluate in deciding whether to approve a

change in a federal credit union's field of membership are:

• whether the change satisfies NCUA's common bond requirements;

• whether the interests of the group to be added are demonstrated;

and

• whether the change is economically advisable.

NCUA-FM - II -- ADDITIONS THROUGH DIRECT AGREEMENT WITH A GROUP 7/94

The most common type of addition to a federal credit union's field of

membership is through agreement with the group itself. The requirements

are similar to those for including a group in a federal credit union's

charter initially.

NCUA-FM - II.A -- Common Bond Requirement 7/94

II.A.1 -- Additions to Fields of Membership of Occupational,

Associational, and Multiple Occupational/Associational Federal Credit

Unions

As with new multiple occupational/associational federal credit unions,

occupational and associational groups may be added to occupational,

associational, and multiple occupational/associational federal credit

unions in two ways. If the group is part of an occupational or

associational common bond which constitutes a majority of the federal

credit union's field of membership, the group may be added regardless of

location. These are commonly called "common bond additions." For any

other occupational or associational common bond, the group must be
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Chartering and Field of Membership Manual

29

within the credit union's operational area. These are commonly called

"select group additions."

The requirements for common bond additions are identical to those for

inclusion of occupational and associational common bonds in a credit

union's initial field, of membership; please refer to Section II.A and

II.B of Chapter 1 for guidance. The requirements for select group

additions are similar to those set forth in Section II.D of Chapter 1

for inclusion of other associational and occupational groups in a

multiple group federal credit union's field of membership initially,

with this exception: The credit union may add groups within the

operational area of one of its planned service facilities if:

• The planned facility begins operation shortly after the group is

added; and

• The current field of membership constitutes a significant portion

of the total field of membership to be served initially by the

proposed facility. Although the addition of a new select group

alone is not enough to justify a planned service facility, it is

permissible to include new groups as partial justification for

such a facility.

Moreover, in the case of a planned facility, NCUA may, in its

discretion, require financial projections and/or a business plan

supporting amendments around that service facility in order to determine

the economic feasibility and to address any safety and soundness

concerns of the amendment.

II.A.2 -- Additions to the Common Bond of a Community Federal Credit

Union

Community federal credit unions, except those designated low-income or

distressed, may expand their fields of membership only by redefining

their boundaries. There must be interaction among persons who live or

work within the proposed well-defined neighborhood, community or rural

district. The burden of proof for existence of the common bond is placed

upon the applicant credit union.

In the majority of cases where community credit unions are asking to

expand their areas of service, and in all cases where a conversion to a

community charter is proposed, an NCUA staff member will make a

documented on-site evaluation of the proposal. The staff member will

prepare a separate analysis of the proposed amendment, independent of

the credit union's application. Following completion of the on-site

evaluation and regional office review of the staff member's report, the

regional director will act on the proposal. Certain expansions require

NCUA Board consideration.

II.A.3 -- Special Situations

II.A.3.a -- General

The special rules for credit unions serving low-income persons, serving

retirees and senior citizens over 50 years old, and serving employees at

industrial parks, shopping centers and similar facilities apply equally

to field of membership additions. However, there are two special

situations unique to existing federal credit unions: (1) corporate

restructurings; and (2) plant or base closings, and other kinds of

distress to a substantial portion of a credit union's membership.

II.A.3.b -- Corporate Restructuring

If an occupational or associational group within a federal credit

union's field of membership undergoes a substantial restructuring, the
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Chartering and Field of Membership Manual

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result is often that portions of the group are sold or spun off. This is

an event which requires a change to the credit union's field of

membership if the credit union is to continue to provide service. NCUA

will permit a credit union to add to its field of membership a sold or

spun off group to which it has been providing service, without regard to

location, if the group requests continued service, documented by a

letter from an official representative, on the group's letterhead where

possible.

II.A.3.c -- Distressed Situations

If a major group within the field of membership of any federal credit

union -- whether occupational, associational, community or multiple

group -- suffers a severe economic reversal -- e.g., a plant or base

closing -- one option for the credit union may be to diversify its field

of membership by adding groups desiring to be served. If economically

advisable, NCUA may facilitate the credit union's diversification

efforts, to the extent and only until the credit union's viability is

assured, by allowing the credit union to add occupational and

associational groups without regard to location. To obtain this

authorization, the credit union must submit a request for designation as

a distressed credit union to its regional director.

The decision will be based on the totality of the circumstances,

including the severity of the economic problem, whether offsetting gains

from the expansion of other groups currently in its field of membership

are reasonably foreseeable, the availability of other groups able to be

served, the likely cost the credit union will incur in reorienting

itself to serve those groups, the competitive environment it is

operating in, the effect on other credit unions, and the availability of

alternatives such as merger. Prior to making a determination on this

issue, NCUA may request such additional information, including a

business plan, as may be appropriate.

NCUA-FM - II.B -- Interests of the Group to be Added 7/94

Of primary concern to NCUA is that quality credit union service be

provided to all groups served by a federal credit union. Therefore, with

respect to each field of membership addition, NCUA requires

documentation from each group to be added stating that it desires

service from the applying credit union.

NCUA-FM - II.C -- Economic Advisability 7/94

Prior to granting a field of membership addition, NCUA will examine the

amendment's likely effect on the credit union's operations and financial

condition, and its likely effect on other credit unions. Most of the

information needed for analyzing the effect of adding a particular group

will already be available to NCUA through the examination and call

reports; generally, nothing more will be needed. However, in particular

cases, a regional director may ask for additional information prior to

making a decision. With respect to a proposed addition's effect on other

credit unions, the requirements on overlapping fields of membership set

forth in Section IV.B of Chapter 1 apply here as well.

NCUA-FM - II.D -- Documentation Required 7/94

The documentation needed for community charter additions will vary

substantially depending on the circumstances, and has been described in

general terms above. For common bond and select group additions, which

constitute the bulk of amendment requests, the procedures are more

standardized. A federal credit union requesting such a change must

submit a formal written request, using the Application for Field of

Membership Amendment, NCUA 4015, shown in Appendix D, or its equivalent,
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Chartering and Field of Membership Manual

31

to the appropriate NCUA regional director. The request must be signed by

an authorized credit union representative.

The Application for Field of Membership Amendment, NCUA 4015, must be

accompanied by the following:

• A letter signed by an official representative of the group to be

added. Wherever possible, this letter must be submitted on the

group's letterhead stationery -- regional directors may, at their

discretion, however, accept such other documentation or

certification as they deem appropriate. This letter must indicate:

• that the group wants to be added to the applicant federal ÀÄÄÙ

credit union's field of membership;

• whether the group presently has any credit union service ÀÄÄÙ

available;

• the number of persons currently included within the group to be

ÀÄÄÙ added and their locations; and

• in the case of a select group addition, the group's proximity

ÀÄÄÙ to one of the credit union's service facilities to which

the group has access.

• If the group is eligible for membership in any other credit union,

documentation must be provided to support inclusion of the group

under the standards set forth in Section IV.B of Chapter 1.

• If the group to be included is an associational group, the credit

union must, where required as established in Chapter 1, also

provide a copy of the group's charter and bylaws defining the

group's purpose, membership classes, and geographical area.

NCUA-FM - III -- ADDITIONS THROUGH CONSOLIDATION WITH ANOTHER CREDIT

UNION 7/94

NCUA supports credit unions desiring to remain a separate entity.

However, there are three other ways a federal credit union can expand

its field of membership, two of which result in a credit union's ceasing

to exist -- by taking in the field of membership of another credit union

through a merger or a purchase and assumption (P&A), or by taking a

portion of a continuing credit union's field of membership through a

spin-off. Spin-offs are discussed in Section VI of this chapter.

NCUA-FM - III.A -- Mergers 7/94

Generally, the standards applicable to field of membership amendments

apply to mergers where the continuing credit union is a federal charter.

In particular, where the merging credit union is state chartered, the

field of membership rules applicable to a credit union converting to a

federal charter apply. However, there are some differences:

• As to a merger involving a common bond addition, the requirements

to provide a request for credit union service from the corporate,

associational, or other unit to be added is not required, since

the unit already has credit union service.

• As to a merger involving a select group addition:

• For the same reason, the requirement for a letter from each

group included in the credit union's field of membership is not

required.
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Chartering and Field of Membership Manual

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• Where a state credit union is merging into a federal credit

union, the operational area requirement may be waived on a

proper showing that the credit union will continue to be able

to provide quality service to its current field of membership

as a federal credit union. Upon merging, the state credit

union's field of membership will be worded to conform to the

NCUA standards set forth in Chapter 1. Any subsequent field of

membership amendments must comply with applicable amendment

procedures.

• As to a merger of a community credit union into a federal credit

union of any type, the continuing credit union may be permitted to

continue to provide service to the merging credit union's members

of record as of the merger date where the operational area

requirement is satisfied. Except in the case of an emergency

merger, the continuing federal credit union can obtain only the

members of record of the merging community credit union.

Where both credit unions are community charters, the continuing credit

union is a federal credit union, and the criteria for expanding the

service area of a community federal credit union (as discussed

previously in this chapter) are satisfied, the entire field of

membership of the merging credit union may be added to the continuing

federal credit union's charter.

Mergers must be approved by all affected NCUA regional directors, and,

as applicable, the state regulators.

NCUA-FM - III.B -- Emergency Mergers 7/94

A specifically designated emergency merger may be approved by NCUA

without regard to field of membership or other legal constraints. An

emergency merger involves NCUA's direct intervention. The credit union

to be merged must either be insolvent or will likely become insolvent

within 12 months and NCUA must determine that:

• an emergency requiring expeditious action exists;

• other alternatives are not reasonably available; and

• the public interest would best be served by approving the merger.

In an emergency merger situation, NCUA takes an active role in finding a

suitable merger partner (continuing credit union). NCUA is primarily

concerned that the continuing credit union has the financial strength

and management expertise to absorb the troubled credit union without

adversely affecting its own financial condition and stability.

As a stipulated condition to an emergency merger, the field of

membership of the merging credit union may be transferred intact to the

continuing federal credit union without regard to any field of

membership restrictions and without changing the character of the

continuing federal credit union for future amendments. Under this

authority, therefore, a federal credit union may take into its field of

membership a group defined by a community or associational common bond

permitted under state law, regardless of whether that common bond

definition could be approved under the Federal Credit Union Act.

NCUA-FM - III.C -- Purchase and Assumptions (P&As) 7/94

Another alternative for acquiring the field of membership of a failing

credit union is through a consolidation known as a purchase and

assumption (P&A).
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Chartering and Field of Membership Manual

33

A P&A has limited application because the failing credit union must be

placed into involuntary liquidation. However, in the few instances where

a P&A may occur, the assuming federal credit union, as with emergency

mergers, may acquire the entire field of membership along with specified

loans, shares and certain other designated assets and liabilities,

without regard to field of membership amendment restrictions and without

changing the character of the continuing federal credit union for

purposes of future field of membership amendments.

P&As involving federally insured state credit unions in different NCUA

regions must be approved by all affected regional directors and, as

applicable, the state regulators.

NCUA-FM - IV -- FIELD OF MEMBERSHIP CONVERSIONS 7/94

A community federal credit union may convert to an occupational,

associational, or multiple group credit union, and an occupational,

associational, or multiple group credit union may convert to a community

credit union. In any case, a change to the credit union's field of

membership will be necessary.

NCUA-FM - IV.A -- Conversion to Occupational, Associational, or Multiple

Group Federal Credit Union 7/94

A community federal credit union converting to an occupational,

associational, or multiple group field of membership must meet the

common bond and economic advisability requirements applicable to the

type of charter which it seeks conversion to.

NCUA-FM - IV.B -- Conversion to Community Charter 7/94

An existing occupational, associational or multiple group federal credit

union may apply to convert to a community charter. In most cases, groups

currently in the credit union's field of membership but outside the new

community credit union's boundaries may be included in the new community

charter.

In order to support a case for a conversion to community charter, the

applicant federal credit union must develop a detailed business plan

incorporating the following data:

• current financial statements, including the income statement and a

summary of loan delinquency;

• a map or maps showing both the existing and proposed boundaries

for the field of membership;

• a written description of the area of community service for the

proposed community credit union;

• the most current population figures for the existing and proposed

boundaries;

• the source of the population information; census data are

considered the most authoritative; the greater the population of

the proposed area, the greater justification necessary to support

the existence of the "community" and interaction among its

residents;

• evidence in the form of surveys or letters from official

representatives of prominent groups located in the area to be

added showing that the persons who live, work, or worship in the

area are interested in affiliating with the applicant credit

union;
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Chartering and Field of Membership Manual

34

• evidence that the proposed area is a of "community" as defined in

"Community Common Bond" in Chapter 1;

• information concerning the availability of financial services to

the residents of the new area;

• a list of credit unions with a home or branch office in the

proposed area. (If present credit union service to the residents

of the new area is adequate, there may be no basis for the

proposed conversion.);

• the attitude of current credit union sponsors and existing credit

union members toward the proposed conversion; and

• the anticipated financial impact on the credit union in terms of

need for additional employees and fixed assets.

NCUA-FM - V -- REMOVAL OF GROUPS FROM THE FIELD OF MEMBERSHIP 7/94

Credit unions may request removal of a group from its field of

membership for various reasons. The most common reasons for this type

amendment are:

• the group is within the overlapping field of membership of two

credit unions and one wishes to discontinue service;

• the federal credit union cannot continue to provide adequate

service to the group;

• the group has ceased to exist;

• the group does not respond to repeated requests to contact the

credit union or refuses to provide needed support; or

• the group initiates action to be removed from the field of

membership.

When a federal credit union requests an amendment to remove a group from

its field of membership, the regional director will determine why the

credit union wishes to remove the group and whether the existing members

of the group will continue membership. Membership may continue for those

who are already members if the credit union has adopted the "once a

member, always a member" bylaw provision.

NCUA-FM - VI -- SPIN-OFFS 7/94

A "spin-off" occurs when, by agreement of the parties, a portion of the

field of membership, assets, liabilities, shares and capital of a credit

union, are transferred to a new or existing credit union. A spin-off is

unique in that one credit union has a field of membership addition and

the other has a removal.

If the spin-off goes to a new federal charter, the requirements of

Chapter 1 apply. (See that chapter for discussion of the field of

membership and documentation requirements for new federal charters.) If

it goes to an existing federal charter, the requirements of Chapter 2

apply.

Spin-offs involving federally insured state credit unions in different

NCUA regions must be approved by all affected regional directors and the

state regulators, as applicable.

The request for approval of a spin-off must be supported with a plan

that addresses, as a minimum:

• Why the spin-off is being requested.
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Chartering and Field of Membership Manual

35

• What part of the field of membership is to be spun-off.

