Federal Credit Union Bylaws

NATIONAL CREDIT UNION ADMINISTRATION

Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of Federal Credit Union Bylaws.

-----------------------------------------------------------------------

SUMMARY: This notice advises the public of the final changes to the

federal credit union (FCU) bylaws. The changes consolidate the two

manuals which currently contain the FCU bylaws into one manual and

eliminate or modernize several bylaws. This action is necessary because

several of the bylaws had become outdated or obsolete.

DATES: The Federal Credit Union Bylaws are effective October 14, 1999.

FOR FURTHER INFORMATION CONTACT: Mary F. Rupp, Staff Attorney, Office

of General Counsel, National Credit Union Administration, 1775 Duke

Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6553.

SUPPLEMENTARY INFORMATION:

Background

On December 17, 1998, the NCUA Board issued a Notice and Request

for Comment on proposed Federal Credit Union (FCU) Bylaws. 64 FR 187

(January 4, 1999). The proposed bylaws were drafted after reviewing

comments in response to a Request for Comment. 62 FR 11778 (March 13,

1997). Those commenters supported the bylaws being published as a

manual rather than a regulation, consolidating the bylaws into one

publication, deleting outdated and obsolete bylaws, and not requiring

FCUs to adopt the revised bylaws.

The proposal was drafted in accordance with those comments. As a

result, the proposed bylaws are more user friendly for FCUs. All of the

information is now in one place; plain English is used; provisions that

are outdated are deleted; and provisions that are operational or

covered in the Accounting Manual or regulations are deleted, unless it

was determined that because of their importance they should also be

included in the bylaws.

Summary of Comments

The Board received 24 comments in response to its proposal. The

seven commenters that specifically comment on the revised format of

consolidating the bylaws in one publication applaud the Board's effort

to make the bylaws more user friendly. Several commenters also comment

favorably on the Board's decision to remove operational issues from the

bylaws. Some of those commenters suggest other areas that could be

removed because they are operational. These are discussed below.

Overall the comments were favorable.

Article by Article Analysis of Comments

Article I, Name--Purposes

Section 2. This provision states the purpose of the credit union is

``to

[[Page 55761]]

promote thrift among its members * * * and to create for them a source

of credit for provident or productive purposes.'' One commenter

suggests changing it to ``provident, productive or business purposes''

because the member business loan rule exempts from its limitations

credit unions that are chartered for the purpose of making business

loans.

The Board agrees that, if an FCU determines that in compliance with

the Federal Credit Union Act (the Act) one of its purposes is to make

member business loans, it should be permitted to add this language to

its bylaws. 12 U.S.C. 1757a(b)(1). This provision is optional. The

final bylaws indicate that FCUs wishing to include the ``business

purposes'' language in their bylaws may do so.

Article II, Qualifications for Membership

Sections 2 and 3. These provisions discuss application for

membership and withdrawal from membership. Four commenters state that

these provisions are operational and should be deleted. One commenter

objects to the withdrawal from membership provision on the basis that

it is inconsistent with the Federal Credit Union Act which states two

grounds for expulsion. 12 U.S.C. 1764(a) and (b). The commenter fails

to distinguish between withdrawal and expulsion. One commenter wants

the provision expanded to include the criteria for membership in the

Chartering Manual.

Although operational, the Board believes that including these

provisions in the bylaws offers useful guidance to FCUs and their

members without placing any additional burdens on them.

Section 5. This provision was deleted because the ``once a member

always a member'' policy is now addressed in the Act. 12 U.S.C.

1759(e)(2). Two commenters suggest that the bylaw be retained with

language allowing FCUs to restrict services to members no longer within

the field of membership.

The Board agrees that the bylaws are an appropriate place for this

provision to be included. The bylaw will repeat the statutory language

and note that FCUs that want to restrict services should state the

restrictions in this bylaw provision. This provision is now Article II,

Section 4.

Article III, Shares of Members

Sections 1 and 3. One commenter likes the proposal's approach of

allowing the FCU to fill in the par value amount of a share and the

time frame to complete payment of one share.

Section 2. One commenter suggests that the requirement that the

``maximum amount of shares that may be held by any one member shall be

established from time to time by resolution of the board'' should say

``may'' instead of ``shall.'' The commenter notes that large FCUs have

no need for the limitation. The Act requires the board to set the

maximum amount and so, this provision must remain. 12 U.S.C. 1761b(7).

One commenter suggests that the requirement that both owners of a

joint account each purchase a share if they both want to be a member

should be stated in the bylaw. The Board agrees that the bylaws are the

appropriate place to clarify that for joint account holders to both be

members, the account must have at least two shares in it. This

provision is added as Section 7 of this Article.

Section 4. This section permits transfer from one member to another

by ``a written instrument'' and requires the transfer to ``carry

dividend credits with it.'' Five commenters state that this provision

is confusing because membership shares generally can't be transferred.

The intent of this provision is to show that a member can only transfer

shares to members and that the shares function like stock in a

corporation.

Some commenters note that the requirement that it be written is

outdated. The Board agrees and is deleting the ``written'' requirement.

Section 5. This section sets forth the requirements for withdrawing

shares from a member's account. Three commenters note that several of

these provisions are operational and should be deleted. One of the

commenters notes that, although section 5(d) allowing deceased members'

accounts to remain open for a period of four years is operational, it

should remain because there is no other authority for it. The Board

agrees that all of the Section 5 provisions are operational but they

provide useful guidance to the FCU and notice to the member and so, the

Board will retain them.

Two commenters suggest that the bylaws include a provision for

statutory liens because NCUA's proposed rule on statutory liens

references a bylaw as authority for a statutory lien. 63 FR 57943

(October 29, 1998). The bylaws do contain a provision for statutory

liens. It is proposed section 5(c) which is currently Article III,

Section 5(d) of the FCU Bylaws.

Four commenters object to deleting Section 5(f). This provision

allows boards to impose fees for excessive share withdrawals.

Commenters note that although the Truth in Savings Act (TISA) requires

FCUs to disclose fees it does not authorize fees. The Board agrees and

will reinstate this provision in the final bylaws as Section 5(e).

Article IV, Meetings of Members

Section 1. This section requires the annual meeting to be held

within 100 miles of the office of the credit union. Four commenters

suggest adding ``any'' before office to allow FCUs greater flexibility.

The Board agrees that since the intent is to allow FCUs the maximum

flexibility possible that ``any'' should be placed before office. One

commenter suggests that the requirement of an annual meeting be

eliminated. This requirement is statutory and cannot be eliminated. 12

U.S.C. 1760.

Section 2. This section states the time frames for notice of annual

and special meetings. Under the current bylaws, notice of the annual

meeting must be given at least 7 days prior to the annual meeting. The

proposal changes the time to at least 30 days but not more than 75

days. Five commenters object to the change. The reasons cited were that

there is more flexibility with 7 days and the new time frame may

require an additional mailing which would be costly because, in the

past, the notice was sent with the quarterly statement. The Board

believes that the requirement of at least 30 days notice to the member

is not an undue hardship on an FCU and that the notice can still be

mailed with the quarterly statement. However, 7 days notice could be an

undue hardship on the membership and does not facilitate maximum member

participation at the annual meeting. The notice requirements for a

special meeting are still only 7 days because there is often a need to

act promptly when scheduling a special meeting. However, that same need

is not generally associated with the scheduling of the annual meeting.

Section 3. This section states the number of members necessary to

request a special meeting. The current bylaws require 25 members or 5%,

whichever is greater, not to exceed 200. The proposal only changes the

not-to-exceed number from 200 to 500. Three commenters object to the

change. It is unclear whether the commenters understood the change

since one said a percentage is fairer and two said small credit unions

are penalized. All three commenters ignored the fact that the 5% limit

still exists. The Board is going to keep the 500 maximum. The intent of

the increase is to prevent a small number of members in a very large

credit union from requesting a special meeting every time they don't

agree with management. The increase has no effect on a small credit

union.

