[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 187-198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33947]


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NATIONAL CREDIT UNION ADMINISTRATION


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice and request for comment.

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SUMMARY: The proposed changes consolidate the two manuals which 
currently contain the federal credit union (FCU) bylaws into one manual 
and eliminate or modernize several bylaws. This action is necessary 
because several of the bylaws had become outdated or obsolete. The 
proposal is intended to update and clarify the FCU bylaws.

DATES: Comments must be received by April 5, 1999.

ADDRESSES: Comments should be directed to Becky Baker, Secretary of the 
Board.
    Mail or hand-deliver comments to: National Credit Union 
Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. You 
may Fax comments to (703) 518-6319 or E-mail comments to 
[email protected]. Please send comments by one method only.

FOR FURTHER INFORMATION CONTACT: Mary F. Rupp, Staff Attorney, Office 
of General Counsel, National Credit Union Administration, 1775 Duke 
Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6553.

SUPPLEMENTARY INFORMATION:

Background

    Section 108 of the Federal Credit Union Act (the Act) requires the 
NCUA Board to prepare bylaws to be used by all federal credit unions 
(FCUs). 12 U.S.C. 1758. The FCU bylaws are contained in two manuals 
entitled Federal Credit Union Bylaws (FCU Bylaws) and Federal Credit 
Union Standard Bylaw Amendments and Guidelines (Standard Amendments). 
These manuals were last updated in December 1987 and October 1991, 
respectively. The bylaws contained in the two manuals may be adopted by 
an FCU without approval from NCUA. An FCU must obtain approval from its 
Regional Director to adopt a bylaw not contained in the manuals.
    On March 7, 1997, the NCUA Board issued a request for comments on 
the FCU Bylaws and Standard Amendments. 62 FR 11778 (March 13, 1997). 
The purpose of the request was to solicit comments to help guide the 
preparation of revised bylaws that would clarify and reorganize 
existing FCU bylaws. The Board received 29 comments.

Summary of Comments

    The Board requested comment on four specific issues, as well as any 
additional comments that would assist the Board in streamlining and 
modernizing the FCU Bylaws. The four specific issues and the comments 
are as follows:
    1. Should the bylaws be published as a regulation? Twenty of the 
twenty-three commenters that responded to this question opposed 
publishing the bylaws as a regulation. These commenters noted that: it 
is rare for NCUA to get involved in a bylaw dispute; NCUA should not be 
enforcing the bylaws, because they are a contract between the FCU and 
its members; NCUA would have to go through the rulemaking process for 
an FCU to change its bylaws; and bylaws are primarily for internal self 
governance and don't raise safety and soundness issues.
    Because the commenters were overwhelmingly opposed to publishing 
the bylaws as a regulation and made a persuasive argument in support of 
this position, the NCUA Board will publish the bylaws as a manual. 
Although the Act requires FCUs to use the bylaws published by NCUA, 
FCUs will continue to have the flexibility to request a nonstandard 
bylaw amendments if the need arises.
    2. Should the bylaws be consolidated in one publication? We asked 
for comment on whether the FCU Bylaws and Standard Amendments should be 
published in one place with alternative provisions side by side when 
necessary. Sixteen of the seventeen commenters that responded to this 
question said yes. The recurring reason given in support of 
consolidation was that it would provide for easier reference and 
improve efficiency. The California Credit Union League advised that it 
works well for California state chartered credit unions and provided a 
copy of the California bylaws. This document was very helpful in 
drafting the proposed consolidated bylaws.
    3. Should outdated bylaws be eliminated? Sixteen of the nineteen 
commenters that responded to this question answered yes. Some of the 
bylaws frequently suggested for deletion were those addressing share 
accounts, lost/stolen passbook procedures, stipulation on loans, late 
fees, pre-payments, cash funds and operations following an attack on 
the United States. It was suggested that a FCU that wishes to retain a 
bylaw that is outdated for most FCUs could adopt a policy. It was also 
suggested that a committee be formed to help decide which bylaws are 
outdated.
    The proposal deletes several outdated provisions. As several of the 
commenters suggested, NCUA staff worked closely with the credit union 
trade groups to ensure that FCUs' voices were heard before deleting a 
provision.
    4. Should FCUs be required to adopt the revised bylaws? Eighteen of 
the twenty-two commenters that responded to this question answered no. 
The reasons cited for this response were that credit unions should have 
maximum flexibility; uniformity is not necessary; forcing FCUs to 
change the way they do business will create an unnecessary regulatory 
burden; and current bylaws work well for a large number of FCUs. 
Because of the overwhelming opposition to this requirement, FCUs, 
although strongly encouraged to adopt the revised bylaws, are not 
required to do so and may continue to use their previously approved FCU 
Bylaws.

Proposed FCU Bylaws

    The bylaws have been revised so that they are more user friendly 
for FCUs. All of the information is now in one place; plain English is 
used; provisions that are outdated are deleted; and provisions that are 
operational or covered in the Accounting Manual or regulations are 
deleted, unless it was determined that because of their importance they 
should also be included in the bylaws. An index will be provided with 
the final version of the bylaws. Currently, there is only an index for 
the FCU Bylaws and not the Standard Amendments.

Article by Article Analysis

    The following articles and sections have no substantive changes. 
There may be some minor editing or technical corrections:

Article I, Sections 1 and 2;
Article II, Sections 1, 2, and 4 (renumbered 3);
Article III, Sections 1, 2 and 5 a, b, d (renumbered c) and e 
(renumbered d);
Article V (renumbered Article IV), Sections 1, 4 and 5;
Article VI (renumbered Article V), Sections 3, 4, 5 and 6;
 Article VII (renumbered Article VI), Sections 1, 2 (renumbered Section 
3), 6 (renumbered Section 7) and 8 (renumbered Section 9);
Article VIII (renumbered Article VII), Sections 1, 2, 4 (renumbered 5) 
a, c

[[Page 188]]

(renumbered b), e and f (renumbered d and e), 7, 8, 9, and 10 
(renumbered 8, 9, 10, and 11);
Article X (renumbered Article IX), Sections 2-6;
Article XI, (renumbered Article X), Sections 1-3;
Article XII (renumbered Article XI), Section 8 (renumbered Section 3);
Article XIV (renumbered Article XII), Section 1;
Article XVI (renumbered Article XIV), Section 1;
Article XVII (renumbered Article XV), Section 1;
Article XVIII (renumbered Article XVI), Section 1;
Article XIX (renumbered Article XVII), Sections 1, 2, 5 and 6; and
Article XXI (renumbered Article XVIII), Section 1.

    The following articles and sections have substantive changes:

Article II, Qualifications for Membership

    Section 3 has been deleted. It required a credit union to assign 
each member a number as a means of identifying the member's account. 
This is an operational matter that does not belong in the bylaws.
    Section 5 has been deleted because the ``once a member always a 
member'' policy is now addressed in the Act.

Article III, Shares of Members

    In Section 3, the requirement that the credit union allow at least 
six months for a member to pay one share has been deleted. Section 1 of 
this Article and the Act require credit unions to allow for the payment 
of shares in installments. 12 U.S.C. 1759.
    The $1 fee limitation on share transfers has been deleted from 
Section 4.
    Section 5(c) addressed withdrawal of shares pledged as security. 
This has been deleted because it should be addressed in the loan 
agreement. The first paragraph of Section 5(e) has been deleted because 
it referenced Article II, Section 5 which has been deleted. Section 
5(f) addressed fees for excessive share withdrawals. This is covered by 
our Truth in Savings Act regulation and has been deleted. 12 CFR 707. 
Section 6(a) and (b) have been combined for easier reading and (c) has 
been deleted.

Article IV, Receipting for Money--Passbooks

    This Article has been deleted. It covered operational procedures of 
the credit union and does not belong in the bylaws.