• Whether the affected credit unions have a common sponsor or are

located within the same operational area.

• Which assets, liabilities, shares and capital are to be

transferred.

• The financial impact the spin-off will have on the affected credit

unions.

• The ability of the acquiring credit union to effectively serve the

new members.

• The proposed spin-off date.

The spin-off request must also include current financial statements from

the affected credit unions and the proposed voting ballot.

For federal credit unions spinning off a group, membership notice and

voting requirements and procedures are the same as for mergers -- see

Part 708 of the NCUA Regulations -- except that only the members

directly affected by the spin-off -- those whose shares are to be

transferred -- are permitted to vote. Members whose shares are not being

transferred will not be afforded the opportunity to vote. Voting

requirements for federally insured state credit unions are governed by

state statute.

NCUA-FM - VII -- PROFESSIONAL CONFLICTS 7/94

It is important for a credit union, as well as professional

organizations such as accounting firms, law firms, real estate title

insurance firms and appraisal firms, to avoid the appearance of

impropriety when the credit union contracts with a professional

organization for services. This is even more critical if the

professional organization and/or its employees are members of the credit

union.

When a professional organization is added to a federal credit union's

field of membership, the credit union should notify professional

organization of certain provisions. The following notice is intended to

ensure that decisions made by a credit union and the professional

organizations serving the credit union are independent of any loan

decisions or deposit activities:

"Please be advised that with respect to the addition of the employees of

[professional organization] to the [FCU], any lending, deposit and/or

other credit union services involving this group's members must avoid

any appearance of impropriety and must follow the ethical standards of

the profession."

NCUA-FM - VIII -- PROCEDURES FOR AMENDING THE FIELD OF MEMBERSHIP 7/94

NCUA-FM - VIII.A -- General 7/94

All requests for approval to amend a federal charter must be submitted

to the appropriate regional director. In normal cases, the regional

director will make a decision on the request within 10 business days. If

a decision cannot be made within that time, the regional director will

notify the credit union within the 10-business-day period.

To streamline the process further, NCUA has instituted two additional

procedures -- a limited preapproval process and a procedure for easing

the workload when making substantial charter changes as with mergers and

charter conversions.
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NCUA-FM - VIII.B -- Streamlined Expansion Procedure (SEP) for Small

Occupational Groups 7/94

In keeping with the goals of NCUA chartering policy to provide service

to all eligible groups desiring credit union service, well-operated

federal credit unions except those designated as "distressed" may take

advantage of the SEP for adding occupational groups to their fields of

membership.

To use this procedure, the federal credit union's board of directors

must first apply to their respective NCUA regional director for a

charter amendment. The charter amendment request must be signed by the

presiding officer of the board of directors.

The following is a sample amendment for permitting a federal credit

union to use the SEP authority:

Groups of persons with occupational common bonds which are located

within 25 miles of one of the credit union's service facilities, which

have provided a written request for service to the credit union, which

do not presently have credit union service available, and which have no

more members in the group than the maximum number established by the

NCUA Board for additions under this provision: Provided, however, that

the National Credit Union Administration may permanently or temporarily

revoke the power to add groups under this provision upon a finding, in

the Agency's discretion, that permitting additions under this provision

are not in the best interests of the credit union, its members, or the

National Credit Union Share Insurance Fund.

Once NCUA has approved the amendment and the credit union board has

adopted it, the SEP authority may be implemented. The charter amendment

permits approved federal credit unions to immediately begin serving

employee groups meeting criteria set forth in this section. Under this

procedure, there is no formal NCUA action necessary on each group being

added.

The maximum number of persons for each group of employees which may be

added under SEP will be established by the NCUA Board from time to time.

The number will be based on potential primary members -- that is, the

persons sharing the basic occupational affinity to each sponsor group;

family members and other derivative members are not included in the SEP

limit. Several groups may be simultaneously added using these

procedures; however, the maximum number of persons for each group must

fall within the SEP limit.

The SEP does not apply to associational groups since NCUA must review

membership requirements and geographical area prior to these groups

being added to a field of membership. The procedure also does not apply

to community charter expansions because of the more individualized

analysis required.

The following SEP steps and documentation requirements must be adhered

to:

• The federal credit union must complete, for each group to be

added, an Application for Field of Membership Amendment, NCUA

4015, shown in Appendix D.

• The federal credit union must obtain a letter, on the group's

letterhead where possible, signed by an official representative

identified by title, requesting credit union service and stating

that the group does not have any other credit union service

available from any source.
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Chartering and Field of Membership Manual

37

• The group must be located within 25 miles of one of the federal

credit union's service facilities.

• The group must indicate the number of potential members -- the

number of employees -- seeking service.

• The federal credit union must maintain the above documentation

permanently with its charter.

• The federal credit union must maintain a control log of groups

added to its field of membership under the SEP. The control log

must include the date the group obtained service, the name and

location of the sponsor group, the number of potential primary

members added, the number of miles to the nearest main or branch

office, the federal credit union board of director's approval of

the group and the date approved. See Appendix D for the SEP

Control Log, NCUA 4016.

• The groups added under SEP must be reported to the federal credit

union's board at the next regular board meeting and made a part of

the meeting minutes.

• The control log and other SEP documentation must be made available

to NCUA upon request.

The regional director may from time to time request service status

reports on group added under SEP. It is advisable to use some method,

such as a sponsor prefix added to the member account number, to readily

access data for such groups.

Should a federal credit union fail to provide quality credit union

service, as determined by the group's members or employees, to a group

added under SEP, NCUA may subsequently permit dual membership with

another credit union.

Should a federal credit union fail to follow the above procedures or

deteriorate financially or operationally, NCUA, in its discretion, may

revoke the SEP privilege.

NCUA-FM - VIII.C -- Block Additions 7/94

When a state credit union is converting to a federal charter or when a

credit union is being merged into a federal credit union, large blocks

of select groups frequently are added to a credit union's field of

membership. In such cases, the federal credit union whose field of

membership is being revised should consult directly with the appropriate

regional office early in the process to ensure the efficient treatment

of such revisions and to avoid misunderstandings.

Therefore, when a block of 50 or more new groups is being added to a

credit union's field of membership at any one time, NCUA may require

that a list of the groups and their locations be provided on a computer

diskette. Direct coordination with the appropriate NCUA regional office

will ensure the compatibility of hardware and software.

NCUA-FM - VIII.D -- Regional Director's Decision 7/94

Except for those field of membership amendments resulting from use of

the SEP, all such amendment requests will be reviewed by regional office

staff in order to ensure conformance to NCUA policy, are properly

documented, and do not cause significantly harmful or unreasonable

overlap with the fields of membership of existing credit unions.

NCUA understands and appreciates the importance of timely processing

well-supported amendment requests. Therefore, NCUA has established a

goal of ten business days from the date of receipt in the regional
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office for processing a routine, complete amendment request. A fully

documented request, including the Application for Field of Membership

Amendment, NCUA 4015, that fulfills all of the criteria discussed in

this manual and does not require written or telephone follow-up will

normally be processed within this time.

In some cases, an on-site review by NCUA staff may be required by the

regional director before acting on a proposed amendment. In addition,

the regional director may, after taking into account the significance of

the proposed field of membership amendment, require the applicant to

submit a business plan.

The condition of the requesting credit union will be considered in every

instance. The economic feasibility of expanding the field of membership

of a credit union with serious financial or operational problems must be

carefully considered if the safety and soundness of the credit union is

to be preserved.

In most cases, field of membership amendments will only be approved for

credit unions which are operating satisfactorily. If a federal credit

union is having difficulty providing good service to its current

membership, it may have even more difficulty serving an enlarged field

of membership. In some cases, expanding the field of membership of a

struggling credit union may do more harm than good. A struggling credit

union's resources need to be focused on current problems. Placing an

additional strain on these resources by increasing the field of

membership may also increase the credit union's problems.

NCUA-FM - VIII.E -- Regional Director's Approval 7/94

If the requested amendment is approved by the regional director, the

credit union will be furnished a formal, updated Section 5 of its

charter which restates the field of membership, including the requested

amendment. After action by the board of directors, the form should be

promptly filed with the credit union's official charter and bylaws.

NCUA-FM - VIII.F -- Regional Director's Disapproval 7/94

Where a regional director disapproves any application, in whole or in

part, under this chapter, the applicant will be informed in writing of

the specific reasons for the action. Where applicable, the regional

director will provide information concerning options or suggestions that

could be considered for gaining approval.

The denial letter will include the procedure for and other information

on the credit union's right to appeal the decision.

NCUA-FM - VIII.G -- Appeal of Regional Director's Decision 7/94

The procedures for filing an appeal of any actions taken by NCUA

regional directors will be followed. If not included with the denial

notice, a copy of these procedures may be obtained from the regional

director who made the decision.

The prospective group may submit substantive new and additional

information to the regional director for reconsideration. In these

cases, the request will not be considered as an appeal but as a request

for reconsideration by the regional director. If the request is again

denied, the group may proceed with the appeal process.

NCUA-FM - IX -- SERVICE STATUS REPORTS 7/94

Federal credit unions which frequently add select groups to their fields

of membership should be prepared to furnish a written summary of the
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39

results of their efforts to bring service to the employees or members of

the select groups.

The regional directors will periodically request that such federal

credit unions submit service status reports to NCUA showing, at a

minimum, the number of primary potential members of each select group

added and the number of persons from each select group who have actually

enrolled as credit union members.

These service status reports can be enlarged to require information

concerning aggregate share and loan activity by select group or

participation in other credit union services.

In any event, federal credit unions using the select group amendment

method should implement an information gathering system early in their

amendment/diversification program to track their progress in providing

service to the potential members of their select groups.

This information will help the credit union to operate more efficiently

and will give management the data necessary to make decisions about

marketing strategy, new promotions, implementation of new services, etc.

The service status reports will enable NCUA to determine which federal

credit unions are serving newly added groups, as well as any federal

credit unions that are not serving new groups.

If the NCUA determines that a federal credit union is not adequately

serving new groups, the regional director may restrict further

amendments and permit the groups not being adequately served to be

overlapped with another federal credit union or remove the select

group(s) not being served from Section 5 of the credit union charter.
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NCUA-FM - CHAPTER 3 -- CHARTER CONVERSIONS 7/94

NCUA-FM - I -- INTRODUCTION 7/94

A charter conversion is a change in the jurisdictional authority under

which a credit union operates. A credit union's charter is the

instrument granted to the institution by the state or federal

government.

Federal credit unions receive their charters from NCUA and are subject

to its supervision, examination, and regulation; they are incorporated

under federal law.

State-chartered credit unions are incorporated in a particular state,

receiving their charter from the state agency responsible for credit

unions and subject to the state's regulator. If the state-chartered

credit union's deposits are federally insured it will also fall under

NCUA's jurisdiction.

A federal credit union's power and authority are derived from the

Federal Credit Union Act and NCUA Rules and Regulations. If the statechartered credit union's deposits are federally insured it will also

fall under NCUA's jurisdiction.

A federal credit union's power and authority are derived from the

Federal Credit Union Act and NCUA Rules and Regulations. State-chartered

credit unions are governed by state law and regulation. There are two

types of charter conversions -- federal charter to state charter, and

state charter to federal charter. Although common bond is not an issue

from NCUA's standpoint in the case of a federal to state charter

conversion, the procedures and forms relevant to such a conversion have

been included in Appendix D.

NCUA-FM - II -- CONVERSION OF A STATE CREDIT UNION TO A FEDERAL CREDIT

UNION 7/94

NCUA-FM - II.A -- General Requirements 7/94

Any state-chartered credit union may apply to convert to a federal

credit union. In order to do so, it must:

• comply with state law regarding conversion;

• file proof of compliance with NCUA;

• file the required conversion application, proposed federal credit

union organization certificate and other documents with NCUA;

• comply with the requirements of the Federal Credit Union Act, e.g.,

common bond and reserve requirements; and

• be granted a charter by NCUA.

Conversions are treated the same as any initial application for a

federal charter, including mandatory on-site examination by NCUA. NCUA

will also consult with the appropriate state authority regarding the

credit union's current condition, management expertise, and past

performance. Since the applicant in a conversion is an on-going credit

union, the economic advisability of granting a charter is more readily

determinable than in the case of an initial charter application.
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Generally, a converting state credit union's field of membership must

conform to NCUA chartering policy. However, if a converting credit union

can demonstrate that it has been effectively serving groups outside what

would have been its operational area if it had been a federal credit

union, the regional director, in his or her discretion, may permit

continued service to these groups after conversion. Every reasonable

effort will be made to phrase the field of membership similar to the

presentations in Chapters 1 and 2 with individually listed groups and

their locations. In any case, subsequent changes must conform to NCUA

amendment policy in effect at that time

NCUA-FM - II.B -- Submission of Conversion Proposal to NCUA 7/94

The following actions are to be taken before submitting a conversion

proposal:

• The credit union board must approve a proposal for conversion.

• The Application to Convert (NCUA 4401) must be completed. Its

purpose is to provide the regional director with information on

the present operating policies and financial condition of the

credit union and the reasons why the conversion is desired. A

continuation sheet may be used if space on the form is inadequate.

Particular attention should be given to answering the question on

the reasons for conversion. These reasons should be stated in

specific terms, not as generalities.

• The application must be accompanied by all required attachments

including the following:

• written evidence that the state regulator is either in

agreement with the conversion proposal or, if not in agreement,

the reasons therefore;

• the Application for Insurance of Accounts (NCUA 9600) in the

case of a state credit union that is not federally insured;

• the Application and Agreements for Insurance of Accounts (NCUA

9500);

• the Federal Credit Union Investigation Report, Conversion of

State Charter to Federal Charter (NCUA 4000);

• the most current financial report and delinquent loan schedule;

and

• the Organization Certificate (NCUA 4008). Only Part (3) and the

signature/notary section of page 4 should be completed and,

where applicable, signed by the credit union officials. The

NCUA regional office will complete the other sections of this

document.

NCUA-FM - II.C -- NCUA Consideration of Application to Convert 7/94

II.C.1 -- Review by the Regional Director

The application will be reviewed to determine that it is complete and

that the proposal is in compliance with Section 125 of the Federal

Credit Union Act. This review will include a determination that the

state credit union's field of membership is in compliance with NCUA's

chartering policies. The regional director may make further

investigation into the proposal and may require the submission of
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42

additional information to support the request to convert. At this point,

NCUA will conduct an on-site review of the credit union.

II.C.2 -- On-Site Review

NCUA will examine the books and records of the credit union on-site.

Nonfederally insured credit unions will be assessed an insurance

application fee.