[[Page 55762]]

Section 4. This section sets forth the order of business at the

annual meeting. Two commenters suggest moving the elections to after

the report by the supervisory committee and one commenter suggests

deleting this provision because it is operational. The Board agrees

that this provision is operational, but rather than delete the

provision, the order of business will no longer be required, but rather

suggested, with the requirement that, whatever order of business an FCU

chooses, it must comply with ``Robert's Rules of Order.''

One commenter suggests that proxy voting be allowed. This is

prohibited by the Act. 12 U.S.C. 1760.

Article V, Elections

The proposal lists four election options: (1) In person elections

with nominating committee and nominations from floor; (2) In person

elections with nominating committee and nominations by petition; (3)

Ballot boxes or voting machines with nominating committee and

nominations by petition; and (4) Electronic device or mail ballot with

nominating committee and nominations by petition. One commenter

suggests a fifth option that would allow an individual to place himself

on the ballot in lieu of nominations from the floor or nomination by

petition. The Board rejects this suggestion because it is contrary to

standard business practice. One commenter likes the four options and

the guidance they offer.

Two commenters suggest nominations from the floor be deleted

because they're archaic and one of those commenters also suggests that

nominations by petition be deleted. The Board recognizes that very few

FCUs still have nominations from the floor but sees no reason to

preclude FCUs from conducting their elections in that manner if they

choose to.

One commenter opposes FCUs checking a box to select their voting

method. The commenter is concerned that an FCU may forget to check a

box or check too many boxes. The commenter suggests that all FCUs

reprint the bylaws with only the method selected printed. The Board

believes that FCUs will take the responsibility of selecting their

bylaws seriously and will follow the appropriate instructions.

Therefore, FCUs have the option of adopting their bylaws by checking

the appropriate boxes or reprinting the bylaws with only the provisions

that apply to them.

Two commenters note that the revised bylaws allow a combined ballot

and identification form but require the ballot and identification form

to be kept in separate places. The commenters are correct that these

provisions are inconsistent and so, the requirement that the ballot and

identification form be kept in separate places has been deleted.

One commenter objects to the requirement for prepaid postage with

the mail and absentee ballots. The Board has required this in the past

and will continue to require it. The rationale behind the requirement

is to elicit as large of a response as possible. In addition, depending

on the type of postage, an FCU is often not required to pay if the

prepaid envelope is not returned.

One commenter objects to the requirement that electronic ballots be

received 5 calendar days prior to the meeting because other ballots are

not handled in the same manner. The commenter is wrong. Mail and

absentee ballots have the same requirements. This enables the FCU to

tally the votes prior to the annual meeting when the results are

announced.

Section 3. Two commenters suggest deleting the order of nominations

because they are operational. The Board agrees, but rather than delete

the order because it provides guidance to some FCUs, it has replaced

``shall'' with ``may.''

Two commenters suggest adding to the nominating committee's

responsibilities the duty to determine that the nominees meet the

criteria for the position. The Board does not agree that this

requirement should be part of the FCU Bylaws but rather, the board of

directors in its discretion could make that a responsibility of the

nominating committee.

Article VI, Board of Directors

Section 2. The proposal allows an FCU to limit the number of

directors and their immediate family members that can be paid employees

of the FCU to 0, 1 or 2. The current bylaws place no limits and the

standard amendments allow an FCU to select any number. Two commenters

object to the two limitation. They suggest the number be left to the

discretion of the FCU. Two other commenters suggest NCUA prohibit any

director or their immediate family member from being a paid employee.

Although the Board would prefer to see an FCU limit the number of

directors and immediate family members that can be paid employees of

the FCU, the Board agrees with the commenters that the ultimate

decision should be made by the board of directors. The final bylaws

allow the FCU to select the number of paid employees that may serve on

the board or are relatives of board members but retain the limitation

in the proposal that it is not a majority of the board.

Section 4. This provision directs the board to fill any vacancies

on the board, credit committee or supervisory committee ``within a

reasonable time.'' Four commenters object to ``within a reasonable

time.'' Some suggestions were to define ``reasonable time,'' put a time

certain in the bylaw or leave it to the board's discretion.

The final bylaw will maintain the ``within a reasonable time

requirement.'' This provision allows the board the flexibility to deal

with different situations and determine what is reasonable under the

circumstances.

Section 5. This section requires one face-to-face board meeting a

quarter. Six commenters object to this requirement and two commenters

noted their approval. The objectors state that NCUA should allow the

board to determine how it wishes to conduct its meetings. The Board

agrees that NCUA should not dictate how a board conducts its meetings.

However, the Board does believe that it is important for a board to

have personal interaction at least once a year, and so, will require

one face-to-face meeting a year. The only requirement for the annual

face-to-face meeting is that a quorum be physically present. Board

members not necessary to obtain a quorum, who wish to participate, may

do so by one of the other approved methods.

Two commenters suggest that the bylaws allow telephone and notation

voting. The revised bylaws allow audio teleconference meetings which is

the same as telephone voting.

Section 6(c). One commenter suggests that this provision be

clarified to state that the board is required to charge off

uncollectible loans. The Board believes this bylaw is self explanatory

and does not need further clarification.

Section 8. This section addresses removal of directors and credit

committee members for missing 3 consecutive meetings or 4 meetings in a

calendar year. One commenter suggests adding ``unexcused'' before

meeting. This is not necessary because the bylaw does not require

removal, but says the board may remove.

Article VII, Board Officers, Management Officials and Executive

Committee

Section 3. This section provides that the chair presides at all

meetings of the board unless suspended by the supervisory committee.

The commenter suggests a 2/3 majority of the board also have the power

to suspend the chair. The Board does not agree. There is no authority

for the board to suspend the chair. There is statutory authority for

[[Page 55763]]

the supervisory committee to suspend any board member. 12 U.S.C. 1761d.

Section 4. This section states that the board must approve all

individuals who are authorized to sign notes, checks, drafts and other

orders of disbursement. The commenter suggests that the board have the

authority to delegate approval authority to the Chief Executive

Officer. The Board believes that this function should remain within the

purview of the board of directors.

Section 6. One commenter objects to the use of the term ``general

manager.'' The commenter suggested a more modern term such as, CEO or

president. The Addendum to this Article of the bylaws allows an FCU to

determine the title and rank of each management official and to use

those titles throughout its bylaws. There is no need to modify this

provision.

Section 6(c). This section requires the FCU to post in its office

in a conspicuous place the FCU's monthly financial statement. Two

commenters object to this requirement. One said it should be deleted

because it's operational and the other suggested that the FCU may want

to post it on the Internet. An FCU may, in addition to posting the

monthly financial statement in its office, post it on the Internet but

because not everyone has access to the Internet, the Board is going to

keep the requirement of posting in the FCU's offices. One commenter

likes the increase from 7 to 20 days to prepare the financial

statement.

Section 6(f). One commenter recommends changing the language in

this section that authorizes the board to ``employ'' to ``the board may

designate, appoint or elect.'' The Board prefers the term ``employ'' to

the suggested language and notes that the bylaw authorizes the

financial officer and not the board as stated by the commenter.

One commenter suggests adding a provision that authorizes the board

to appoint a committee of not less than 3 directors to serve at its

pleasure. This addition is not necessary because section 10 of this

Article allows the board to appoint an executive committee that serves

the same function as the commenter has suggested.

One commenter commends NCUA for allowing FCUs to determine the

title and rank of each board officer and management official.

Article VIII, Option 1 Credit Committee or Option 2 Loan Officers (No

Credit Committee)

Option 1, Section 8 and Option 2, Section 4. These sections require

preference be given to smaller loans if all other factors are nearly

equal. Two commenters object to this provision because FCUs should be

able to make this decision on a case-by-case basis. Although, there is

no specific statute or regulation requiring a preference for small

loans, one of the purposes of an FCU is ``creating a source of credit

for provident or productive purposes.'' 12 U.S.C. 1752(1). Because this

provision enables small credit unions to serve more members, the Board

is retaining it, but changing the language from ``will'' to ``should''

in recognition that it is voluntary.

