[Federal Register Volume 72, Number 210 (Wednesday, October 31, 2007)]
[Rules and Regulations]
[Pages 61495-61509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21397]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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

DATES: This rule is effective November 30, 2007.

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

SUPPLEMENTARY INFORMATION:

A. Background

    On May 24, 2007, the Board issued a Notice and Request for comments 
on the proposed reincorporation of the Federal Credit Union Bylaws 
(proposal). 72 FR 30984 (June 5, 2007). The proposal also included 
bylaw provisions on director succession, an expedited approval process 
for bylaw amendments previously approved for other FCUs,

[[Page 61496]]

and revisions to the Introduction to the FCU Bylaws to reflect these 
changes. Id. On July 2, 2007, the Board extended the original comment 
period an additional two weeks. 72 FR 37122 (July 9, 2007).
    NCUA is reincorporating the FCU Bylaws into NCUA regulations to 
clarify NCUA's authority to use a range of administrative actions to 
enforce bylaw violations in the rare cases where bylaw disputes cannot 
be resolved within an FCU. As discussed in the proposal, NCUA removed 
the Bylaws from its regulations in the 1980's. 72 FR 30984, 30985 (June 
5, 2007). NCUA is concerned that the policy of requiring members to 
enforce rights granted in the Bylaws in state courts has resulted in 
members being unable to enforce rights granted in the Bylaws. The 
proposal limits NCUA intervention to cases where a fundamental, 
material member right is at issue and outlines a dispute resolution 
process.
    The Federal Register requires the FCU Bylaws to be published as an 
Appendix to Part 701 rather than being incorporated by reference in the 
regulatory text. Accordingly, Sec.  701.2 of the final rule has been 
revised from the proposal and specifically reincorporates the FCU 
Bylaws into NCUA's regulations as an Appendix.

B. Comments

General

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

Reincorporation of FCU Bylaws Into NCUA Regulation, Standards for NCUA 
Involvement, and Dispute Resolution Process

    Most commenters opposing reincorporation cited concerns over 
increased regulation and oversight. The NCUA Board reiterates its 
position that reincorporating the Bylaws into NCUA's regulations 
imposes no new regulatory burden, as all FCUs are already required to 
have NCUA-approved bylaws. NCUA publishes form bylaw language and all 
FCUs have adopted some version of the form language. Further, as the 
preamble to the proposal stated, under the risk-based examination 
system in use for FCUs, examiners do not currently, nor will they once 
the Bylaws are incorporated in the regulations, inquire into an FCU's 
bylaws unless management raises the issue.
    In contrast, commenters supporting reincorporation cited the lack 
of other realistic options for bylaw enforcement and the potential for 
credit union boards to violate bylaws with impunity. The most common 
theme was dissatisfaction with NCUA's policy of requiring members to 
enforce bylaws under state contract law. Commenters cited the expense 
and time required to bring suit as well as the possibility courts will 
find members lack standing to litigate bylaw disputes.
    The commenters were split on the issue of whether NCUA needs to 
reincorporate the FCU Bylaws to clarify its ability to use its full 
range of enforcement actions.
    Five commenters expressed the view that NCUA already has authority 
to use its full range of enforcement actions to enforce the Bylaws. 
Three commenters stated the FCU Act gives no authority to NCUA to 
enforce bylaw violations other than by charter suspension or 
revocation. Based on its analysis of the FCU Act, the Board concludes 
reincorporating the Bylaws is necessary to provide clear authority for 
NCUA to use its full range of enforcement actions for Bylaw violations.
    NCUA does not agree with the commenters who assert its authority to 
enforce the Bylaws using the full range of administrative actions is 
clear under the current system. The FCU Act gives NCUA explicit 
authority to suspend or revoke the charter of any FCU, or place the FCU 
into involuntary liquidation, for a violation of any provision of its 
bylaws. 12 U.S.C. 1766(b)(1). A charter revocation or suspension, 
however, is a very extreme remedy and is unlikely to be an appropriate 
remedy for any bylaw violation. The resultant loss of credit union 
service would likely result in far more harm to members than the FCU's 
failure to follow its bylaws. The FCU Act also allows NCUA to place 
FCUs into conservatorship for reasons including protection of members' 
interests. 12 U.S.C. 1786(h)(1). Conservatorship, like charter 
suspension or liquidation, is an extreme remedy NCUA would prefer not 
to use if other enforcement options are available. The FCU Act, 
however, does not explicitly provide for such other options.
    In contrast, the FCU Act explicitly provides NCUA authority to take 
other, less severe administrative actions for other types of 
violations. A cease and desist order, for example, identifies the 
violation, gives the credit union a deadline to come into compliance, 
and may prescribe procedures to come into compliance. NCUA may issue 
cease and desist orders for violations of ``a law, rule, or 
regulation.'' 12 U.S.C. 1786(e)(1). Before promulgating its proposed 
regulation, NCUA considered whether the authority to issue cease and 
desist orders extended to bylaw violations that did not also violate a 
statutory or regulatory requirement or pose a threat to the safety and 
soundness of the FCU. As discussed in the proposal, previous Board 
actions removed the Bylaws from NCUA regulations. 72 FR 30984, 30985 
(June 5, 2007).
    As a result, NCUA has concluded it should now reincorporate the 
Bylaws to give it clear authority to act if a bylaw violation threatens 
a fundamental, material credit union member right.
    Some commenters suggested NCUA simply change its policy on 
enforcement of Bylaws violations not involving another violation or a 
safety and soundness threat without adopting a regulation. Agencies are 
entitled to change their positions, as long as they explain the new 
position and the reasons necessitating the change. Motor Vehicle 
Manufacturers Ass'n v. State Farm Ins. Co., 463 U.S. 29, 41-42 (1983). 
Courts take a dim view of reversals of agency positions adopted without 
public notice, such as agency interpretations adopted in the course of 
litigation. Bowen v. Georgetown University Hosp., 488 U.S. 204, 212 
(1988). NCUA believes an abrupt reversal of prior policy, could leave 
any enforcement action taken for a Bylaw violation not involving an 
issue of safety and soundness or violations of other regulations 
vulnerable to challenge. Instead, the Board is using the rulemaking 
process to adopt its revised policy--which is actually a return to the 
Bylaws' original status as a regulation--to allow for public notice and 
input.

[[Page 61497]]

    In summary, the FCU Act's explicit provisions for enforcing Bylaw 
violations include only limited and drastic options, and the Act's 
provisions for other, less severe remedies do not explicitly cover 
Bylaw violations. The Board has concluded that its authority in this 
area is not clear unless the Bylaws are again incorporated in NCUA 
regulations. Because the reincorporation of the Bylaws changes NCUA's 
most recent policy regarding Bylaws enforcement and returns the Bylaws 
to their original status as regulation, the Board is adopting the 
change using the rulemaking process.
    One commenter who argued NCUA's existing authority would allow the 
use of the full range of actions for bylaw violations suggested that 
if, in fact, the Act provided authority only to liquidate or conserve 
FCUs for bylaw violations, NCUA could not create authority to use other 
actions by adopting the Bylaws as a regulation. Several other 
commenters generally questioned NCUA's authority to adopt this rule 
reincorporating the Bylaws. NCUA disagrees with these comments, as the 
FCU Act provides separate authority for it to adopt regulations. 
Section 120 of the FCU Act gives the NCUA Board broad, general 
authority to ``prescribe rules and regulations for the administration 
of [the FCU Act].'' 12 U.S.C. 1766. This authority is in no way limited 
by the separate authority to suspend or revoke an FCU's charter or 
place an FCU into conservatorship for failing to follow its bylaws. 
Moreover, several provisions of the FCU Act clearly contemplate that 
FCUs will follow their bylaws. The FCU Act's references to bylaws 
include the following requirements:
     FCUs must adopt bylaws prescribed by NCUA. 12 U.S.C. 1758.
     FCUs may impose late charges as permitted by their bylaws. 
12 U.S.C. 1757(10).
     FCUs must hold their annual meetings at the time and place 
prescribed by their bylaws. 12 U.S.C. 1760.
     An FCU's bylaws must prescribe the number of and the 
procedures for electing directors, and may provide for a credit 
committee. 12 U.S.C. 1761; 1761c(a), (b).
     An FCU's bylaws must specify the number of board officers 
and identify the compensated officer, if any. 12 U.S.C. 1761a.
     An FCU's board of directors must follow bylaw provisions 
allowing for an elected or appointed credit committee, the appointment 
of loan officers, the hiring and compensation of officers and 
employees, the appointment of an executive committee, and information 
it is required to review at monthly meetings. 12 U.S.C. 1761b(4), (5), 
(10), (11), (13), (15).
     An FCU's supervisory committee may call a special meeting 
of the members to consider a bylaw violation. 12 U.S.C. 1761d.
     The amount to be refunded to expelled members is to be 
determined according to the bylaws. 12 U.S.C. 1764(c).
     Shares issued to minors are subject to conditions 
prescribed in the bylaws. 12 U.S.C. 1765.
    The FCU Act provisions noted above require an FCU's bylaws to 
provide procedures and rules for an FCU's structure and operation, at 
the time of chartering and going forward. Under its general rulemaking 
authority NCUA is charged with administering the FCU Act. This 
authority is not restricted by the separate authority for charter 
revocation or suspension, or conservatorship, for bylaw violations. The 
FCU Act's many references to the FCU Bylaws demonstrate the Act 
requires FCUs to follow their bylaws. As the FCU Act allows NCUA 
authority to administer its provisions, and the FCU Act requires FCUs 
to have and follow bylaws, the NCUA Board finds reincorporating the FCU 
Bylaws into NCUA regulations will assist in its administration of the 
FCU Act.
    Accordingly, the NCUA Board concludes reincorporating the Bylaws 
will clarify its authority without imposing any new regulatory burden 
on FCUs, and the final rule reincorporates the FCU Bylaws into NCUA 
regulations as an Appendix to Part 701.
    Commenters were also split on whether the proposal adequately 
defined and limited the situations in which NCUA has discretion to take 
action. Seven commenters found the standard adequate or supported 
limiting NCUA intervention to disputes involving fundamental, material 
member rights, as described in the preamble to the proposal. Eight 
other commenters found the standard too broad and expressed concern 
NCUA would start to intervene in all bylaw disputes. The NCUA Board 
reiterates the agency will limit its involvement to bylaw disputes 
involving a fundamental, material credit union member right, including 
the right to: Maintain a share account; maintain credit union 
membership; have access to credit union facilities; participate in the 
director election process; attend annual and special meetings; and 
petition for removal of directors and committee members. The proposal 
added language to the Introduction to the Bylaws explaining NCUA's 
discretion to intervene in disputes involving fundamental, material 
credit union member rights; the final rule includes minor revisions to 
this language to further clarify the Board's intent.
    The preamble to the proposal explained FCUs and FCU members should 
continue to attempt to resolve bylaw disputes within the credit union, 
and contact the regional office with jurisdiction for the FCU if a 
bylaw dispute cannot be resolved internally. 72 FR 30984, 30986 (June 
5, 2007). Six commenters--both supporters and opponents of 
reincorporation--sought additional details regarding the resolution of 
bylaw disputes.
    Four commenters requested additional information on the internal 
procedures FCUs and their members should use to resolve bylaw disputes. 
FCUs and FCU members should attempt to resolve bylaw disputes with the 
usual procedures for addressing member complaints, such as requesting 
review by the supervisory committee. Every FCU must have a supervisory 
committee, appointed from among its members. 12 U.S.C. 1761(b). One of 
the supervisory committee's roles is reviewing member complaints, and 
the Board believes the supervisory committee is well-suited to address 
bylaw disputes, since it has substantial experience in investigating 
and resolving member complaints.
    Several commenters also raised questions about how NCUA will 
determine when to take an enforcement action related to a bylaw 
dispute. The NCUA Board reiterates NCUA's regional offices will analyze 
disputes to see if they affect a fundamental, material credit union 
member right. A determination that a fundamental, material member right 
may be affected allows NCUA the discretion to intervene, but does not 
require intervention. As noted previously in this preamble and in the 
preamble to the proposal, the Board's view is the agency will only 
become involved in bylaw disputes that involve fundamental, material 
credit union member rights. In considering whether to initiate formal 
administrative action, the agency will consider various factors, as it 
would with any regulatory violation, including the specific facts and 
circumstances in a case; alternatives, such as a supervisory letter; 
the willingness of the parties to cure a violation; and the seriousness 
of the violation.
    Two commenters sought clarification about who may report bylaw 
disputes to NCUA. As is presently the case, any FCU member or FCU 
official may report a bylaw dispute within an FCU.