II.C.3 -- Approval by the Regional Director and Conditions to the

Approval

The conversion will be approved by the regional director if it is in

compliance with Section 125 of the Federal Credit Union Act and meets

the criteria for federal insurance. Where applicable, the regional

director will indicate any special conditions that the credit union must

meet in order to convert to a federal charter, including changes to the

credit union's field of membership in order to conform to NCUA's

chartering policies. Some of these conditions may be set forth in a

Letter of Understanding and Agreement (LUA), which requires the

signature of the officials and the regional director.

II.C.4 -- Notification

The regional director will notify both the credit union and the state

regulator of the decision on the conversion.

NCUA-FM - II.D -- Action by Board of Directors 7/94

II.D.1 -- General

Upon being informed of the regional director's approval, the board must:

• comply with all requirements of the state regulator that will

enable the credit union to convert to a federal charter and cease

being a state credit union;

• obtain a letter or official statement from the state regulator

certifying that the credit union has met all of the state

requirements and will cease to be a state credit union upon its

receiving a federal charter. A copy of this document must be

submitted to the regional director;

• obtain a letter from the share insurer, if applicable, certifying

that the credit union has met all withdrawal requirements. A copy

of this document must be submitted to the regional director; and

• submit a statement of the action taken to comply with any

conditions imposed by the regional director in the approval of the

conversion proposal and, if applicable, submit the signed LUA.

II.D.2 -- Application for a Federal Charter

When the regional director has received evidence that the board has

completed the actions described above, the federal charter and new

Certificate of Insurance will be issued.

The credit union may then complete the conversion as discussed in the

following section. Denials are appealable. (See Chapter 1, Section

VIII.D.)

NCUA-FM - II.E -- Completion of the Conversion 7/94

II.E.1 -- Effective Date of Conversion

The date on which the regional director approves the Organization

Certificate and the Application and Agreements for Insurance of Accounts
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is the date on which the credit union becomes a federal credit union.

The regional director will notify the credit union and the state

regulator of the date of the conversion.

II.E.2 -- Assumption of Assets and Liabilities

As of the effective date, the federal credit union will be the owner of

all of the assets and will be responsible for all of the liabilities and

share accounts of the state credit union.

II.E.3 -- Board of Directors' Meeting

Upon receipt of its federal charter, the board will hold its first

meeting as a federal credit union. At this meeting, the board will

transact such business as is necessary to complete the conversion as

approved and to operate the credit union in accordance with the

requirements of the Federal Credit Union Act and NCUA Rules and

Regulations. Actions to be taken at this meeting include:

• change of the credit union's name on all records, accounts,

investments and other documents evidencing assets or liabilities

of the credit union;

• changes to the credit union's books and records:

• As of the commencement of business, the accounting system,

records, and forms must conform to the standards established by

NCUA;

• New journal and cash record and general ledger records should

be set up. The general ledger accounts for the state credit

union will be posted through the effective date of the

conversion, and the new balances will be transferred to the new

general ledger accounts of the federal credit union;

• The income and expense accounts of the state credit union will

not be closed unless the conversion is at the close of an

accounting period or is required by the state regulator; and

• The individual share and loan ledger accounts used by the state

credit union may continue to be used.

The federal credit union's name will be properly reflected on these

accounts.

II.E.4 -- Reports to NCUA

Within 10 business days after commencement of operations, the recently

converted federal credit union must submit to the regional director the

following:

• Report of Officials (NCUA 4501).

• Financial and Statistical Reports, (Forms FCU 109A, 109B, and

109F, or their equivalent) as of the commencement of business of

the federal credit union.

NCUA-FM - III -- CONVERSION OF A FEDERAL CREDIT UNION TO A STATE CREDIT

UNION 7/94

NCUA-FM - III.A -- General Requirements 7/94

Any federal credit union may apply to convert to a state credit union.

In order to do so, it must:
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44

• Notify NCUA prior to commencing the process to convert to a state

charter and state the reason(s) for the conversion;

• Comply with the requirements of Section 125 of the Federal Credit

Union Act that enable it to convert to a state credit union and to

cease being a federal credit union; and

• Comply with applicable state law and the requirements of the state

regulator.

Particular attention should be given to answering the question on the

reasons for conversion. These reasons should be stated in specific

terms, not as generalities.

NCUA-FM - III.B -- Special Provisions Regarding Federal Share Insurance

7/94

If the federal credit union wants to continue federal share insurance

after the conversion to a state credit union, it must submit an

Application for Insurance of Accounts (NCUA 9600) to the regional

director at the time it requests approval of the conversion proposal.

The regional director has the authority to approve or disapprove the

Application.

If the converting federal credit union does not want to continue federal

share insurance or if its application for continued insurance is denied,

insurance will cease in accordance with the provisions of Section 206 of

the Federal Credit Union Act.

If, upon its conversion to a state credit union, the federal credit

union will be terminating its federal share insurance or converting from

federal to non federal share insurance, it must comply with the

membership notice and voting procedures set forth in Section 206 of the

Federal Credit Union Act and Part 708 of NCUA's Rules and Regulations.

Where the state credit union will be non federally insured, federal

insurance ceases on the effective date of the charter conversion. If it

will be otherwise uninsured, then federal insurance will cease 1 year

after the date of conversion subject to the restrictions in Section

206(d)(1) of the Federal Credit Union Act. In either case, the state

credit union will be entitled to a refund of the federal credit union's

NCUSIF capitalization deposit and any unused portion of the federal

insurance premium after the final date on which any of its shares are

federally insured.

The NCUA Board reserves the right to delay the refund of the

capitalization deposit for up to 1 year if it determines that payment

would jeopardize the NCUSIF.

NCUA-FM - III.C -- Submission of Conversion Proposal to NCUA 7/94

Upon approval of a proposition for conversion by a majority vote of the

board of directors at a meeting held in accordance with the federal

credit union's bylaws, the conversion proposal will be submitted to the

regional director and will include:

• a current financial report;

• a current delinquent loan schedule;

• an explanation and appropriate documents relative to any changes

in insurance of member accounts;

• a resolution of the board of directors;

• a proposed Notice of Special Meeting of the Members (NCUA 4221);
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45

• a copy of the ballot to be sent to members (NCUA 4506);

• evidence that the state regulator is in agreement with the

conversion proposal; and

• a statement of reasons supporting the request to convert.

NCUA-FM - III.D -- Approval of Proposal to Convert 7/94

III.D.1 -- Review by the Regional Director

The proposal will be reviewed to determine that it is complete and is in

compliance with Section 125 of the Federal Credit Union Act. The

regional director may make further investigation into the proposal and

require the submission of additional information to support the request.

III.D.2 -- Conditions to the Approval

The regional director will indicate any special conditions that the

credit union must meet in order to proceed with the conversion.

III.D.3 -- Approval by the Regional Director

The proposal will be approved by the regional director if it is in

compliance with Section 125 and, in the case where the state credit

union will no longer be federally insured, the notice and voting

requirements of Section 206 of the Federal Credit Union Act.

III.D.4 -- Notification

The regional director will notify both the credit union and the state

regulator of the decision on the proposal.

NCUA-FM - III.E -- Approval of Proposal by Members 7/94

Upon approval of the proposal by the regional director, the following

actions will be taken by the board of directors:

• The proposal must be submitted to the members for approval and a

date set for a vote on the proposal. The proposal may be acted on

at the annual meeting, at a special meeting for that purpose, or

by written ballot to be filed by the date set for the vote.

• Members must be given advance notice (NCUA 4221) of the meeting at

which the proposal is to be submitted in accordance with the

provisions of the Federal Credit Union Bylaws (Article V). The

notice shall:

• Specify the purpose, time and place of the meeting; Include a

brief and accurate statement of the reasons for and ÀÄÙ against

the proposed conversion, including any effects it could have

upon share holdings, insurance of member accounts, and the

policies and practices of the credit union;

• Include a brief and accurate statement of the reasons for and

against the proposed conversion, including any effects it could

have upon share holdings, insurance of member accounts, and the

policies and practices of the credit union.

• Inform the members that they have the right to vote on the

proposal at the meeting, or by written ballot to be filed not

later than the date and time announced for the annual meeting,

or at the special meeting called for that purpose;

• Be accompanied by a Ballot for Conversion Proposal (NCUA 4506);

and
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• State in bold face type that the issue will be decided by a

majority of members who vote.

• A copy of the notice of the meeting shall be delivered to the

regional director at the same time that it is delivered to the

members.

• The proposed conversion must be approved by a majority of all of

the members who vote on the proposal, a quorum being present, in

order for the credit union to proceed further with the

proposition. Ballots cast by members who did not attend the

meeting but who submitted their ballots in accordance with

instructions above will be counted with votes cast at the meeting.

In order to have a suitable record of the vote, the voting at the

meeting should be by written ballot as well.

• The board of directors shall, within 10 days, certify the results

of the membership vote to the regional director. The statement

shall be verified by affidavits of the Chief Executive Officer and

the Recording Officer on NCUA 4505.

NCUA-FM - III.F -- Compliance with State Laws 7/94

If the proposition for conversion is approved by a majority of all

members who voted, the board of directors should then:

• ensure that all requirements of state law and the state regulator

have been accommodated;

• ensure that the state charter or the license has been received

within 90 days from the date the members approved the proposal to

convert; and

• ensure that the regional director is kept informed as to progress

toward conversion and of any material delay or of substantial

difficulties which may be encountered.

If the conversion cannot be completed within the 90-day period, the

regional director should be informed of the reasons for the delay.

NCUA-FM - III.G -- Completion of Conversion 7/94

In order for the conversion to be completed, the following steps are

necessary:

• The board of directors will submit a copy of the state charter to

the regional director within 10 days of its receipt. This will be

accompanied by the federal charter and the federal insurance

certificate. A copy of the financial reports (FCU 109A and 109B)

as of the preceding month-end should be submitted at this time.

• The regional director will notify the credit union and the state

regulator in writing of the receipt of evidence that the credit

union has been authorized to operate as a state credit union.

• The credit union shall cease to be a federal credit union as of

the effective date of the state charter.

• If the regional director finds a material deviation from the

provisions that would invalidate any steps taken in the

conversion, the credit union and the state regulator shall be

promptly notified in writing. This notice may be either before or

after the copy of the state charter is filed with the regional

director. The notice will inform the credit union as to the nature

of the adverse findings. The conversion will not be effected and
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47

completed until the improper actions and steps have been

corrected.

• Upon ceasing to be a federal credit union, the credit union shall

no longer be subject to any of the provisions of the Federal

Credit Union Act, except as may apply if federal share insurance

coverage is continued. The successor state credit union shall be

immediately vested with all of the assets and shall continue to be

responsible for all of the obligations of the federal credit union

to the same extent as though the conversion had not taken place.

Operation of the credit union from this point will be in

accordance with the requirements of state law and the state

regulator.

• If the regional director is satisfied that the conversion has been

accomplished in accordance with the approved proposal, the federal

charter will be canceled.

• There is no federal requirement for closing the records of the

federal credit union at the time of conversion or for the manner

in which the records shall be maintained thereafter. The

converting credit union is advised to contact the state regulator

for applicable state requirements. The credit union shall neither

use the words "Federal Credit Union" in its name nor represent

itself in any manner as being a federal credit union.

• If the state credit union is to be federally insured, the regional

director will issue a new insurance certificate.
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NCUA-FM - APPENDIX A

GLOSSARY 7/94

These definitions apply only for use with this Manual. Definitions are

not intended to be all inclusive or comprehensive. This Manual, the

Federal Credit Union Act, and NCUA Rules and Regulations as well as

state laws may be used for further reference.

Appeal - The right of a credit union or charter applicant to request

reconsideration of an unfavorable NCUA decision to a higher authority.

Associational common bond - Association resulting from membership in an

organization, participation in whose activities develops common

loyalties, mutual benefits and mutual interests. The association should

hold regular meetings and sponsor other activities that provide for

contact among members.

Associational credit union - A credit union whose field of membership

consists primarily of persons who are members of one or more related

associational groups.

Business plan - Plan submitted by a charter applicant or existing

federal credit union addressing the economic viability of a proposed

charter or field of membership addition.

Charter - The document which authorizes a group or combination of groups

to operate as a credit union and defines the fundamental limits of its

operating authority, generally including the persons the credit union is

permitted to accept for membership. Charters are issued by the National

Credit Union Administration for federal credit unions and by the

designated state chartering authority for credit unions organized under

the laws of that state.

Common bond - The characteristic or combination of characteristics which

distinguishes a particular group of persons from the general public.

There are only three common bonds which can serve as a basis for a

group's forming or being included in a federal credit union: employment

by the same person or entity or group of entities ("occupational common

bond"), membership in the same association ("associational common

bond"), and residence, employment, or religious affiliation in the same

geographic area ("community common bond").

Community common bond - Residence or employment of persons and

businesses and other legal entities located within the same well-defined

neighborhood, community or rural district.

Community credit union - A credit union whose field of membership

consists of persons who live or work in the same well-defined

neighborhood, community, or rural district.

Conversion - The process of changing from a federal to a state or state

to federal credit union charter.

Credit union - A member-owned, not-for-profit cooperative financial

institution formed to permit those in the field of membership specified

in the charter to save, borrow, and obtain related financial services.

Federal credit unions are chartered as corporations pursuant to the

Federal Credit Union Act.

Economic viability - An overall evaluation of the credit union's or

charter applicant's ability to operate successfully.
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Chartering and Field of Membership Manual

Emergency merger - Pursuant to Section 205(h) of the Federal Credit

Union Act, authority of NCUA to merge two credit unions without regard

to field of membership policy.

Exclusionary clause - A limitation, written in a credit union's charter,

which precludes the credit union from serving a portion of a group

otherwise included in its field of membership. Exclusionary clauses are

used to prevent certain overlaps of fields of membership between credit

unions.

Federal share insurance - Insurance coverage provided by the National

Credit Union Share Insurance Fund and administered by the National

Credit Union Administration. Coverage is provided for qualified accounts

in all federal credit unions and participating state credit unions.

Field of membership - The persons (persons may include organizations and

other legal entities) a credit union is permitted to accept for

membership. A federal credit union's field of membership, set forth in

Section 5 of its charter, may be made up entirely of a single group,

related groups with one common bond, or of unrelated groups each having

its own common bond.

Letter of Understanding and Agreement - Agreement between NCUA and

federal credit union officials not to engage in certain activities

and/or to establish reasonable operational goals. These are normally

entered into with new charter applicants, and occasionally with credit

unions granted significant charter amendments and are for a limited

time.

Merger - Absorption by one credit union of all of the assets,

liabilities and equity of another credit union. Mergers must be approved

by the National Credit Union Administration and by the appropriate state

regulator whenever a state credit union is involved.