Option 1, Section 6 and Option 2, Section 2. Two commenters object

to the requirement that the credit committee and loan officers

``endeavor diligently to assist applicants in solving their financial

problems.'' Commenters state that the requirement sets a standard that

is difficult to quantify or achieve and unnecessary and out of place in

the bylaws. Recognizing that one of the purposes of an FCU is to

promote thrift among its members, the Board is retaining this provision

but changing the language from ``will'' to ``should'' in recognition

that it is voluntary. 12 U.S.C. 1752(1).

Article IX, Supervisory Committee

Section 1. This provision states that the supervisory committee

shall consist of not less than 3 nor more than the maximum number

permitted by the Act. One commenter suggests that it say ``5'' since

that's the maximum number permitted by the Act. The Board agrees and

has changed the language in the bylaw to ``5.''

Section 4. This section requires the supervisory committee to

verify the accounts of all members. One commenter suggests it require

the supervisory committee to ``cause the verification.'' The Board

agrees and has modified the language so that it is consistent with the

Act. 12 U.S.C. 1761d. In addition, the commenter suggested ``all

accounts'' may be unnecessary and that a ``representative sampling''

may be more appropriate.

Since NCUA's regulations set forth the specific requirements for

the supervisory committee audit and verification, they do not need to

be repeated in the bylaws. 12 CFR 701.12.

Section 5. One commenter objects to the requirement that the

supervisory committee call a special meeting to vote on the removal of

a suspended director. This requirement is statutory. 12 U.S.C. 1761d.

One commenter suggests holding supervisory committee members to the

same attendance requirements as directors and credit committee members.

Unlike the board of directors and credit committee, there is no

requirement that the supervisory committee hold monthly meetings and

so, the same attendance requirements are not appropriate.

Article XI, Loans and Lines of Credit to Members

Section 1. The proposal tracks the current FCU bylaws and requires

that a loan to a nonnatural person be either share secured or

personally guaranteed. Fourteen commenters object to this requirement.

The commenters note that loans to nonnatural persons are currently

covered in the business loan regulation and that there is no need or

justification for additional requirements in the bylaw. The commenters

note that because of this bylaw federally-insured state-chartered

credit unions have an unfair advantage over FCUs in this area.

The Board agrees that because the requirements for loans to

nonnatural persons are set forth in NCUA's regulations there is no

justification for placing additional requirements for these loans in

the bylaws. 12 CFR part 723. This provision is deleted from the final

bylaws.

Section 2. Five commenters state that this section should be

eliminated because it repeats the requirement in section 1 that the

credit union follow all applicable law and regulations. The Board

agrees and has deleted this provision.

Section 3. This section requires members to pay a late charge as

determined by the board. One commenter suggests that it be deleted. The

Act requires this section to be in the bylaws. 12 U.S.C. 1757(10).

Article XIII, Deposit of Funds

Two commenters object to including this provision in the bylaws

because it's operational. One commenter approves of this provision

because it grants an FCU the discretion to select the number of days

within which to make its deposits. Although this provision is

operational, the Board believes it is helpful for smaller credit unions

and so, it will remain.

Article XV, Minors

This provision states that shares may be issued in the name of a

minor. One commenter states that it should be deleted because it's

already in the Act. 12 U.S.C. 1765. The Board thinks this provision is

important and should be repeated in the bylaws.

Article XVI, Definitions

Four commenters suggest that the definitions be moved to the front

because it's more user friendly. The

[[Page 55764]]

Board agrees that the definitions should not be in the middle of the

bylaws, but rather than place them in the front where they are a

distraction to the reader, the Board has placed them at the end for

easy reference.

Section 1(f). One commenter suggests that ``applicable law and

regulations'' also include ``state law.'' The Board agrees and has

changed the definition to include ``state law.''

Article XVII, General

Section 2. This provision states the requirements for officers,

directors, committee members and employees of the FCU to keep member

transactions confidential. The provision lists some specific exceptions

to the confidentiality requirements. Seven commenters object to this

provision as it's currently drafted. It should be noted that Congress

is currently considering financial reform legislation that will require

NCUA and the other financial institution regulators to issue

regulations governing release of financial information. The commenters

suggest that rather than list specific exceptions that may become

outdated in light of the changing law in this area or may not include

all permissible exceptions, the bylaw should prohibit disclosure except

when permitted by state or federal law. The Board agrees and has

modified the bylaw accordingly.

Section 3. This provision states the authority of the members to

remove officers, committee members and directors. Several commenters

like the deletion of the authority of members to remove employees. Four

commenters suggest that the bylaws either delete the authority of

members to remove officers or define the term ``officer.'' The Board

agrees that the term ``officer'' should be deleted.

Two commenters suggest that a higher number than 15 be required for

a quorum at a special meeting to remove officers and directors. The

Board believes that the number required for a quorum for a meeting of

the members should be consistent throughout the bylaws and has retained

15.

Section 7. One commenter suggests eliminating the requirement that

members keep the FCU informed of their current address. The Board

believes that the bylaws are an appropriate place for this requirement.

Section 8. One commenter suggests using the indemnification

language from the Ohio indemnification statute. The proposal allows an

FCU to indemnify to the extent allowed by state law or the Model

Business Corporation Act. The Board sees no reason to limit an FCU to

one state's law.

Miscellaneous

Two commenters suggest that the bylaws be redrafted to remove all

gender specific references. The Board agrees and has made the

appropriate changes throughout the bylaws.

Two commenters suggest that the bylaws contain the requirement that

an FCU's organization certificate and field of membership amendments be

an appendix to the bylaws. Although Article XVII, Section 5 of the

proposal requires that the FCU keep these documents in a place of

safekeeping, the Board agrees that these documents should be kept with

the bylaws. Section 5 is revised to include this requirement.

Six commenters suggest that the definitions of ``immediate family

member'' and ``household'' be included in the bylaws. The commenters

note that this is particularly important for FCUs that choose to have

more restrictive definitions than those in the regulation. The Board

agrees and has added these terms to the definition section of the

bylaws.

FCUs Adopting Revised Bylaws

There is some confusion about whether the revised bylaws will be

mandatory. Although the proposal stated that ``[b]ecause of the

overwhelming opposition to this requirement, FCUs although strongly

encouraged to adopt the revised bylaws, are not required to do so and

may continue to use their previously approved bylaws,'' a few

commenters objected to the revised bylaws being mandatory. 64 FR at

187. The Board reiterates that the revised FCU Bylaws are not

mandatory.

An issue that has not been addressed is whether FCUs will be

allowed to adopt just part of the revised bylaws. This is particularly

important for FCUs that have nonstandard amendments that are not

addressed in the revised bylaws. The Board, in an effort to achieve

maximum participation by FCUs, will allow them to adopt portions of the

revised bylaws, if an FCU finds that adoption of the entire revised

bylaws is impracticable. The Board cautions FCUs adopting only a

portion of the revised bylaws to use extreme care because they run the

risk of having inconsistent or conflicting bylaw provisions.

In addition, although the Act requires FCUs to use the bylaws

published by NCUA, FCUs will continue to have the flexibility to

request a nonstandard bylaw amendment if the need arises. 12 U.S.C.

1758.

Final Bylaws

The final bylaws are identical to the proposed bylaws unless noted

above in the summary of comments. They will be published as a manual

entitled Federal Credit Union Bylaws. The document will contain an

index that will make it easier to use than the current bylaws that only

have an index for the FCU Bylaws and not the Standard Amendments.

By the National Credit Union Administration Board on October 6,

1999.

Becky Baker,

Secretary of the Board.

