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301.21

Payment or amortization of loans. 301.22 Selling checks and money orders. 301.23 Cashing checks and money orders. 301.24 Refund of interest.

301.25 Insured loans to student members in eligible higher education or vocation institutions.

301.26 Purchase of accounting services. 301.27 Participation in accounting service center.

301.28 Joint operations and activities.

AUTHORITY: The provisions of this Part 301 issued under sec. 21, 73 Stat. 635, 12 U.S.C. 1766; § 301.21 issued under sec. 8(5), 73 Stat. 630; 12 U.S.C. 1757(5); §§ 301.22 and 301.23 issued under sec. 8(12), 73 Stat. 631; 12 U.S.C. 1757(12); § 301.24 issued under secs. 14, 21, 73 Stat. 632, 635; 12 U.S.C. 1761b, 1766; § 301.25 issued under secs. 434, 16, 79 Stat. 1247, 1048; 20 U.S.C. 1084, 994.

SOURCE: The provisions of this Part 301 appear at 25 F.R. 5286, June 14, 1960, unless otherwise noted.

§ 301.1 Organization of Federal credit unions.

(a) Persons desiring to form a Federal credit union shall submit, in duplicate, on forms prescribed by the Bureau, a proposed organization certificate (Form FCU 503B). The certificate shall be subscribed to before an officer competent to administer oaths by not less than 7 natural persons who have a common bond of occupation, or association, or are within a well-defined neighborhood, community, or rural district, and shall specifically state:

(1) The proposed name of the association.

(2) The location of the proposed Federal credit union and the territory in which it will operate.

(3) The names and addresses of the subscribers to the certificate and the number of shares subscribed by each. (4) The par value of the shares, which shall be $5 each.

(5) The proposed field of membership, specified in detail.

(6) The term of the existence of the corporation, which may be perpetual.

(7) The fact that the certificate is made to enable such persons to avail themselves of the advantages of the Federal Credit Union Act, as amended. Copies of the form of organization certificate may be obtained from the Washington Office of the Bureau or from any Regional Office.

(b) The proposed organization certificates shall be submitted to the Regional Representative together with a check or money order payable to the Bureau of Federal Credit Unions in the amount of $25.00 in payment of the investigation fee of $20.00 and charter fee of $5.00. The Regional Representative will investigate and make recommendations as to whether the proposed organization certificate conforms to the Act; as to the general character and fitness of the subscribers thereto; and as to the economic advisability of establishing the proposed Federal credit union. The report and recommendation of the Regional Representative shall be forwarded to the Bureau in Washington, D.C. The Director shall consider the proposed organization certificate and the recommendations of the Regional Representative and shall approve or disapprove the proposed organization certificate. The organization certificate, if approved, shall be the charter of the Federal credit union. If the organization certificate is disapproved, the incorporators shall be notified of the basis for such action and the charter fee of $5.00 shall be returned to them. Under no circumstances shall the investigation fee of $20.00 be returned.

§ 301.3 Standard form of bylaws.

(a) Proposed bylaws, in form and content approved by the Director, shall be submitted by the incorporators to the Director for his approval at the time of submitting an organization certificate to the Regional Representative.

(b) Specimen copies of the standard form of bylaws (FCU 503-C) may be obtained from the Regional or Washington Offices of the Bureau.

§ 301.4 Amendment of bylaws and charters.

Amendments to the bylaws of a Federal credit union may be adopted and amendments to the charter requested as provided in the bylaws. No amendment of the bylaws or of the charter shall become effective, however, until approved in writing by the Director.

§ 301.5 Other applications.

(a) Except as otherwise provided by rule or regulation of the Bureau all applications, requests, and submittals regarding Federal credit unions, for which no form of application has been prescribed by the Bureau, shall be in writing, signed by the applicant or his duly • authorized agent, and shall contain a statement of the action requested, the reasons and facts relied upon as the · basis for such requested action, and the applicant's interest in the matter. The application, request, or submittal shall be addressed to the Regional Representative or to the Bureau of Federal Credit Unions in Washington, D.C. The applicant shall furnish such other pertinent information as may be required by the : Director.

(b) Unless otherwise provided in these regulations, all applications regarding Federal credit union matters shall be investigated and reviewed by the Regional Representative. The report and recommendations of the Regional Representa

Total assets

$500,000 or less....

Over $500,000 and not over $1,000,000

Over $1,000,000 and not over $2,000,000

tive as to the application shall be transmitted to the Bureau in Washington, D.C. Notice of the action of the Director shall be promptly transmitted to the applicant together with a statement as to the basis for the action.

§ 301.6 Fee for supervision. (a) Extent of fee. (1) Not later than January 31 of each calendar year, each Federal credit union shall pay to the Bureau, for the preceding calendar year, a supervision fee in accordance with the graduated scale set forth in subparagraph (2) of this paragraph on the basis of assets as of December 31 of such preceding year, but such fee shall in no event be less than $10.00: Provided, however, That no such annual fee shall be payable by such an organization with respect to the year in which its charter is issued or the year in which final distribution is made in liquidation of the credit union or the charter is otherwise canceled.