Article V--Renumbered Article IV, Meetings of Members

    In Section 2, the time frame for notification of the annual meeting 
has been changed from ``at least 7days'' to ``at least 30 but no longer 
than 75 days.''
    Section 3 has been revised to allow directors to call a special 
meeting. This is currently a standard amendment. In addition, the 
maximum number of members necessary to call a special meeting has been 
changed from 200 to 500.

Article VI--Renumbered Article V, Elections

    An FCU elects the voting method it wishes to follow by checking the 
appropriate box. The choices provided are currently contained in the 
FCU Bylaws and Standard Amendments. An additional electronic voting 
option has been added. In addition, the absentee ballot provision from 
the Standard Amendments has been included as an option the FCU may 
elect by checking the box.
    In Section 7, the age to vote has been changed from ``not greater 
than 16'' to ``not greater than 18'' because this is the age of legal 
majority in most states.

Article VII--Renumbered Article VI, Board of Directors

    Section 2 has been added. This provision allows a credit union to 
elect an option currently available in the Standard Amendments limiting 
the number of directors and family members of directors who can be paid 
employees of the credit union and electing whether or not the 
management official and assistant management official may serve on the 
board.
    Section 3 is renumbered Section 4 and the phrase ``within a 
reasonable time'' has been added to the provision requiring the board 
to fill vacancies on the board and committees until the next annual 
meeting.
    Section 4 is renumbered Section 5. It adopts the Standard Amendment 
requirement of at a minimum one face-to-face board meeting each 
calendar quarter. The FCU Bylaws require monthly, in person board 
meetings.
    Section 5 is renumbered Section 6. It combines the Standard 
Amendment option of no credit committee with the FCU Bylaw of a credit 
committee. The no credit committee option adds a new provision allowing 
the board to appoint a mid-level loan review committee but, in 
compliance with the Act, still requires the board to review all appeals 
of loan denials. The mid-level loan review committee is currently being 
used by some FCUs through a nonstandard bylaw amendment.
    Section 7 is renumbered Section 8. It allows the board to declare a 
position vacant if a director or credit committee member misses 3 
consecutive meetings or 4 meetings within a calendar year. This is a 
combination of the FCU Bylaws and the Standard Amendments.

Article VIII--Renumbered Article VII. Board Officers, Management 
Officials and Executive Committee

    The requirement that the executive officer countersign all notes, 
etc. has been deleted from Section 3 and a new Section 4 has been added 
that requires the board to approve all individuals authorized to sign 
notes, etc.
    Section 5 is renumbered Section 6. Subsection (b) is deleted 
because it is covered by the addition of Section 4. Subsection (d) is 
renumbered (c) and the time frame is changed from 7 to 20 days, an 
option available in the standard amendment.
    Section 6 is renumbered Section 7. The prohibition against the 
manager and assistant manager serving on the board is deleted because 
it is now addressed in Article VI, Section 2.
    The suggested titles have been deleted from the Addendum and the 
board has been directed to identify the positions. In an effort to be 
consistent throughout the bylaws, the following terms have been 
replaced: ``executive officers'' with ``board officers'', ``executive 
officer'' with ``chair'', ``assistant executive officer'' with ``vice 
chair'' and ``recording officer'' with ``secretary''.

Article IX--Renumbered Article VIII. Option 1 Credit Committee or 
Option 2 Loan Officers

    An FCU selects Option 1 if it has a credit committee and Option 2 
if it doesn't. The Options mirror the current FCU Bylaws and Standard 
Amendments.

Article X--Renumbered Article IX. Supervisory Committee

    Section 1 is modified slightly to allow the terms of the 
supervisory committee to be staggered in the same way that the terms of 
the credit committee are.

Article XII--Renumbered Article XI. Loans and Lines of Credit to 
Members

    Section 1 is taken from the standard amendment that allows FCUs to 
make loans to nonnatural persons under certain limited circumstances. 
The FCU Bylaws only allow loans to nonnatural persons if the loan is 
share secured. Some of the commenters asked the Board to expand this 
provision beyond the standard amendment. The Board has safety and 
soundness concerns with expanding this provision beyond what

[[Page 189]]

is allowed in the standard amendment but is interested in receiving 
additional comment on this issue.
    Sections 2-7 have been deleted and replaced with the requirement 
that the FCU follow applicable law and regulations. All of the 
requirements in deleted Sections 2-7 were either operational or set 
forth in NCUA's regulations.

Article XIII. Reserves

    This provision has been deleted because it is covered in the Act 
and regulations.

Article XIV--Renumbered Article XII. Dividends

    Sections 2 and 3 have been deleted because they are covered in the 
Act and regulations.

Article XV--Renumbered Article XIII. Deposit and Disbursement of 
Funds-Investments and Borrowings

    Retitled Deposit of Funds. Section 1 is modernized by allowing FCUs 
to fill in the number of days and the amounts. Sections 2-5 are deleted 
because they are operational.

Article XVIII--Renumbered Article XVI. Definitions

    Section 2(a) is deleted because ``members of their immediate 
families'' will be defined in NCUA's regulations.

Article XIX--Renumbered Article XVII. General

    Section 3 follows the standard amendment which limits the 
membership's authority to remove to directors, committee members or 
officers and does not provide the authority to remove employees.
    Section 4 is the conflict of interest provision for directors, 
committee members, officers and employees. It has been expanded to 
prohibit participation not only in matters affecting their pecuniary 
interest but also matters affecting their personal interest. Personal 
interest is intended to include matters affecting their family members.
    Section 7 requires the member to keep the board informed of his 
current address but deletes the discussion on permissible fees.
    Section 8 adds the provision from the standard amendments that 
allows the board to indemnify officials and employees in accordance 
with the laws of the state or the Model Business Corporation Act.

Article XX. Operations Following an Attack on the United States

    This provision is deleted from the bylaws. FCUs may adopt a board 
policy setting forth the FCU's policy in the event of an attack.

Request for Comment

    The Board is interested in receiving comments on the proposed 
format of the FCU Bylaws, as well as any substantive issues the 
commenters wish to see addressed in the final bylaws.

    By the National Credit Union Administration Board on December 
17, 1998.
Becky Baker,
Secretary of the Board.

BYLAWS

Federal Credit Union, Charter         No. ________

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

Article I. Name--Purposes

    Section 1. The name of this credit union is as stated in section 1 
of the charter (approved organization certificate) of this credit 
union.
    Section 2. The purpose of this credit union is to promote thrift 
among its members by affording them an opportunity to accumulate their 
savings and to create for them a source of credit for provident or 
productive purposes.

Article II. Qualifications for Membership

    Section 1. The field of membership of this credit union is limited 
to that stated in section 5 of its charter.
    Section 2. Applications for membership from persons eligible for 
membership under section 5 of the charter must be signed by the 
applicant on forms approved by the board. Upon approval of an 
application by a majority of the directors, or a majority of the 
members of a duly authorized executive committee or by a membership 
officer, and upon subscription to at least one share of this credit 
union and the payment of the initial installment, and the payment of a 
uniform entrance fee if required by the board, the applicant is 
admitted to membership. If a membership application is denied, the 
reasons must be furnished in writing to the person whose application is 
denied, upon written request.
    Section 3. A member who withdraws all shareholdings or fails to 
comply with the time requirements in article III, section 3, ceases to 
be a member. By resolution, the board may require persons readmitted to 
membership to pay another entrance fee.