Bylaws

Federal Credit Union, Charter No. __________ (A corporation

chartered under the laws of the United States)

Article I. Name--Purposes

Section 1. The name of this credit union is as stated in section 1

of the charter (approved organization certificate) of this credit

union.

Section 2. The purpose of this credit union is to promote thrift

among its members by affording them an opportunity to accumulate their

savings and to create for them a source of credit for provident or

productive purposes. 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. The field of membership of this credit union is limited

to that stated in section 5 of its charter.

Section 2. Applications for membership from persons eligible for

membership under section 5 of the charter must be signed by the

applicant on forms approved by the board. Upon approval of an

application by a majority of the directors, or a majority of the

members of a duly authorized executive committee or by a membership

officer, and upon subscription to at least one share of this credit

union and the payment of the initial installment, and the payment of a

uniform entrance fee if required by the board, the applicant is

admitted to membership. If a membership application is denied, the

reasons must be furnished in writing to the person whose application is

denied, upon written request.

Section 3. A member who withdraws all shareholdings or fails to

comply with the time requirements in article III, section 3, ceases to

be a member. By resolution, the board may require persons readmitted to

membership to pay another entrance fee.

[[Page 55765]]

Section 4. 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. A credit union that wishes to

restrict services to members no longer within the field of membership

should specify the restrictions in this section.

Article III. Shares of Members

Section 1. The par value of each share will be $______.

Subscription to shares are payable at the time of subscription, or in

installments of at least $______ per month.

Section 2. The maximum amount of shares that may be held by any one

member will be established from time to time by resolution of the

board.

Section 3. A member who fails to complete payment of one share

within ______ of admission to membership, or within ______ from the

increase in the par value of shares, or a member who reduces the share

balance below the par value of one share and does not increase the

balance to at least the par value of one share within ______ of the

reduction may be terminated from membership.

Section 4. Shares may only be transferred from one member to

another by an instrument in a form as the board may prescribe. Such

transfer will carry dividend credits with it.

Section 5. Money paid in on shares or installments of shares may be

withdrawn as provided in these bylaws or regulation on any day when

payment on shares may be made: provided, however, that

(a) The board has the right, at any time, to require members to

give, in writing, not more than 60 days notice of intention to withdraw

the whole or any part of the amounts paid in by them.

(b) The board may determine that, if shares are paid in under an

accumulated payroll deduction plan as prescribed in the Accounting

Manual for Federal Credit Unions, they may not be withdrawn until

credited to members' accounts.

(c) No member may withdraw any shareholdings below the amount of

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; except that shares

issued in an irrevocable trust as provided in section 6 of this article

are not subject to restrictions upon withdrawal except as stated in the

trust agreement.

(d) The share account of a deceased member (other than one held in

joint tenancy with another member) may be continued until the close of

the dividend period in which the administration of the deceased's

estate is completed, but not to exceed a period of 4 years.

(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. Shares may be issued in a revocable or irrevocable

trust, subject to the following: When shares are issued in a revocable

trust, the settlor must be a member of this credit union in his own

right. When shares are issued in an irrevocable trust, 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. 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.

Article IV. Meetings of Members

Section 1. The annual meeting of the members must be held within

the period authorized in the Act, in the county in which any office of

the credit union is located or within a radius of 100 miles of such

office, at the time and place as the board determines and announces in

the notice of the annual meeting.

Section 2. At least 30 but no more than 75 days before the date of

any annual meeting or at least 7 days before the date of any special

meeting of the members, the secretary must give written notice to each

member by in person delivery, or by mailing the written notice to each

member at the address that appears on the records of this credit union.

Notice of the annual meeting may be given by posting the notice in a

conspicuous place in the office of this credit union where it may be

read by the members, at least 30 days prior to such meeting, if the

annual meeting is to be held during the same month as that of the

previous annual meeting and if this credit union maintains an office

that is readily accessible to members where regular business hours are

maintained. Any meeting of the members, whether annual or special, may

be held without prior notice, at any place or time, if all the members

entitled to vote, who are not present at the meeting, waive notice in

writing, before, during, or after the meeting.

Notice of any special meeting must state the purpose for which it

is to be held, and no business other than that related to this purpose

may be transacted at the meeting.

Section 3. Special meetings of the members may be called by the

chair or the board of directors upon a majority vote, or by the

supervisory committee as provided in these bylaws, and may be held at

any location permitted for the annual meeting. A special meeting must

be called by the chair within 30 days of the receipt of a written

request of 25 members or 5% of the members as of the date of the

request, whichever number is larger. However, a request of no more than

500 members may be required for such meeting. The notice of a special

meeting must be given as provided in section 2 of this article.

Section 4. The 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.

(d) Report of the financial officer or the chief management

official.

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

(f) Report of the supervisory committee.

(g) Unfinished business.

(h) New business other than elections.

(i) Elections.

(j) Adjournment.

The order of business must comply with ``Robert's Rules of Order.''

Section 5. 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 not fewer than 7 nor more than 14

days thereafter. The members present at any such adjourned meeting will

constitute a quorum, regardless of the number of members present. The

same notice must be given for the adjourned meeting as is prescribed in

section 2 of this article for the original meeting, except that such

notice must be given not fewer than 5

[[Page 55766]]

days previous to the date of the meeting as fixed in the adjournment.

Article V. Elections

The Credit Union must select one of the four voting options. This

may be done by printing the credit union's bylaws with the option

selected or retaining this copy and checking the box of the option

selected.

{time} Option A1--In-Person Elections; Nominating Committee and

Nominations From Floor

Section 1. At least 30 days prior to each annual meeting, the chair

will appoint a nominating committee of not fewer than three members. It

is the duty of the nominating committee to nominate at least one member

for each vacancy, including any unexpired term vacancy, for which

elections are being held, and to determine that the members nominated

are agreeable to the placing of their names in nomination and will

accept office if elected.

Section 2. After the nominations of the nominating committee have

been placed before the members, the chair calls for nominations from

the floor. When nominations are closed, tellers are appointed by the

chair, ballots are distributed, the vote is taken and tallied by the

tellers, and the results announced. All elections are determined by

plurality vote and will be by ballot except where there is only one

nominee for the office.

{time} Option A2--In-Person Elections; Nominating Committee and

Nominations by Petition

Section 1. At least 120 days prior to each annual meeting the chair

will appoint a nominating committee of not fewer than three members. It

is the duty of the nominating committee to nominate at least one member

for each vacancy, including any unexpired term vacancy, for which

elections are being held, and to determine that the members nominated

are agreeable to the placing of their names in nomination and will

accept office if elected. The nominating committee files its

nominations with the secretary of the credit union at least 90 days

prior to the annual meeting, and the secretary notifies in writing all

members eligible to vote at least 75 days prior to the annual meeting

that nominations for vacancies may also be made by petition signed by

1% of the members with a minimum of 20 and a maximum of 500.

The written notice must indicate that the election will not be

conducted by ballot and there will be no nominations from the floor

when there is only one nominee for each position to be filled. A brief

statement of qualifications and biographical data in a form approved by

the board of directors will be included for each nominee submitted by

the nominating committee with the written notice to all eligible

members. Each nominee by petition must submit a similar statement of

qualifications and biographical data with the petition. The written

notice must state the closing date for receiving nominations by

petition. In all cases, the period for receiving nominations by

petition must extend at least 30 days from the date that the petition

requirement and the list of nominating committee's nominees are mailed

to all members. To be effective, such nominations must be accompanied

by a signed certificate from the nominee or nominees stating that they

are agreeable to nomination and will serve if elected to office. Such

nominations must be filed with the secretary of the credit union at

least 40 days prior to the annual meeting and the secretary will ensure

that nominations by petition along with those of the nominating

committee are posted in a conspicuous place in each credit union office

at least 35 days prior to the annual meeting.

Section 2. All persons nominated by either the nominating committee

or by petition must be placed before the members. When nominations are

closed, tellers are appointed by the chair, ballots are distributed,

the vote is taken and tallied by the tellers, and the results

announced. All elections are determined by plurality vote and will be

by ballot except where there is only one nominee for each position to

be filled.