[[Page 61498]]

Likewise, any FCU, member, or official may report a bylaw dispute to 
NCUA.
    One commenter asked if FCU members must seek to enforce an FCU's 
bylaws as a contract, in court, before requesting NCUA intervention. 
The preamble to the proposal noted FCU members still have the right to 
seek enforcement of the Bylaws in court. 72 FR 30984, 30985 (June 5, 
2007). The NCUA Board clarifies FCU members do not need to seek 
judicial relief before reporting a bylaw dispute to NCUA.
    Two commenters asked if regional directors' decisions on bylaw 
disputes may be appealed to the NCUA Board. The right to appeal a 
regional director's decision and to what forum will depend on the 
nature of the decision, namely, whether a regional director's decision 
involves formal administrative action. For example, if the agency takes 
formal administrative action by issuing an immediate cease and desist 
order directing an FCU to cease activity that violates the Bylaws or 
directing an FCU to undertake specific actions to cure a violation, 
then an FCU will have a right to challenge the order in federal court. 
12 U.S.C. 1786(e), (f).
    The preamble to the proposal stated NCUA's intent that FCUs and 
their members continue to attempt to resolve bylaw disputes internally. 
72 FR 30984, 30986 (June 5, 2007). Several commenters asked for a 
similar statement to be added to the Introduction to the Bylaws or the 
text of Sec.  701.2. The Board agrees this would be helpful and the 
final rule revises the Introduction accordingly.

Director Succession Amendments

    The only changes the proposal made to the FCU Bylaws were 
amendments on director succession; the amendments essentially 
incorporated NCUA legal opinions. The proposal added a new Section to 
Article IX to clarify the supervisory committee's responsibilities if 
an FCU has no remaining directors. If an entire board of directors 
resigns, is removed simultaneously, or for whatever circumstance is 
unable to serve, the supervisory committee has the responsibility to 
act as a board of directors until the members elect new directors. The 
proposal also cross-references this new language in Article XVI, 
Section 3, addressing removal of directors by members, and Article VI, 
Section 4, addressing board of director vacancies.
    Seven of eight commenters on this subject generally approved of the 
new language. Two commenters sought clarifications in the process and 
one of these commenters suggested alternative language for the 
amendment to Article IX. The commenter's alternative language would 
give the supervisory committee acting as the board the option of 
holding a special meeting to elect directors if the FCU's annual 
meeting is already scheduled or would usually occur within the next 45 
days. The proposal had required the supervisory committee to serve as 
the board until the next annual meeting if the annual meeting were 
scheduled, or would usually occur, within the next 45 days. The final 
rule adopts the commenter's alternative, as NCUA agrees FCUs in this 
rare situation should have the option of formally electing directors as 
soon as possible, even if the next annual meeting will occur shortly.
    In addition, the final rule includes certain grammatical changes to 
the proposal. The proposal used the term ``temporary board'' to refer 
to the supervisory committee acting as the board and ``interim board'' 
to refer to the new directors elected at the special meeting. A 
commenter's suggested alternative deletes the references to 
``temporary'' and ``interim'' boards in Article IX, and instead uses 
the terms ``supervisory committee acting as the board'' and ``board.'' 
The NCUA Board finds these suggestions improve the bylaw and has 
adopted them.
    The proposal prohibited the supervisory committee acting as the 
board from acting on policy matters. 72 FR 30984, 30987 (June 5, 2007). 
The intent of this prohibition was to ensure that an elected board 
makes decisions affecting the direction and future of an FCU. One 
commenter sought more explanation of permissible actions by the 
supervisory committee acting as the board, and another commenter 
requested the prohibition on acting on policy matters be modified to 
allow for policy action in exigent circumstances. Generally, the 
Board's view is the supervisory committee acting as the board should 
maintain the status quo and defer major decisions, such as opening new 
branches or launching new products, until the FCU's members elect a new 
board of directors. NCUA believes an exception for exigent 
circumstances is unnecessary given the short period of service that is 
likely and the fact that the limitation is only on policy matters. 
Also, an FCU where the supervisory committee is acting as the board 
will likely be in contact with its examiner and can seek advice on 
whether matters should be left to the elected board.
    NCUA also clarifies that newly chartered FCUs and FCUs defined as 
``troubled'' under Sec.  701.14 of NCUA's regulations must follow the 
procedures under Sec.  701.14 and notify NCUA of changes in their 
boards. NCUA recognizes these bylaw provisions may not afford 
sufficient time to notify NCUA 30 days before the effective date of the 
change in board members as required by Sec.  701.14, but the 
supervisory committee acting as the board should notify the Regional 
Office of the change as soon as possible. The regulation also provides 
a waiver of the prior notice requirement for board members elected at a 
members' meeting, if the Regional Office receives notice within 48 
hours of the election. 12 CFR 701.14(c)(2)(i). A newly chartered or 
troubled FCU that loses all its directors will likely be in contact 
with its examiner and can seek further advice on compliance with Sec.  
701.14.
    The sole commenter opposing these provisions argued NCUA lacks 
authority to adopt them because they are inconsistent with the FCU 
Act's requirement for FCUs to be governed by a board of directors and 
for vacancies on the board to be filled by the remaining directors. 
NCUA believes the commenter misunderstood the proposal and its intent. 
The bylaw applies only in the rare circumstance of an FCU losing all 
its directors simultaneously and does not conflict with the FCU Act's 
requirement for director vacancies to be filled by other directors. The 
FCU Act is silent about how to proceed when an FCU has no remaining 
directors, leaving NCUA discretion to address this matter through 
regulation.

Expedited Approval Process for Previously Approved Bylaw Amendments

    The proposed rule also outlined an expedited review process for 
bylaw amendments previously approved for other FCUs, which NCUA is 
adopting as proposed. NCUA will post the actual language of bylaw 
amendments approved since the last major revision of the FCU Bylaws in 
April 2006 on its website. Other FCUs seeking to adopt identical 
language will receive a response from NCUA's regional offices within 15 
business days. All seven commenters on this topic endorsed the 
proposal.
    One commenter also suggested NCUA post the language for all 
previously approved bylaw amendments that remain consistent with 
current NCUA guidance, not only amendments approved since April 2006. 
Because NCUA's Office of General Counsel staff has received only a 
handful of requests for bylaw amendment language predating the 2006 
revisions, the Board has determined posting actual language for all 
bylaw amendments would not be the most productive use of staff 
resources. Further, FCUs seeking exact

[[Page 61499]]

language for an approved bylaw amendment that predates 2006 can access 
the Opinion Letters on NCUA's Web site and contact their regional 
office or the Office of General Counsel to obtain the exact language of 
any approved amendments.