(2) Scale of supervision fees:

30 cents per $1,000.

Maximum fee

$150, plus 25 cents per $1,000 in excess of $500,000 $275, plus 20 cents per $1,000 in excess o $1,000,000.

Over $2,000,000 and not over $5,000,000 $475, plus 15 cents per $1,000 in excess of

Over $5,000,000--

$2,000,000.

#925, plus 10 cents per $1,000 in excess of $5,000,000.

Provided, however, That no fee shall be payable with respect to the last fractional part of $1,000 of total assets.

(3) Definition of assets:

(1) The term, "assets," as used in this section shall mean all items properly coming within the classification of asset accounts as stated in the Accounting Manual for Federal Credit Unions, FCU544, as revised.

(ii) The term, "total assets," as used in this section shall mean the sum of all E assets.

(b) Supervision fee certificate. The treasurer of each Federal credit union shall certify as to the correctness of the Supervision Fee Certificate, Form FCU511 Rev. He shall send, not later than January 31 of each year, the original Supervision Fee Certificate and as many copies as the Bureau may request, together with a check in payment of the supervision fee stated on the Supervision

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ment of the supervision fee(s). The decision of the employee of the Bureau as to the amount due shall be final and conclusive: Provided, That the Federal credit union may make the supplementary payment subject to the results of an appeal from the employee's decision to the Regional Representative: Provided further, That the Federal credit union shall file such appeal within 30 days from the date of the employee's decision. If the audit discloses that an overpayment has been made, the employee of the Bureau is authorized to advise and assist the Federal credit union to prepare and file a request for a refund of the amount of overpayment. Such request should be addressed to the Regional Representative.

§ 301.7 Fee for examination.

(a) Each Federal credit union shall pay the Bureau a fee for each examination in accordance with the schedule of fees fixed from time to time by the Director.

(b) In establishing such fees, the Director shall consider the anticipated aggregate cost of the examination program including supervision, salaries, travel and all other items which affect the cost of the examination program.

(c) The fee for examinations of Federal credit unions with assets of less than $25,000 shall not exceed 50 cents per hundred dollars of assets as of the effective date of the examination. The Director may establish a minimum fee for examination which shall not exceed $25.00. The Director may waive the fee for an examination within twelve months after the date a charter is approved if the payment would, in the opinion of the Director, cause a hardship.

(d) Each Federal credit union shall be notified at least 30 days prior to the effective date of any schedule of fees fixed pursuant to this section. Upon receipt of such notification interested persons may submit written data, views, or arguments for consideration by the Director, and the Director may, after consideration, make such revisions in the proposed schedule or such change in the effective date as he deems appropriate. Fach Federal credit union shall be notified of such revision or change not less than 15 days prior to the final effective date.

§ 301.8 Fee for examination of Federal credit unions in liquidation.

Federal credit unions in liquidation may be examined prior to or following completion of liquidation. A fee assessed in accordance with the most recent schedule of examination fees prescribed by the Director as provided in § 301.7 shall be paid for each such examination. § 301.9 Loans by Federal credit unions

to other credit unions.

On authorization of its board of directors, or a duly appointed executive committee, a Federal credit union may invest its funds in loans to other Federal credit unions or to State chartered credit unions in the total amount not exceeding 25 percent of its paid-in and unimpaired capital and surplus. The terms of such loans shall not exceed one year and the rate of interest shall not exceed 6 percent per annum. Prior to making the loan, the Federal credit union shall require the borrowing credit union to furnish the following:

(a) A current financial and statistica! report;

(b) A copy of the latest supervisory committee audit report;

(c) A certified copy of the resolution of the board of directors or the executive committee authorizing such borrowing: and

(d) A certificate from the secretary of the credit union that the persons negotiating the loan and executing the note are officers of the credit union and are authorized to act in its behalf, and that such borrowing does not exceed the maximum borrowing power of the borrowing credit union.

§ 301.10 Establishment of cash funds for making change.

The board of directors of a Federal credit union may establish a permanent eash fund in an amount not to exceed $500 for the purpose of making change and cashing checks. On all cash funds established in excess of $500, except temporary funds which shall not be retained longer than 3 banking days, the board of directors shall obtain prior written permission of the Regional Representative.

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election or appointment of officials, a report setting forth the names and addresses of its officials. Copies of the standard form of report prescribed by the Bureau (Form FCU-2) may be obtained from the Regional Representative or from the Bureau in Washington, D.C. § 301.12 Supervisory committee audits.

The minimum audits to be performed by the supervisory committee of every Federal credit union each calendar year shall be one comprehensive annual audit and three quarterly audits. Reports of such audits shall be promptly made to the board of directors of the Federal credit union on Form FCU-701 for the comprehensive annual audit and on Form FCU-702 for the quarterly audit. A copy of each comprehensive annual audit report shall be filed by the supervisory committee with the Regional Representative no later than 15 days after completion of the annual audit. [27 F.R. 6980, July 24, 1962]

§ 301.13 Financial and statistical and other reports.

