441-710-0085 Guidelines for a Low-Income Designated Credit Union (1) A credit union may be designated by the director as a low-income credit union if the director determines it is in the public interest that the director designate the credit union as a low-income credit union and the credit union demonstrates that: (a) A majority of current members of the credit union: (A) Make less than 80 percent of the average for all wage earners as established by the most recently published U.S. Department of Labor’s Bureau of Labor Statistics; (B) Have a household income at or below 80 percent of the median household income for the nation as established by the most recently published Census Bureau data; or (C) Are enrolled as full-time or part-time students in a college, university, high school, or vocational school; or (b) The community charter credit union’s field of membership is limited to geographic areas in which a majority of the residents, if members of the credit union, would fall within the low income criteria described in subsection (a) of this section. (2) A credit union designated by the director as a low-income credit union may accept: (a) Payments from a non-member that is a natural or nonnatural person to hold shares (including deposits) in the credit union, provided: (A) The non-member shares do not exceed the greater of 20 percent of the total number of shares of the credit union or $1,500,000, unless a greater amount has been approved by the director with NCUA concurrence; and (B) The non-member is informed prior to a payment being made that a non-member share does not provide the holder with membership or voting rights in the credit union. (b) Payments on secondary capital accounts if: (A) The board of directors of the credit union has adopted and the credit union follows a written plan meeting the requirements of section (5) of this rule; (B) The payments are from nonnatural persons, that may be non-members of the credit union, for an uninsured non-share account; (C) The director approves the written plan; (D) At or before the time the credit union first receives a payment on secondary capital, the credit union provides to the secondary capital account holder a written disclosure statement meeting the requirements of section (6) of this rule; and (E) The director has not removed the designation of the credit union as a low-income credit union. (3) Secondary capital accounts must be issued with a fixed maturity of not less than five years. (4) A low-income credit union may use secondary capital for any purpose permitted by law. (5) Each plan for secondary capital must include: (a) A detailed statement specifying the credit union’s need for, maximum amount of, sources and intended uses of the secondary capital; (b) The terms of a secondary capital account, including maturity, basis for determining interest or dividend rate and calculation disclosures, withdrawal restrictions, and balance requirements; (c) The credit union’s loan and investment policies; (d) A demonstration that the planned uses of secondary capital conform to the low-income credit union’s strategic plan, business plan, and budget; (e) A pro forma income statement and balance sheet, including any off-balance sheet items, covering a minimum of the next two years reflecting the issuance and uses of the amount of secondary capital described in subsection (a) of this section; (f) An explanation of how the credit union will provide for liquidity to repay secondary capital upon maturity of the accounts; and (g) A copy of the credit union’s proposed disclosure statement meeting the requirements of section (6) of this rule. (6) Each secondary capital account disclosure statement must be signed by the account holder and include: (a) A statement that a secondary capital account does not provide the holder with membership or voting rights in the credit union; (b) A statement that funds in a secondary capital account are not insured by the National Credit Union Share Insurance Fund or any other governmental or private entity; (c) The terms of the secondary capital account, including the maturity, dividend rate and calculation disclosure, withdrawal restrictions and account balance requirements; (d) A statement that the secondary capital may not be pledged as security on a loan or other obligation to the low-income credit union or any other party; (e) A statement that funds, including interest accrued and paid into the secondary capital account, may be used, pro rata with all other secondary capital, to cover operating losses realized by the low-income credit union that exceed its net available reserves (exclusive of secondary capital and allowance accounts for loan and lease losses), and if so used, will not be restored; and (f) A statement that any claim by a secondary capital account holder against the low-income credit union will be subordinate to all other claims, including shareholders, creditors and the National Credit Union Share Insurance Fund. (7) Secondary capital may not be pledged by the account holder as security on a loan or other obligation to the low-income credit union or any other party. (8)(a) A low-income credit union that issues secondary capital accounts pursuant to section (2) of this rule must record the funds on its balance sheet in an equity account entitled “uninsured secondary capital account.” (b) For accounts with remaining maturities of less than five years, the low-income credit union must reflect the net worth value of the accounts in its financial statement according to the following schedule: (A) Four to less than five years remaining, 80% of the original balance; (B) Three to less than four years remaining, 60% of the original balance; (C) Two to less than three years remaining, 40% of the original balance; (D) One to less than two years remaining, 20% of the original balance; (E) Less than one year remaining, 0% of the original balance. (c) The low-income credit union must reflect the full amount of the secondary capital on deposit in a footnote to its financial statement. (9) In the event of a merger or other voluntary dissolution of the low-income credit union, other than a merger into another low-income credit union: (a) Secondary capital accounts must be closed and paid out to the respective account holders to the extent they are not needed to cover losses at the time of merger or dissolution; and (b) Non-member shares must be closed and paid out to the respective share holders. (10)(a) The director may periodically review the low-income qualifications of a credit union. The designation of a credit union as a low-income credit union may be removed by the director: (A) At the request of the credit union if the director determines that the action will not adversely affect the members of the credit union and that the action would be in the public interest; or (B) If, following notice to the credit union and opportunity for a hearing under ORS chapter 183, the director determines that the credit union no longer meets the criteria to be a low-income credit union and that removal of the designation is in the public interest. (b) Immediately following removal of the designation as a low-income credit union, the credit union must give written notice of the removal of the designation to all: (A) Credit union members; (B) Non-members holding shares; and (C) Secondary capital account holders. (c) The written notice to all non-members and secondary account holders must include information: (A) That the credit union is no longer eligible to receive payments on non-member shares or secondary capital; (B) That all non-member shares and secondary capital accounts will be closed; (C) That all secondary capital accounts will be redeemed with no early withdrawal penalty; and (D) Of the date of redemption, which must be 90 days after the effective date of removal of the designation as a low-income credit union, or at the maturity date of a secondary capital account, whichever occurs first. Statutory/Other Authority: ORS 723.102, Sec. 5, Ch. 343 & 2007 OL Statutes/Other Implemented: Sec. 5, Ch. 343 & 2007 OL History: FCS 7-2007, f. 11-2-07, cert. ef. 1-1-08