Number of Members Required To Call a Special Meeting

    Although the proposal did not explicitly ask for comments on the 
750-member cap on the number of members required to call a special 
meeting, it noted the NCUA Board has decided it may consider individual 
FCUs' requests to increase this number through the bylaw amendment 
process outlined in the Introduction to the FCU Bylaws. 72 FR 30984, 
30986 (June 5, 2007). Six of the eight commenters on this subject urged 
NCUA to adopt amendments to the FCU Bylaws increasing the cap to either 
a percentage of members, regardless of size, or a higher maximum number 
for larger credit unions. One commenter opposing an increase noted, 
although some increase in the cap may be appropriate for very large 
credit unions, setting the cap too high would disenfranchise members 
just as much as an FCU board ignoring the members' request for a 
special meeting.
    The NCUA Board understands concerns some commenters expressed about 
the potential for a relatively small number of members to make 
disruptive requests for special meetings. NCUA also agrees with the 
commenter who expressed concern about the potential for 
disenfranchisement of FCU members resulting from a higher cap. The cap 
recently increased from 500 to 750 members. 71 FR 24551, 24554 (April 
26, 2006). More time is needed to assess the appropriateness of this 
figure for large FCUs. Obtaining 750 signatures to request a special 
meeting is a significant undertaking, and NCUA is not aware of any 
actual instances since 2006 where members obtained this number of 
signatures to require a board of directors to hold a special meeting 
for a frivolous reason. NCUA repeats any necessary changes in this area 
should be handled through the bylaw amendment process explained in the 
introduction to the Bylaws. Any FCU requesting such an amendment should 
have documented, verifiable reasons why an increase in the cap is 
necessary, such as a history of members' abuse of the special meeting 
request process at that particular FCU.

C. Specific Changes to the FCU Bylaws

    The Federal Credit Union Bylaws, as amended by this final rule, are 
reprinted in their entirety as Appendix A to Part 701. The final rule 
made very few changes to the text of the FCU Bylaws, and these changes 
are listed below.
    (1) The following paragraph was added to the end of Section 3 of 
Article IX:
    If all director positions become vacant simultaneously, the 
supervisory committee immediately assumes the role of the board of 
directors. The supervisory committee acting as the board must generally 
call and hold a special meeting to elect a board that will serve until 
the next annual meeting. The special meeting must occur at least 7 but 
no more than 14 days after all director positions became vacant, and 
candidates for the board at the special meeting may be nominated by 
petition or from the floor. However, if the next annual meeting has 
been scheduled and will occur within 45 days after all the director 
positions become vacant, the supervisory committee may decide to forego 
the special meeting and continue serving as the board until the 
election of new directors at the annual meeting.
    If the next annual meeting has not been scheduled, but the month 
and day of the previous year's meeting plus 7 days falls within 45 days 
after all the director positions become vacant, the supervisory 
committee acting as the board may decide to forego the special meeting 
to elect new directors. In this case, the supervisory committee must 
schedule the annual meeting within 7 days before or after the month and 
day of the previous annual meeting and continue to serve as the board 
until directors are elected at the annual meeting.
    The supervisory committee acting as the board may not act on policy 
matters. However, directors elected at a special meeting have the same 
powers as directors elected at the annual meeting.
    (2) The following sentence was added to the end of Section 3 of 
Article XVI:
    If member votes at a special meeting result in the removal of all 
directors, the supervisory committee immediately becomes the temporary 
board of directors and must follow the procedures in Article IX, 
Section 3.
    (3) The following sentence was inserted after the first sentence of 
Section 4 of Article VI:
    If all director positions become vacant simultaneously, the 
supervisory committee immediately becomes the temporary board of 
directors and must follow the procedures in Article IX, Section 3.
    (4) The sixth paragraph of the Introduction was deleted and 
replaced with the following paragraph:
    Federal credit unions considering an amendment may find it useful 
to review the bylaws section of the agency Web site, which includes 
Office of General Counsel opinions about proposed bylaw amendments. 
Opinions issued after April 2006 will include the language of approved 
amendments. Even if an amendment has been previously approved, the 
credit union must submit a proposed amendment to NCUA for review under 
the procedure listed above to ensure the amendment is identical. Credit 
unions requesting previously approved amendments will receive notice of 
the regional office's decision within 15 business days of the receipt 
of the request.
    (5) The last paragraph of the Introduction was deleted and replaced 
with the following two paragraphs:
    NCUA expects federal credit unions and their members will make 
every effort to resolve bylaw disputes using the credit union's 
internal member complaint resolution process. If a bylaw dispute cannot 
be resolved internally, however, credit union officials or members 
should contact the regional office with jurisdiction for the credit 
union for assistance in resolving the dispute.
    NCUA has discretion to take administrative actions when a credit 
union is not in compliance with its bylaws. If a potential violation is 
identified, NCUA will carefully consider all of the facts and 
circumstances in deciding whether to take enforcement action. NCUA will 
not take action against minor or technical violations, but emphasizes 
that it retains discretion to enforce the bylaws in appropriate cases, 
such as safety and soundness concerns or threats to fundamental, 
material credit union member rights.
    (6) The first paragraph of the Introduction was replaced with the 
following paragraph:
    Effective Date: After consideration of public comment, the National 
Credit Union Administration (NCUA) Board adopted these Bylaws and 
incorporated them as Appendix A to Part 701 of NCUA's regulations on 
[date of final]. Unless a federal credit union has adopted bylaws 
before [date of final] it must adopt these revised Bylaws.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a rule may have on a 
substantial number of small credit unions, defined as those under ten 
million dollars in assets. This rule incorporates the Bylaws into 
NCUA's regulations

[[Page 61500]]

without imposing any regulatory burden, since the FCU Act requires FCUs 
to adopt NCUA-approved bylaws. The rule will not have a significant 
economic impact on a substantial number of small credit unions, and, 
therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

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

Executive Order 13132

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

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

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

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121 (SBREFA), provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the APA. 5 
U.S.C. 551. The Office of Management and Budget has determined that 
this rule is not a major rule for purposes of SBREFA. As required by 
SBREFA, NCUA will file the appropriate reports with Congress and the 
General Accounting Office so that the final rule may be reviewed.

List of Subjects in 12 CFR Part 701

    Credit unions.

    By the National Credit Union Administration Board on October 25, 
2007.
Mary F. Rupp,
Secretary of the Board.

0
Accordingly, NCUA amends 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 is revised to read as follows:

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

0
2. Part 701 is amended by adding Sec.  701.2 to read as follows:


Sec.  701.2  Federal credit union bylaws.

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


0
3. Appendix A to 12 CFR Part 701 is added to read as follows:

Appendix A to Part 701--Federal Credit Union Bylaws

Introduction

    A. Effective date. After consideration of public comment, the 
National Credit Union Administration (NCUA) Board adopted these Bylaws 
and incorporated them as Appendix A to Part 701 of NCUA's regulations 
on November 30, 2007. Unless a federal credit union has adopted bylaws 
before November 30, 2007, it must adopt these revised bylaws.
    B. Adoption of all or part of these bylaws. Although federal credit 
unions may retain any previously approved version of the bylaws, the 
NCUA Board encourages federal credit unions to adopt the revised bylaws 
because it believes they provide greater clarity and flexibility for 
credit unions and their officials and members. Federal credit unions 
may also adopt portions of the revised bylaws and retain the remainder 
of previously approved bylaws, but the NCUA Board cautions federal 
credit unions to be extremely careful. Federal credit unions must be 
careful because they run the risk of having inconsistent or conflicting 
provisions because of the various options the revised bylaws provide as 
well as other revisions in the text.
    C. Bylaw amendments. 1. The FCU Bylaws contain several provisions 
allowing FCU boards to select from an option or range of options and 
fill in a blank. Changes to ``fill-in-the-blank'' provisions are, in 
fact, changes to the FCU's bylaws and require a two-thirds vote of the 
board. As long as the FCU selects from the permissible options for 
completing the blank, the FCU need not submit the change for NCUA 
approval using the process outlined below.
    2. Federal credit unions continue to have the flexibility to 
request other bylaw amendments if the need arises. NCUA must approve 
any bylaw amendments; federal credit unions may no longer adopt 
amendments from the ``Standard Bylaw Amendments'' booklet because the 
1999 revisions to the bylaws included sufficient flexibility to make 
the separate list of standard bylaw amendments superfluous. Thus, NCUA 
no longer differentiates between ``standard'' and ``nonstandard'' bylaw 
amendments.
    3. The procedure for approval of bylaw amendments is as follows:
    a. The federal credit union wishing to adopt a bylaw amendment must 
file a request with its regional director.
    b. The request must include the section of the bylaws to be 
amended; the reason for or purpose of the amendment, including an 
explanation of why the amendment is desirable and what it will 
accomplish for the credit union; and the specific, proposed wording of 
the amendment.
    c. After review by the regional director and consultation within 
the agency, the regional director will advise the credit union if a 
proposed amendment is approved.
    4. Federal credit unions considering an amendment may find it 
useful to review the bylaws section of the agency Web site, which 
includes Office of General Counsel opinions about proposed bylaw 
amendments. Opinions issued after April 2006 will include the

[[Page 61501]]

language of approved amendments. Even if an amendment has been 
previously approved, the credit union must submit a proposed amendment 
to NCUA for review under the procedure listed above to ensure the 
amendment is identical. Credit unions requesting previously approved 
amendments will receive notice of the regional office's decision within 
15 business days of the receipt of the request.
    D. The nature of the bylaws. 1. The Federal Credit Union Act 
requires the NCUA Board to prepare bylaws for federal credit unions. 12 
U.S.C. 1758. The bylaws address a broad range of matters concerning a 
credit union's organization and governance, the relationship of the 
credit union to its members, and the procedures and rules a credit 
union follows. The bylaws supplement the broad provisions of: A federal 
credit union's charter, which establishes the existence of a federal 
credit union; the Federal Credit Union Act, which establishes the 
powers of federal credit unions; and NCUA regulations, which implement 
the Federal Credit Union Act. As a legal matter, a federal credit 
union's bylaws must conform to and cannot be inconsistent with any 
provision of its charter, the Federal Credit Union Act, NCUA 
regulations or other laws or regulations applicable to its operations.
    2. NCUA expects federal credit unions and their members will make 
every effort to resolve bylaw disputes using the credit union's 
internal member complaint resolution process. If a bylaw dispute cannot 
be resolved internally, however, credit union officials or members 
should contact the regional office with jurisdiction for the credit 
union for assistance in resolving the dispute.
    3. NCUA has discretion to take administrative actions when a credit 
union is not in compliance with its bylaws. If a potential violation is 
identified, NCUA will carefully consider all of the facts and 
circumstances in deciding whether to take enforcement action. NCUA will 
not take action against minor or technical violations, but emphasizes 
that it retains discretion to enforce the bylaws in appropriate cases, 
such as safety and soundness concerns or threats to fundamental, 
material credit union member rights.