Article III. Shares of Members

    Section 1. The par value of each share shall be $____. Subscription 
to shares are payable at the time of subscription, or in installments 
of at least $____ per month.
    Section 2. The maximum amount of shares that may be held by any one 
member shall be established from time to time by resolution of the 
board.
    Section 3. A member who fails to complete payment of one share 
within ____ of admission to membership, or within ____ from the 
increase in the par value of shares, or a member who reduces the share 
balance below the par value of one share and does not increase the 
balance to at least the par value of one share within ____ of the 
reduction may be terminated from membership.
    Section 4. Shares may only be transferred from one member to 
another by a written instrument in a form as the board may prescribe. 
Such transfer will carry dividend credits with it.
    Section 5. Money paid in on shares or installments of shares may be 
withdrawn as provided in these bylaws or regulation on any day when 
payment on shares may be made: Provided, however, That
    (a) The board has the right, at any time, to require members to 
give, in writing, not more than 60 days notice of intention to withdraw 
the whole or any part of the amounts so paid in by them.
    (b) The board may determine that, if shares are paid in under an 
accumulated payroll deduction plan as prescribed in the Accounting 
Manual for Federal Credit Unions, they may not be withdrawn until 
credited to members' accounts.
    (c) No member may withdraw any shareholdings below the amount of 
his primary or contingent liability to the credit union if he is 
delinquent as a borrower, or if borrowers for whom he is comaker, 
endorser, or guarantor are delinquent, without the written approval of 
the credit committee or loan officer; except that shares issued in an 
irrevocable trust as provided in section 6 of this article are not 
subject to restrictions upon withdrawal except as stated in the trust 
agreement.
    (d) The share account of a deceased member (other than one held in 
joint tenancy with another member) may be continued until the close of 
the dividend period in which the administration of the deceased's 
estate is completed, but not to exceed a period of 4 years.
    Section 6. Shares may be issued in a revocable or irrevocable 
trust, subject to the following:
    When shares are issued in a revocable trust, the settlor must be a 
member of this credit union in his own right. When shares are issued in 
an irrevocable trust, the settlor or the beneficiary must be a member 
of this credit union in his own

[[Page 190]]

right. The name of the beneficiary must be stated in both a revocable 
and irrevocable trust. For purposes of this section, shares issued 
pursuant to a pension plan authorized by the rules and regulations 
shall be treated as an irrevocable trust unless otherwise indicated in 
the rules and regulations.

Article IV. Meetings of Members

    Section 1. The annual meeting of the members must be held within 
the period authorized in the Act, in the county in which the office of 
the credit union is located or within a radius of 100 miles of such 
office, at the time and place as the board determines and announces in 
the notice of the annual meeting.
    Section 2. At least 30 but no more than 75 days before the date of 
any annual meeting or at least 7 days before the date of any special 
meeting of the members, the secretary must give written notice to each 
member by in person delivery, or by mailing the written notice to each 
member at the address that appears on the records of this credit union. 
Notice of the annual meeting may be given by posting the notice in a 
conspicuous place in the office of this credit union where it may be 
read by the members, at least 30 days prior to such meeting, if the 
annual meeting is to be held during the same month as that of the 
previous annual meeting and if this credit union maintains an office 
that is readily accessible to members where regular business hours are 
maintained. Any meeting of the members, whether annual or special, may 
be held without prior notice, at any place or time, if all the members 
entitled to vote, who are not present at the meeting, waive notice in 
writing, before, during, or after the meeting.
    Notice of any special meeting must state the purpose for which it 
is to be held, and no business other than that related to this purpose 
may be transacted at the meeting.
    Section 3. Special meetings of the members may be called by the 
chair or the board of directors upon a majority vote, or by the 
supervisory committee as provided in these bylaws, and may be held at 
any location permitted for the annual meeting. A special meeting must 
be called by the chair within 30 days of the receipt of a written 
request of 25 members or 5% of the members as of the date of the 
request, whichever number is larger. However, a request of no more than 
500 members may be required for such meeting. The notice of a special 
meeting must be given as provided in section 2 of this article.
    Section 4. The order of business at annual meetings of members must 
be--
    (a) Ascertainment that a quorum is present.
    (b) Reading and approval or correction of the minutes of the last 
meeting.
    (c) Report of directors.
    (d) Report of the financial officer or the chief management 
official.
    (e) Report of the credit committee, if there is one.
    (f) Report of the supervisory committee.
    (g) Unfinished business.
    (h) New business other than elections.
    (i) Elections.
    (j) Adjournment.
    The members assembled at any annual meeting may suspend the above 
order of business upon a two-thirds vote of the members present at the 
meeting.
    Section 5. Except as otherwise provided, 15 members constitutes a 
quorum at annual or special meetings. If no quorum is present, an 
adjournment may be taken to a date not fewer than 7 nor more than 14 
days thereafter. The members present at any such adjourned meeting will 
constitute a quorum, regardless of the number of members present. The 
same notice must be given for the adjourned meeting as is prescribed in 
section 2 of this article for the original meeting, except that such 
notice must be given not fewer than 5 days previous to the date of the 
meeting as fixed in the adjournment.

Article V. Elections

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

{time}  Option A1--In-person elections; nominating committee and 
nominations from floor

    Section 1. At least 30 days prior to each annual meeting, the chair 
will appoint a nominating committee of not fewer than three members. It 
is the duty of the nominating committee to nominate at least one member 
for each vacancy, including any unexpired term vacancy, for which 
elections are being held, and to determine that the members nominated 
are agreeable to the placing of their names in nomination and will 
accept office if elected.
    Section 2. After the nominations of the nominating committee have 
been placed before the members, the chair calls for nominations from 
the floor. When nominations are closed, tellers are appointed by the 
chair, ballots are distributed, the vote is taken and tallied by the 
tellers, and the results announced. All elections are determined by 
plurality vote and will be by ballot except where there is only one 
nominee for the office.

{time}  Option A2--In-person elections; nominating committee and 
nominations by petition

    Section 1. At least 120 days prior to each annual meeting the chair 
will appoint a nominating committee of not fewer than three members. It 
is the duty of the nominating committee to nominate at least one member 
for each vacancy, including any unexpired term vacancy, for which 
elections are being held, and to determine that the members nominated 
are agreeable to the placing of their names in nomination and will 
accept office if elected. The nominating committee files its 
nominations with the secretary of the credit union at least 90 days 
prior to the annual meeting, and the secretary notifies in writing all 
members eligible to vote at least 75 days prior to the annual meeting 
that nominations for vacancies may also be made by petition signed by 
1% of the members with a minimum of 20 and a maximum of 500.
    The written notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when there is only one nominee for each position to be filled. A brief 
statement of qualifications and biographical data in a form approved by 
the board of directors will be included for each nominee submitted by 
the nominating committee with the written notice to all eligible 
members. Each nominee by petition must submit a similar statement of 
qualifications and biographical data with the petition. The written 
notice must state the closing date for receiving nominations by 
petition. In all cases, the period for receiving nominations by 
petition must extend at least 30 days from the date that the petition 
requirement and the list of nominating committee's nominees are mailed 
to all members. To be effective, such nominations must be accompanied 
by a signed certificate from the nominee or nominees stating that they 
are agreeable to nomination and will serve if elected to office. Such 
nominations must be filed with the secretary of the credit union at 
least 40 days prior to the annual meeting and the secretary will ensure 
that nominations by petition along with those of the nominating 
committee are posted in a conspicuous place in each credit union office 
at least 35 days prior to the annual meeting.
    Section 2. All persons nominated by either the nominating committee 
or by

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petition must be placed before the members. When nominations are 
closed, tellers are appointed by the chair, ballots are distributed, 
the vote is taken and tallied by the tellers, and the results 
announced. All elections are determined by plurality vote and will be 
by ballot except where there is only one nominee for each position to 
be filled.
    Nominations cannot be made from the floor unless insufficient 
nominations have been made by the nominating committee or by petition 
to provide for one nominee for each position to be filled or 
circumstances prevent the candidacy of the one nominee for a position 
to be filled. Only those positions without a nominee are subject to 
nominations from the floor. In the event nominations from the floor are 
permitted and result in more than one nominee for a position to be 
filled, when nominations have been closed, tellers are appointed by the 
chair, ballots are distributed, the vote is taken and tallied by the 
tellers, and the results announced. When only one member is nominated 
for each position to be filled, the chair may take a voice vote or 
declare each nominee elected by general consent or acclamation at the 
annual meeting.

