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FEDERAL
CREDIT
UNIONS
| NCUA 8005 | Revised June 1996 |
FACTS ABOUT
WHAT IS A FEDERAL
FEDERAL CREDIT UNIONS
CREDIT UNION?
A federal credit union is a financial cooperative chartered by the federal government and owned by its members. Federal credit unions offer members a safe place to save and borrow at reasonable rates. Surplus income is returned to members in the form of dividends.
Originating in Europe, credit unions began organizing in America in the early 1900s to promote thrift among their members. Credit unions then and now serve many left unserved by traditional banking incitations and provide an alternative to oppressive loan-rate charges.
Today's credit unions remain unique financial institutions with a philosophy to operate not for profit but for service. Annual polls show that credit unions lead the financial community year after year in providing top-quality personal service to millions of Americans.
Federal credit unions are chartered, supervised, and insured by the National Credit Union Administration (NCUA), an agency of the federal government.
WHAT A CREDIT UNION DOES
Credit unions encourage their members to save regularly to build economic security for themselves and their families. Credit union members provide one another with consumer and, in many cases, home mortgage loans from their pooled savings. this benefit and many others help members achieve financial stability.
Credit unions are not new. The credit union movement began in the United States in 1909 when the first credit union was formed in Massachusetts, New Hampshire.
WHO CAN JOIN AN FCU?
Each federal credit union's charter specifies who is eligible to join. Membership is limited to groups or people with a common bond of employment, association, or residence specified in its charter.
Eligible people must submit a membership application and purchase one share to join. By depositing usually $5 to $10, members actually purchase and own a share in their credit union and can vote in officer elections.
NUMBER OF FEDERAL
CREDIT UNION MEMBERS
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CREDIT UNIONS GROW
CONSISTENTLY
Federal credit unions deposits and the number of members they serve have grown every year since the first federal credit union was chartered in 1934 .
CONGRESS FORMED OUR
FEDERAL CREDIT UNIONS
SYSTEM
The U.S. Congress drafted and President Roosevelt signed the Federal Credit Union Act in 1934. This Act established the federal credit unions system and created NCUA's predecessor to charter and supervise federal credit unions. The general provisions in the Federal Act are similar to those of many Sate credit union laws.
The Federal Credit Union Act is amended periodically to evolve and remain a modern credit union law. This contemporary law, coupled with the NCUA Board's commitment to reduce regulatory burden, enables federal credit unions to offer a variety of services to meet the financial needs of their members. For example, in addition to basic passbook share savings accounts, many federal credit unions offer share drafts, share certificates, credit cards, and individual retirement accounts. In recent years, many have expanded their lending programs to include real estate, member business, and guaranteed student loans as well as the traditional consumer loans. As technology evolves, more and more federal credit unions respond by offering transaction services by telephone and by personal computer via the Internet.
MEMBER SAVINGS IN
FEDERAL CREDIT UNIONS
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DEPOSITS ARE SAFE
Member deposits in federal credit unions are insured up to $100,000 per account by the National Credit Union Share Insurance Fund (NCUSIF) and backed by the full faith of the U.S. government. Savings are also protected by a number of provisions in the Federal Credit Union Act and the Standard Bylaws. Some protections are:
HOW A FEDERAL
CREDIT UNION OPERATES
The basic purpose of credit unions is to encourage systematic savings. Whether large or small, the amount is secondary to developing the habit of saving regularly.
Members accumulated savings are used to make loans to fellow credit union members. Each federal credit union's board of directors, elected by the members, has the authority to set loan amounts or loan ceilings as the credit union grows. The interest rate charged on loans is also established by the credit union's board of directors. The interest and other finance charges are disclosed in total and as an annual percentage rate in compliance with the Truth in Lending Act.
Federal credit unions operate in compliance with this and all other federal consumer protection laws, including the Equal Credit Opportunity Act. The law requires that credit be made available to all members without regard to sex, marital status, race, age or other prohibited bases.