Table of Contents

Page

Article I. Name--Purposes
Article II. Qualifications for Membership
Article III. Shares of Members
Article IV. Meetings of Members
Article V. Elections
Article VI. Board of Directors
Article VII. Board Officers, Management Officials and Executive 
Committee
Article VIII. Credit Committee or Loan Officers
Article IX. Supervisory Committee
Article X. Organization Meeting
Article XI. Loans and Lines of Credit to Members
Article XII. Dividends
Article XIII. Reserved
Article XIV. Expulsion and Withdrawal
Article XV. Minors
Article XVI. General
Article XVII. Amendments of Bylaws and Charter
Article XVIII. Definitions

BYLAWS

Federal Credit Union, Charter No.------------

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

Article I. Name--Purposes

    Section 1. Name. The name of this credit union is as stated in 
Section 1 of the charter (approved organization certificate) of this 
credit union.
    Section 2. Purposes. This credit union is a member-owned, 
democratically operated, not-for-profit organization managed by a 
volunteer board of directors, with the specified mission of meeting 
the credit and savings needs of consumers, especially persons of 
modest means. The purpose of this credit union is to promote thrift 
among its members by affording them an opportunity to accumulate 
their savings and to create for them a source of credit for 
provident or productive purposes. The credit union may add business 
as one of its purposes by placing a comma after ``provident'' and 
inserting ``business.''

Article II. Qualifications for Membership

    Section 1. Field of membership. The field of membership of this 
credit union is limited to that stated in Section 5 of its charter.
    Section 2. Membership application procedures. Applications for 
membership from persons eligible for membership under Section 5 of 
the charter must be signed by the applicant on forms approved by the 
board. The applicant is admitted to membership after approval of an 
application by a majority of the directors, a majority of the 
members of a duly authorized executive committee, or by a membership 
officer, and after subscription to at least one share of this credit 
union and the payment of the initial installment, and the payment of 
a uniform entrance fee if required by the board. If a person whose 
membership application is denied makes a written request, the credit 
union must explain the reasons for the denial in writing.
    Section 3. Maintenance of membership share required. A member 
who withdraws all shareholdings or fails to comply with the time 
requirements for restoring his or her account balance to par value 
in Article III, Section 3, ceases to be a member. By resolution, the 
board may require persons readmitted to membership to pay another 
entrance fee.
    Section 4. Continuation of membership. Once a member becomes a 
member that person may remain a member until the person or 
organization chooses to withdraw or is expelled in accordance with 
the Act and Article XIV of these bylaws. A member who is disruptive 
to credit union operations may be subject to limitations on services 
and access to credit union facilities. A credit union that wishes to 
restrict services to members no longer within the field of 
membership should specify the restrictions in this section.
    Staff commentary on qualifications for membership:
    Entrance fee--FCUs may not vary the entrance fee among different 
classes of members because the Act requires a uniform fee. FCUs may, 
however, eliminate the entrance fee for all applicants.

Article III. Shares of Members

    Section 1. Par value. The par value of each share will be $----
--. Subscriptions to shares are payable at the time of subscription, 
or in installments of at least $------ per month.
    Section 2. Cap on shares held by one person. The board may 
establish, by resolution, the maximum amount of shares that any one 
member may hold.
    Section 3. Time periods for payment and maintenance of 
membership share. A member who fails to complete payment of one 
share within ------ of admission to membership, or within ------ 
from the increase in the par value of shares, or a member who 
reduces the share balance below the par value of one share and does 
not increase the balance to at least the par value of one share 
within ------ of the reduction will be terminated from membership.
    Section 4. Transferability. Shares may only be transferred from 
one member to another by an instrument in a form as the board may 
prescribe. Shares that accrue credits for unpaid dividends retain 
those credits when transferred.
    Section 5. Withdrawals. Money paid in on shares or installments 
of shares may be withdrawn as provided in these bylaws or regulation 
on any day when payment on shares may be made, provided, however, 
that
    (a) The board has the right, at any time, to require members to 
give up to 60 days written notice of intention to withdraw the whole 
or any part of the amounts paid in by them.
    (b) Reserved.
    (c) No member may withdraw any shareholdings below the amount of 
the member's primary or contingent liability to the credit union if 
the member is delinquent as a borrower, or if borrowers for whom the 
member is comaker, endorser, or guarantor are delinquent, without 
the written approval of the credit committee or loan officer. 
Coverage of overdrafts under an overdraft protection policy does not 
constitute delinquency for purposes of this paragraph. Shares issued 
in an irrevocable trust as provided in Section 6 of this article are 
not subject to withdrawal restrictions except as stated in the trust 
agreement.
    (d) The share account of a deceased member (other than one held 
in joint tenancy with another member) may be continued until the 
close of the dividend period in

[[Page 61502]]

which the administration of the deceased's estate is completed.
    (e) The board will have the right, at any time, to impose a fee 
for excessive share withdrawals from regular share accounts. The 
number of withdrawals not subject to a fee and the amount of the fee 
will be established by board resolution and will be subject to 
regulations applicable to the advertising and disclosure of terms 
and conditions on member accounts.
    Section 6. Trusts. Shares may be issued in a revocable or 
irrevocable trust, subject to the following:
    When shares are issued in a revocable trust, the settlor must be 
a member of this credit union in his or her own right. When shares 
are issued in an irrevocable trust, either the settlor or the 
beneficiary must be a member of this credit union. The name of the 
beneficiary must be stated in both a revocable and irrevocable 
trust. For purposes of this section, shares issued pursuant to a 
pension plan authorized by the rules and regulations will be treated 
as an irrevocable trust unless otherwise indicated in the rules and 
regulations.
    Section 7. Joint accounts and membership requirements. Select 
one option and check the box corresponding to that option.
    -- Option A--Separate account not required to establish 
membership
    Owners of a joint account may both be members of the credit 
union without opening separate accounts. For joint membership, both 
owners are required to fulfill all of the membership requirements 
including each member purchasing and maintaining at least one share 
in the account.
    -- Option B--Separate account required to establish membership
    Each member must purchase and maintain at least one share in a 
share account that names the member as the sole or primary owner. 
Being named as a joint owner of a joint account is insufficient to 
establish membership.
    Staff commentary on shares:
    i. Installments--FCUs may insert zero for the number of 
installments. The FCU Act allows membership upon the payment of the 
initial installment of a membership share, but NCUA no longer views 
this provision as requiring FCUs to offer the option of paying for 
the membership share in installments.
    ii. Par value--FCUs may establish differing par values for 
different classes of members or types of accounts, provided this 
action does not violate any federal, state or local 
antidiscrimination laws. For example, an FCU may want to establish a 
higher par value for recent credit union members, without requiring 
long-time members to bring their accounts up to the new par value. A 
differing par value may also be permissible for different types of 
accounts, such as requiring a higher par value for a member with 
only a share draft account. If a credit union adopts differing par 
values, all of the possible par values should be stated in Section 
1.
    iii. Reduction in share balance below par value--When a member's 
account balance falls below the par value, Section 3 requires FCUs 
to allow members a minimum time period to restore their account 
balance to the par value before membership is terminated. FCUs may 
not delete this requirement or delete references to this requirement 
in Article II, Section 3.

Article IV. Meetings of Members

    Section 1. Annual meeting. The annual meeting of the members 
must be held [insert time for annual meeting, for example, ``during 
the month of March/on the third Saturday of April/ no later than 
March 31''], in the county in which any office of the credit union 
is located or within a radius of 100 miles of an office, at the time 
and place as the board determines and announces in the notice of the 
annual meeting.
    Section 2. Notice of meetings required. a. At least 30 but no 
more than 75 days before the date of any annual meeting or at least 
7 days before the date of any special meeting of the members, the 
secretary must give written notice to each member. Notice may be by 
written notice delivered in person or by mail to the member's 
address, or, for members who have opted to receive statements and 
notices electronically, by electronic mail. Notice of the annual 
meeting may be given by posting the notice in a conspicuous place in 
the office of this credit union where it may be read by the members, 
at least 30 days before the meeting, if the annual meeting is to be 
held during the same month as that of the previous annual meeting 
and if this credit union maintains an office that is readily 
accessible to members where regular business hours are maintained. 
Any meeting of the members, whether annual or special, may be held 
without prior notice, at any place or time, if all the members 
entitled to vote, who are not present at the meeting, waive notice 
in writing, before, during, or after the meeting.
    b. Notice of any special meeting must state the purpose for 
which it is to be held, and no business other than that related to 
this purpose may be transacted at the meeting.
    Section 3. Special meetings. a. Special meetings of the members 
may be called by the chair or the board of directors upon a majority 
vote, or by the supervisory committee as provided in these bylaws. 
The chair must call a special meeting, meaning the meeting must be 
held, within 30 days of the receipt of a written request of 25 
members or 5% of the members as of the date of the request, 
whichever number is larger. However, a request of no more than 750 
members may be required to call a special meeting.
    b. The notice of a special meeting must be given as provided in 
Section 2 of this article. Special meetings may be held at any 
location permitted for the annual meeting.
    Section 4. Items of business for annual meeting and rules of 
order for annual and special meetings. The suggested order of 
business at annual meetings of members is--
    (a) Ascertainment that a quorum is present.
    (b) Reading and approval or correction of the minutes of the 
last meeting.
    (c) Report of directors, if there is one. For credit unions 
participating in the Community Development Revolving Loan Program, 
the directors must report on the credit union's progress on 
providing needed community services, if required by NCUA 
Regulations.
    (d) Report of the financial officer or the chief management 
official.
    (e) Report of the credit committee, if there is one.
    (f) Report of the supervisory committee, as required by Section 
115 of the Act.
    (g) Unfinished business.
    (h) New business other than elections.
    (i) Elections, as required by Section 111 of the Act.
    (j) Adjournment.
    k. To the extent consistent with these bylaws, all meetings of 
the members will be conducted according to ------------. The order 
of business for the annual meeting may vary from the suggested 
order, provided it includes all required items and complies with the 
rules of procedure adopted by the credit union.
    The credit union must fill in the blank with one of the 
following authorities, noting the edition to be used: Democratic 
Rules of Order, The Modern Rules of Order, Robert's Rules of Order, 
or Sturgis' Standard Code of Parliamentary Procedure.
    Section 5. Quorum. Except as otherwise provided, 15 members 
constitute a quorum at annual or special meetings. If no quorum is 
present, an adjournment may be taken to a date at least 7 but not 
more than 14 days thereafter. The members present at any adjourned 
meeting will constitute a quorum, regardless of the number of 
members present. The same notice must be given for the adjourned 
meeting as is prescribed in Section 2 of this article for the 
original meeting, except that the notice must be given at least 5 
days before the date of the meeting as fixed in the adjournment.