Multiple group credit union - A credit union whose field of membership

consists of groups of persons, each group with its own common bond. The

groups may be occupational, associational, or a combination thereof and

do not need to share a common bond or be in any way related to one

another.

Occupational common bond - Employment by the same entity or related

entities.

"Employment" includes long term contractual arrangements which are the

practical equivalent of regular employment.

Occupational credit union - A credit union whose field of membership

consists primarily of persons employed in the same entity or related

entities.

Operational area - The region which, as determined by NCUA in its

discretion, may reasonably be served by one of a credit union's service

facilities.

Overlap - The situation which results when a group is eligible for

membership in more than one credit union.

Potential membership - Persons eligible to become primary members of a

federal credit union.

Primary members - Members sharing the basic occupational, associational

or community affinity to the field of membership.

Purchase and assumption - Purchase of all or a part of the assets of and

assumption of all or a part of the liabilities of one credit union by
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Chartering and Field of Membership Manual

another credit union. The purchased and assumed credit union must first

be placed into involuntary liquidation.

Select group - An occupational or associational group with its own

common bond.

Secondary or derivative members - Members included in the field of

membership by virtue of their close relationship to a common bond group

(e.g., immediate family members, employees of the credit union, etc.).

Service facility - A place where, as determined by NCUA in its sole

discretion: (1) shares are accepted for members' accounts; (2) loan

applications are accepted or loans are disbursed; (3) a member can deal

directly with a credit union representative; and (4) the service

provided is clearly associated with that particular credit union. An

automated teller machine or similar device is not a federal credit union

service facility. Similarly, a branch or service center shared by a

number of credit unions is not a service facility for purposes of this

definition.

Service status report - Periodic written statements made by federal

credit unions to NCUA summarizing the results of efforts to bring

service to the employees or members of select groups.

Subscribers - For a federal credit union, at least seven individuals who

sign the charter application and pledge at least one share.
National Credit Union Administration

Chartering and Field of Membership Manual

NCUA-FM - APPENDIX B

LETTER OF UNDERSTANDING AND AGREEMENT 7/94

To the Board of Directors and Other Officials

____________ Federal Credit Union

Since the purposes of credit unions are to promote thrift and to make

funds available for loans to credit union members for provident and

productive purposes, and since newly chartered credit unions do not

generally have sufficient reserves to cover large losses on loans or

meet unduly large liquidity requirements, Federal insurance coverage of

member accounts under the National Credit Union Share Insurance Fund

will be granted to the above named credit union subject to the

conditions listed in this Letter of Understanding and Agreement and in

the Organization Certificate and Application and Agreements for

Insurance of Accounts. These terms are listed below and are subject to

acceptance by authorized credit union officials.

1. The credit union will refrain from soliciting or accepting brokered

fund deposits from any source without the prior written approval of the

Regional Director.

2. The credit union will refrain from the making of large loans, that

is, loans in excess of 5 percent of unimpaired capital and surplus, to

any one member or group of members without the prior written approval of

the Regional Director.

3. The credit union will not establish or invest in a Credit Union

Service Organization (CUSO) without the prior written approval of the

Regional Director.

4. The credit union will not enter into any insurance programs whereby

the credit union member finances the payment of insurance premiums

through loans from the credit union.

5. Any special insurance plan/program, that is, insurance other than

usual and normal surety bonding or casualty or liability or loan

protection and life savings insurance coverage, which the credit union

officials intend to undertake, will be submitted to the Regional

Director of the National Credit Union Administration for written

approval prior to the officials committing the credit union thereto.

6. The credit union will prepare and mail to the district examiner

financial and statistical reports as required by the Federal Credit

Union Act and Bylaws by the 20th of each month following that for which

the report is prepared.

7. As the credit union's officials gain experience and the credit union

achieves target levels of growth and profitability, the above terms and

conditions may be renegotiated by the two parties.

We, the undersigned officials of the ____________ Federal Credit Union,

as authorized by the board of directors, acknowledge receipt of and

agree to the attached Letter of Understanding and Agreement dated

____________ 19 ____________ .

This Letter of Understanding and Agreement has been voluntarily entered

into with the National Credit Union Administration. We agree to comply

with all terms and conditions expressed in this Letter of Understanding

and Agreement.
National Credit Union Administration

Chartering and Field of Membership Manual

Should the NCUA Board determine that these terms and conditions have not

been complied with or that the board of directors or other officials

have not conducted the affairs of the credit union in a sound and

prudent manner, the NCUA Board may terminate insurance coverage of the

credit union. If actions by the officials, in violation of this Letter

of Understanding and Agreement, cause the credit union to become

insolvent, the officials assume such personal liability as may result

from their actions.

The term of this Letter of Understanding and Agreement shall be for the

period of at least 24 months from the date the credit union is insured.

This Letter of Understanding and Agreement may, at the option of the

Regional Director, be extended for an additional 24 months at the end of

the initial term of this agreement.

Dated this ____________ day of ____________ 19 ____________ .

NATIONAL CREDIT UNION ADMINISTRATION BOARD

ON BEHALF OF THE NATIONAL CREDIT UNION SHARE INSURANCE FUND

________________________

Regional Director

___________________ Federal Credit Union

By:

_____________________________

Chief Executive Officer Date

_____________________________

Chief Financial Officer Date

_____________________________

Secretary Date
National Credit Union Administration

Chartering and Field of Membership Manual

NCUA-FM - APPENDIX C

NCUA OFFICES 7/94

CENTRAL OFFICE

1775 Duke Street

Alexandria, VA 22314-3428

Commercial: 703-518-6300

REGION I - ALBANY

9 Washington Square Washington

Avenue Extension

Albany, NY 12205-5512

Commercial: 518-464-4180

FAX: 518-464-4195

Connecticut Maine Massachusetts

New Hampshire

New York Rhode Island Vermont

REGION II - CAPITAL

1775 Duke Street, Suite 4206

Alexandria, VA 22314-3437

Commercial: 703-838-0401

FAX: 703-838-0571

Delaware District of Columbia

Maryland New Jersey

Pennsylvania Virginia West

Virginia

REGION III - ATLANTA

7000 Central Parkway, Suite 1600

Atlanta, GA 30328-4598

Commercial: 404-396-4042

FAX: 404-698-8211

Alabama Arkansas Florida Georgia

Kentucky Louisiana Mississippi

North Carolina

Puerto Rico South Carolina

Tennessee Virgin Islands

REGION IV - CHICAGO

4225 Naperville Road, Suite 125

Lisle, IL 60532-3658

Commercial: 708-245-1000

FAX: 708-245-1016

Illinois Indiana Michigan

Missouri

Ohio Wisconsin

REGION V - AUSTIN

4807 Spicewood Springs Road,

Suite 5200

Austin, TX 78759-8490

Commercial: 512-482-4500

FAX: 512-482-4511

Arizona Colorado Iowa Kansas

Minnesota Nebraska New Mexico

North Dakota

Oklahoma South Dakota Texas Utah

Wyoming

REGION VI - PACIFIC

2300 Clayton Road, Suite 1350

Concord, CA 94520-2407

Commercial: 510-825-6125

FAX: 510-486-3729

Alaska American Samoa California

Guam

Hawaii Idaho Montana Nevada

Oregon Washington
National Credit Union Administration

Chartering and Field of Membership Manual

NCUA-FM - APPENDIX D -- NCUA FORMS 7/94

NCUA 4000 -- Conversion of State Charter to a Federal Charter -- FCU

Investigation Report

NCUA 4001 -- FCU Investigation Report

NCUA 4008 -- Charter

NCUA 4009 -- Approval of Organization Certificate & Certification of

Insurance

NCUA 4012 -- Report of Official & Agreement to Serve

NCUA 4015 -- Application for Field of Membership Amendment

NCUA 4016 -- Streamlined Expansion Procedure (SEP) Control Log

NCUA 4221 -- Notice of Meeting of Members

NCUA 4401 -- Application to Convert from a State Credit Union to an FCU

NCUA 4505 -- Affidavit

NCUA 4506 -- Ballot for Conversion Proposal

NCUA 9500 -- Application and Agreement for Insurance of Accounts

NCUA 9501 -- Certification of Resolutions

NCUA 9600 -- Information to be Provided in Support of the Application

of a State Credit Union for Insurance of Accounts
Conversion of State Charter to Federal Charter

FEDERAL CREDIT UNION INVESTIGATION REPORT

(Note of Organizer)

This report must be filled in completely and submitted with the other completed forms listed in Chapter 3, page 3-2 under II. B “Submission of

Conversion Proposal to NCUA”.

A. INFORMATION FOR CHARTER AND BYLAWS

1. Proposed Name Federal Credit Union

Second choice of name Federal Credit Union

2. Contact Bus. Tel. No./Area Code

Person Res. Tel. No./Area Code

3. The credit union will maintain its office at

(City) ( County) (State) (Zip)

4. Permanent mailing address of credit union

5. Define proposed field of membership (Attach a copy of current state charter field of membership)

6. The board will have (an odd number. 5 to 15)_members; the credit committee (an odd number, 3 to 7)_members; the supervisory committee

(3 to 5)_members. Each official must complete a Report of Official and Agreement to Serve (NCUA 4012) which is to be submitted with this

investigation report.

B. CHARACTER AND FITNESS OF SUBSCRIBERS

(Please type or print)

7. List of the subscribers who have signed the organization certificate (7 not more than 10 persona). Names should be IDENTICAL to signatures on

the organization certificate (NCUA 4008). Each subscriber listed below has subscribed to at least one share in accordance with Section 103 of the

Federal Credit Union Act:

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

 Name Address

Occupation Years of Membership

Name Address

Occupation Years of Membership

ANY ADDITIONAL COMMENTS OR INFORMATION THAT IS DEEMED PERTINENT OR HELPFUL IN GIVING CONSIDERATION TO

THIS APPLICATION SHOULD BE INCLUDED AS AN ATTACHMENT.

The undersigned certifies that to the best of his/her knowledge and belief the above information is true and correct.

I do (do not) recommend that a charter be granted so this group.

Signature , Organizer

Organizer's Address

NCUA 4000
INSTRUCTIONS

A. INFORMATION FOR CHARTERS AND BYLAWS

The subscriber should select a name for the proposed credit union, desirably a short one. Although it need not fully describe the group,

the name should not be misleading. The last three words in the name must be “Federal Credit Union. ” Since the name selected should not duplicate

exactly the name of an existing credit union, item 1 provides space for a second choice.

The territory of operations of a Federal credit union is described in the field of membership, item 5. The principal office of she credit

union will usually be maintained at a location described in the field of membership.

The proposed field of membership should be defined so clearly that it leaves no room for any doubt as to whom the credit union is to

serve or the area in which it is to operate. Corporations and other organizations referred to in the definition of the field of membership should be

designated by the exact names rather than by some local or popular contraction of these names. Any segment of a larger organization should be

identified with the parent. The field of membership for each type of common bond and samples are discussed in detail in Chapter 1 of the "Chartering

and Field of Membership Manual. “

With the guidance of the organizer, the subscribers to the Organization Certificate decide on the number of directors and credit committee

members, The board and credit committee must be composed of an odd number of members. The supervisory committee is appointed by the board

of directors.

B. CHARACTER AND FITNESS OF SUBSCRIBERS

The names and addresses of the subscribers should be recorded legibly and completely in item 7 of this report. It is from this information

that the Administration prepares section 3 of the charter. The names of the subscribers must be IDENTICAL to their signatures on the Organization

Certificate.

C. SUBMITTAL OF CHARTER APPLICATION

In addition to this Investigation Report, the following should be submitted to the appropriate regional director of NCUA:

1. Organization Certificate, NCUA 4008- two notarized originals. At least seven, but no more than ten persons, must sign both copies

of the organization certificate. Signatures on both copies moat be identical. The person administering the oath must not be one of the subscribers.

Tire oath on both copies of the organization certificate must be executed and show the notary’s seal and date the commission expires as required by

State law;

2. Report of Official and Agreement to Serve, NCUA 4012- one original for each board member, credit committee member, and

supervisory committee member;

3. Application and Agreements for Insurance of Accounts, NCUA 9500- one original;

4. Business Plan - refer to Chapter 1 of the Chartering and Field of Membership Manual for a discussion of the components of an

acceptable business plan.

5. Certificate of Resolution, NCUA 9501 - one original.

NCUA 4000
FEDERAL CREDIT UNION INVESTIGATION REPORT

under "Submittal of Charter Application." Please refer to page 7 for instructions in completing this report.

(Note to Organizer) This report form must be filled in completely and submitted with the other completed forms listed on page 8

A. INFORMATION FOR CHARTER AND BYLAWS

1. Proposed

name Federal Credit Union

Second

choice Federal Credit Union

2. Contact Business Tel.

Person Residence Tel.

Address

3. The credit union will maintain its offices at

(City, State, County, Zip Code)

3a. Proposed permanent mailing address of credit union

4. Define proposed field of membership

5. The board will have (an odd number, 5 to 15) members; the credit committee will have (an odd number,

3 to 7) members; the supervisory committee will have (3 to 5) members. Each official must complete a

Report of Official and Agreement to Serve (NCUA 4012) which is to be submitted with this investigation report.

B. ECONOMIC ADVISABILITY OF ORGANIZING PROPOSED CREDIT UNION

(Attach a separate sheet if space available is not adequate)

GENERAL INFORMATION

1. Potential membership

NOTE: Number of employees for occupational, active members for associational (or families for religious groups), or

population per most recent census for community-type fields of membership.

2. Potential interest (survey results).

NOTE: Sample must consist of a minimum of 250 potential members. Copy of survey form(s) utilized should be attached.

Number of people surveyed

Number of people responding to survey

Number of people pledging an initial deposit

Total dollars pledged $

Number pledging systematic savings

Total dollars pledged (per month) $

3. Number of persons attending the charter-organization meeting

4. Are officials of the sponsor favorable toward the proposal to organize a credit union?

NOTE: Attach letters of support from company officials (occupational-type); association officials (associational-type);

business, civic, or other community organizations (community-type).

For Paperwork Reduction Act Notice, see page 7.

NCUA 4001 PAGE 1
5. What facilities and assistance, if any, will the sponsor provide?

Office Space (Describe)

Office Supplies

Payroll deductions

Funding for start-up costs, if so $

Other (Describe)

6. Is credit union service now available to any members of the group?

If so, explain the nature and approximate extent of overlapping of such service with the field of membership proposed in this

application, i.e., employees who are labor union members eligible for membership in another credit union on an associational

basis; labor union members who are eligible for credit union membership on an occupational basis; community residents

who are eligible for credit union membership in occupational or associational credit unions located within the proposed

boundaries.