Nominations cannot be made from the floor unless insufficient

nominations have been made by the nominating committee or by petition

to provide for one nominee for each position to be filled or

circumstances prevent the candidacy of the one nominee for a position

to be filled. Only those positions without a nominee are subject to

nominations from the floor. In the event nominations from the floor are

permitted and result in more than one nominee for a position to be

filled, when nominations have been closed, tellers are appointed by the

chair, ballots are distributed, the vote is taken and tallied by the

tellers, and the results announced. When only one member is nominated

for each position to be filled, the chair may take a voice vote or

declare each nominee elected by general consent or acclamation at the

annual meeting.

{time} Option A3--Election by Ballot Boxes or Voting Machine;

Nominating Committee and Nomination by Petition

Section 1. At least 120 days prior to each annual meeting, the

chair will appoint a nominating committee of not fewer than three

members. It is the duty of the nominating committee to nominate at

least one member for each vacancy, including any unexpired term

vacancy, for which elections are being held, and to determine that the

members nominated are agreeable to the placing of their names in

nomination and will accept office if elected. The nominating committee

files its nominations with the secretary of the credit union at least

90 days prior to the annual meeting, and the secretary notifies in

writing all members eligible to vote at least 75 days prior to the

annual meeting that nominations for vacancies may also be made by

petition signed by 1% of the members with a minimum of 20 and a maximum

of 500.

The written notice must indicate that the election will not be

conducted by ballot and there will be no nominations from the floor

when there is only one nominee for each position to be filled. A brief

statement of qualifications and biographical data in a form approved by

the board of directors will be included for each nominee submitted by

the nominating committee with the written notice to all eligible

members. Each nominee by petition must submit a similar statement of

qualifications and biographical data with the petition. The written

notice must state the closing date for receiving nominations by

petition. In all cases, the period for receiving nominations by

petition must extend at least 30 days from the date of the petition

requirement and the list of nominating committee's nominees are mailed

to all members. To be effective, such nominations must be accompanied

by a signed certificate from the nominee or nominees stating that they

are agreeable to nomination and will serve if elected to office. Such

nominations must be filed with the secretary of the credit union at

least 40 days prior to the annual meeting and the secretary will ensure

that nominations by petition along with those of the nominating

committee are posted in a conspicuous place in each credit union office

at least 35 days prior to the annual meeting.

Section 2. 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 election tellers will be appointed by the board of

directors;

[[Page 55767]]

(b) If sufficient nominations are made by the nominating committee

or by petition to provide more than one nominee for any position to be

filled, the secretary, at least 10 days prior to the annual meeting,

will cause ballot boxes and printed ballots, or voting machines, to be

placed in conspicuous locations, as determined by the board of

directors with the names of the candidates posted near the boxes or

voting machines. The name of each candidate will be followed by a brief

statement of qualifications and biographical data in a form approved by

the board of directors;

(c) After the members have been given 24 hours to vote at

conspicuous locations as determined by the board of directors, the

ballot boxes or voting machines will be opened, the vote tallied by the

tellers, the tallies placed in the ballot boxes, and the ballot boxes

resealed. The tellers are responsible at all times for the ballot boxes

or voting machines and the integrity of the vote. A record must be kept

of all persons voting and the tellers must assure themselves that each

person so voting is entitled to vote; and

(d) The ballot boxes will be taken to the annual meeting by the

tellers. At the annual meeting, printed ballots will be distributed to

those in attendance who have not voted and their votes will be

deposited in the ballot boxes placed by the tellers, before the

beginning of the meeting, in conspicuous locations with the names of

the candidates posted near them. After such members have been given an

opportunity to vote at the annual meeting, balloting will be closed,

the ballot boxes opened, the vote tallied by the tellers and added to

the previous count, and the chair will announce the result of the vote.

{time} Option A4--Election by Electronic Device (Including But Not

Limited to Telephone and Electronic Mail) or Mail Ballot;

Nominating Committee and Nominations by Petition

Section 1. At least 120 days prior to each annual meeting, the

chair will appoint a nominating committee of not fewer than three

members. It is the duty of the nominating committee to nominate at

least one member for each vacancy, including any unexpired term

vacancy, for which elections are being held, and to determine that the

members nominated are agreeable to the placing of their names in

nomination and will accept office if elected. The nominating committee

files its nominations with the secretary of the credit union at least

90 days prior to the annual meeting, and the secretary notifies in

writing all members eligible to vote at least 75 days prior to the

annual meeting that nominations for vacancies may also be made by

petition signed by 1% of the members with a minimum of 20 and a maximum

of 500.

The written notice must indicate that the election will not be

conducted by ballot and there will be no nominations from the floor

when there is only one nominee for each position to be filled. A brief

statement of qualifications and biographical data in a form approved by

the board of directors will be included for each nominee submitted by

the nominating committee with the written notice to all eligible

members. Each nominee by petition must submit a similar statement of

qualifications and biographical data with the petition. The written

notice must state the closing date for receiving nominations by

petition. In all cases, the period for receiving nominations by

petition must extend at least 30 days from the date of the petition

requirement and the list of nominating committee's nominees are mailed

to all members. To be effective, such nominations must be accompanied

by a signed certificate from the nominee or nominees stating that they

are agreeable to nomination and will serve if elected to office. Such

nominations must be filed with the secretary of the credit union at

least 40 days prior to the annual meeting and the secretary will ensure

that nominations by petition along with those of the nominating

committee are posted in a conspicuous place in each credit union office

at least 35 days prior to the annual meeting.

Section 2. All elections will be by electronic device or mail

ballot, subject to the following conditions:

(a) The election tellers will be appointed by the board of

directors;

(b) If sufficient nominations are made by the nominating committee

or by petition to provide more than one nominee for any position to be

filled, the secretary, at least 30 days prior to the annual meeting,

will cause either a printed ballot or notice of ballot to be mailed to

all members eligible to vote;

(c) If the credit union is conducting its elections electronically,

the secretary will cause the following materials to be mailed to each

eligible voter 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.

(2) One instruction sheet stating specific instructions for the

electronic election procedure, including how to access and use the

system, and the period of time in which votes will be taken. The

instruction will state that members without the requisite electronic

device necessary to vote on the system may vote by mail ballot upon

written or telephone request and specify the date the request must be

received by the credit union.

(3) It is the duty of the tellers of election to verify, or cause

to be verified the name of the voter and the credit union account

number as they are registered in the electronic balloting system. It is

the duty of the teller to test the integrity of the balloting system at

regular intervals during the election period.

(4) Ballots must be received no later than midnight 5 calendar days

prior to the annual meeting.

(5) Voting will be closed at the midnight deadline specified in

subsection (4) hereof and the vote will be tallied by the tellers. The

result must be verified at the annual meeting and the chair will make

the result of the vote public at the annual meeting.

(6) In the event of malfunction of the electronic balloting system,

the board of directors may in its discretion order elections be held by

mail ballot only. Such mail ballots must conform to section 2(d) of

this Article and must be mailed to all eligible members 30 days prior

to the annual meeting. The board may make reasonable adjustments to the

voting time frames above, or postpone the annual meeting when

necessary, to complete the elections prior to the annual meeting.

(d) If the credit union is conducting its election by mail ballot,

the secretary will cause the following materials to be mailed to each

member and the following procedures will be followed:

(1) One ballot, clearly identified as such, on which the names of

the candidates for the board of directors and the candidates for other

separately identified offices or committees are printed in order as

determined by the draw of lots. The name of each candidate will be

followed by a brief statement of qualifications and biographical data

in a form approved by the board of directors;

(2) One ballot envelope clearly marked with instructions that the

completed ballot must be placed in that envelope and sealed;

(3) One identification form to be completed so as to include the

name, address, signature and credit union account number of the voter;

(4) One mailing envelope in which the voter, pursuant to

instructions provided with the mailing envelope,

[[Page 55768]]

must insert the sealed ballot envelope and the identification form, and

which must have postage prepaid and be preaddressed for return to the

tellers;

(5) When properly designed, one form can be printed that represents

a combined ballot 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 prior to the date of the annual meeting;

(8) Voting will be closed at the midnight deadline specified in

subsection (7) hereof and the vote will be tallied by the tellers. The

result will be verified at the annual meeting and the chair will make

the result of the vote public at the annual meeting.