CONTROL AND MANAGEMENT
Controlling management is in the hands of the credit union members. Members elect a volunteer board of directors at the annual meeting. Each member has one vote regardless of the number of shares owned. The board elects officers from its own membership and appoints a supervisory committee.
LOANS OUTSTANDING
AT FEDERAL CREDIT UNIONS
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EARNINGS
The credit union's net earnings from loan operations or other sources, except that portion of gross income set aside in a reserve account for loan losses, may be distributed to the members in the form of dividends. Annually, federal credit unions pay over $5 billion in dividends to their shareholder members. The board of directors of each federal credit union has wide latitude in determining the credit union's dividend rate and terms.
BENEFITS TO SPONSOR
ORGANIZATIONS
A credit union is an important fringe benefit, according to various sponsor organizations.
Credit unions do not require outside financial support so there is no direct cost to a sponsor, including any employer whose employees organize a credit union. Many employers, however, find credit unions so beneficial in maintaining employee morale and well-being that they gladly provide space on the premises to serve as a credit union office.
Employers often allow employees to direct-deposit their paychecks into a credit union account. Credit unions pioneered this convenient innovation. Experience shows this simplifies deposit operations and encourages more employees to use credit union services.
Many employers permit employees time to conduct credit union business, especially during the first few months of its operation. The personnel office and the credit union can be mutually helpful in assisting employees to help themselves and in make the credit union an effective employee service organization. In fact, educating members to maintain responsible financial affairs is the third basic function of credit unions - the other functions are to promote thrift and provide credit.
HOW TO START A
FEDERAL CREDIT UNION
If you think a federal credit union would help you and the others where you work, members of an association where you belong, or people in your community, first discuss the need with members of the group. If the group is interested, write or call the appropriate NCUA regional office listed on the back of this brochure. That office will be pleased to provide further information and, in many instances, will send a representative to talk to your group and answer questions. If your group is eligible, NCUA's regional staff will help you prepare an application for a charter and see that your group receives guidance in getting your federal credit union started.
NCUA service is available at no cost or obligation.
Check the back page to find which of NCUA's six regional offices serves your State.
Additional information about NCUA and federal credit unions can be obtained through NCUA's Internet Web site at http://www.ncua.gov.
NATIONAL CREDIT UNION ADMINISTRATION REGIONAL OFFICES
| ADDRESS | AREA SERVED | |
| Region I (Albany) | ||
| National Credit Union Administration
9 Washington Square Washington Avenue Extension Albany, NY 12205 (518) 464-4180 |
Connecticut, Maine, Massachusetts,
New Hampshire, New York, Rhode Island, Vermont | |
| Region II (Capital) | ||
| National Credit Union Administration
1775 Duke Street, Suite 4206 Alexandria, VA 22314-3437 (703)838-0401 |
Delaware, District of Columbia, Maryland,
New Jersey, Pennsylvania, Virginia, West Virginia |
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| Region III (Atlanta) | ||
| National Credit Union Administration
7000 Central Parkway Suite 1600 Atlanta, GA 30328 (770) 396-4042 |
Alabama, Arkansas, Florida, Georgia,
Kentucky, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, Virgin Islands | |
| Region IV (Chicago) | ||
| National Credit Union Administration
300 Park Boulevard Suite 155 Itasca, IL 60143 (708) 250-6000 |
Illinois, Indiana, Michigan, Missouri,
Ohio, Wisconsin | |
| Region V (Austin) | ||
| National Credit Union Administration
4807 Spicewood Springs Road Suite 5200 Austin, TX 78759-8490 (512) 482-4500 |
Arizona, Colorado, Iowa, Kansas,
Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, Wyoming | |
| Region VI (Pacific) | ||
| National Credit Union Administration
2300 Clayton Road Suite 1350 Concord, CA 94520 (510) 825-6125 |
Alaska, American Samoa, California,
Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Washington | |
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