Article V. Elections

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

Option A1--In-Person Elections; Nominating Committee and 
Nominations From Floor

    Section 1. Nomination procedures. At least 30 days before each 
annual meeting, the chair will appoint a nominating committee of 
three or more members. It is the duty of the nominating committee to 
nominate at least one member for each vacancy, including any 
unexpired term vacancy, for which elections are being held, and to 
determine that the members nominated are agreeable to the placing of 
their names in nomination and will accept office if elected.
    Section 2. Election procedures. After the nominations of the 
nominating committee have been placed before the members, the chair 
calls for nominations from the floor. When nominations are closed, 
the chair appoints the tellers, ballots are distributed, the vote is 
taken and tallied by the tellers, and the results announced. All 
elections are determined by plurality vote and will be by ballot 
except where there is only one nominee for the office.

Option A2--In-Person Elections; Nominating Committee and 
Nominations by Petition

    Section 1. Nomination procedures. a. At least 120 days before 
each annual meeting the chair will appoint a nominating

[[Page 61503]]

committee of three or more members. It is the duty of the nominating 
committee to nominate at least one member for each vacancy, 
including any unexpired term vacancy, for which elections are being 
held, and to determine that the members nominated are agreeable to 
the placing of their names in nomination and will accept office if 
elected.
    b. The nominating committee files its nominations with the 
secretary of the credit union at least 90 days before the annual 
meeting, and the secretary notifies in writing all members eligible 
to vote at least 75 days before the annual meeting that nominations 
for vacancies may also be made by petition signed by 1% of the 
members with a minimum of 20 and a maximum of 500. The secretary may 
use electronic mail to notify members who have opted to receive 
notices or statements electronically.
    c. The written notice must indicate that the election will not 
be conducted by ballot and there will be no nominations from the 
floor when the number of nominees equals the number of positions to 
be filled. A brief statement of qualifications and biographical data 
in a form approved by the board of directors will be included for 
each nominee submitted by the nominating committee with the written 
notice to all eligible members. Each nominee by petition must submit 
a similar statement of qualifications and biographical data with the 
petition. The written notice must state the closing date for 
receiving nominations by petition. In all cases, the period for 
receiving nominations by petition must extend at least 30 days from 
the date that the petition requirement and the list of nominating 
committee's nominees are mailed to all members. To be effective, 
nominations by petition must be accompanied by a signed certificate 
from the nominee or nominees stating that they are agreeable to 
nomination and will serve if elected to office. Nominations by 
petition must be filed with the secretary of the credit union at 
least 40 days before the annual meeting and the secretary will 
ensure that nominations by petition, along with those of the 
nominating committee, are posted in a conspicuous place in each 
credit union office at least 35 days before the annual meeting.
    Section 2. Election procedures. a. All persons nominated by 
either the nominating committee or by petition must be placed before 
the members. When nominations are closed, the chair appoints the 
tellers, ballots are distributed, the vote is taken and tallied by 
the tellers, and the results announced. All elections are determined 
by plurality vote and will be by ballot except where there is only 
one nominee for each position to be filled.
    b. If sufficient nominations are made by the nominating 
committee or by petition to provide at least as many nominees as 
positions to be filled, nominations cannot be made from the floor. 
In the event nominations from the floor are permitted and result in 
more nominees than positions to be filled, when nominations have 
been closed, the chair appoints the tellers, ballots are 
distributed, the vote is taken and tallied by the tellers, and the 
results announced. When the number of nominees equals the number of 
positions to be filled, the chair may take a voice vote or declare 
each nominee elected by general consent or acclamation at the annual 
meeting.

Option A3--Election by Ballot Boxes or Voting Machine; Nominating 
Committee and Nomination by Petition

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

Option A4--Election by Electronic Device (Including But Not Limited 
To Telephone and Electronic Mail) or Mail Ballot; Nominating 
Committee and Nominations by Petition

    Section 1. Nomination procedures. a. At least 120 days before 
each annual meeting, the chair will appoint a nominating committee 
of three or more members. It is the duty of the nominating committee 
to nominate at least one member for each vacancy, including any 
unexpired term vacancy, for which elections are being held, and to 
determine that the members nominated are agreeable to the placing of 
their names in nomination and will accept office if elected.
    b. The nominating committee files its nominations with the 
secretary of the credit union at least 90 days before the annual 
meeting, and the secretary notifies in writing all members eligible 
to vote at least 75 days before the annual meeting that nominations 
for vacancies may also be made by petition signed by 1% of the 
members with a minimum of 20 and a maximum of 500. The secretary may 
use electronic mail to notify members who have opted to receive 
notices or statements electronically.
    c. The notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when the number of nominees equals the number of positions to be 
filled. A brief statement of qualifications and biographical data in 
a form approved by the board of directors will be included for each 
nominee submitted by the nominating committee with the notice to all 
eligible members. Each

[[Page 61504]]

nominee by petition must submit a similar statement of 
qualifications and biographical data with the petition. The notice 
must state the closing date for receiving nominations by petition. 
In all cases, the period for receiving nominations by petition must 
extend at least 30 days from the date of the petition requirement 
and the list of nominating committee's nominees are mailed to all 
members. To be effective, nominations by petition must be 
accompanied by a signed certificate from the nominee or nominees 
stating that they are agreeable to nomination and will serve if 
elected to office. Nominations by petition must be filed with the 
secretary of the credit union at least 40 days before the annual 
meeting and the secretary will ensure that nominations by petition, 
along with those of the nominating committee, are posted in a 
conspicuous place in each credit union office at least 35 days 
before the annual meeting.
    Section 2. Election procedures. All elections are determined by 
plurality vote. All elections will be by electronic device or mail 
ballot, subject to the following conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating 
committee or by petition to provide more nominees than positions to 
be filled, the secretary, at least 30 days before the annual 
meeting, will cause either a printed ballot or notice of ballot to 
be mailed to all members eligible to vote. Electronic mail may be 
used to provide the notice of ballot to members who have opted to 
receive notices or statements electronically;
    (c) If the credit union is conducting its elections 
electronically, the secretary will cause the following materials to 
be transmitted to each eligible voter and the following procedures 
will be followed:
    (1) One notice of balloting stating the names of the candidates 
for the board of directors and the candidates for other separately 
identified offices or committees. The name of each candidate must be 
followed by a brief statement of qualifications and biographical 
data in a form approved by the board of directors. Electronic mail 
may be used to provide the notice of ballot to members who have 
opted to receive notices or statements electronically.
    (2) One mail ballot that conforms to Section 2(d) of this 
article and one instruction sheet stating specific instructions for 
the electronic election procedure, including how to access and use 
the system, and the period of time in which votes will be taken. The 
instruction will state that members without the requisite electronic 
device necessary to vote on the system may vote by submitting the 
enclosed mail ballot and specify the date the mail ballot must be 
received by the credit union. For members who have opted to receive 
notices or statements electronically, the mail ballot is not 
required and electronic mail may be used to provide the instructions 
for the electronic election procedure.
    (3) It is the duty of the tellers of election to verify, or 
cause to be verified the name of the voter and the credit union 
account number as they are registered in the electronic balloting 
system. It is the duty of the teller to test the integrity of the 
balloting system at regular intervals during the election period.
    (4) Ballots must be received no later than midnight, 5 calendar 
days before the annual meeting.
    (5) The vote will be tallied by the tellers. The result must be 
verified at the annual meeting and the chair will make the result of 
the vote public at the annual meeting.
    (6) In the event of malfunction of the electronic balloting 
system, the board of directors may in its discretion order elections 
be held by mail ballot only. The mail ballots must conform to 
Section 2(d) of this article and must be mailed once more to all 
eligible members 30 days before the annual meeting. The board may 
make reasonable adjustments to the voting time frames above, or 
postpone the annual meeting when necessary, to complete the 
elections before the annual meeting.
    (d) If the credit union is conducting its election by mail 
ballot, the secretary will cause the following materials to be 
mailed to each member and the following procedures will be followed:
    (1) One ballot, clearly identified as the ballot on which the 
names of the candidates for the board of directors and the 
candidates for other separately identified offices or committees are 
printed in random order. The name of each candidate will be followed 
by a brief statement of qualifications and biographical data in a 
form approved by the board of directors;
    (2) One ballot envelope clearly marked with instructions that 
the completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the 
voter;
    (4) One mailing envelope in which the voter, following 
instructions provided with the mailing envelope, must insert the 
sealed ballot envelope and the identification form, and which must 
have postage prepaid and be preaddressed for return to the tellers;
    (5) When properly designed with features that preserve the 
secrecy of the ballot, one form can be printed that represents a 
combined ballot and identification form, and postage prepaid and 
preaddressed return envelope;
    (6) It is the duty of the tellers to verify, or cause to be 
verified, the name and credit union account number of the voter as 
appearing on the identification form; to place the verified 
identification form and the sealed ballot envelope in a place of 
safekeeping pending the count of the vote; in the case of a 
questionable or challenged identification form, to retain the 
identification form and sealed ballot envelope together until the 
verification or challenge has been resolved;
    (7) Ballots mailed to the tellers must be received by the 
tellers no later than midnight 5 days before the date of the annual 
meeting;
    (8) The vote will be tallied by the tellers. The result will be 
verified at the annual meeting and the chair will make the result of 
the vote public at the annual meeting.