Section 3. Nominations 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. Members cannot vote by proxy, but a member other than a

natural person may vote through an agent designated in writing for the

purpose. A trustee, or other person acting in a representative

capacity, is not, as such, entitled to vote.

Section 5. Irrespective of the number of shares, no member has more

than one vote.

Section 6. The names and addresses of members of the board, board

officers, executive committee, and members of the credit committee, if

applicable, and supervisory committees must be forwarded to the

Administration in accordance with the Act and regulations in the manner

as may be required by the Administration.

Section 7. The board may establish by resolution a minimum age, not

greater than 18 years of age, as a qualification for eligibility to

vote at meetings of the members, or to hold elective or appointive

office, or both.

The Credit Union may select the absentee ballot provision in

conjunction with the voting procedure it has selected. This may be done

by printing the credit union's bylaws with this provision or by

retaining this copy and checking the box.

{time} Section 8 The board of directors may authorize the use of

absentee ballots in conjunction with the other procedures authorized in

this article, subject to the following conditions:

(a) The election tellers will be appointed by the board of

directors;

(b) If sufficient nominations are made by the nominating committee

or by petition to provide more than one nominee for any position to be

filled, the secretary, at least 30 days prior to the annual meeting,

will cause printed ballots to be mailed to all members of the credit

union who are eligible to vote and who have submitted a written request

for an absentee ballot;

(c) The secretary will cause the following materials to be mailed

to each such eligible voter who has submitted a written request for an

absentee ballot:

(1) One ballot, clearly identified as such, on which the names of

the candidates for the board of directors and the candidates for other

separately identified offices or committees are printed in order as

determined by the draw of the lots. The name of each candidate will be

followed by a brief statement of qualifications and biographical data

in a form approved by the board of directors;

(2) One ballot envelope clearly marked with instructions that the

completed ballot must be placed in that envelope and sealed;

(3) One identification form to be completed so as to include the

name, address, signature and credit union account number of the voter;

(4) One mailing envelope in which the voter, pursuant to

instructions provided with the envelope, must insert the sealed ballot

envelope and the identification form, and which must have postage

prepaid and be preaddressed for return to the tellers;

(5) When properly designed, one form can be printed that represents

a combined ballot and identification form, and postage prepaid and

preaddressed return envelope;

(d) It is the duty of the tellers of election 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 pursuant to subsection (b)

hereof, must be received by the tellers no later than midnight 5 days

prior to the date of the annual meeting; and

(f) After the expiration of the period of time specified in the

preceding subsection (e), the voting by absentee ballot will be closed

and absentee ballots deposited in the ballot boxes to be taken to the

annual meeting or included in a precount in accordance with procedures

specified in Article V, Section 2.

Article VI. Board of Directors

Section 1. The board consists of __________ members, all of whom

must be members of this credit union. The number of directors may be

changed to an odd number not fewer than 5 nor more than 15 by

resolution of the board. No reduction in the number of directors may be

made unless corresponding vacancies exist as a result of deaths,

resignations, expiration of terms of office, or other actions provided

by these bylaws. A copy of the resolution of the board covering any

increase or decrease in the number of directors must be filed with the

official copy of the bylaws of this credit union.

Section 2. __________ (Fill in the number) directors or committee

members may be a paid employee of the credit union. __________ (Fill in

the number) immediate family members of a director or committee member

may be a paid employee of the credit union. In no case may employees

and family members constitute a majority of the board. The board may

appoint a management official who __________ (may or may not) be a

member of the board and one or more assistant management officials who

__________ (may or may not) be a member of the board. If the management

official or assistant management official is permitted to serve on the

board, he or she may not serve as the chair.

Section 3. Regular terms of office for directors must be for

periods of either 2 or 3 years as the board determines: provided,

however, that all regular terms must be for the same number of years

and until the election and qualification of successors. The regular

terms must be fixed at the beginning, or upon any increase or decrease

in the number of directors, that approximately an equal number of

regular terms must expire at each annual meeting.

[[Page 55769]]

Section 4. Any vacancy on the board, credit committee, if

applicable, or supervisory committee will be filled within a reasonable

time by vote of a majority of the directors then holding office.

Directors and credit committee members so appointed will hold office

only until the next annual meeting, at which any unexpired terms will

be filled by vote of the members, and until the qualification of their

successors. Members of the supervisory committee so appointed will hold

office until the first regular meeting of the board following the next

annual meeting of members, at which the regular term expires, and until

the appointment and qualification of their successors.

Section 5. A regular meeting of the board must be held each month

at the time and place fixed by resolution of the board. One regular

meeting each calendar 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 such

manner as the board may from time to time by resolution prescribe.

Special meetings may be conducted using audio or video teleconference

methods.

Section 6. The board has the general direction and control of the

affairs of this credit union and is responsible for performing all the

duties customarily performed by boards of directors. This includes but

is not limited to the following:

(a) Directing the affairs of the credit union in accordance with

the Act, these bylaws, the rules and regulations and sound business

practices.

(b) Establishing programs to achieve the purposes of this credit

union as stated in Article 1, section 2, of these bylaws.

(c) Establishing a loan collection program and authorizing the

chargeoff of uncollectible loans.

(d) Determining that all persons appointed or elected by this

credit union to any position requiring the receipt, payment or custody

of money or other property of this credit union, or in its custody or

control as collateral or otherwise, are properly bonded in accordance

with the Act and regulations.

(e) Performing additional acts and exercising additional powers as

may be required or authorized by applicable law.

If the credit union has an elected credit committee, you do not

need to check a box. If the credit union has no credit committee check

Option 1 and if it has an appointed credit committee check Option 2.

{time} Option 1--No Credit Committee

(f) Reviewing denied loan applications of members who file written

requests for such review.

(g) Appointing one or more loan officers and delegating to those

officers the power to approve or disapprove loans, lines of credit or

advances from lines of credit.

(h) In its discretion, appointing a loan review committee to review

loan denials and delegating to the committee the power to overturn

denials of loan applications. The committee will function as a mid-

level appeal committee for the board. Any denial of a loan by the

committee must be reviewed by the board upon written request of the

member. The committee must consist of three members and the regular

term of office of the committee member will be for two years. Not more

than one member of the committee may be appointed as a loan officer.

{time} Option 2--Appointed Credit Committee.

(f) Appointing an odd number of credit committee members as

provided in Article VIII of these bylaws.

Section 7. A majority of the number of directors, including any

vacant positions, constitutes a quorum for the transaction of business

at any meeting; but fewer than a quorum may adjourn from time to time

until a quorum is in attendance.

Section 8. If a director or a credit committee member, if

applicable, fails to attend regular meetings of the board or credit

committee, respectively, for 3 consecutive months, or 4 meetings within

a calendar year, or otherwise fails to perform any of the duties 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.

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. Any member of the supervisory committee may be suspended

by a majority vote of the board of directors. The members of this

credit union will decide, at a special meeting held not fewer than 7

nor more than 14 days after any such suspension, whether the suspended

committee member will be removed from or restored to the supervisory

committee.

Article VII. Board Officers, Management Officials and Executive

Committee

Section 1. The board officers of this credit union are comprised of

a chair, one or more vice chairs, a financial officer, and a secretary,

all of whom are elected by the board and from their number. The board

determines the title and rank of each board officer and records them in

the addendum to this Article. One board officer, the ________________,

may be compensated for services as determined by the board. If more

than one vice chair is elected, the board determines their rank as

first vice chair, second vice chair, and so on. The offices of the

financial officer and secretary may be held by the same person. Unless

removed as provided in these bylaws, the board officers elected at the

first meeting of the board hold office until the first meeting of the

board following the first annual meeting of the members and until the

election and qualification of their respective successors.