{time}  Option A3--Election by ballot boxes or voting machine; 
nominating committee and nomination by petition

    Section 1. At least 120 days prior to each annual meeting the chair 
will appoint a nominating committee of not fewer than three members. It 
is the duty of the nominating committee to nominate at least one member 
for each vacancy, including any unexpired term vacancy, for which 
elections are being held, and to determine that the members nominated 
are agreeable to the placing of their names in nomination and will 
accept office if elected. The nominating committee files its 
nominations with the secretary of the credit union at least 90 days 
prior to the annual meeting, and the secretary shall notify in writing 
all members eligible to vote at least 75 days prior to the annual 
meeting that nominations for vacancies may also be made by petition 
signed by 1% of the members with a minimum of 20 and a maximum of 500.
    The written notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when there is only one nominee for each position to be filled. A brief 
statement of qualifications and biographical data in a form approved by 
the board of directors will be included for each nominee submitted by 
the nominating committee with the written notice to all eligible 
members. Each nominee by petition must submit a similar statement of 
qualifications and biographical data with the petition. The written 
notice must state the closing date for receiving nominations by 
petition. In all cases, the period for receiving nominations by 
petition must extend at least 30 days from the date of the petition 
requirement and the list of nominating committee's nominees are mailed 
to all members. To be effective, such nominations must be accompanied 
by a signed certificate from the nominee or nominees stating that they 
are agreeable to nomination and will serve if elected to office. Such 
nominations must be filed with the secretary of the credit union at 
least 40 days prior to the annual meeting and the secretary will ensure 
that nominations by petition along with those of the nominating 
committee are posted in a conspicuous place in each credit union office 
at least 35 days prior to the annual meeting.
    Section 2. All elections shall be determined by plurality vote. The 
election will be conducted by ballot boxes or voting machines, subject 
to the following conditions:
    (a) The election tellers will be appointed by the board of 
directors;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more than one nominee for any position to be 
filled, the secretary, at least 10 days prior to the annual meeting, 
will cause ballot boxes and printed ballots, or voting machines, to be 
placed in conspicuous locations, as determined by the board of 
directors with the names of the candidates posted near the boxes or 
voting machines. The name of each candidate will be followed by a brief 
statement of qualifications and biographical data in a form approved by 
the board of directors;
    (c) After the members have been given 24 hours to vote at 
conspicuous locations as determined by the board of directors, the 
ballot boxes or voting machines will be opened, the vote tallied by the 
tellers, the tallies placed in the ballot boxes, and the ballot boxes 
resealed. The tellers are responsible at all times for the ballot boxes 
or voting machines and the integrity of the vote. A record must be kept 
of all persons voting and the tellers must assure themselves that each 
person so voting is entitled to vote; and
    (d) The ballot boxes will be taken to the annual meeting by the 
tellers. At the annual meeting, printed ballots will be distributed to 
those in attendance who have not voted and their votes will be 
deposited in the ballot boxes placed by the tellers, before the 
beginning of the meeting, in conspicuous locations with the names of 
the candidates posted near them. After such members have been given an 
opportunity to vote at the annual meeting, balloting will be closed, 
the ballot boxes opened, the vote tallied by the tellers and added to 
the previous count, and the chair will announce the result of the vote.

  Option A4--Election by electronic device (including but not limited 
to telephone and electronic mail) or mail ballot; nominating committee 
and nominations by petition

    Section 1. At least 120 days prior to each annual meeting the chair 
will appoint a nominating committee of not fewer than three members. It 
is the duty of the nominating committee to nominate at least one member 
for each vacancy, including any unexpired term vacancy, for which 
elections are being held, and to determine that the members nominated 
are agreeable to the placing of their names in nomination and will 
accept office if elected. The nominating committee files its 
nominations with the secretary of the credit union at least 90 days 
prior to the annual meeting, and the secretary notifies in writing all 
members eligible to vote at least 75 days prior to the annual meeting 
that nominations for vacancies may also be made by petition signed by 
1% of the members with a minimum of 20 and a maximum of 500.
    The written notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when there is only one nominee for each position to be filled. A brief 
statement of qualifications and biographical data in a form approved by 
the board of directors will be included for each nominee submitted by 
the nominating committee with the written notice to all eligible 
members. Each nominee by petition must submit a similar statement of 
qualifications and biographical data with the petition. The written 
notice must state the closing date for receiving nominations by 
petition. In all cases, the period for receiving nominations by 
petition must extend at least 30 days from the date of the petition 
requirement and the list of nominating committee's nominees are mailed 
to all members. To be effective, such nominations must be accompanied 
by a signed certificate from the nominee or nominees stating that they 
are agreeable to nomination and will serve if elected to office. Such 
nominations must be filed with the secretary of the credit union at 
least 40 days prior to the annual meeting and the secretary will ensure 
that nominations by petition along with those of the nominating 
committee are posted in a conspicuous

[[Page 192]]

place in each credit union office at least 35 days prior to the annual 
meeting.
    Section 2. All elections will be by electronic device or mail 
ballot, subject to the following conditions:
    (a) The election tellers will be appointed by the board of 
directors;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more than one nominee for any position to be 
filled, the secretary, at least 30 days prior to the annual meeting, 
will cause either a printed ballot or notice of ballot to be mailed to 
all members eligible to vote;
    (c) If the credit union is conducting its elections electronically, 
the secretary will cause the following materials to be mailed to each 
eligible voter:
    (1) One notice of balloting stating the names of the candidates for 
the board of directors and the candidates for other separately 
identified offices or committees. The name of each candidate must be 
followed by a brief statement of qualifications and biographical data 
in a form approved by the board of directors.
    (2) One instruction sheet stating specific instructions for the 
electronic election procedure, including how to access and use the 
system, and the period of time in which votes will be taken. The 
instruction will state that members without the requisite electronic 
device necessary to vote on the system may vote by mail ballot upon 
written or telephone request and specify the date the request must be 
received by the credit union.
    (3) It is the duty of the tellers of election to verify, or cause 
to be verified the name of the voter and the credit union account 
number as they are registered in the electronic balloting system. It is 
the duty of the teller to test the integrity of the balloting system at 
regular intervals during the election period.
    (4) Ballots must be received no later than midnight 5 calendar days 
prior to the annual meeting.
    (5) Voting will be closed at the midnight deadline specified in 
subsection (4) hereof and the vote will be tallied by the tellers. The 
result must be verified at the annual meeting and the chair will make 
the result of the vote public at the annual meeting.
    (6) In the event of malfunction of the electronic balloting system, 
the board of directors may in its discretion order elections be held by 
mail ballot only. Such mail ballots must conform to section 2(d) of 
this Article and must be mailed to all eligible members 30 days prior 
to the annual meeting. The board may make reasonable adjustments to the 
voting time frames above, or postpone the annual meeting when 
necessary, to complete the elections prior to the annual meeting.
    (d) If the credit union is conducting its election by mail ballot, 
the secretary will cause the following materials to be mailed to each 
candidate:
    (1) One ballot, clearly identified as such, on which the names of 
the candidates for the board of directors and the candidates for other 
separately identified offices or committees are printed in order as 
determined by the draw of lots. The name of each candidate will be 
followed by a brief statement of qualifications and biographical data 
in a form approved by the board of directors;
    (2) One ballot envelope clearly marked with instructions that the 
completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the voter;
    (4) One mailing envelope in which the voter, pursuant to 
instructions provided with the mailing envelope, must insert the sealed 
ballot envelope and the identification form, and which must have 
postage prepaid and be preaddressed for return to the tellers;
    (5) When properly designed, one form can be printed that represents 
a combined ballot/identification form, and postage prepaid and 
preaddressed return envelope;
    (6) It is the duty of the tellers to verify, or cause to be 
verified, the name of the voter and his credit union account number as 
appearing on the identification form; to place the verified 
identification form and the sealed ballot envelope in separate places 
of safekeeping pending the count of the vote; in the case of a 
questionable or challenged identification form, to retain the 
identification form and sealed ballot envelope together until the 
verification or challenge has been resolved;
    (7) Ballots mailed to the tellers must be received by the tellers 
no later than midnight 5 days prior to the date of the annual meeting;
    (8) Voting will be closed at the midnight deadline specified in 
subsection (7) hereof and the vote will be tallied by the tellers. The 
result will be verified at the annual meeting and the chair will make 
the result of the vote public at the annual meeting.
    Section 3. Nominations shall be in the following order:
    (a) Nominations for directors.
    (b) Nominations for credit committee members, if applicable. 
Elections may be by separate ballots following the same order as the 
above nominations or, if preferred, may be by one ballot for all 
offices.
    Section 4. Members cannot vote by proxy, but a member other than a 
natural person may vote through an agent designated in writing for the 
purpose. A trustee, or other person acting in a representative 
capacity, is not, as such, entitled to vote.
    Section 5. Irrespective of the number of shares, no member has more 
than one vote.
    Section 6. The names and addresses of members of the board, board 
officers, executive committee, and members of the credit committee, if 
applicable and supervisory committees must be forwarded to the 
Administration in accordance with the Act and regulations in the manner 
as may be required by the Administration.
    Section 7. The board may establish by resolution a minimum age, not 
greater than 18 years of age, as a qualification for eligibility to 
vote at meetings of the members, or to hold elective or appointive 
office, or both.
    The Credit Union may select the absentee ballot provision in 
conjunction with the voting procedure it has selected. This may be done 
by printing the credit union's bylaws with this provision or by 
retaining this copy and checking the box.