All Options Continue Here

    Section 3. Order of nominations. Nominations may be in the 
following order:
    (a) Nominations for directors.
    (b) Nominations for credit committee members, if applicable. 
Elections may be by separate ballots following the same order as the 
above nominations or, if preferred, may be by one ballot for all 
offices.
    Section 4. Proxy and agent voting. Members cannot vote by proxy. 
A member other than a natural person may vote through an agent 
designated in writing for the purpose.
    Section 5. One vote per member. Irrespective of the number of 
shares, no member has more than one vote.
    Section 6. Submission of information regarding credit union 
officials to NCUA. The names and addresses of members of the board, 
board officers, executive committee, and members of the credit 
committee, if applicable, and supervisory committees must be 
forwarded to the Administration in accordance with the Act and 
regulations in the manner as may be required by the Administration.
    Section 7. Minimum age requirement. Members must be at least -- 
years of age by the date of the meeting (or for appointed offices, 
the date of appointment) in order to vote at meetings of the 
members, hold elective or appointive office, sign nominating 
petitions, or sign petitions requesting special meetings.
    The Credit Union's board should adopt a resolution inserting an 
age no greater than 18, or the age of majority under the state law 
applicable to the credit union, in the blank space.
    The Credit Union may select the absentee ballot provision in 
conjunction with the voting procedure it has selected. This may be 
done by printing the credit union's bylaws with this provision or by 
retaining this copy and checking the box.
    -- Section 8. Absentee ballots. The board of directors may 
authorize the use of absentee ballots in conjunction with the other 
procedures authorized in this article, subject to the following 
conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating 
committee or by petition to provide more than one nominee for any 
position to be filled, the secretary, at least 30 days before the 
annual meeting, will cause printed ballots to be mailed to all 
members of the credit union who are eligible to vote and who have 
submitted a written or electronic request for an absentee ballot;
    (c) The secretary will cause the following materials to be 
mailed to each eligible voter who has submitted a written or 
electronic request for an absentee ballot:
    (1) One ballot, clearly identified as the ballot on which the 
names of the candidates for the board of directors and the 
candidates for other separately identified offices or committees are 
printed in random order. The name of each candidate will be followed 
by a brief statement of qualifications and biographical data in a 
form approved by the board of directors;

[[Page 61505]]

    (2) One ballot envelope clearly marked with instructions that 
the completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the 
voter;
    (4) One mailing envelope in which the voter, pursuant to 
instructions provided with the envelope, must insert the sealed 
ballot envelope and the identification form, and which must have 
postage prepaid and be preaddressed for return to the tellers;
    (5) When properly designed with features that preserve the 
secrecy of the ballot, one form can be printed that represents a 
combined ballot and identification form, and postage prepaid and 
preaddressed return envelope;
    (d) It is the duty of the election tellers to verify, or cause 
to be verified, the name and credit union account number of the 
voter as appearing on the identification form; to place the verified 
identification and the sealed ballot envelope in a place of 
safekeeping pending the count of the vote; in the case of a 
questionable or challenged identification form, to retain the 
identification form and the sealed ballot envelope together until 
the verification or challenge has been resolved; and in the event 
that more than one voting procedure is used, to verify that no 
eligible voter has voted more than one time;
    (e) Ballots mailed to the tellers must be received by the 
tellers no later than midnight 5 days before the date of the annual 
meeting;
    (f) Absentee ballots will be deposited in the ballot boxes to be 
taken to the annual meeting or included in a precount in accordance 
with procedures specified in Article V, Section 2; and
    (g) If a member has chosen to receive statements and notices 
electronically, the credit union may provide notices required in 
this section by email and provide instructions for voting via 
electronic means instead of mail ballots.
    Staff commentary on the election process:
    i. Eligibility Requirements: The Act and the FCU Bylaws contain 
the only eligibility requirements for membership on an FCU's board 
of directors, which are as follows:
    (a) The individual must be a member of the FCU before 
distribution of ballots;
    (b) the individual cannot have been convicted of a crime 
involving dishonesty or breach of trust unless the NCUA Board has 
waived the prohibition for the conviction; and
    (c) the individual meets the minimum age requirement established 
under Article V, Section 7 of the FCU Bylaws.
    Anyone meeting the three eligibility requirements may run for a 
seat on the board of directors if properly nominated. It is the 
nominating committee's duty to ascertain that all nominated 
candidates, including those nominated by petition, meet the 
eligibility requirements.
    ii. Nomination Criteria for Nominating Committee: The FCU Act 
and the FCU Bylaws do not prohibit a board of directors from 
establishing reasonable criteria, in addition to the eligibility 
requirements, for a nominating committee to follow in making its 
nominations, such as financial experience, years of membership, or 
conflict of interest provisions. The board's nomination criteria, 
however, applies only to individuals nominated by the nominating 
committee; they cannot be imposed on individuals who meet the 
eligibility requirements and are properly nominated from the floor 
or by petition.
    iii. Candidates' Names on Ballots: When producing an election 
ballot, the FCU's secretary may order the names of the candidates on 
the ballot using any method for selection provided it is random and 
used consistently from year to year so as to avoid manipulation or 
favoritism.
    iv. Secret Ballots: An FCU must establish an election process 
that assures members their votes remain confidential and secret from 
all interested parties. If the election process does not separate 
the member's identity from the ballot, FCUs should use a third-party 
teller that has sole control over completed ballots. If the ballots 
are designed so that members' identities remain secret and are not 
disclosed on the ballot, FCUs may use election tellers from the FCU. 
In any case, FCU employees, officials, and members must not have 
access to ballots identifying members or to information that links 
members' votes to their identities.
    v. Plurality Voting: At least one nominee must be nominated for 
each vacant seat. When there are more nominees than seats open for 
election, the nominees who receive the greatest number of votes are 
elected to the vacant seats.
    vi. Minimum Age Requirement: The age the board selects may not 
be greater than the age of majority under the state law applicable 
to the credit union.

Article VI. Board of Directors

    Section 1. Number of members. The board consists of ------
members, all of whom must be members of this credit union. The 
number of directors may be changed to an odd number not fewer than 5 
nor more than 15 by resolution of the board. No reduction in the 
number of directors may be made unless corresponding vacancies exist 
as a result of deaths, resignations, expiration of terms of office, 
or other actions provided by these bylaws. A copy of the resolution 
of the board covering any increase or decrease in the number of 
directors must be filed with the official copy of the bylaws of this 
credit union.
    Section 2. Composition of board. ------(Fill in the number, 
which may be zero) directors or committee members may be a paid 
employee of the credit union. ------(Fill in the number, which may 
be zero) immediate family members of a director or committee member 
may be a paid employee of the credit union. In no case may 
employees, family members, or employees and family members 
constitute a majority of the board. The board may appoint a 
management official who ------(may or may not) be a member of the 
board and one or more assistant management officials who ------(may 
or may not) be a member of the board. If the management official or 
assistant management official is permitted to serve on the board, he 
or she may not serve as the chair.
    Section 3. Terms of office. Regular terms of office for 
directors must be for periods of either 2 or 3 years as the board 
determines. All regular terms must be for the same number of years 
and until the election and qualification of successors. Regular 
terms must be fixed at the first meeting, or upon any increase or 
decrease in the number of directors, so that approximately an equal 
number of regular terms must expire at each annual meeting.
    Section 4. Vacancies. Any vacancy on the board, credit 
committee, if applicable, or supervisory committee will be filled as 
soon as possible by vote of a majority of the directors then holding 
office. If all director positions become vacant simultaneously, the 
supervisory committee immediately becomes the temporary board of 
directors and must follow the procedures in Article IX, Section 3. 
Directors and credit committee members appointed to fill a vacancy 
will hold office only until the next annual meeting, at which any 
unexpired terms will be filled by vote of the members, and until the 
qualification of their successors. Members of the supervisory 
committee appointed to fill a vacancy will hold office until the 
first regular meeting of the board following the next annual meeting 
of members, at which the regular term expires, and until the 
appointment and qualification of their successors.
    Section 5. Regular and special meetings. A regular meeting of 
the board must be held each month at the time and place fixed by 
resolution of the board. One regular meeting each calendar year must 
be conducted in person. If a quorum is present in person for the 
annual in person meeting, the remaining board members may 
participate using audio or video teleconference methods. The other 
regular meetings may be conducted using audio or video 
teleconference methods. The chair, or in the chair's absence the 
ranking vice chair, may call a special meeting of the board at any 
time and must do so upon written request of a majority of the 
directors then holding office. Unless the board prescribes 
otherwise, the chair, or in the chair's absence the ranking vice 
chair, will fix the time and place of special meetings. Notice of 
all meetings will be given in the manner the board may from time to 
time by resolution prescribe. Special meetings may be conducted 
using audio or video teleconference methods.
    Section 6. Board responsibilities. The board has the general 
direction and control of the affairs of this credit union and is 
responsible for performing all the duties customarily performed by 
boards of directors. This includes but is not limited to the 
following:
    (a) Directing the affairs of the credit union in accordance with 
the Act, these bylaws, the rules and regulations and sound business 
practices.
    (b) Establishing programs to achieve the purposes of this credit 
union as stated in Article I, Section 2, of these bylaws.
    (c) Establishing a loan collection program and authorizing the 
chargeoff of uncollectible loans.
    (d) Establishing a policy to address training for newly elected 
and incumbent directors and volunteer officials, in areas such as