Section 2. Board officers elected at the meeting of the board next

following the annual meeting of the members, which must be held not

later than 7 days after the annual meeting, hold office for a term of 1

year and until the election and qualification of their respective

successors: provided, however, that any person elected to fill a

vacancy caused by the death, resignation, or removal of an officer is

elected by the board to serve only for the unexpired term of such

officer and until a successor is duly elected and qualified.

Section 3. The chair presides at all meetings of the members and at

all meetings of the board, unless disqualified through suspension by

the supervisory committee. The chair also performs such other duties as

customarily appertain to the office of

[[Page 55770]]

the chair or as may be directed to perform by resolution of the board

not inconsistent with the Act and regulations and these bylaws.

Section 4. The board must approve all individuals who are

authorized to sign all notes of this credit union and all checks,

drafts and other orders for disbursement of credit union funds.

Section 5. The ranking vice chair has and may exercise all the

powers, authority, and duties of the chair during the chair's absence

or inability to act.

Section 6. The financial officer manages this credit union under

the control and direction of the board unless the board has appointed a

management official to act as general manager. Subject to such

limitations, controls and delegations as may be imposed by the board,

the financial officer will:

(a) Have custody of all funds, securities, valuable papers and

other assets of this credit union.

(b) Provide and maintain full and complete records of all the

assets and liabilities of this credit union in accordance with forms

and procedures prescribed in the Accounting Manual for Federal Credit

Unions or otherwise approved by the Administration.

(c) Within 20 days after the close of each month, ensure that a

financial statement showing the condition of this credit union as of

the end of the month, including a summary of delinquent loans is

prepared and submitted to the board and post a copy of such statement

in a conspicuous place in the office of the credit union where it will

remain until replaced by the financial statement for the next

succeeding month.

(d) Ensure that such financial and other reports as 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 such employees.

(f) Perform such other duties as customarily appertain to the

office of the financial officer or as may be directed to perform by

resolution of the board not inconsistent with the Act, regulations and

these bylaws.

The board may employ one or more assistant financial officers, none

of whom may also hold office as chair or vice chair, and may authorize

them, under the direction of the financial officer, to perform any of

the duties devolving on the financial officer, including the signing of

checks. When designated by the board, any assistant financial officer

may also act as financial officer during the financial officer's

temporary absence or temporary inability to act.

Section 7. The board may appoint a management official who is under

the direction and control of the board or of the financial officer as

determined by the board. The management official may be assigned any or

all of the responsibilities of the financial officer described in

section 6 of this article. The board will determine the title and rank

of each management official and record them in the addendum to this

article. The board may employ one or more assistant management

officials. The board may authorize assistant management officials under

the direction of the management official, to perform any of the duties

devolving on the management official, including the signing of checks.

When designated by the board, any assistant management official may

also act as management official during the management official's

temporary absence or temporary inability to act.

Section 8. The board employs, fixes the compensation, and

prescribes the duties of such employees as may in the discretion of the

board be necessary, and has the power to remove such employees, unless

it has delegated these powers to the financial officer or management

official. Neither the board, the financial officer, nor the management

official has the power or duty to employ, prescribe the duties of, or

remove necessary clerical and auditing assistance employed or utilized

by the supervisory committee and, if there is a credit committee, the

power or duty to employ, prescribe the duties of, or remove any loan

officer appointed by the credit committee.

Section 9. The secretary prepares and maintains full and correct

records of all meetings of the members and of the board, which records

will be prepared within 7 days after the respective meetings. The

secretary must promptly inform the Administration in writing of any

change in the address of the office of this credit union or the

location of its principal records. The secretary will give or cause to

be given, in the manner prescribed in these bylaws, proper notice of

all meetings of the members, and perform such other duties as may be

directed to perform by resolution of the board not inconsistent with

the Act, regulations and these bylaws. The board may employ one or more

assistant secretaries, none of whom may also hold office as chair, vice

chair, or financial officer, and may authorize them under direction of

the secretary to perform any of the duties devolving on the secretary.

Section 10. The board may appoint an executive committee of not

fewer than three directors to serve at its pleasure, to act for it with

respect to specifically delegated functions authorized by the Act and

regulations. The board may also authorize such executive committee or a

membership officer(s) appointed by the board from the membership other

than a board member paid as an officer, the financial officer, any

assistant to the paid officer of the board or to the financial officer

or any loan officer, to serve at its pleasure to approve applications

for membership under such conditions as the board and these bylaws may

prescribe. No executive committee member or membership officer may be

compensated as such.

Section 11. The board may appoint an investment committee composed

of not less than two, to serve at its pleasure to have charge of making

investments under rules and procedures established by the board. No

member of the investment committee may be compensated as such.

Addendum: The board 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.

{time} Option 1--Article VIII. Credit Committee

Section 1. The credit committee consists of __________ members. All

the members of the credit committee must be members of this credit

union. The number of members of the credit committee must be an odd

number and may be changed to not fewer than 3 nor more than 7 by

resolution of the board. No reduction in the number of members may be

made unless corresponding vacancies exist as a result of deaths,

resignations, expiration of terms of office, or other actions provided

by these bylaws. A copy of the resolution of the board covering any

increase or decrease in the number of committee members must be filed

with the official copy of the bylaws of this credit union.

Section 2. Regular terms of office for elected credit committee

members are for periods of either 2 or 3 years as the board 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.

[[Page 55771]]

Regular terms of office for appointed credit committee members are

for periods as determined by the board and as noted in the board's

minutes.

Section 3. The credit committee chooses from their number a chair

and a secretary. The secretary of the committee prepares and maintains

full and correct records of all actions taken by it, and such records

must be prepared within 3 days after the action. The offices of the

chair and secretary may be held by the same person.

Section 4. The credit committee may, by majority vote of its

members, appoint one or more loan officers to serve at its pleasure,

and delegate to 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 such record becomes a part of the records of the

committee. All applications or requests not approved by a loan officer

must be acted upon by the committee. No individual may disburse funds

of this credit union for any application or share withdrawal which the

individual has approved as a loan officer.

Section 5. The credit committee holds meetings as the business of

this credit union may require, and not less frequently than once a

month. Notice of such meetings will be given to members of the

committee in a manner as the committee may from time to time, by

resolution, prescribe.

Section 6. The credit committee or loan officer must for each loan

or line of credit 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. No loan or line of credit may be made unless approved by

the committee or a loan officer in accordance with applicable law and

regulations.

Section 8. Subject to the limits imposed by applicable law and

regulations, these bylaws, and the general policies of the board, the

credit committee, or a loan officer, 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.

{time} Option 2--Article VIII. Loan Officers (No Credit Committee)

Section 1. 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 such 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. The loan officer must for each loan or line of credit

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. No loan or line of credit may be made unless approved by

a loan officer in accordance with applicable law and regulations.

Section 4. Subject to the limits imposed by applicable law and

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 smaller applications if the need and credit

factors are nearly equal.

Article IX. Supervisory Committee

Section 1. The supervisory committee is appointed by the board from

among the members of this credit union, one of whom may be a director

other than the financial officer. The board determines the number of

members on the committee, which may not be fewer than 3 nor more than

5. No member of the credit committee, if applicable, or any employee of

this credit union may be appointed to the committee. Regular terms of

committee members are for periods of 1, 2, or 3 years as the board

determines: provided, however, that all regular terms are for the same

number of years and until the appointment and qualification of

successors. The regular terms are fixed at the beginning, or upon any

increase or decrease in the number of committee members, so that

approximately an equal number of regular terms expires at each annual

meeting.