7. What potential difficulties do you detect in the elected officials carrying out their management, responsibilities or in the

FCU achieving its stated objectives?

NOTE TO ORGANIZER: The officials’ projected goals for share growth must be recorded in the business plan.

8. What provisions have been made to overcome potential difficulties?

Dates of planned contacts by organizer to determine progress and to assist the group:

(Date) (Date) (Date)

(Rev 2/89) NCUA 4001 PAGE 2
SPECIFIC INFORMATION - OCCUPATIONAL CHARTER APPLICANTS

9. How long has the sponsor company been in existence?

10. What was the highest number of employees during the past three years? ; Lowest number during the past three

years. If a large variance, please explain,

11. Are there any contemplated changes in the corporate structure of the company? If yes, explain

12. Have there been any significant changes in the corporate structure in the past three years? . If yes, please explain .

13. Are there any negotiations now in progress between management and labor that could lead to work stop-pages? . If

yes, please explain

14. If the credit union cannot operate on the employer’s prope~, explain how the credit union will be able to transact business

effectively with the members.

15. If the employees to be served by the credit union work in more than one location or city, identify each location with the

corresponding number of employees working at each.

16. Are there other employees of the company who are not being included in the proposed field of membership?

 if so, give the number and location of the other employees and explain why a credit union is being proposed for this group only,

NCUA 4001 PAGE 3
SPECIFIC INFORMATION - ASSOCIATIONAL CHARTER APPLICANTS

17. State the purpose and goals of the organization sponsoring this charter.

18. List the types of activities and their frequency, which the organization sponsors that provide contact among the members

and from which common loyalties, mutual benefits, and mutual interests are developed.

19. In what year was the organization established? Is it incorporated? . Where is the

headquarters located?

20. Give statistics as to trends in membership during the last five years.

21. What is the frequency of members’ meetings? . Average attendance . Dues

required

22. State the geographic territo~ where members reside.

23. Except for religious and labor union groups, obtain a copy of the current bylaws, the constitution or articles of incorpora-tion,

and recent financial statements, i.e. balance sheet, and income and expense statement. Submit these documents with this

application.

24. If the bylaws, constitution or articles of incorporation provides for more than one type of membership and if all classes of

membership are to be included in the credit union’s field of membership, provide justification for the inclusion of other than

“regular” members.

25. For labor union group only, complete a through c:

 a. State the number of labor union members at each place of employment.

b. State the total number of employees, whether union members or not, working at each place of employment. Give a breakdown

of union versus nonunion employees.

c. What has been done toward organizing a credit union on an employee basis? Discuss fully.

NCUA 4001 PAGE 4
SPECIFIC INFORMATION - COMMUNITY CHARTER APPLICANTS

26. List the factors or conditions which make this residential unit a logical group for credit union operation.

27. If the area to be served by the credit union is adjacent to any major metropolitan area, explain why it is not considered a part

of such metropolitan area.

28. Which business, civic, or other community organizations support the proposed credit union? List and show the support

pledged including the names and titles of officials who were contacted. Obtain and attach letters of support from these individuals.

29. Provide a map which clearly outlines the credit union’s proposed community boundaries.

30. Are there currently any state or federal credit unions operating within the proposed community boundaries?

If so, provide a list of the credit union’s names and mailing addresses.

31. List any other financial institutions, i.e. banks, savings and loan associations, etc., located within the proposed community

boundaries.

C. CHARACTER AND FITNESS OF SUBSCRIBERS

1. List of subscribers who have signed the organization certificate (7 not more than 10 persons). Names should be lDENTICAL to

signature on the organization certificate (NCUA 4008), Each subscriber listed below has subscribed to at least one share in

accordance with Section 103 of the Federal Credit Union Act:

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

NCUA 4001 PAGE 5
Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

Name

Address

Occupation

Years of Residence

2. Are all of the subscribers within the field of membership? . Do they appear to be fairly representative of the group

described in the definition of the field of membership? . If not, explain

3. Does your investigation indicate that the subscribers are persons of good character? . If not, explain

4. From your investigation, is it your judgment that the directors and committee members are persons of good character, and

that they have the ability and determination to operate a credit union satisfactorily? If not, explain

5. Does it appear that there are any factions within the group which may render smooth and efficient credit union operations

difficult? . If so, explain

6. Is there any indication that the proposed credit union would be used for selfish gain by any person or group of persons within

the group to be served? .

7. Is an application for a State charter now pending? .

8. Has the group ever had a credit union? . If so, when did it liquidate or merge?

ANY ADDITIONAL COMMENTS OR INFORMATION THAT IS DEEMED PERTINENT OR HELPFUL IN GIVING CONSIDERATION TO

THIS APPLICATION SHOULD BE INCLUDED AS AN ATTACHMENT.

The undersigned certifies that to the best of their knowledge and belief the above information is true and correct,

I do (do not) recommend that a charter be granted to this group.

Signature , Organizer

Organizer’s Address

Telephone No. Date

NCUA 4001 PAGE 6
INSTRUCTIONS

A. INFORMATION FOR CHARTER AND BYLAWS

The subscriber should select a name for the proposed credit union, desirably a short one. Although it need

not fully describe the group, the name should not be misleading. The last three words in the name must be “Federal

Credit Union. ” Since the name selected should not duplicate exactly the name of an existing credit union, item 1

provides space for a second choice.

The territory of operations of a Federal credit union is described in the field of membership, item 4. The

principal office of the credit union will usually be maintained at a location described in the field of membership.

The proposed field of membership should be defined so clearly that it leaves no room for any doubt as to

whom the credit union is to serve or the area in which it is to operate. Corporations and other organizations referred

to in the definition of the field of membership should be designated by the exact names rather than by some local or

popular contraction of these names. Any segment of a larger organization should be identified with the parent. The

field of membership for each type of common bond and samples are discussed in detail in Chapter 1 of the

“Chartering and Field of Membership Manual ".

With the guidance of the organizer, the subscribers to the Organization Certificate decide on the number of

directors and credit committee members. The board and credit committee must be composed of an odd number of

members. The supervisory committee is appointed by the board of directors.

B. ECONOMIC ADVISABILITY OF ORGANIZING PROPOSED CREDIT UNION

This section of the report contains information on:

1. The size and compactness of the group;

2. The nature of the common bond;

3. The attitude of the:

a. (if occupational based field of membership) management of the sponsor

organization;

b. (if associational based field of membership) officers of the sponsor

association;

c. (if community based field of membership) community leaders and/or officers of prominent

associations or organizations in the area to be served;

4. The facilities available for credit union operations;

5. The availability of existing credit union service, and

6. Other facts to support a potential for successful operation.

This section of the report should contain information on the management, association or civic leaders

contacted that intend to support or utilize the credit union, In those cases where certain persons in the area are

opposed to the credit union, the organizer should point out the factors which indicate that the group will be able to

overcome this handicap.

Clerical assistance at least during the first few months of operation, payroll deductions, and office space are

desirable aids in the development of a credit union. Plans for overcoming any obstacles to effective operation such

as lack of office space or scattered field of membership should be described briefly. If more space is needed than

that provided, a separate sheet may be used.

C. CHARACTER AND FITNESS OF SUBSCRIBERS

The names and addresses of the subscribers should be recorded legibly and completely in item C. 1. of this

report. It is from this information that the Administration prepares section 3 of the charter. The names of the

subscribers must be IDENTICAL to their signatures on the Organization Certificate.

NCUA 4001 PAGE 7
D. SUBMITTAL OF CHARTER APPLICATION

In addition to this Investigation Report, the following should be submitted to the appropriate regional

director of NCUA:

1, Organization Certificate, NCUA 4008- two notarized originals. At least seven, but no more than ten

persons, must sign both copies of the organization certificate. Signatures on both copies must be identical. The

person administering the oath must not be one of the subscribers. The oath on both copies of the organization

certificate must be executed and show the notary’s seal and date the commission expires as required by State law;

2. Report of Official and Agreement to Serve, NCUA 4012- one original for each board member, credit

committee member, and supervisory committee member;

3. Application and Agreements for Insurance of Accounts, NCUA 9500- one original;

4. Business Plan - refer to Chapter 1 of the Chartering and Field of Membership Manual for a discussion

of the components of an acceptable business plan.

5. Certificate of Resolution, NCUA 9501- one original.

NCUA 4001 PAGE 8
NATIONAL CREDIT UNION ADMINISTRATION

FEDERAL CREDIT UNION

(A corporation chartered under

the laws of the United States)

CHARTER NO.

NCUA 4008

1
ORGANIZATION CERTIFICATE

FEDERAL CREDIT UNION

Charter No.

TO NATIONAL CREDIT UNION ADMINISTRATION:

We, the undersigned, do hereby associate ourselves as a Federal credit union for the purposes indicated in and in accordance with the provisions of the Federal Credit Union Act, (12

U.S.C. 1751 et seq.). We hereby request approval of this organization certificate; we hereby

apply for insurance of member accounts; we agree to comply with the requirements of said

Act, with the terms of this organization certificate and with all laws, rules, and regulations now

or hereafter applicable to Federal credit unions,

(1) The name of this credit union shall be

Federal Credit Union.

(2) This credit union will maintain its office and will operate in the territory described

in the field of membership.

NCUA 4008

2
(3) The names and addresses of the subscribers to this certificate and the number of

shares subscribed by each are as follows:

NAME ADDRESS SHARES

(4) The par value of the shares of this credit union will be as stated in the bylaws.

(5) The field of membership shall be limited to those having the following common bond:

NCUA 4008

3
(6) The term of this credit union’s existence shall be perpetual: Provided, however, that

upon the finding that this credit union is bankrupt or insolvent or has violated any provision

of this organization certificate, of the bylaws, of the Federal Credit Union Act including any

amendments thereto or thereof, or of any regulations issued thereunder, this organization certificate may be suspended or revoked under the provisions of Section 120 (b) of the Federal

Credit Union Act.

(7) This certificate is made to enable the undersigned to avail themselves of the

advantages of said Act.

(8) The management of this credit union, the conduct of its affairs, and the powers,

duties, and privileges of its directors, officers, committees and membership shall be set forth

in the approved bylaws and any approved amendments thereto or thereof.

IN WITNESS WHEREOF we1 have hereunto subscribed our names this

day of , 1 9 _ .

Subscribed before me, an officer competent to

administer oaths, at

CITY/STATE

this day of ,

19 _ .

Signed

Title

(Notary public or other competent officer)

1At least seven signers none of whom should administer the oath

NCUA 4008

4
APPROVAL OF ORGANIZATION CERTIFICATE

AND CERTIFICATION OF INSURANCE

Pursuant to the provisions of the Federal Credit Union Act (12 U.S.C. 1751 et. seq.), the

foregoing organization certificate and insurance of member accounts of

Federal Credit Union are approved

this day of , 19__ .

CHAIRMAN

NATIONAL CREDIT UNION ADMINISTRATION

NCUA 4009
REPORT OF OFFICIAL AND AGREEMENT TO SERVE

TO: NATIONAL CREDIT UNION ADMINISTRATION

(Type or Print)

Proposed Federal Credit Union

❑ Mr. ❑ Ms. Title of Newly

Name Elected/Appointed Credit Union

❑ Mrs. ❑ Miss Position

Last First Middle

Maiden Name (If Different From Above)

Address (Res.)

Street City State Zip Code

Phone + Area Code

(Residence) (Business)

Place of Birth Date of Birth

City/State Social Security

Employer Number

Type of Business

Number of years with present employer Your position title

Education background (circle highest grade completed)

12345678910111 2 123 4 ( ) MAJOR FIELD OF STUDY

(Grade and High School) (College)

Other training or experience

Are you willing to accept the position of trust for which you have been selected and to remain in office until

such time as a qualified successor is found? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❑ Yes ❑ NO

Have you been informed as to the general duties and responsibilities of an official of the proposed Federal

credit union and are you willing to devote the time necessary to familiarize yourself with and to perform

your duties?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❑ Yes ❑ NO

Estimated number of hours per month you will be able to donate as a volunteer

IF THE ANSWER IS YES TO THE FOLLOWING QUESTION, PLEASE PROVIDE INFORMATION AS INSTRUCTED ON

REVERSE SIDE OF THIS FORM:

Have you ever been convicted of any CRIMINAL OFFENSE involving dishonesty or a breach of trust?. . . . . . . ❑ Yes ❑ No

To facilitate the process of obtaining a credit and background check, please provide the following:

2. Any other names which you have used , and,

2. Previous address, (if your address changed over the past 2 years).

3. Name of Spouse

READ THE FOLLOWING CAREFULLY BEFORE SIGNING

CERTIFICATION AND AGREEMENT TO SERVE:

I certify that the information provided on this form is true and correct. Further, 1, the undersigned, having been duly designated

to occupy the position(s) indicated above, do hereby agree to serve in the above-stated office(s) of this proposed credit union

until the first annual meeting held in accordance with the Federal Credit Union Act and the bylaws of this credit union and

until the election of my successor(s). I further pledge to carry out the duties and responsibilities commensurate with said office(s)

as promulgated by the Federal Credit Union Act and the bylaws of this credit union. I have read the Privacy Act Notice on

the reverse side of this form.

Date Signature Witness

NCUA 4012 PAGE 1
PRIVACY ACT NOTICE

The Privacy Act of 1974 (Public Law 93-579) requires that you be advised as to the legal authority, purpose and uses

of the information solicited by this form. Pursuant to Sections 104 and 205(d) of the Federal Credit Union Act, the information

in this form is requested for the purpose of completing the investigation required for a new Federal credit union. The information in this form will be primarily used in considering the soundness of the management for the proposed Federal credit union.

However, this form may be disclosed to any of the following sources: a congressional office in response to your inquiry to

that office; an appropriate Federal, state or local authority in the investigation or enforcement of a statute or regulation; or

employees of a Federal agency for audit purposes. Failure to complete this form or omission of any item of information, except

for disclosure of your social security number, may result in a delay in the process for chartering the proposed Federal credit

union. In accordance with Section 792.36 of NCUA’S regulations, you are not required to furnish your social security number

on this form. Your social security number, if voluntarily provided, will be used to more easily verify the information required

by this form. No penalty will result to you as a management official or to the chartering of the proposed Federal credit union

if you do not provide your social security number.