[[Page 61506]]

ethics and fiduciary responsibility, regulatory compliance, and 
accounting and determining that all persons appointed or elected by 
this credit union to any position requiring the receipt, payment or 
custody of money or other property of this credit union, or in its 
custody or control as collateral or otherwise, are properly bonded 
in accordance with the Act and regulations.
    (e) Performing additional acts and exercising additional powers 
as may be required or authorized by applicable law.
    If the credit union has an elected credit committee, you do not 
need to check a box. If the credit union has no credit committee 
check Option 1 and if it has an appointed credit committee check 
Option 2.
    -- Option 1 No Credit Committee.
    (f) Reviewing denied loan applications of members who file 
written requests for review.
    (g) Appointing one or more loan officers and delegating to those 
officers the power to approve or disapprove loans, lines of credit 
or advances from lines of credit.
    (h) In its discretion, appointing a loan review committee to 
review loan denials and delegating to the committee the power to 
overturn denials of loan applications. The committee will function 
as a mid-level appeal committee for the board. Any denial of a loan 
by the committee must be reviewed by the board upon written request 
of the member. The committee must consist of three members and the 
regular term of office of the committee member will be for two 
years. Not more than one member of the committee may be appointed as 
a loan officer.
    -- Option 2. Appointed Credit Committee.
    (f) Appointing an odd number of credit committee members as 
provided in Article VIII of these bylaws.
    Section 7. Quorum. A majority of the number of directors, 
including any vacant positions, constitutes a quorum for the 
transaction of business at any meeting, except that vacancies may be 
filled by a quorum consisting of a majority of the directors holding 
office as provided in Section 4 of this article. Fewer than a quorum 
may adjourn from time to time until a quorum is in attendance.
    Section 8. Attendance and removal. a. If a director or a credit 
committee member, if applicable, fails to attend regular meetings of 
the board or credit committee, respectively, for 3 consecutive 
months, or 4 meetings within a calendar year, or otherwise fails to 
perform any of the duties as a director or a credit committee 
member, the office may be declared vacant by the board and the 
vacancy filled as provided in the bylaws.
    b. The board may remove any board officer from office for 
failure to perform the duties thereof, after giving the officer 
reasonable notice and opportunity to be heard.
    When any board officer, membership officer, executive committee 
member or investment committee member is absent, disqualified, or 
otherwise unable to perform the duties of the office, the board may 
by resolution designate another member of this credit union to fill 
the position temporarily. The board may also, by resolution, 
designate another member or members of this credit union to act on 
the credit committee when necessary in order to obtain a quorum.
    Section 9. Suspension of supervisory committee members. Any 
member of the supervisory committee may be suspended by a majority 
vote of the board of directors. The members of this credit union 
will decide, at a special meeting held not fewer than 7 nor more 
than 14 days after any suspension, whether the suspended committee 
member will be removed from or restored to the supervisory 
committee.

Article VII. Board Officers, Management Officials and Executive 
Committee

    Section 1. Board officers. The board officers of this credit 
union are comprised of a chair, one or more vice chairs, a financial 
officer, and a secretary, all of whom are elected by the board and 
from their number. The board determines the title and rank of each 
board officer and records them in the addendum to this article. One 
board officer, the ------------, may be compensated for services as 
determined by the board. If more than one vice chair is elected, the 
board determines their rank as first vice chair, second vice chair, 
and so on. The offices of the financial officer and secretary may be 
held by the same person. If a management official or assistant 
management official is permitted to serve on the board, he or she 
may not serve as the chair. Unless removed as provided in these 
bylaws, the board officers elected at the first meeting of the board 
hold office until the first meeting of the board following the first 
annual meeting of the members and until the election and 
qualification of their respective successors.
    Section 2. Election and term of office. Board officers elected 
at the meeting of the board next following the annual meeting of the 
members, which must be held not later than 7 days after the annual 
meeting, hold office for a term of 1 year and until the election and 
qualification of their respective successors: provided, however, 
that any person elected to fill a vacancy caused by the death, 
resignation, or removal of an officer is elected by the board to 
serve only for the unexpired term of that officer and until a 
successor is duly elected and qualified.
    Section 3. Duties of Chair. The chair presides at all meetings 
of the members and at all meetings of the board, unless disqualified 
through suspension by the supervisory committee. The chair also 
performs other duties customarily assigned to the office of the 
chair or duties he or she is directed to perform by resolution of 
the board not inconsistent with the Act and regulations and these 
bylaws.
    Section 4. Approval required. The board must approve all 
individuals who are authorized to sign all notes of this credit 
union and all checks, drafts and other orders for disbursement of 
credit union funds.
    Section 5. Vice chair. The ranking vice chair has and may 
exercise all the powers, authority, and duties of the chair during 
the chair's absence or inability to act.
    Section 6. Duties of financial officer. i. The financial officer 
manages this credit union under the control and direction of the 
board unless the board has appointed a management official to act as 
general manager. Subject to limitations, controls and delegations 
the board may impose, the financial officer will:
    (a) Have custody of all funds, securities, valuable papers and 
other assets of this credit union.
    (b) Provide and maintain full and complete records of all the 
assets and liabilities of this credit union in accordance with forms 
and procedures prescribed in regulations and other guidance approved 
by the Administration, including, for small credit unions, the 
Accounting Manual for Federal Credit Unions.
    (c) Within 20 days after the close of each month, ensure that a 
financial statement showing the condition of this credit union as of 
the end of the month, including a summary of delinquent loans is 
prepared and submitted to the board and post a copy of the statement 
in a conspicuous place in the office of the credit union where it 
will remain until replaced by the financial statement for the next 
succeeding month.
    (d) Ensure that financial and other reports the Administration 
may require are prepared and sent.
    (e) Within standards and limitations prescribed by the board, 
employ tellers, clerks, bookkeepers, and other office employees, and 
have the power to remove these employees.
    (f) Perform other duties customarily assigned to the office of 
the financial officer or duties he or she is directed to perform by 
resolution of the board not inconsistent with the Act, regulations 
and these bylaws.
    ii. The board may employ one or more assistant financial 
officers, none of whom may also hold office as chair or vice chair, 
and may authorize them, under the direction of the financial 
officer, to perform any of the duties devolving on the financial 
officer, including the signing of checks. When designated by the 
board, any assistant financial officer may also act as financial 
officer during the financial officer's temporary absence or 
temporary inability to act.
    Section 7. Duties of management official and assistant 
management official. The board may appoint a management official who 
is under the direction and control of the board or of the financial 
officer as determined by the board. The management official may be 
assigned any or all of the responsibilities of the financial officer 
described in Section 6 of this article. The board will determine the 
title and rank of each management official and record them in the 
addendum to this article. The board may employ one or more assistant 
management officials. The board may authorize assistant management 
officials under the direction of the management official, to perform 
any of the duties devolving on the management official, including 
the signing of checks. When designated by the board, any assistant 
management official may also act as management official during the 
management official's temporary absence or temporary inability to 
act.
    Section 8. Board powers regarding employees. The board employs, 
fixes the compensation, and prescribes the duties of employees as 
necessary, and has the power to remove employees, unless it has 
delegated these powers to the financial officer or management 
official. Neither the board, the

[[Page 61507]]

financial officer, nor the management official has the power or duty 
to employ, prescribe the duties of, or remove necessary clerical and 
auditing assistance employed or used by the supervisory committee 
and, if there is a credit committee, the power or duty to employ, 
prescribe the duties of, or remove any loan officer appointed by the 
credit committee.
    Section 9. Duties of secretary. The secretary prepares and 
maintains full and correct records of all meetings of the members 
and of the board, which records will be prepared within 7 days after 
the respective meetings. The secretary must promptly inform the 
Administration in writing of any change in the address of the office 
of this credit union or the location of its principal records. The 
secretary will give or cause to be given, in the manner prescribed 
in these bylaws, proper notice of all meetings of the members, and 
perform other duties he or she may be directed to perform by 
resolution of the board not inconsistent with the Act, regulations 
and these bylaws. The board may employ one or more assistant 
secretaries, none of whom may also hold office as chair, vice chair, 
or financial officer, and may authorize them under direction of the 
secretary to perform any of the duties assigned to the secretary.
    Section 10. Executive committee. As authorized by the Act, the 
board may appoint an executive committee of not fewer than three 
directors to serve at its pleasure, to act for it with respect to 
the board's specifically delegated functions. When making 
delegations to the executive committee, the board must be specific 
with regard to the committee's authority and limitations related to 
the particular delegation. The board may also authorize any of the 
following to approve membership applications under conditions the 
board and these bylaws may prescribe: an executive committee; a 
membership officer(s) appointed by the board from the membership, 
other than a board member paid as an officer; the financial officer; 
any assistant to the paid officer of the board or to the financial 
officer; or any loan officer. No executive committee member or 
membership officer may be compensated as such.
    Section 11. Investment committee. The board may appoint an 
investment committee composed of not less than two, to serve at its 
pleasure to have charge of making investments under rules and 
procedures established by the board. No member of the investment 
committee may be compensated as such. Addendum: The board must list 
the positions of the board officers and management officials of this 
credit union. They are as follows:
    Select Option 1 if the credit union has a credit committee and 
Option 2 if it does not have a credit committee.

