Federal Credit Union Governance (Ch. 1)

Question 1

Benefits of credit union membership

Answer 1

• Lower and fewer fees than other financial institutions
• Members exercise democratic control of the credit union by attending regular and special meetings, electing the board of directors and inspecting the federal credit union’s books and records
• Each member only has one vote regardless of the number of shares held, ensuring each member has a say in the overall direction of the credit union

Question 2

Basic structure of a federal credit union’s board of directors

Answer 2

• Board must consist of an odd number of 5-15 directors
• Board terms will be 2 or 3 years and must be the same for each office
• Vacancies are filled by a majority vote
• Board must hold regular meetings at least once a month
• At least one regular meeting each year must be held in person

Question 3

Main responsibilities of the Supervisory Committee

Answer 3

Acts as the watchdog of the federal credit union and conducts annual audits and verification of accounts.

• Reviews the performance of the credit union, its officials and employees, and make recommendations to the board for improvements that can be made
• Can employ certified public accountants and/or other independent qualified persons to assist in its audit, account verification and clerical duties
• If the full board of directors is removed simultaneously, the committee fills in until a special meeting is called to elect board members who will serve until the next annual meeting
• May suspend any director, board officer, or member of the credit committee until the next meeting of the members by unanimous vote
• Can call a special meeting to consider any violations of the FCU Act, regulations, the credit union’s charter and bylaws or to consider any acts it deems to be unsafe or unauthorized

Question 4

Reasonable expenses a director can submit for reimbursement

Answer 4

• Travel and lodging expenses incurred while attending FCU meetings or trainings
• Meals during travel or meetings
• Expenses related to providing a computer or cellphone, or reimbursing officials who use their own computer or cellphones

Question 5

Are credit unions required to fully adopt the standard bylaws each time NCUA provides updates? Can credit unions keep their own version?

Answer 5

• Federal credit unions may choose to adopt the new version in its entirety, adopt some of the new provisions, or adopt none of them
• Each federal credit union may have its own unique version of the bylaws

Question 6

What is the annual meeting process, including the notice requirements? How many members must be present to have a quorum?

Answer 6

• Written notice must be provided to the membership 30-75 days prior to the meeting
• Notices may be given in person, by mail, electronically to members who have elected to receive statements and notices electronically
• Must be placed in the federal credit union’s office and on the credit union’s website
• 15 members constitute a quorum

Question 7

What are the eligibility requirements to run for the board?

Answer 7

1. Must be a member of the credit union
2. Have no convictions of crimes of dishonesty or breach of trust
3. Must meet the age requirements

Question 8

What are the responsibilities of the board of directors?

Answer 8

• General responsibilities of the Board
− Set the general direction and control of the credit union
− Establish the strategic plan and adopt operating policies to implement that plan
• Board Meetings
− Meet once per month, including one in‐person meeting per year
− Special meetings can also be called by the Chair or a majority of the directors (by written request)
− Record and retain meeting minutes
• Duties of the Board outlined in Article VI of the Bylaws
− Directing the credit union in accordance with laws, regulations, bylaws, and sound business practices
− Establish programs to achieve the credit union’s purpose
− Establish loan collection and charge‐off program
− Require training for board and volunteers, including ethics, fiduciary duties, compliance and accounting
− Establish dividend periods and declare dividends
− Perform other acts and exercise additional powers, as needed

Question 9

Board Officers - Who elects them? Who presides over board meetings?

Answer 9

• The Board of Directors elects board officers.
• The chair preside over the meetings
• Vice Chair fills in with the chair is absent or unable to fulfill his or her duties

Positions: Chair, one or more Vice Chairs, Financial Officer, and Secretary

Question 10

What is the special meeting process?

Answer 10

• Written notice must be provided at least 7 days prior to the meeting
• Notices may be given in person, by mail or electronically to members who have elected to receive statements and notices electronically
• Notice must state the purpose of the meeting and no other business may be conducted at the meeting
• Can be called by the board chair, majority vote of the board, the supervisory committee or the members
• 15 members constitutes a quorum

Question 11

Can board members be compensated for their duties? How many directors can be compensated?

Answer 11

Only one board officer may be compensated. Credit unions determine which officer, if any, can be compensated.