{time}   Section 8. The board of directors may authorize the use of 
absentee ballots in conjunction with the other procedures authorized in 
this article, subject to the following conditions:

    (a) The election tellers will be appointed by the board of 
directors;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more than one nominee for any position to be 
filled, the secretary, at least 30 days prior to the annual meeting, 
will cause printed ballots to be mailed to all members of the credit 
union who are eligible to vote and who have submitted a written request 
for an absentee ballot;
    (c) The secretary will cause the following materials to be mailed 
to each such eligible voter who has submitted a written request for an 
absentee ballot:
    (1) One ballot, clearly identified as such, on which the names of 
the candidates for the board of directors and the candidates for other 
separately identified offices or committees are printed in order as 
determined by the draw of the lots. The name of each candidate will be 
followed by a brief statement of qualifications and biographical data 
in a form approved by the board of directors;
    (2) One ballot envelope clearly marked with instructions that the

[[Page 193]]

completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the voter;
    (4) One mailing envelope in which the voter, pursuant to 
instructions provided with the envelope, must insert the sealed ballot 
envelope and the identification form, and which must have postage 
prepaid and be preaddressed for return to the tellers;
    (5) When properly designed, one form can be printed that represents 
a combined ballot/identification form, and postage prepaid and 
preaddressed return envelope;
    (d) It shall be the duty of the tellers of election to verify, or 
cause to be verified, the name of the voter and his credit union 
account number as appearing on the identification form; to retain in a 
safe place the verified identification form and to place the sealed 
ballot envelope in the ballot box in the credit union office; in the 
case of a questionable or challenged identification form, to retain the 
identification form and the sealed ballot envelope together until the 
verification or challenge has been resolved; and in the event that more 
than one voting procedure is used, to verify that no eligible voter has 
voted more than one time;
    (e) Ballots mailed to the tellers pursuant to subsection (b) 
hereof, must be received by the tellers no later than midnight 5 days 
prior to the date of the annual meeting; and
    (f) After the expiration of the period of time specified in 
subsection (e) hereof, the voting by absentee ballot will be closed and 
absentee ballots deposited in the ballot boxes to be taken to the 
annual meeting or included in a precount in accordance with procedures 
specified in Article V, Section 2.

Article VI. Board of Directors

    Section 1. The board consists of ____ members, all of whom must be 
members of this credit union. The number of directors may be changed to 
an odd number not fewer than 5 nor more than 15 by resolution of the 
board. No reduction in the number of directors may be made unless 
corresponding vacancies exist as a result of deaths, resignations, 
expiration of terms of office, or other actions provided by these 
bylaws. A copy of the resolution of the board covering any increase or 
decrease in the number of directors must be filed with the official 
copy of the bylaws of this credit union.
    Section 2. ____ (No, one or two) directors or committee members may 
be a paid employee of the credit union. ____ (No, one or two) immediate 
family members of a director or committee member may be a paid employee 
of the credit union. In no case may employees and family members 
constitute a majority of the board. The board may appoint a management 
official who ____ (may or may not) be a member of the board and one or 
more assistant management officials who ____ (may or may not) be a 
member of the board. If the management official or assistant management 
official is permitted to serve on the board, he or she may not serve as 
the chair.
    Section 3. Regular terms of office for directors must be for 
periods of either 2 or 3 years as the board determines: Provided, 
however, that all regular terms must be for the same number of years 
and until the election and qualification of successors. The regular 
terms must be fixed at the beginning, or upon any increase or decrease 
in the number of directors, that approximately an equal number of 
regular terms must expire at each annual meeting.
    Section 4. Any vacancy on the board, credit committee (if 
applicable), or supervisory committee will be filled within a 
reasonable time by vote of a majority of the directors then holding 
office. Directors and credit committee members (if applicable) so 
appointed will hold office only until the next annual meeting, at which 
any unexpired terms will be filled by vote of the members, and until 
the qualification of their successors. Members of the supervisory 
committee so appointed will hold office until the first regular meeting 
of the board following the next annual meeting of members at which the 
regular term expires and until the appointment and qualification of 
their successors.
    Section 5. A regular meeting of the board must be held each month 
at the time and place fixed by resolution of the board. One regular 
meeting each calendar quarter must be conducted in person. The other 
regular meetings may be conducted using audio or video teleconference 
methods. The chair, or in his absence the ranking vice chair, may call 
a special meeting of the board at any time; and must do so upon written 
request of a majority of the directors then holding office. Unless the 
board prescribes otherwise, the chair, or in his absence the ranking 
vice chair, will fix the time and place of special meetings. Notice of 
all meetings will be given in such manner as the board may from time to 
time by resolution prescribe. Special meetings may be conducted using 
audio or video teleconference methods.
    Section 6. The board has the general direction and control of the 
affairs of this credit union and is responsible for performing all the 
duties customarily performed by boards of directors. This includes but 
is not limited to the following:
    (a) Directing the affairs of the credit union in accordance with 
the Act, these bylaws, the rules and regulations and sound business 
practices.
    (b) Establishing programs to achieve the purposes of this credit 
union as stated in article 1, section 2, of these bylaws.
    (c) Establishing a loan collection program and authorizing the 
chargeoff of uncollectible loans.
    (d) Determining that all persons appointed or elected by this 
credit union to any position requiring the receipt, payment or custody 
of money or other property of this credit union, or in its custody or 
control as collateral or otherwise, are properly bonded in accordance 
with the Act and regulations.
    (e) Performing additional acts and exercising additional powers as 
may be required or authorized by applicable law.
    If the credit union has an elected credit committee, you do not 
need to check a box. If the credit union has no credit committee check 
Option 1 and if it has an appointed credit committee check Option 2.