Article VIII. Option 1 Credit Committee

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

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

    Section 1. Records of loan officer; prohibition on loan officer 
disbursing funds. Each loan officer must maintain a record of each 
approved or not approved transaction within 7 days of the filing of 
the application or request, and that record becomes a part of the 
records of the credit union. No individual may disburse funds of 
this credit union for any application or share withdrawal which the 
individual has approved as a loan officer.
    Section 2. Duties of loan officer. For each loan or line of 
credit, the loan officer must inquire into the character and 
financial condition of the applicant and the applicant's sureties, 
if any, to ascertain their ability to repay fully and promptly the 
obligations incurred by them and to determine whether the loan or 
line of credit will be of probable benefit to the borrower. The loan 
officers should endeavor diligently to assist applicants in solving 
their financial problems.
    Section 3. Unapproved loans prohibited. No loan or line of 
credit may be made unless approved by a loan officer in accordance 
with applicable law and regulations.
    Section 4. Lending procedures. Subject to the limits imposed by 
law and regulations, these bylaws, and the general policies of the 
board, a loan officer determines the security if any required for 
each application and the terms of repayment. The security furnished 
must be adequate in quality and character and consistent with sound 
lending practices. When funds are not available to make all the 
loans and lines of credit for which there are applications, 
preference should be given, in all cases, to the applications for 
lesser amounts if the need and credit factors are nearly equal.

Article IX. Supervisory Committee

    Section 1. Appointment and membership. The supervisory committee 
is appointed by the board from among the members of this credit 
union, one of whom may be a director other than the financial 
officer or the compensated officer of the board. The board 
determines the number of members on the committee, which may not be 
fewer than 3 nor more than 5. No member of the credit committee, if 
applicable, or any employee of this credit union may be appointed to 
the committee. Regular terms of committee

[[Page 61508]]

members are for periods of 1, 2, or 3 years as the board determines: 
Provided, however, that all regular terms are for the same number of 
years and until the appointment and qualification of successors. The 
regular terms are fixed at the beginning, or upon any increase or 
decrease in the number of committee members, so that approximately 
an equal number of regular terms expires at each annual meeting.
    Section 2. Officers of supervisory committee. The supervisory 
committee members choose from among their number a chair and a 
secretary. The secretary of the supervisory committee prepares, 
maintains, and has custody of full and correct records of all 
actions taken by it. The offices of chair and secretary may be held 
by the same person.
    Section 3. Duties of supervisory committee. a. The supervisory 
committee makes, or causes to be made, the audits, and prepares and 
submits the written reports required by the Act and regulations. The 
committee may employ and use clerical and auditing assistance 
required to carry out its responsibilities prescribed by this 
article, and may request the board to provide compensation for this 
assistance. It will prepare and forward to the Administration 
required reports.
    b. If all director positions become vacant simultaneously, the 
supervisory committee immediately assumes the role of the board of 
directors. The supervisory committee acting as the board must 
generally call and hold a special meeting to elect a board that will 
serve until the next annual meeting. The special meeting must occur 
at least 7 but no more than 14 days after all director positions 
became vacant, and candidates for the board at the special meeting 
may be nominated by petition or from the floor. However, if the next 
annual meeting has been scheduled and will occur within 45 days 
after all the director positions become vacant, the supervisory 
committee may decide to forego the special meeting and continue 
serving as the board until the election of new directors at the 
annual meeting.
    c. If the next annual meeting has not been scheduled, but the 
month and day of the previous year's meeting plus 7 days falls 
within 45 days after all the director positions become vacant, the 
supervisory committee acting as the board may decide to forego the 
special meeting to elect new directors. In this case, the 
supervisory committee must schedule the annual meeting within 7 days 
before or after the month and day of the previous annual meeting and 
continue to serve as the board until directors are elected at the 
annual meeting.
    d. The supervisory committee acting as the board may not act on 
policy matters. However, directors elected at a special meeting have 
the same powers as directors elected at the annual meeting.
    Section 4. Verification of accounts. The supervisory committee 
will cause the verification of the accounts of members with the 
records of the financial officer from time to time and not less 
frequently than as required by the Act and regulations. The 
committee must maintain a record of this verification.
    Section 5. Powers of supervisory committee--removal of directors 
and credit committee members. By unanimous vote, the supervisory 
committee may suspend until the next meeting of the members any 
director, board officer, or member of the credit committee. In the 
event of any suspension, the supervisory committee must call a 
special meeting of the members to act on the suspension, which 
meeting must be held not fewer than 7 nor more than 14 days after 
the suspension. The chair of the committee acts as chair of the 
meeting unless the members select another person to act as chair.
    Section 6. Powers of supervisory committee--special meetings. By 
the affirmative vote of a majority of its members, the supervisory 
committee may call a special meeting of the members to consider any 
violation of the provisions of the Act, the regulations, or of the 
charter or the bylaws of this credit union, or to consider any 
practice of this credit union which the committee deems to be unsafe 
or unauthorized.

Article X. Organization Meeting

    Section 1. Initial meeting. When application is made for a 
federal credit union charter, the subscribers to the organization 
certificate must meet for the purpose of electing a board of 
directors and a credit committee, if applicable. Failure to commence 
operations within 60 days following receipt of the approved 
organization certificate is cause for revocation of the charter 
unless a request for an extension of time has been submitted to and 
approved by the Regional Director.
    Section 2. Election of directors and credit committee. The 
subscribers elect a chair and a secretary for the meeting. The 
subscribers then elect from their number, or from those eligible to 
become members of this credit union, a board of directors and a 
credit committee, if applicable, all to hold office until the first 
annual meeting of the members and until the election and 
qualification of their respective successors. If not already a 
member, every person elected under this section or appointed under 
Section 3 of this article, must qualify within 30 days by becoming a 
member. If any person elected as a director or committee member or 
appointed as a supervisory committee member does not qualify as a 
member within 30 days of election or appointment, the office will 
automatically become vacant and be filled by the board.
    Section 3. Election of board officers. 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. Loan purposes. Loans may only be made to members and 
for provident or productive purposes in accordance with applicable 
law and regulations.
    The credit union may add business as one of its purposes by 
placing a comma after ``provident'' and inserting ``business.''
    Section 2. Delinquency. Any member whose loan is delinquent may 
be required to pay a late charge as determined by the board of 
directors.

Article XII. Dividends

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

Article XIII. RESERVED

Article XIV. Expulsion and Withdrawal

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

Article XV. Minors

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

Article XVI. General

    Section 1. Compliance with law and regulation. All power, 
authority, duties, and functions of the members, directors, 
officers, and employees of this credit union, pursuant to the 
provisions of these bylaws, must be exercised in strict conformity 
with the provisions of applicable law and regulations, and of the 
charter and the bylaws of this credit union.
    Section 2. Confidentiality. The officers, directors, members of 
committees and employees of this credit union must hold in 
confidence all transactions of this credit union with its members 
and all information respecting their personal affairs, except when 
permitted by state or federal law.
    Section 3. Removal of directors and committee members. 
Notwithstanding any other provisions in these bylaws, any director 
or committee member of this credit union may be removed from office 
by the affirmative vote of a majority of the members present at a 
special meeting called for the purpose, but only after an 
opportunity has been given to be heard. If member votes at a special 
meeting result in the removal of all

[[Page 61509]]

directors, the supervisory committee immediately becomes the 
temporary board of directors and must follow the procedures in 
Article IX, Section 3.
    Section 4. Conflicts of interest prohibited. No director, 
committee member, officer, agent, or employee of this credit union 
may participate in any manner, directly or indirectly, in the 
deliberation upon or the determination of any question affecting his 
or her pecuniary or personal interest or the pecuniary interest of 
any corporation, partnership, or association (other than this credit 
union) in which he or she is directly or indirectly interested. In 
the event of the disqualification of any director respecting any 
matter presented to the board for deliberation or determination, 
that director must withdraw from the deliberation or determination; 
and if the remaining qualified directors present at the meeting plus 
the disqualified director or directors constitute a quorum, the 
remaining qualified directors may exercise with respect to this 
matter, by majority vote, all the powers of the board. In the event 
of the disqualification of any member of the credit committee, if 
applicable, or the supervisory committee, that committee member must 
withdraw from the deliberation or determination.
    Section 5. Records. Copies of the organization certificate of 
this credit union, its bylaws and any amendments to the bylaws, and 
any special authorizations by the Administration must be preserved 
in a place of safekeeping. Copies of the organization certificate 
and field of membership amendments should be attached as an appendix 
to these bylaws. Returns of nominations and elections and 
proceedings of all regular and special meetings of the members and 
directors must be recorded in the minute books of this credit union. 
The minutes of the meetings of the members, the board, and the 
committees must be signed by their respective chairmen or presiding 
officers and by the persons who serve as secretaries of those 
meetings.
    Section 6. Availability of credit union records. All books of 
account and other records of this credit union must be available at 
all times to the directors and committee members of this credit 
union provided they have a proper purpose for obtaining the records. 
The charter and bylaws of this credit union must be made available 
for inspection by any member and, if the member requests a copy, it 
will be provided for a reasonable fee.
    Section 7. Member contact information. Members must keep the 
credit union informed of their current address.
    Section 8. Indemnification. (a) The credit union may elect to 
indemnify to the extent authorized by (check one)

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

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

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

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

Article XVII. Amendments of Bylaws and Charter

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

Article XVIII. Definitions

    Section 1. General definitions. When used in these bylaws the 
terms:
    ``Act'' means the Federal Credit Union Act, as amended.
    ``Administration'' means the National Credit Union 
Administration.
    ``Applicable law and regulations'' means the Federal Credit 
Union Act and rules and regulations issued thereunder or other 
applicable federal and state statutes and rules and regulations 
issued thereunder as the context indicates (such as The Higher 
Education Act of 1965).
    ``Board'' means board of directors of the federal credit union.
    ``Immediate family member'' means spouse, child, sibling, 
parent, grandparent, grandchild, stepparents, stepchildren, 
stepsiblings, and adoptive relationships.
    ``NCUA Board'' means the Board of the National Credit Union 
Administration.
    ``Regulation'' or ``regulations'' means rules and regulations 
issued by the NCUA Board.
    ``Share'' or ``shares'' means all classes of shares and share 
certificates that may be held in accordance with applicable law and 
regulations.

 [FR Doc. E7-21397 Filed 10-30-07; 8:45 am]
BILLING CODE 7535-01-P