Section 2. The supervisory committee members choose from among

their number a chair and a secretary. The secretary of the supervisory

committee prepares, maintains, and has custody of full and correct

records of all actions taken by it. The offices of chair and secretary

may be held by the same person.

Section 3. The supervisory committee makes, or causes to be made,

such audits, and prepares and submits such written reports, as are

required by the Act and regulations. The committee may employ and use

such clerical and auditing assistance as may be required to carry out

its responsibilities prescribed by this article, and may request the

board to provide compensation for such assistance. It will prepare and

forward to the Administration such reports as may be required.

Section 4. The supervisory committee will cause the verification of

the accounts of all members with the records of the financial officer

from time to time and not less frequently than as required by the Act

and regulations. The committee must maintain a record of such

verification.

Section 5. By unanimous vote, the supervisory committee may suspend

until the next meeting of the members any director, board officer, or

member of the credit committee. In the event of any such suspension,

the supervisory committee must call a special meeting of the members to

act on the suspension, which meeting must be held not fewer than 7 nor

more than 14 days after the suspension. The chair of the committee acts

as chair of the meeting unless the members select another person to act

as chair.

Section 6. By the affirmative vote of a majority of its members,

the supervisory committee may call a special meeting of the members to

consider any violation of the provisions of the Act, the regulations,

or of the charter or the bylaws of this credit union, or to consider

any practice of this credit union which the committee deems to be

unsafe or unauthorized.

[[Page 55772]]

Article X. Organization Meeting

Section 1. At the time application is made for a federal credit

union charter, the subscribers to the organization certificate must

meet for the purpose of electing a board of directors and a credit

committee, if applicable. Failure to commence operations within 60 days

following receipt of the approved organization certificate is cause for

revocation of the charter unless a request for an extension of time has

been submitted to and approved by the Regional Director.

Section 2. The subcribers elect a chair and a secretary for the

meeting. The subscribers then elect from their number, or from those

eligible to become members of this credit union, a board of directors

and a credit committee, if applicable, all to hold office until the

first annual meeting of the members and until the election and

qualification of their respective successors. If not already a member,

every person elected under this section or appointed under section 3 of

this article, must qualify within 30 days by becoming a member. If any

person elected as a director or committee member or appointed as a

supervisory committee member does not qualify as a member within 30

days of such an election or appointment, the office will automatically

become vacant and be filled by the board.

Section 3. Promptly following the elections held under the

provisions of section 2 of this article, the board must meet and elect

the board officers who will hold office until the first meeting of the

board of directors following the first annual meeting of the members

and until the election and qualification of their respective

successors. The board also appoints a supervisory committee at this

meeting as provided in Article IX, section 1, of these bylaws and a

credit committee, if applicable. The members so appointed hold office

until the first regular meeting of the board following the first annual

meeting of the members and until the appointment and qualification of

their respective successors.

Article XI. Loans and Lines of Credit to Members

Section 1. Loans may only be made to members and for provident or

productive purposes in accordance with applicable law and regulations.

Section 2. Any member whose loan is delinquent may be required to

pay a late charge as determined by the board of directors.

Article XII. Dividends

Section 1. The board establishes dividend periods and declares

dividends as permitted by the Act and applicable regulations.

Article XIII. Deposit of Funds

Section 1. All funds of this credit union, except for petty cash

and cash change funds, must be deposited in such qualified depository

or depositories from among those authorized by applicable law and

regulations as the board may from time to time by resolution designate;

and must be so deposited not later than the __________ (fill in number)

banking day after their receipt: provided, however, that receipts in

the aggregate of $__________ (fill in number) or less may be held as

long as 1 week before they are deposited.

Article XIV. Expulsion and Withdrawal

Section 1. A member may be expelled only in the manner provided by

the Act. Expulsion or withdrawal will not operate to relieve a member

of any liability to this credit union. All amounts paid in on shares by

expelled or withdrawing members, prior to their expulsion or

withdrawal, will be paid to them in the order of their withdrawal or

expulsion, but only as funds become available and only after deducting

any amounts due to this credit union.

Article XV. Minors

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

Article XVI. General

Section 1. All power, authority, duties, and functions of the

members, directors, officers, and employees of this credit union,

pursuant to the provisions of these bylaws, must be exercised in strict

conformity with the provisions of applicable law and regulations, and

of the charter and the bylaws of this credit union.

Section 2. The officers, directors, members of committees and

employees of this credit union must hold in confidence all transactions

of this credit union with its members and all information respecting

their personal affairs, except when permitted by state or federal law.

Section 3. 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.

Section 4. No director, committee member, officer, agent, or

employee of this credit union may participate in any manner, directly

or indirectly, in the deliberation upon or the determination of any

question affecting his 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, such director must withdraw from such deliberation or

determination; and in such event the remaining qualified directors

present at the meeting, if constituting a quorum with the disqualified

director or directors, may exercise with respect to this matter, by

majority vote, all the powers of the board. In the event of the

disqualification of any member of the credit committee, if applicable,

or the supervisory committee, such committee member must withdraw from

such deliberation or determination.

Section 5. Copies of the organization certificate of this credit

union, its bylaws and any amendments thereof, and any special

authorizations by the Administration must be preserved in a place of

safekeeping. 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 such meetings.

Section 6. All books of account and other records of this credit

union must be available at all times to the directors and committee

members of this credit union. The charter and bylaws of this credit

union must be made available for inspection by any member and, if the

member requests a copy, it will be provided for a reasonable fee.

Section 7. Members must keep the credit union informed of their

current address.

Section 8. (a) The credit union may elect to indemnify to the

extent authorized by (check one)

[ ] law of the state of __________:

[ ] Model Business Corporation Act:

the following individuals from any liability asserted against them and

expenses reasonably incurred by them in connection with judicial or

administrative proceedings to which

[[Page 55773]]

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. 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. When used in these bylaws the terms:

(a) ``Act'' means the Federal Credit Union Act, as amended.

(b) ``Administration'' means the National Credit Union

Administration.

(c) ``Board'' means board of directors of the federal credit union.

(d) ``NCUA Board'' means the Board of the National Credit Union

Administration.

(e) ``Regulation'' or ``regulations'' means rules and regulations

issued by the NCUA Board.

(f) ``Applicable law and regulations'' means the Federal Credit

Union Act and rules and regulations issued thereunder or other

applicable federal and state statutes and rules and regulations issued

thereunder as the context indicates (such as The Higher Education Act

of 1965).

(g) ``Paid in and unimpaired capital,'' as of a given date, means

the balance of the paid-in share accounts as of such date, less any

losses that may have been incurred for which there is no reserve or

which have not been charged against undivided earnings.

(h) ``Surplus,'' as of a given date, means the credit balance of

the undivided earnings account on such date, after all losses have been

provided for and net earnings or net losses have been added thereto or

deducted therefrom, as the case may be. Reserves are not considered as

a part of the surplus.

(i) ``Share'' or ``shares'' means all classes of shares and share

certificates that may be held in accordance with applicable law and

regulations.

Section 2. If included in the definition of the field of membership

in the organization certificate charter of this credit union, the term

or expressions:

(a) ``Organizations of such persons'' means an organization or

organizations composed exclusively of persons who are within the field

of membership of this credit union.

(b) ``Immediate family member'' eligibility is limited to spouse,

child, sibling, parent, grandparent or grandchild. For the purposes of

this definition, immediate family member includes stepparents,

stepchildren, stepsiblings, and adoptive relationships. A credit union

may adopt a more restrictive definition of this term by deleting this

definition from its bylaws and replacing it with its own more

restrictive definition.

(c) ``Household'' is defined as persons living in the same

residence maintaining a single economic unit. A credit union may adopt

a more restrictive definition of this term by deleting this definition

from its bylaws and replacing it with its own more restrictive

definition.

[FR Doc. 99-26716 Filed 10-13-99; 8:45 am]

BILLING CODE 7535-01-P