{time}  Option 1  No Credit Committee.

    (f) Reviewing denied loan applications of members who file written 
requests for such review.
    (g) Appointing one or more loan officers and delegating to those 
officers the power to approve or disapprove loans, lines of credit or 
advances from lines of credit.
    (h) In its discretion, appointing a loan review committee to review 
loan denials and delegating to the committee the power to overturn 
denials of loan applications. The committee will function as a mid-
level appeal committee for the board. Any denial of a loan by the 
committee must be reviewed by the board upon written request of the 
member. The committee must consist of three members and the regular 
term of office of the committee member will be for two years. Not more 
than one member of the committee may be appointed as a loan officer.

{time}  Option 2  Appointed Credit Committee.

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

[[Page 194]]

    Section 7. A majority of the number of directors, including any 
vacant positions, constitutes a quorum for the transaction of business 
at any meeting thereof; but fewer than a quorum may adjourn from time 
to time until a quorum is in attendance.
    Section 8. If a director or a credit committee member, if 
applicable, fails to attend regular meetings of the board or credit 
committee, respectively, for 3 consecutive months, or 4 meetings within 
a calendar year, or otherwise fails to perform any of the duties 
devolving upon him as a director or a credit committee member, the 
office may be declared vacant by the board and the vacancy filled as 
herein provided. The board may remove any board officer from office for 
failure to perform the duties thereof, after giving the officer 
reasonable notice and opportunity to be heard.
    When any board officer, membership officer, executive committee 
member or investment committee member is absent, disqualified, or 
otherwise unable to perform the duties of the office, the board may by 
resolution designate another member of this credit union to act 
temporarily in his place. The board may also, by resolution, designate 
another member or members of this credit union to act on the credit 
committee when necessary in order to obtain a quorum.
    Section 9. Any member of the supervisory committee may be suspended 
by a majority vote of the board of directors. The members of this 
credit union will decide, at a special meeting held not fewer than 7 
nor more than 14 days after any such suspension, whether the suspended 
committee member will be removed from or restored to the supervisory 
committee.

Article VII. Board Officers, Management Officials and Executive 
Committee

    Section 1. The board officers of this credit union are comprised of 
a chair, one or more vice chairs, a financial officer, and a secretary, 
all of whom are elected by the board and from their number. The board 
determines the title and rank of each board officer and records them in 
the addendum to this article. One board officer, the ________, may be 
compensated for services as determined by the board. If more than one 
vice chair is elected, the board determines their rank as first vice 
chair, second vice chair, and so on. The offices of the financial 
officer and secretary may be held by the same person. Unless removed as 
provided in these bylaws, the board officers elected at the first 
meeting of the board hold office until the first meeting of the board 
following the first annual meeting of the members and until the 
election and qualification of their respective successors.
    Section 2. Board officers elected at the meeting of the board next 
following the annual meeting of the members, which must be held not 
later than 7 days after the annual meeting, hold office for a term of 1 
year and until the election and qualification of their respective 
successors: Provided, however, That any person elected to fill a 
vacancy caused by the death, resignation, or removal of an officer is 
elected by the board to serve only for the unexpired term of such 
officer and until a successor is duly elected and qualified.
    Section 3. The chair presides at all meetings of the members and at 
all meetings of the board, unless disqualified through suspension by 
the supervisory committee. The chair also performs such other duties as 
customarily appertain to the office of the chair or as may be directed 
to perform by resolution of the board not inconsistent with the Act and 
regulations and these bylaws.
    Section 4. The board must approve all individuals who are 
authorized to sign all notes of this credit union and all checks, 
drafts and other orders for disbursement of credit union funds.
    Section 5. The ranking vice chair has and may exercise all the 
powers, authority, and duties of the chair during the absence of the 
latter or his inability to act.
    Section 6. The financial officer manages this credit union under 
the control and direction of the board unless the board has appointed a 
management official to act as general manager. Subject to such 
limitations, controls and delegations as may be imposed by the board, 
the financial officer will:
    (a) Have custody of all funds, securities, valuable papers and 
other assets of this credit union.
    (b) Provide and maintain full and complete records of all the 
assets and liabilities of this credit union in accordance with forms 
and procedures prescribed in the Accounting Manual for Federal Credit 
Unions or otherwise approved by the Administration.
    (c) Within 20 days after the close of each month, ensure that a 
financial statement showing the condition of this credit union as of 
the end of the month, including a summary of delinquent loans is 
prepared and submitted to the board and post a copy of such statement 
in a conspicuous place in the office of the credit union where it will 
remain until replaced by the financial statement for the next 
succeeding month.
    (e) Ensure that such financial and other reports as the 
Administration may require are prepared and sent.
    (f) Within standards and limitations prescribed by the board, 
employ tellers, clerks, bookkeepers, and other office employees, and 
have the power to remove such employees.
    (g) Perform such other duties as customarily appertain to the 
office of the financial officer or as may be directed to perform by 
resolution of the board not inconsistent with the Act, regulations and 
these bylaws.
    The board may employ one or more assistant financial officers, none 
of whom may also hold office as chair or vice chair, and may authorize 
them, under the direction of the financial officer, to perform any of 
the duties devolving on the financial officer, including the signing of 
checks. When designated by the board, any assistant financial officer 
may also act as financial officer during the temporary absence of the 
financial officer or in the event of his/her temporary inability to 
act.
    Section 7. The board may appoint a management official who is under 
the direction and control of the board or of the financial officer as 
determined by the board. The management official may be assigned any or 
all of the responsibilities of the financial officer described in 
section 6 of this article. The board will determine the title and rank 
of each management official and record them in the addendum to this 
article. The board may employ one or more assistant management 
officials. The board may authorize assistant management officials under 
the direction of the management official, to perform any of the duties 
devolving on the management official, including the signing of checks. 
When designated by the board, any assistant management official may 
also act as management official during the temporary absence of the 
management official or in the event of his temporary inability to act.
    Section 8. The board employs, fixes the compensation, and 
prescribes the duties of such employees as may in the discretion of the 
board be necessary, and has the power to remove such employees, unless 
it has delegated these powers to the financial officer or management 
official. Neither the board, the financial officer, nor the management 
official has the power or duty to employ, prescribe the duties of, or 
remove necessary clerical and auditing assistance employed or utilized 
by the supervisory committee and, if there is a credit committee, the 
power or duty to employ, prescribe the duties

[[Page 195]]

of, or remove any loan officer appointed by the credit committee.
    Section 9. The secretary prepares and maintains full and correct 
records of all meetings of the members and of the board, which records 
will be prepared within 7 days after the respective meetings. The 
secretary must promptly inform the Administration in writing of any 
change in the address of the office of this credit union or the 
location of its principal records. The secretary will give or cause to 
be given, in the manner prescribed in these bylaws, proper notice of 
all meetings of the members, and perform such other duties as may be 
directed to perform by resolution of the board not inconsistent with 
the Act, regulations and these bylaws. The board may employ one or more 
assistant secretaries, none of whom may also hold office as chair, vice 
chair, or financial officer, and may authorize them under direction of 
the secretary to perform any of the duties devolving on the secretary.
    Section 10. The board may appoint an executive committee of not 
fewer than three directors to serve at its pleasure, to act for it with 
respect to specifically delegated functions authorized by the Act and 
regulations. The board may also authorize such executive committee or a 
membership officer(s) appointed by the board from the membership other 
than a board member paid as an officer, the financial officer, any 
assistant to the paid officer of the board or to the financial officer 
or any loan officer, to serve at its pleasure to approve applications 
for membership under such conditions as the board and these bylaws may 
prescribe. No executive committee member or membership officer may be 
compensated as such.
    Section 11. The board may appoint an investment committee composed 
of not less than two, to serve at its pleasure to have charge of making 
investments under rules and procedures established by the board. No 
member of the investment committee may be compensated as such.
    Addendum: The board shall list the positions of the board officers 
and management officials of this credit union. They are as follows:

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

{time} Option 1  Article VIII. Credit Committee

    Section 1. The credit committee consists of ____ members. All the 
members of the credit committee must be members of this credit union. 
The number of members of the credit committee must be an odd number and 
may be changed to not fewer than 3 nor more than 7 by resolution of the 
board. No reduction in the number of members may be made unless 
corresponding vacancies exist as a result of deaths, resignations, 
expiration of terms of office, or other actions provided by these 
bylaws. A copy of the resolution of the board covering any increase or 
decrease in the number of committee members must be filed with the 
official copy of the bylaws of this credit union.
    Section 2. Regular terms of office for elected credit committee 
members are for periods of either 2 or 3 years as the board shall 
determine: Provided, however, That all regular terms are for the same 
number of years and until the election and qualification of successors. 
The regular terms are fixed at the beginning, or upon any increase or 
decrease in the number of committee members, that approximately an 
equal number of regular terms expire at each annual meeting.
    Regular terms of office for appointed credit committee members are 
for periods as determined by the board and as noted in the board's 
minutes.
    Section 3. The credit committee chooses from their number a chair 
and a secretary. The secretary of the committee prepares and maintains 
full and correct records of all actions taken by it, and such records 
must be prepared within 3 days after the action. The offices of the 
chair and secretary may be held by the same person.
    Section 4. The credit committee may, by majority vote of its 
members, appoint one or more loan officers to serve at its pleasure, 
and delegate to him/her or them the power to approve application for 
loans or lines of credit, share withdrawals, releases and substitutions 
of security, within limits specified by the committee and within limits 
of applicable law and regulations. Not more than one member of the 
committee may be appointed as a loan officer. Each loan officer must 
furnish to the committee a record of each transaction approved or not 
approved by him within 7 days of the date of the filing of the 
application or request, and such record becomes a part of the records 
of the committee. All applications or requests not approved by a loan 
officer must be acted upon by the committee. No individual may disburse 
funds of this credit union for any application or share withdrawal 
which he has approved as a loan officer.
    Section 5. The credit committee holds such meetings as the business 
of this credit union may require, and not less frequently than once a 
month. Notice of such meetings will be given to members of the 
committee in such a manner as the committee may from time to time, by 
resolution, prescribe.
    Section 6. The credit committee or loan officer must inquire into 
the character and financial condition of each applicant for a loan or 
line of credit and his sureties, if any, to ascertain their ability to 
repay fully and promptly the obligations incurred by them and to 
determine whether the loan or line of credit will be of probable 
benefit to the borrower. The credit committee and its appointed loan 
officers will endeavor diligently to assist applicants in solving their 
financial problems.
    Section 7. No loan or line of credit may be made unless approved by 
the committee or a loan officer in accordance with applicable law and 
regulations.
    Section 8. Subject to the limits imposed by applicable law and 
regulations, these bylaws, and the general policies of the board, the 
credit committee, or a loan officer, shall determine the security if 
any required for each application and the terms of repayment. The 
security furnished must be adequate in quality and character and 
consistent with sound lending practices. When funds are not available 
to make all the loans and lines of credit for which there are 
applications, preference will be given, in all cases, to the smaller 
applications if the need and credit factors are nearly equal.

  Option 2  Article VIII. Loan Officers (No Credit Committee)

    Section 1. Each loan officer must maintain a record of each 
transaction approved or not approved by him/her within 7 days of the 
filing of the application or request, and such records becomes a part 
of the records of the credit union. No individual may disburse funds of 
this credit union for any application or share withdrawal which he has 
approved as a loan officer.
    Section 2. The loan officer must inquire into the character and 
financial condition of each applicant for a loan or line of credit and 
his sureties, if any, to ascertain their ability to repay fully and 
promptly the obligations incurred by them and to determine whether the 
loan or line of credit will be of probable benefit to the borrower. The 
loan officers will endeavor diligently to assist applicants in solving 
their financial problems.
    Section 3. No loan or line of credit may be made unless approved by 
a loan officer in accordance with applicable law and regulations.
    Section 4. Subject to the limits imposed by applicable law and

[[Page 196]]

regulations, these bylaws, and the general policies of the board, a 
loan officer determines the security if any required for each 
application and the terms of repayment. The security furnished must be 
adequate in quality and character and consistent with sound lending 
practices. When funds are not available to make all the loans and lines 
of credit for which there are applications, preference will be given, 
in all cases, to the smaller applications if the need and credit 
factors are nearly equal.

Article IX. Supervisory Committee

    Section 1. The supervisory committee is appointed by the board from 
among the members of this credit union, one of whom may be a director 
other than the financial officer. The board determines the number of 
members on the committee, which may not be fewer than 3 nor more than 
the maximum number permitted by the Act. No member of the credit 
committee, if applicable, or any employee of this credit union may be 
appointed to the committee. Regular terms of committee members are for 
periods of 1, 2, or 3 years as the board determines: Provided, however, 
That all regular terms are for the same number of years and until the 
appointment and qualification of successors. The regular terms are 
fixed at the beginning, or upon any increase or decrease in the number 
of committee members, so that approximately an equal number of regular 
terms expires at each annual meeting.
    Section 2. The supervisory committee members choose from among 
their number a chair and a secretary. The secretary of the supervisory 
committee prepares, maintains, and has custody of full and correct 
records of all actions taken by it. The offices of chair and secretary 
may be held by the same person.
    Section 3. The supervisory committee makes, or causes to be made, 
such audits, and prepares and submits such written reports, as are 
required by the Act and regulations. The committee may employ and use 
such clerical and auditing assistance as may be required to carry out 
its responsibilities prescribed by this article, and may request the 
board to provide compensation for such assistance. It will prepare and 
forward to the Administration such reports as may be required.
    Section 4. The supervisory committee must verify the accounts of 
all members with the records of the financial officer from time to time 
and not less frequently than as required by the Act and regulations. 
The committee must maintain a record of such verification.
    Section 5. By unanimous vote, the supervisory committee may suspend 
until the next meeting of the members any director, board officer, or 
member of the credit committee. In the event of any such suspension, 
the supervisory committee must call a special meeting of the members to 
act on the suspension, which meeting must be held not fewer than 7 nor 
more than 14 days after the suspension. The chair of the committee acts 
as chair of the meeting unless the members select another person to act 
as chair.
    Section 6. By the affirmative vote of a majority of its members, 
the supervisory committee may call a special meeting of the members to 
consider any violation of the provisions of the Act, the regulations, 
or of the charter or the bylaws of this credit union, or to consider 
any practice of this credit union which the committee deems to be 
unsafe or unauthorized.

Article X. Organization Meeting

    Section 1. At the time application is made for a federal credit 
union charter, the subscribers to the organization certificate must 
meet for the purpose of electing a board of directors and a credit 
committee, if applicable. Failure to commence operations within 60 days 
following receipt of the approved organization certificate is cause for 
revocation of the charter unless a request for an extension of time has 
been submitted to and approved by the Regional Director.
    Section 2. The subcribers elect a chair and a secretary for the 
meeting. The subscribers then elect from their number, or from those 
eligible to become members of this credit union, a board of directors 
and a credit committee, if applicable, all to hold office until the 
first annual meeting of the members and until the election and 
qualification of their respective successors. If not already a member, 
every person elected under this section or appointed under section 3 of 
this article, must qualify within 30 days by becoming a member. If any 
person elected as a director or committee member or appointed as a 
supervisory committee member does not qualify as a member within 30 
days of such an election or appointment, his office will automatically 
become vacant and be filled by the board.
    Section 3. Promptly following the elections held under the 
provisions of section 2 of this article, the board must meet and elect 
the board officers who will hold office until the first meeting of the 
board of directors following the first annual meeting of the members 
and until the election and qualification of their respective 
successors. The board also appoints a supervisory committee at this 
meeting as provided in article IX, section 1, of these bylaws and a 
credit committee, if applicable. The members so appointed hold office 
until the first regular meeting of the board following the first annual 
meeting of the members and until the appointment and qualification of 
their respective successors.