Further information needed if answer to CRIMINAL OFFENSE question on reverse side of form was YES:

CRIMINAL OFFENSE:

Nature of offense

Date of occurrence Date of conviction

Sentence conferred

(Attach a separate sheet if space provided is not adequate)

CRIMINAL OFFENSE GUIDELINES

The Federal Credit Union Act, Subchapter II, section 205(d), requires that, “Except with the written consent of the Administrator, no person shall serve as director, officer, committee member, or employee of an insured credit union who has

been convicted or who is hereafter convicted, of any criminal offense involving dishonesty or breach of trust.” To assist the

Administrator in making a determination of the fitness of a person who is selected to serve and who the organizer believes

is qualified to serve as an official, the specific information above will need to be furnished,

If the Board believes that, in view of the facts presented and the date of the offense, they can give their consent to

the appointment they will so advise that person in writing. If on the other hand, the Board believes after careful consideration

that they cannot in good conscience give their written consent to the appointment they will contact the organizer and ask

that another person be selected for the position. The person selected will have to complete a Report of Official and Agreement

to Serve.

An indication of whether the bonding company would agree to provide coverage should be included if the person is

to serve as treasurer. Bonding company agrees to provide coverage ❑ Yes ❑ No.

NCUA 4012 PAGE 2
APPLICATION FOR FIELD OF MEMBERSHIP AMENDMENT

1.

2.

3.

4.

5.

6.

(Attach a separate application for each group included in your request for expansion.)

Name and address of credit union:

Name of group/association to be added:

(If Association, include Charter/Bylaws.)

Description of business:

Address:

Total number of potential employees/members to be added:

Sponsor’s headquarters location:

If relevant, work and/or paid from location: also indicate the number of employees

location:

at each

Distance to nearest credit union service facility group has access to:

Address of the nearest service facility group has access to:

Is the group eligible for membership in any other credit union? NO Yes

If yes, give the name and location of the other servicing credit union. Also include, if

applicable, a letter of release from the overlapped credit union.

Attach a letter, on letterhead stationery if possible, from the group requesting credit union

service.

NCUA 4015

Page 1
The regional director may request other documentation appropriate to the situation. This may

include current financial statements, branch office financial statements, or other data.

Other comments:

Name and title of credit union board-authorized representative

(e.g., Credit Union Manager/President/CEO-Please print or type)

Signature

(Date)

NCUA 4015

Page 2
SEP CONTROL LOG

SEP charter amendment:

d Certification

orized

ature)

Name and Location(City, ST) of SponsorGroup

Distance toNearest CUBranch

Number ofEmployees/PrimaryPotential Members

Control Page Number

NCUA 4016
NOTICE OF MEETING OF THE MEMBERS

FEDERAL CREDIT UNION

(City) (State)

THIS PROPOSITION WILL BE DECIDED BY A MAJORITY OF THE MEMBERS WHO VOTE.

Notice is hereby given that a meeting of the members of

Federal Credit Union,

has been called and will be held at

on , 19 , at o’clock, _ .M. for the purpose of considering and

voting upon the following resolution:

“RESOLVED, That the Federal Credit

Union be converted to a credit union chartered under the laws of the State of and

that its operation under Federal charter be discontinued.

RESOLVED FURTHER, That the board of directors and the officers of this credit union be and are hereby

authorized and directed to do all things necessary to effect and to complete the conversion of this credit

union from a Federal to a State-chartered credit union”

The board of directors of this credit union has given careful consideration to the advantages and the disadvantages

of the proposed conversion and believes it to be in the best interest of the members for the following reasons:

The proposed conversion would result in the following disadvantages or adverse changes in services and benefits to

the members of the credit union:

NCUA 4221
The board of directors recommends that the members approve the proposal to convert to a State charter

The members’ accounts will ❑ will not ❑ continue to be insured by the National Credit Union Share Insurance Fund.

Attached is your ballot. You are urged to bring your ballot to the meeting and to cast your vote after hearing the discussion of the proposal. If you cannot attend the meeting, you are urged to mark your vote, date and sign your ballot, have

it postmarked no later than the date and the time announced for the meeting of the members, and mail it to the following

address:

BY ORDER OF THE BOARD OF DIRECTORS

TITLE:

(CHIEF EXECUTIVE OFFICER)

TITLE:

(CHIEF RECORDING OFFICER)

Issued

(Date)

NCUA 4221
APPLICATION TO CONVERT FROM A STATE TO A FEDERAL CREDIT UNION

The Credit Union of (city), (State), incorporated under the laws of the State of on ,19 by decision of its

board of directors, hereby makes application to the National Credit Union Administration to convert to a Federal credit union.

_ ,

1. Field of membership of State-chartered credit union. (Use exact wording of charter, articles of incorporation or bylaws,

as amended to date.)

2. Is proposed Federal charter to cover same field of membership? Yes ❑ No ❑ If answer is “No,” explain fully:

3. Standard financial and statistical reports as of ,19 , or comparable forms of reports, certified

correct by the treasurer and verified by the affidavit of the president or vice-president, are attached.

4. A schedule of delinquent loans classified 2 to 6 months, 6 to 12 months, and 12 months and over delinquent is attached.

(As a minimum, schedule should include for each delinquent loan: loan date, last payment date, unpaid balance, security,

and comment on collectibility.)

5. The following policies on loans to members are currently in effect in this credit union:

a. Interest rates on loans:

b. Charges incident to making loans which are passed on to borrowers:

c. Maturity limits:

d. Unsecured loan limit:

e. Secured loan limit:

f. Types of security accepted:

g. Requirements of amortization (Repayment requirements):

6. Attached is a list of unsecured loans in excess of the amounts stipulated in the Act. (For each loan show account number,

original amount, terms, and unpaid balance.)

7. Attached is a list of loans with maturities in excess of periods stipulated in the Act and the NCUA Rules and Regulations.

(For each loan show account number, original amount, terms, unpaid balance, and security.)

NCUA 4401
8. Types of accounts which members are required or are permitted to maintain: Share ❑ Deposit ❑ Other ❑ (describe):

9. Describe any real estate owned by credit union, including a list of its current market value:

10. Describe and list any investments which are outside of the investment powers of Federal credit unions (Refer to Section

107(7), Federal Credit Union Act):

11. Names and locations of any depository institutions in which the credit union deposits its funds but which are beyond the

purview of deposit powers authorized by Section 107(8) of the Federal Credit Union Act.

12. Describe any services rendered to or on behalf of members or of the public, other than accepting and maintaining accounts of members and making loans to members:

13. Describe what you propose to do about any policies, procedures, assets or liabilities which do not comply with the Federal

Credit Union Act:

14. Give specific reasons as to why you desire to convert to a Federal credit union:

We hereby authorize the National Credit Union Administration to examine our books and our records and agree to pay an

examination fee in accordance with Section 701.6 of the National Credit Union Administration Rules and Regulations.

We, the undersigned Chief Executive Officer and

Chief Financial Officer of the Credit

Union of , State of certify:

That we are the duly elected Chief Executive Officer and the Chief Financial Officer, respectively, of said credit union; that

the statements made in this Application to Convert from a State to a Federal Credit Union and the schedules attached hereto

are true, complete, and correct to the best of our knowledge and belief and are made in good faith.

TITLE:

(CHIEF EXECUTIVE OFFICER)

TITLE:

(CHIEF FINANCIAL OFFICER)

NCUA 4401
 AFFIDAVIT 

 PROOF OF RESULTS OF MEMBERSHIP VOTE ON PROPOSED CONVERSION 

We, the undersigned

president/vice president and

secretary of the Federal Credit Union, hereby swear or affirm as

follows:

1. That the conversion proposal as set forth in the attached Notice of Meeting of the Members was fully

explained to the members present at said meeting of members.

2. That on the date of the said meeting of members there were members of this

credit union qualified to vote; members were present at said meeting; of those members

present, members voted in favor of the conversion and members

voted against the conversion; of those members not present at the meeting but who filed ballots,

members voted in favor of the conversion and members voted against the

conversion; and that, without duplication of the votes of any member, a total of members

voted in favor of the conversion and members voted against the conversion.

3. That the action of the members of this credit union at said meeting is fully and completely recorded in

the minutes of said meeting and all ballots cast by the members on the question of conversion, either

at the meeting or by delivery to the credit union, are on file with the secretary of this credit union.

TITLE:

(CHIEF EXECUTIVE OFFICER)

TITLE:

(CHIEF RECORDING OFFICER)

Federal Credit Union

Subscribed before me, an officer competent to administer oaths, at

, this day of , 19__ _

(SEAL)

My Commission Expires , 19 .

NCUA 4505

Signed

Title

(Notary Public or other competent officer)
BALLOT FOR CONVERSION PROPOSAL

I have read the notice concerning the meeting of the members of the Federal Credit

Union called for , 1 9 _, to consider and to vote upon the following proposition:

“RESOLVED, That the Federal Credit

Union be converted to a credit union chartered under the laws of the State of , and

operation under Federal Charter Number be discontinued.

RESOLVED FURTHER, That the board of directors and the officers of this credit union be and are hereby

authorized and directed to do all things necessary to effect and complete the conversion of this credit

union from a Federal to a State-chartered credit union. ”

I hereby cast my vote on the proposition: (Place an X in the square opposite the appropriate statement.)

I vote for the conversion ❑

I vote against the conversion ❑

(Account Number) (Signature of Member)

Date

NCUA 4506
APPLICATION AND AGREEMENTS FOR INSURANCE OF ACCOUNTS

 Date 

TO: The National Credit Union Administration Board (Board)

The proposed Federal Credit Union,

(Mailing Address)

(City) (State) (Zip Code)

applies for insurance of its accounts as provided in Title II of the Federal Credit Union Act, and in consideration of the granting

of insurance, hereby agrees:

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

To pay the reasonable cost of such examinations as the Board may deem necessary in connection with determining

the eligibility of the application for insurance.

To permit and pay the reasonable cost of such examinations as in the judgment of the Board may from time to time

be necessary for the protection of the fund and of other insured credit unions.

To permit the Board to have access to any information or report with respect to any examination made by or for any

public regulatory authority and furnish such additional information with respect thereto as the Board may require.

To provide protection and indemnity against burglary, defalcation, and other similar insurable losses, of the type,

in the form, and in an amount at least equal to that required by the laws under which the credit union is organized

and operates.

To maintain such regular reserves as may be required by Section 116 of the Federal Credit Union Act.

To maintain such special reserves as the Board, by regulation or in special cases, may require for protecting the

interest of members.

Not to issue or have outstanding any account or security the form of which, by regulation or in special cases, has

not been approved by the Board.

To pay and maintain the capitalization deposit required by Title II of the Federal Credit Union Act.

To pay the premium charges for insurance imposed by Title II of the Federal Credit Union Act.

To comply with the requirements of Title II of the Federal Credit Union Act and of regulations prescribed by the Board

pursuant thereto.

To permit the Board to have access to all records and information concerning the affairs of the credit union and to

furnish such information pertinent thereto that the Board may require. -

12. To comply with Title 18 of the United States Code and other pertinent Federal statutes as they may exist or may

be hereafter promulgated or amended.

We, the undersigned, certify to the correctness of the information submitted. In support of this application the undersigned

submit the Schedules described below:

Schedule No. Title

We, the undersigned, further certify that to the best of our knowledge and belief no proposed officer, committee member,

or employee of this credit union has been convicted of any criminal offense involving dishonesty or a breach of trust, except

as noted in attachments to this application. We further agree to notify the Board if any proposed or future officer commits

a criminal offense.

Chief Executive Officer Chief Financial Officer

Note: A willfully false certification is a criminal offense. U.S. Code, Title 18. Sec. 1001.

NCUA 9500
CERTIFICATION OF RESOLUTIONS

FEDERAL CREDIT UNION (PROPOSED)

We certify that we are the duly elected and qualified chief executive officer and recording officer

of the above-named proposed Federal credit union and that at the charter-organization meeting

the board of directors passed the following resolution and recorded it in its minutes:

“Be it resolved that this credit union apply to the National Credit Union

Administration Board for insurance of its accounts as provided in Title II of

the Federal Credit Union Act.

Be it further resolved that the president and treasurer be authorized and directed to execute the Application and Agreements for Insurance of Accounts

as prescribed by the Board and any other papers and documents required in connection therewith; to pay all expenses and do all other things

necessary or proper to secure and continue in force such insurance.”

Chief Executive Officer

Recording Officer, Board of Directors

NCUA 9501
INFORMATION TO BE PROVIDED IN SUPPORT OF THE APPLICATION OF A STATE CHARTERED

CREDIT UNION FOR INSURANCE OF ACCOUNTS

credit union

1. Show below the location of the credit union’s books and reeds.

(Street Address)

(City) (state) (zip) (Telephone)

2. Show the date (month, day, year) in which the credit union was chartered. 1 9

3. Attach a copy of the credit union’s field of membership as shown in the charter, articles of incorporation and/

or bylaws, as amended to date. Please identify it as the first schedule in the consecutive number sequence, as

discussed in the instructions. schedule No.

4. Potential membership (total number of persons who could be served including present members.

5. Describe type activity sponsor organization is engaged in. (See instructions pertaining to item No. 5.)

6. Does the credit union operate under standard bylaws provided by

the state supervisory authority.

a. Attach a copy of the current official bylaws under which the

credit union operated. Schedule No.

7. Is the credit union under any administrative restraints by the

State Supervisory Authority?

a. Explain fully on an attached schedule. Schedule No.

8. Attach a copy of the latest State supervisory authority examination. Copies of any correspondence from the

accountant’s report if made in lieu of a State supervisory authority examination. Copies of any correspondence

from the State supervisory authority which accompanied the examination report should also be included.

9. Attach copies of the Balance Sheet and of the Statement of Income and Expense (or Financial and Statistical

Report) for the month preceding the date of this application and for the same month of the preceding year.

schedule Nos. . (Identify current year statement with (a) after schedule no. and previous Year with(b).)

10.Reserves

a. Show below the requirements of the State law and/or your bylaws for transfer of earnings to reserves (either

monthly or at the end of each accounting period).

11.Delinquent Loans and Charged-off Loans

a. Attach a copy of the delinquent loan list as of the month-end preceding the date of this application. See

instructions pertaining to Item No. 11 a. on page 7. Schedule No. .

NCUA 9600 Page 1

Yes ❑ No ❑

(Complete a.) (Stop)

Yes ❑ No ❑

(Stop) (Complete a.)
b. List below the requested information on delinquent loans for the last four calendar quarters preceding the date of the

application (March 31, June 30, September 30 and December 31). Also show total share and loan balances for all

members for same period.

(a) (b)

*Other Delinquent Delinquent Date Date Date

Categories

Date

Categories

2 mos. to less than

6 mea. $ $ $ $

6 mos. to less than

12 mos. $ $ $ $

12 mos. and over $ $ $ $

Totals )

Share Balances $ $ $ $

Loan Balances $ $ $ $

*See instructions pertaining to Item No. 11 b.

c. List below the requested information on loans charged off during the last three years and the current year. List total

of all reserves both revocable and irrevocable for the same period as (balance at year-end or current period).