(a) Each operating Federal credit union shall file in the Regional Office on or before January 15 of each year an annual Financial and Statistical report on Form FCU-521 as of the previous December 31. Form FCU-521 is furnished to all Federal credit unions by the Bureau, and copies may be obtained from any Regional Office.

(b) When it is deemed necessary or desirable and upon written notice from the Director, Federal credit unions shall file, in accordance with instructions contained in such notice as to time and place, such Financial and Statistical or other reports as of such date or dates as shall be prescribed in such notice.

(c) When it is deemed necessary because of the condition of the Federal credit union and upon written notice from the Director or Regional Representative, the Federal credit union shall file, in accordance with the instructions contained in such notice as to time and place, Financial and Statistical reports including reports on Form FCU-109, as of such date or dates as shall be prescribed in such notice.

§ 301.14 Accounting Manual for Federal Credit Unions.

The Bureau has promulgated for use by Federal credit unions the Accounting

Manual for Federal Credit Unions (Form FCU-544). A copy of this manual is furnished to each Federal credit union at the time the approved organization certificate is delivered to the incorporators by the Bureau. This manual specifies the type of records to be maintained and the standard accounting forms to be used by Federal credit unions. A Federal credit union may develop a substitute for any of the standard accounting forms and place it in use without advance approval of the Bureau: Provided, It meets the applicable criteria set forth in the Accounting Manual. [30 F.R. 9094, July 21, 1965] § 301.15

Credit Manual.

The Bureau has promulgated a manual of instructions for credit committees, loan officers, and other officials and employees of Federal credit unions (Form FCU-548). A copy of this manual is furnished to each Federal credit union at the time the approved organization certificate is delivered to the incorporators by the Bureau.

§ 301.16 Supervisory Committee Manual for Federal Credit Unions.

The Bureau has promulgated a manual of procedure for supervisory committees of Federal credit unions (Form FCU-545). A copy of this manual is furnished to each Federal credit union at the time the approved organization certificate is delivered to the incorporators by the Bureau.

§ 301.17 Federal Credit Union Handbook.

The Bureau has promulgated a manual of instructions for directors and officers of Federal credit unions (Form FCU-543). A copy of this handbook is furnished to each Federal credit union at the time the approved organization certificate is delivered to the incorporators by the Bureau.

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§ 301.19 Retirement benefits for employees of Federal credit unions.

Federal credit unions may make provision for reasonable retirement benefits for employees and for officers who are compensated in conformance with the Act and the bylaws, but no Federal credit union shall undertake to administer its own retirement plan.

§ 301.20

Surety bond coverage for Federal credit unions.

(a) The board of directors of each Federal credit union shall at least semiannually, carefully review the bond coverage in force in order to ascertain its adequacy in relation to the exposure and to the minimum requirements fixed from time to time by the Director.

(b) All surety bonds must provide for faithful-performance-of-duty coverage for any officer or employee while performing any of the duties of the treasurer as prescribed in the Act, the bylaws, or rules and regulations of the Bureau.

(c) No form of surety bond shall be used except as is approved by the Director. Credit Union Blanket Bond, Standard Form No. 23 of the Surety Association of America (revised to May 1950), plus Faithful Performance Rider (for use with this form to broaden Insuring Clause (A), Revised to May 1950) shall be considered as the minimum coverage required and is hereby approved. Credit Union Blanket Bond-BFCU Optional Form No. 576 plus Faithful Performance of Duty Rider-Form BFCU 576F is also approved. No other bond form may be used unless specifically approved in writing by the Director. No form of surety bond is approved for use by a Federal credit union having its office outside of the continental United States unless by the terms of the bond or by an appropriate rider attached thereto the provisions of the bond are made applicable within the jurisdiction in which the office of such Federal credit union is located.

(d) All sureties writing Federal credit union bonds must hold a certificate of authority from the Secretary of the Treasury under the act of Congress approved July 30, 1947 (6 U.S.C., secs. 6-13) as an acceptable surety on Federal bonds in the State or jurisdiction concerned.

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1 $100,000 plus $50,000 for each additional million or fraction thereof of assets.

It shall be the duty of the board of directors of each Federal credit union to provide proper protection to meet any circumstance by obtaining adequate bond (and insurance) coverage in excess of the above minimum schedule.

(g) The Director may require additional coverage for any Federal credit union when, in his opinion, the surety bonds in force are insufficient to provide adequate surety coverage and it shall be the duty of the board of directors of the Federal credit union to obtain such additional coverage within thirty days after the date of written notice.

§ 301.21 Payment or amortization of loans.

(a) Within the limits of the Act and such further limits as may be imposed by the board of directors pursuant to the Act and the bylaws, the credit committee, or a duly appointed and authorized loan officer, of a Federal credit union, in arriving at the terms of payment or amortization of an approved loan to & member, shall take into account, among other factors deemed relevant, the source of funds and the regularity and frequency of receipt of funds which the

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