Article XI. Loans and Lines of Credit to Members

    Section 1. Loans to individuals may only be made to members and for 
provident or productive purposes in accordance with applicable law and 
regulations. Loans to a member other than a natural person may not 
exceed its shareholdings in this credit union, unless the loan is made 
jointly to one or more natural person members and a business 
organization in which they have a majority interest, or if the 
nonnatural person is an association, the loan is made jointly to a 
majority of the members of the association and to the association in 
its own right.
    Section 2. All loans made by the credit union must follow 
applicable law and regulations.
    Section 3. Any member whose loan is delinquent may be required to 
pay a late charge as determined by the board of directors.

Article XII. Dividends

    Section 1. The board establishes dividend periods and declares 
dividends as permitted by the Act and applicable regulations.

Article XIII. Deposit of Funds

    Section 1. All funds of this credit union, except for petty cash 
and cash change funds, must be deposited in such qualified depository 
or depositories from among those authorized by applicable law and 
regulations as the board may from time to time by resolution designate; 
and must be so deposited not later than the ____ (fill in number) 
banking day after their receipt: Provided, however, That receipts in 
the aggregate of $____ (fill in number) or less may be held as long as 
1 week before they are deposited.

Article XIV. Expulsion and Withdrawal

    Section 1. A member may be expelled only in the manner provided by 
the Act. Expulsion or withdrawal will not operate to relieve a member 
of any liability to this credit union. All amounts paid in on shares by 
expelled or withdrawing members, prior to their

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expulsion or withdrawal, will be paid to them in the order of their 
withdrawal or expulsion, but only as funds become available and only 
after deducting any amounts due to this credit union.

Article XV. Minors

    Section 1. Shares may be issued in the name of a minor.

Article XVI. Definitions

    Section 1. When used in these bylaws the terms:
    (a) ``Act'' means the Federal Credit Union Act, as amended.
    (b) ``Administration'' means the National Credit Union 
Administration.
    (c) ``Board'' means board of directors of the federal credit union.
    (d) ``NCUA Board'' means the Board of the National Credit Union 
Administration.
    (e) ``Regulation'' or ``regulations'' means rules and regulations 
issued by the NCUA Board.
    (f) ``Applicable law and regulations'' means the Federal Credit 
Union Act and rules and regulations issued thereunder or other 
applicable federal statutes and rules and regulations issued thereunder 
as the context indicates (such as The Higher Education Act of 1965).
    (g) ``Paid in and unimpaired capital,'' as of a given date, means 
the balance of the paid-in share accounts as of such date, less any 
losses that may have been incurred for which there is no reserve or 
which have not been charged against undivided earnings.
    (h) ``Surplus,'' as of a given date, means the credit balance of 
the undivided earnings account on such date, after all losses have been 
provided for and net earnings or net losses have been added thereto or 
deducted therefrom, as the case may be. Reserves are not considered as 
a part of the surplus.
    (i) ``Share'' or ``shares'' means all classes of shares and share 
certificates that may be held in accordance with applicable law and 
regulations.
    Section 2. If included in the definition of the field of membership 
in the organization certificate charter of this credit union, the term 
or expression ``Organizations of such persons'' means an organization 
or organizations composed exclusively of persons who are within the 
field of membership of this credit union.

Article XVII. General

    Section 1. All power, authority, duties, and functions of the 
members, directors, officers, and employees of this credit union, 
pursuant to the provisions of these bylaws, must be exercised in strict 
conformity with the provisions of applicable law and regulations, and 
of the charter and the bylaws of this credit union.
    Section 2. The officers, directors, members of committees and 
employees of this credit union must hold in confidence all transactions 
of this credit union with its members and all information respecting 
their personal affairs, except to the extent deemed necessary by the 
board in connection with:
    (a) The making of loans and extending lines of credit.
    (b) The collection of loans.
    (c) The guarantee of member share drafts by third parties.
    In accordance with the above, the board of directors may authorize 
participation in:
    (a) A credit reporting agency if it has determined that use of such 
an agency is essential in the making of loans and extending lines of 
credit and that information supplied by the credit union concerning its 
members will be made available only to legitimate members belonging to 
that agency and persons who have a legitimate business need for 
information in connection with a business transaction involving a 
consumer.
    (b) A consumer reporting agency if it has determined that 
information supplied by the credit union is essential to the guarantee 
of member share drafts by that agency.
    Section 3. Notwithstanding any other provisions in these bylaws, 
any director, committee member or officer of this credit union may be 
removed from office by the affirmative vote of a majority of the 
members present at a special meeting called for the purpose, but only 
after an opportunity has been given to be heard.
    Section 4. No director, committee member, officer, agent, or 
employee of this credit union may participate in any manner, directly 
or indirectly, in the deliberation upon or the determination of any 
question affecting his pecuniary or personal interest or the pecuniary 
interest of any corporation, partnership, or association (other than 
this credit union) in which he or she is directly or indirectly 
interested. In the event of the disqualification of any director 
respecting any matter presented to the board for deliberation or 
determination, such director must withdraw from such deliberation or 
determination; and in such event the remaining qualified directors 
present at the meeting, if constituting a quorum with the disqualified 
director or directors, may exercise with respect to this matter, by 
majority vote, all the powers of the board. In the event of the 
disqualification of any member of the credit committee, if applicable 
or the supervisory committee, such committee member must withdraw from 
such deliberation or determination.
    Section 5. Copies of the organization certificate of this credit 
union, its bylaws and any amendments thereof, and any special 
authorizations by the Administration must be preserved in a place of 
safekeeping. Returns of nominations and elections and proceedings of 
all regular and special meetings of the members and directors must be 
recorded in the minute books of this credit union. The minutes of the 
meetings of the members, the board, and the committees must be signed 
by their respective chairmen or presiding officers and by the persons 
who serve as secretaries of such meetings.
    Section 6. All books of account and other records of this credit 
union must be available at all times to the directors and committee 
members of this credit union. The charter and bylaws of this credit 
union must be made available for inspection by any member and, if the 
member requests a copy, it will be provided for a reasonable fee.
    Section 7. Each member must keep the credit union informed about 
his current address.
    Section 8. (a) The credit union may elect to indemnify to the 
extent authorized by (check one)

[  ] law of the state of ____:
[  ] Model Business Corporation Act:

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

[  ] current officials
[  ] former officials
[  ] current employees
[  ] former employees

    (b) The credit union may purchase and maintain insurance on behalf 
of the individuals indicated in (a) above against any liability 
asserted against them and expenses reasonably incurred by them in their 
official capacities and arising out of the performance of their 
official duties to the extent such insurance is permitted by the 
applicable state law or the Model Business Corporation Act.
    (c) The term ``official'' in this bylaw means a person who is a 
member of the board of directors, credit committee, supervisory 
committee, other volunteer committee (including elected or appointed 
loan officers or membership

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officers), established by the board of directors.

Article XVIII. Amendments of Bylaws and Charter

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

[FR Doc. 98-33947 Filed 12-31-98; 8:45 am]
BILLING CODE 7535-01-U