19 19 19 Current Yr. to Date *Totals Since

19 Organization

Total Charged Off

Total Recovered

Net Charged Off

Total of all

Reserves

*this information is available.

12. Does the credit union have any unrecorded or contingent liabilities Yes ❑ No ❑

(including pending law suits or civil actions)? (Complete a.) (Stop)

a. List on a schedule the complete description of such liabilities, including amounts, status of the items, and a description of the circumstances creating the liabilities or contingent liabilities. Schedule No.

13. Do any asset accounts (other than loans to members, investments, Year ❑ No ❑

and real estate) have actual values leas than the book values (complete a.) (stop)

shown on the Balance Sheet?

a. List on a separate schedule a description of such assets, showing at least the following information: account

number, description of item, book value and actual value. Schedule No.

14. List below or on an attached schedule any investments or real estate as discussed in the instructions pertaining to

Item No. 14. Schedule No. . Attach a copy of the credit union’s current investment policies.

Investments/Loans to Credit Union Service Organization (CUSO) should be listed separately on page 6.

Description of Item Current Market Value Current Book Value

$ $

$ $

NCUA 9600 Page 2
15. Individual Share and Loan Ledgers:

a. Were the totals of the trial balance tapes of the individual share and

loan ledgers in agreement with the balances of the respective general

ledger control accounts as of the month-end preceding the date of

this-application?

b. What are the differences as of the month end preceding the date of this application?

Shares Loans

Balances in General Ledger

Totals of the trial balance of the

individual ledgers

Differences

16. Supervisory Committee:

a. What is the effective date of the last complete comprehensive annual audit performed by the supervisory

committee? Effective Date

(1) If the effective date of the annual audit is not within the last 18 months what is the supervisory committee’s target

date for completion of a comprehensive audit? Date

b. Show the effective date of the supervisory committee’s last controlled verification of all members’ accounts:

Effective Date

(1) If all members’ accounts have not been verified under controlled conditions during the last two years what is the

supervisory committee’s target date for completion of the verification program?

Date

c. If it is necessary to complete either 16a(1) or 16 b(1 ), please describe the directors’ plans for seeing that the target

dates are met. (DISCUSS below or on an attached schedule.) Schedule No.

17. Surety Bond. List below the credit union’s surety bond coverage.

a. Name of carrier

b. Standard form number of the bond

(i.e. 23, 576, 577,578,581, 562 CU-1, other)

c. Basic amount of coverage $

d. Bond premium paid to (date)

e. What is the amount of coverage required by State law or your bylaws?

f. Riders to the bond (list below)

(i.e., faithful performance, forgery, misplacement, etc.)

18. Credit Union Services

Does the credit union render any services to or perform any functions on

behalf of the members, non-members, organizations, or the public other

than the usual savings and loan services for members?

a. Attach a schedule describing each activity in full. Schedule No. .

19. Does the credit union know of any adverse economic condition that is

affecting or will affect its present or future operation or that of the

sponsor organization?

a. Attach a schedule describing the condition and its possible effect on the credit union’s future.

Schedule No. .

20. To the best of the credit union’s knowledge and belief, has any director,

officer, committee member, or employee been convicted of any

criminal offense involving dishonesty or breach of trust?

a. Attach a statement describing the circumstances. Schedule No. .

21. Lending policies and practices:

a. Complete (on page 4) showing the present policies and practices on loans to members.

b. Complete page 5 in accordance with the instructions pertaining to Item No. 21 b.

NCUA 9600 Page 3

Yes ❑ No ❑

(stop) (Complete b.)

Yes ❑ No ❑

(Complete a.) (Stop)

Yes ❑ No ❑

(Complete a.) (Stop)

Yes ❑ No ❑

(Complete a.) (Stop)

$ $

$ $

$ $
LENDING POLICIES AND PRACTICES

Maximum I Maximum Period I Required Amount of

1. Credit Union Policies and Practices

a. Unsecured Loan Limits

b. Secured Loan Limits

(1)

(2)

(3)

(4)

(5)

New Auto Collateral

Used Auto Collateral

Real Estate

(a) First Mortgage

(b) Second Mortgage

Comakers

Others (describe)

c. Loans to Organizations

d. Loans to Director, Officers,

or Committee Members

2. State Credit Union Law; Bylaws

a. Unsecured Loan Limits

b. Secured Loan Limits

c. Loans to Directors, Officers,

or Committee Members

List below or on an attached page, any additional policies, including the interest rates applied to members’ loans and the

method of assessing and accounting for interest income, i.e.: add-on, discount or unpaid balance.

NCUA 9600 Page 4
SCHEDULE OF LARGEST LOANS

Complete this form as discussed in the instructions pertaining to Item 21 b.

*there is more than one type of collateral assign value to each type.

NCUA 9600 Page 5

Account

No.

Unpaid Loan

Balance

Repayment

Period

(No. Months)

Status of Repayment

Current Delinquent

(No. Months)

Appraised

Collateral

Value*

Description of

Collateral
CREDIT UNION SERVICE ORGANIZATION

 (CUSO) 

1. Name of CUSO

2. Date of CUSO’S Organization

(Date of obtaining charter from State)

3. Type of organization (circle one):

a. General Partnership c. Joint Ownership

b. Limited Partnership d. Corporation

4. Owners of CUSO (list name, charter number if FCU, and percentage of ownership, if possible).

Name - Charter Number (if FCU) % Name - Charter Number (if FCU) %

a.

b.

(Continue on reverse side if additional space is required)

5. Capitalization (list investors and amount of investment in CUSO).

Name - Charter Number (if FCU) Amount Name - Charter Number (if FCU) Amount

a.

b.

(Continue on reverse side if additional space is required)

6. List all known services which are being offered by the CUSO (be as specific as possible),

7. Comments (include all other pertinent information, if applicable, not previously discussed).

8. Attach latest Financial and Statistical Report of CUSO, if available.
INSTRUCTIONS FOR COMPLETION OF APPLICATION OF A STATE CHARTERED CREDIT UNION

 FOR INSURANCE OF ACCOUNTS 

The application and all supporting documents should be

prepared, photocopied, and submitted in accordance with the

procedures outlined in the letter that transmitted these instructions. Additional schedules may be included if deemed

appropriate.

All items should be completed. If the answer given to a

question is followed by the word “Stop,” proceed to the next

numbered question. If, however, the answer given is followed

by instructions, the additional parts of that question should

be completed before going on to the next question.

When page 1 specifies that a schedule should be prepared

and attached, please assign a schedule number in consecutive order, starting with number one. Please show the

schedule number at the top right-hand corner of the schedule.

Some of the items are self-explanatory and require no

special instructions. Other items, however, need special explanations, definitions, and instructions for completion. These

are listed below, identified by the same item numbers as

appear in Exhibit A.

Item No. 5: Show whether the sponsor organization is

associational, occupational or residential. If occupational,

please show the specific products or services produced.

Item No. 10: Reserves: The term “reserve” in Exhibit A

means that account, or accounts, which represents

segregated portions of earnings as provided by the law,

bylaws, and/or the credit union’s management for the absorption of losses relating to loans to members. (These accounts

are usually called Regular Reserve, Reserve for Bad Debts,

Guarantee Reserve, Guarantee Fund, Special Reserve for

Losses, and Allowance for Loan Losses.)

Item No. 11 a: The delinquent loan list requested should

include, for each delinquent loan, the account number of the

borrower, date of loan, original amount of loan, unpaid

balance, date of last payment of principal, excluding transfers

from pledged shares, collateral, and comments regarding the

collectibility of each loan in the categories 6 months to less

than 12 months and 12 months and over. Payments of interest only should be so identified.

For the purpose of this application, loan delinquency will

be determined on the basis of the borrowers’ payments in

relation to the terms of the notes, as follows:

If a loan is in arrears by two monthly payments plus

any part of the third payment, the loan is 2 months delinquent and, therefore, the entire unpaid balance is

shown in the 2 months to less than 6 months category.

A loan in arrears a total of 6 monthly payments plus

any part of the seventh payment would be 6 months

delinquent and the entire unpaid balance shown in the

6 months to less than 12 months category. A loan in

arrears a total of 12 monthly payments plus any part

of the thirteenth payment would be 12 months delinquent and the entire unpaid balance shown in the 12

months and over category.

Item No. 11 b: the schedule provided for the delinquent

loan information is set up in delinquency categories of 2

months to less than 6 months, 6 months to less than 12

months, and 12 months and over. Credit unions that compute delinquency using categories other than shown in column (b) may use these other categories and show them in

column (a). Credit unions using column (a) need not show

the delinquencies in the column (b) categories. It is not

necessary to report on loans which are delinquent less than

2 months.

Adverse Trends: If items 8, 9, or 11 indicate adverse

trends such as significant decreases in shares, loans or

reserves, increases in loan delinquency or loan charge-offs,

or unresolved serious exceptions shown in the State examination report the credit union may attach an explanation and

identify it as “Explanation of Adverse Trends or Unresolved

Examination Exceptions” and assign it a schedule number.

Item No. 14: This item need be completed only if the credit

union owns any of the following:

A.

B.

c.

Investments in U.S. Government securities guaranteed

as to principal and interest or Federal Agency securities,

the market value of which is now less than the book

value.

Real estate other than that used entirely for the credit

union’s own office(s).

Other investments of any type except:

1.

2.

3.

4.

5.

Loans to other credit unions.

Certificates of, or accounts in, federally insured savings and loan associations.

Certificates of deposit in National or State banks.

Deposits or accounts in State central credit unions.

Common trust investments with International Credit

Union Services Corporation (ICUS).

If corporate bonds are listed, please show maturity date,

rate of interest on bonds and current yield rate.

If stocks are listed, please show number of shares and

bid price.

Please identify the source of the market valuation information and the date of such information.

Item No. 21 b: The largest loans to members should be

shown on page 5. In selecting the loans for this Exhibit, list

the largest outstanding unpaid loan balance and proceed in

descending order by dollar amount until the number specified

NCUA 9600 Page 7
below has been shown. The number of such loans to be listed

will be determined as follows:

If your credit You should list the

union has the following no. of

following no. of the largest unpaid

outstanding loans balances

Under 100 5

100 to 199 10

200to 299 15

300 to 399 20

400 or more 25

If any of the above loans are delinquent, please show the

number of months delinquent in the appropriate “Status of

Repayment” column.

Page 6: Complete page 6 for each investment/loan to a

Credit Union Service Organization (CUSO).

TERMINATION OF INSURANCE

Should the credit union, after obtaining insurance of

member accounts, desire to terminate its insured status, this

could be accomplished by complying with the provisions of

Section 206(a), (c) and (d) of Title II of the Federal Credit Union

Act. This action would require approval by a vote of the majority of the members, and ninety days written notice of the

proposed termination date to NCUA. Member accounts would

continue to be insured for one year following termination of

insurance and the insurance premium would be paid during

that period. After termination of insurance, the credit union

shall give prompt and reasonable notice to all members

whose accounts are insured that it has ceased to be an

insured credit union.

Sections 206(a)(2) and 206(d)(2) and (3) of the Act provide

that an insured credit union may also terminate its insurance

by converting from its status as an insured credit union under

the Act to insurance from a corporation authorized and duly

licensed to insure member accounts. In this event, approval

is required by a majority of all the directors and by affirmative

vote of a majority of the members voting, provided that

at least 20 percent of the members have voted on the

proposition. Under this provision for termination, insurance

of member accounts would cease as of the date of

termination.

NCUA 9600 Page 8
 APPLICATION AND AGREEMENTS FOR INSURANCE OF ACCOUNTS 

 STATE CHARTERED CREDIT UNION 

Date

TO: The National Credit Union Administration Board

The Credit Union,

Insurance Certificate Number (if applicable)

(mailing address) (city) (state) (zip code)

applies for insurance of its accounts as provided in Title II of the Federal Credit Union Act, and in consideration of the granting

of insurance, hereby agrees:

1.

2.

3.

4.

5.

6.

7.

To permit and pay the cost of such examinations as the

NCUA Board deems necessary for the protection of the

interests of the National Credit Union Share Insurance

Fund;

To permit the Board to have access to all records and

information concerning the affairs of the credit union, including any information or report related to an examination made by or for any other regulating authority, and

to furnish such records, information, and reports upon

request of the NCUA Board;

To possess such fidelity coverage and such coverage

against burglary, robbery, and other losses as is required

by Parts 701.20 and 741 of NCUA’S regulations;

To meet, at a minimum, the statutory reserve and full

and fair disclosure requirements imposed on Federal

credit unions by Section 116 of the Federal Credit Union

Act and Parts 702 of NCUA’S regulations, and to maintain

such special reserves as the NCUA Board may by regulation or on a case-by-case basis determine are necessary

to protect the interests of members. Any waivers of the

statutory reserve or full and fair disclosure requirements

or any direct charges to the statutory reserve other than

loss loans must have the prior written approval of the

NCUA Board. In addition, corporate credit unions shall

be subject to the reserve requirements specified in Part

704 of NCUA’S regulations;

Not to issue or have outstanding any account or security

the form of which has not been approved by the NCUA

Board, except accounts authorized by state law for state

credit unions;

To maintain the deposit and pay the insurance premium

charges imposed as a condition of insurance pursuant

to Title II (Share Insurance) of the Federal Credit Union

Act;

To comply with the requirements of Title II (Share insurance) of the Federal Credit Union Act and of regulations

prescribed by the NCUA Board pursuant thereto; and

6.

9.

10.

11.

For any investments other than loans to members and

obligations or securities expressly authorized in Title I

of the Federal Credit Union Act, as amended to establish

now and maintain at the end of each accounting period

and prior to payment of any dividend, an Investment

Valuation Reserve Account in an amount at least equal

to the net excess of book value over current market value

of the investments. If the market value cannot be determined, an amount equal to the full book value will be

established. When, as of the end of any dividend period,

the amount in the Investment Valuation Reserve exceeds

the difference between book value and market value, the

board of directors may authorize the transfer of the excess to Undivided Earnings.

When a stat-bartered credit union is permitted by state

law to accept nonmember shares or deposits from

sources other than other credit unions and public units,

such nonmember accounts shall be identified as

nonmember shares or deposits on any statement or

report required by the NCUA Board for insurance purposes. Immediately after a state-chartered credit union

receives notice from NCUA that its member accounts are

federally insured, the credit union will advise any present

nonmember share and deposit holders by letter that their

accounts are not insured by the National Credit Union

Share Insurance. Also, future nonmember share and

deposit fund holders will be so advised by letter as they

open accounts.

In the event a state-chartered credit union chooses to

terminate its status as a federally-insured credit union,

then it shall meet the requirements imposed by Sections

206(a)(l) and 206(c) of the Federal Credit Union Act and

Part 741.6 of NCUA’S regulations.

In the event a state-chartered credit union chooses to

convert from federal insurance to some other insurance

from a corporation authorized and duly licensed to insure member accounts, then it shall meet the requirements imposed by Sections 206(a)(2), 206(c),

206(d)(2), and 206(d)(3) of the Federal Credit Union Act.

NCUA 9600 Page 9
In support of this application we submit pages 1-6 and Schedules described below:

Schedule No. Title

CERTIFICATIONS AND RESOLUTIONS

We, the undersigned, certify that we are the duly elected and qualified presiding officer and recording officer of the credit

union and that at a properly called regular or special meeting of its board of directors, at which a quorum was present, the

following resolutions were passed and recorded in its minutes:

We, the undersigned, certify to the correctness of the information submitted.

Be it resolved that this credit union apply to the National Credit Union Administration Board for insurance of its accounts

as provided in Title II of the Federal Credit Union Act.

Be it resolved that the presiding officer and recording officer be authorized and directed to execute the Application and

Agreement for Insurance of Accounts as prescribed by the NCUA Board and any other papers and documents required

in connection therewith and to pay all expenses and do ail such other things necessary or proper to secure and continue

in force such insurance.

We, further certify that to the best of our knowledge and belief no existing or proposed officer, committee member, or

employee of this credit union has been convicted of any criminal offense involving dishonesty or breach of trust, except

as noted in attachments to this application. We further agree to notify the Board if any existing, proposed or future

officer, committee member or employee is indicted for such an offense.

(Signature) Presiding Officer, Board of Directors

(Print or type Presiding Officer’s Name)

(Signature) Recording Officer, Board of Directors

(Print or type Recording Officer’s Name)

NCUA 9600 Page 10
National Credit Union Administration

Chartering and Field of Membership Manual

NCUA-FM - APPENDIX E -- USE OF OUTSIDE AGENTS TO SOLICIT FIELD OF

MEMBERSHIP AMENDMENTS AND MEMBERS 7/94

PURPOSE

This appendix addresses the National Credit Union Administration's

(NCUA) experience with credit unions and arrangements whereby agents

outside the organization of the credit union solicit credit union

membership in conjunction with the sale of products or services. This

section also provides guidelines for these arrangements.

While these guidelines are not mandated by federal law or regulation,

they do represent what the NCUA considers to be safe and sound policies

and procedures to protect the credit union's assets. Since state laws

vary, the guidance may not address every area. Thus, each credit union

considering such ventures should obtain a written legal opinion from its

counsel, as well as financial counseling from its normal sources.

BACKGROUND

As credit unions continue to grow and expand their fields of membership

to select groups, there has been an increased interest by vendors in

mutually beneficial relationships. These business dealings involve the

vendor selling services or products and may also include the credit

union's financing the sale of items. Generally, such arrangements

operate as follows:

• The vendor contacts select group sponsors providing information on

the credit union and the insurance or other product to be offered.

Alternatively, credit unions may initiate relationships, typically

with an automobile dealer, to finance autos. This is commonly

called "indirect lending."

• The vendor assists the sponsor in requesting inclusion in the

credit union's field of membership. With an indirect lending

arrangement the vendor may have the purchaser prepare a membership

application and promptly submits the application, usually by a

fax, to the credit union.

• After the field of membership amendment is approved by NCUA or the

state regulator, the vendor arranges to meet with employees. In

the case of individual membership applications, approval or denial

by the credit union's membership officer is required prior to

consideration of lending activity. Under no circumstances may a

credit union provide membership services conditioned upon

subsequent action approving membership.

• The vendor represents the credit union to the employees and

enrolls them into membership in accordance with appropriate laws,

regulations, and bylaws.

• The vendor explains the products or services being marketed and

enrolls the employee in a program or plan. In the case of

insurance plans, policies are typically paid by periodic

installments, and frequently in one lump sum.

• The vendor arranges for payroll deductions to the credit union. If

the employee has an insurance policy or some other plan with

periodic installments, generally, the credit union's deduction is

increased and arrangements are made for the credit union to

forward the appropriate amount to the vendor's company.

These arrangements have been beneficial to some credit unions and

vendors. The credit union receives a service -- solicitation of members
National Credit Union Administration

Chartering and Field of Membership Manual

-- free of charge. Membership increases and the credit union grows. The

vendor has a marketing tool to complement its marketing program.

Additionally, in the case of insurance vendors, if the credit union

distributes the premiums or other payments directly to the vendor's

company, the vendor's paperwork is greatly reduced.

SAFETY AND SOUNDNESS ISSUES

NCUA's experience in these arrangements has shown that potential risk to

the credit union exists unless prior planning and internal controls are

in place. NCUA has liquidated or taken administrative action in a number

of credit unions in recent years when these controls were absent. Some

unsafe and unsound practices are described below:

• The credit union did not investigate the vendor's or the vendor's

company's reputation, financial soundness, or the authority to do

business in the state where the credit union operated. In those

cases where NCUA liquidated the credit unions, the companies or

firms were of the fly-by-night variety, out to obtain quick

profits in short periods of time. Dealing with well established

and reputable firms is important if problems arise due to member

complaints. Additionally, in the event of suits against the

company or firm, adequate financial standing can often mitigate

the credit union's losses.

• The credit union did not review the programs or products offered

to "its" new members. In several instances, the policies were life

insurance policies or annuity contracts which called for annual

premiums (normally paid by installments) over long periods of time

-- 20 to 30 years. While normal for such contracts, they generally

called for limited reimbursement in the event of cancellation, for

instance 20 percent reimbursement, if canceled before one year, 45

percent, two years, 55 percent, three years, etc. Many members who

enrolled in these contracts did not understand the terms. When

they subsequently canceled the policy and received only a 20

percent return, they held the credit union responsible. While the

credit union had no legal obligation, it presented public relation

problems which could have been avoided.

• The credit union was unfamiliar with the sales techniques used by

the vendor to enroll members into the credit union and in the

vendor's programs. In the liquidated credit unions mentioned

above, unethical methods were used to sign unsophisticated

members. It was not uncommon to have them just sign blank forms

which included a membership card, payroll deduction authorization,

insurance policy, and a loan application and the first year's

premium or other payment.

• The credit union did not provide written instructions to the

vendor on procedures to enroll members. Thus the vendor contacted

groups which the credit union was ill-equipped to serve.

• The credit union authorized the vendor to approve loans en masse

to cover first year fees or insurance premiums. NCUA considers

this an unsafe and unsound practice which will result in

appropriate administrative action. In several liquidated credit

unions which had arrangements with insurance vendors employees

were enrolled in the credit union, received a loan to pay the

first year's premium and authorized payroll deductions.

The reason the insurance agency proceeded in this manner was to be

reimbursed immediately by the carrier for new policies. Such

reimbursement ranged from 85 to 105 percent of the first year's premium.
National Credit Union Administration

Chartering and Field of Membership Manual

Thus an agency that enrolled just 100 new members for $500 per year

insurance contracts could have received $42,500 to $52,500 in fees. This

desire to obtain reimbursement clouded the vendor's objectivity and

resulted in members having unwanted policies, which they generally

canceled. At a minimum, since the policyholder received only 20 percent

return on the policy, the credit union had a public relations problem

collecting its exposed 80 percent. At the worst, the credit union had a

loss loan.

• The credit union failed to obtain proper payroll deduction

authorizations and authority to remit fees or insurance premiums

to the company. In several cases, payroll deduction for all

members, even those who chose not to enroll in the vendor's

program, were sent to the company first. The company then sent the

unauthorized fee or premium deductions to the credit union. This

procedure exposed the credit union to misappropriation of funds by

the company, to a potential surety problem, and to an uninsured

status until the funds were received in the credit union.

• In another case, a vendor contracted with a credit union to assist

credit union members select, locate, and negotiate the purchase or

lease of automobiles. Members paid a fee to the vendor during the

closing transactions.

The vendor also provided marketing assistance to attract select employee

groups into the credit union. The vendor was alleged to have falsified

and concealed material facts and to have aided prospective credit union

members in falsifying credit information to the credit union in attempts

to obtain credit.

In some cases the prospective member obtained possession of the

automobile prior to being accepted as a member and in other cases prior

to being approved for the financing. Other operational issues that have

led to abuses are the following:

(1) The dealer directly accepting the borrower's payments.

(2) The dealer making payments on behalf of the borrower potentially

disguising past due accounts.

(3) The borrower/purchaser applying for the title potentially resulting

in an improperly recorded lien.

(4) The dealer financing the down payment thus allowing the borrower to

have no stake in the collateral.

(5) The credit union permitting or initiating overdrafts in the vendor

reserve or holdback accounts. (Sometimes the credit union requires

deposits from the dealer to be held by the credit union to better assure

good faith performance by the vendor.)

(6) The credit union placing full reliance on the dealer for credit

checks.

(7) Financing indirect loans that are out of the credit union's normal

trade area.

(8) The dealer adds costs to the purchase price, such as insurance,

warranties, and taxes, thus leaving the borrower with no equity in the

car, and the lender with an undercollateralized loan.

(9) Dealers generate a large volume of loans in an attempt to overwhelm

credit union staff in hopes that the weaker loans will be approved.

(There are instances where dealers resubmit previously denied loans

during peak periods in attempts to get them approved.)
National Credit Union Administration

Chartering and Field of Membership Manual

(10) The dealer inflates the purchase price or the trade in values,

resulting in undercollateralized loans.

(11) An increased potential for making loans to persons who are not

eligible to be credit union members exists because of dealer

involvement.

(12) By allowing the dealer to negotiate the contract, including

interest rates, there is a possibility of inequity among members.

In many instances, the prospective credit union member was pressured to

solicit his employer for inclusion into the credit union's field of

membership. In certain of these instances, the employer group had

existing credit union affiliation with another credit union. In certain

other instances, the vendor indicated the prospective member was

affiliated with a legitimate group in the credit union's field of

membership, when, in fact, the person was not employed by the group.

The vendor failed to properly complete required documentation for loans

and lease agreements. In some cases the vendor indicated excessively

high annual mileage limits in lease agreements.

RECOMMENDED INVESTIGATIVE PROCEDURES

Before entering into an agreement with a vendor acting as the credit

union's agent in soliciting membership, a federally insured credit union

should thoroughly investigate the impact of this action on its financial

operations and condition; determine its legal liabilities; clearly

define its moral responsibilities; and assure proper control of these

activities. The following steps are recommended:

• Thoroughly investigate the financial condition of all

corporations, partnerships or other entities involved in the

activities. Obtain and review financial statements and credit

reports, such as Dunn and Bradstreet, on each entity. Consider the

need for appropriate bonding by each company.

• Review the organizational structure and reputation of each entity.

Included in the review should be a certification that each entity

is authorized to do business in the state where the credit union

is authorized to do business.

• Review and approve the contracts or policies to be offered. Since

members may hold the credit union morally responsible for problems

which may occur, the officials should consider the impact of each

contract or policy on its public relations with members.

• Determine through a written legal opinion that all forms,

documents and procedures used by the credit union to obtain

membership, payroll deductions or to transfer funds to a vendor

are legal and protect the credit union.

• Ascertain the credit union's liability under the Holder in Due

Course rule.

• Determine the type of recourse agreement (full recourse, limited

recourse or without recourse) that the credit union will enter

into with the vendor.

• Develop cash flow and budget projections showing the effect of

increased membership on the credit union's financial condition and

ability to serve new members.

• Track by individual vendor, loans, loan delinquency and loan

losses for each financing derived from the indirect lending

relationship.
National Credit Union Administration

Chartering and Field of Membership Manual

• Develop procedures to monitor the activities of vendors as

discussed below under Agreements.

• Develop brochures and handouts to be presented to potential

members. Among these should be a disclaimer that the credit union

does not endorse the products or services and that the vendor can

make no commitments regarding membership approval or the granting

of loans. Other materials to be presented are discretionary by the

credit union.

• Obtain written confirmation from surety that such activities are

bondable.

• Ensure the individual in charge of indirect lending is experienced

with indirect financing or contacts another credit union with

experience in this type of lending.

Start slow, utilizing only one or two reputable new car dealerships.

AGREEMENTS

All arrangements with a vendor should be in writing and reviewed by

credit union legal counsel. Such agreements should include, but not be

limited to, the following:

• Scope of the vendor's authority to contact sponsors, such as

limits on sponsor's assets, number of employees/potential members,

financial condition, organizational structure, geographical

location, and sponsor stability in the area.

• Procedures for the vendor to follow in contacting sponsors. These

should require the vendor to present any product or service as

separate and distinct from credit union membership and to state

that inclusion in the field of membership is subject to regulatory

approval. There should be absolute indication that the credit

union is not endorsing any products or services marketed by the

vendor.

• Procedures for vendors to follow once a sponsor is included in the

credit union's field of membership.

• Procedures for automobile dealers to follow when shopping sales

contracts to lenders.

• Understanding and agreements on fees or points paid to automobile

dealers.

• Agreement that products or services to be offered and materials,

brochures and handouts to be presented by the vendor are to be

approved, in advance, by the credit union.

• Agreement that all approved brochures and handouts of the credit

union will be distributed.

• Agreement that credit union representatives may accompany the

vendor on contacts with sponsors and on membership enrollments.

• Agreement that the credit union may disqualify any vendor or

vendor's representative from representing the credit union.

Generally such an agreement will include a preliminary approval

process as well as monitoring standards to include necessary

credit union training.

• Procedures for auditing indirect lending activities with the

dealer.
National Credit Union Administration

Chartering and Field of Membership Manual

• Any other standard contractual agreements necessary to contract

law.

SUMMARY

Credit unions and vendors can engage in mutually beneficial contractual

agreements provided that adequate planning and internal controls are

instituted. Credit unions engaging in these activities should plan,

direct, and control these activities in a safe and sound manner.
National Credit Union Administration

Chartering and Field of Membership Manual

NCUA-FM - APPENDIX F -- TRADE ASSOCIATIONS 7/94

Credit Union National Association

(CUNA)

P.O. Box 431

Madison, WI 53701

608-231-4000

National Association of Federal Credit Unions

(NAFCU)

3138 N. 10th Street, Suite 300

Arlington, VA 22201

703-522-4770

National Association of State Credit Union

Supervisors (NASCUS)

1901 North Fort Myer Drive

Suite 201 Arlington, VA 22209

703-528-8351

National Federation of Community

Development Credit Unions

(NFCDCU)

120 Wall Street, 10th Floor

New York, NY 10005-3902

212-809-1850