12 Cfr 725 (1-1-20 Ed)

National Credit Union Administration

§ 725.2

rules and regulations as may be promulgated by the Secretary of Labor,
the Secretary of the Treasury, or any
other authority exercising jurisdiction
over such trust or custodial accounts.
The federal credit union shall maintain
individual records for each participant
which show in detail all transactions
relating to the funds of each participant or beneficiary.
[55 FR 30211, July 25, 1990, as amended at 63
FR 14026, Mar. 24, 1998; 65 FR 10934, Mar. 1,
2000; 69 FR 45238, July 29, 2004]

§ 724.2

Self-directed plans.

A federal credit union may facilitate
transfers of plan funds to assets other
than share and share certificates of the
credit union, provided the conditions of
§ 724.1 are met and the following additional conditions are met:
(a) All contributions of funds are initially made to a share or share certificate account in the Federal credit
union;
(b) Any subsequent transfer of funds
to other assets is solely at the direction of the member and the Federal
credit union exercises no investment
discretion and provides no investment
advice with respect to plan assets (i.e.,
the credit union performs only custodial duties); and
(c) The member is clearly notified of
the fact that National Credit Union
Share Insurance Fund coverage is limited to funds held in share or share certificate accounts of NCUSIF-insured
credit unions.
[55 FR 30211, July 25, 1990, as amended at 69
FR 45239, July 29, 2004]

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§ 724.3 Appointment of successor trustee or custodian.
Any plan operated pursuant to this
part shall provide for the appointment
of a successor trustee or custodian by a
person, committee, corporation or organization other than the Federal credit union or any person acting in his capacity as a director, employee or agent
of the Federal credit union upon notice
from the Federal credit union or the
Board that the Federal credit union is
unwilling or unable to continue to act
as trustee or custodian.

PART
725—NATIONAL
CREDIT
UNION ADMINISTRATION CENTRAL LIQUIDITY FACILITY
Sec.
725.1 Scope.
725.2 Definitions.
725.3 Regular membership.
725.4 Agent membership.
725.5 Capital stock.
725.6 Termination of membership.
725.7 Special share accounts in federally
chartered agent members.
725.8–725.16 [Reserved]
725.17 Applications for extensions of credit.
725.18 Creditworthiness.
725.19 Collateral requirements.
725.20 Repayment, security and credit reporting agreements; other terms and
conditions.
725.21 Modification of agreements.
725.22 Advances to insurance organizations.
725.23 Other advances.
AUTHORITY: 12 U.S.C. 1795f(a)(2).
SOURCE: 44 FR 49437, Aug. 23, 1979, unless
otherwise noted.
EDITORIAL NOTE: Nomenclature changes to
part 725 appear at 84 FR 1608, Feb. 5, 2019.

§ 725.1

Scope.

This part contains the regulations
implementing the National Credit
Union Central Liquidity Facility Act,
subchapter III of the Federal Credit
Union Act. The National Credit Union
Administration Central Liquidity Facility is a mixed-ownership Government corporation within the National
Credit Union Administration. It is
managed by the National Credit Union
Administration Board and is owned by
its member credit unions. The purpose
of the Facility is to improve the general financial stability of credit unions
by meeting their liquidity needs and
thereby encourage savings, support
consumer and mortgage lending and
provide basic financial resources to all
segments of the economy.
§ 725.2

Definitions.

As used in this part:
(a) Agent means an Agent member of
the Facility.
(b) Agent group means an Agent member of the Facility consisting of a
group of corporate credit unions, one of
which is designated as the group’s

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§ 725.2

12 CFR Ch. VII (1–1–20 Edition)

Agent group representative and authorized to transact business with the Facility on behalf of the group or any
member of the group.
(c) Agent loan means an advance of
funds by an Agent to a member natural
person credit union to meet liquidity
needs which have been the basis for a
Facility advance.
(d) Corporate credit union means a
Federal or state-chartered credit union
primarily serving other credit unions.
A credit union is primarily serving
other credit unions when the total dollar amount of the shares and deposits
received from other credit unions plus
loans to other credit unions exceeds 50
percent of the total dollar amount of
all shares and deposits plus loans during the qualifying period, as defined in
paragraph (o) of this section.
(e) Facility or Central Liquidity Facility means the National Credit Union
Administration Central Liquidity Facility.
(f) Facility advance means an advance
of funds by the Facility to a Regular or
Agent member.
(g) Facility lending officer means any
employee of the Facility or the National Credit Union Administration
who has been designated by the NCUA
Board as a Facility lending officer.
(h) Liquid assets means the following
unpledged assets:
(1) Cash on hand;
(2) Share or deposit accounts with remaining maturities of one year or less
maintained in corporate credit unions
or institutions insured by the Federal
Deposit Insurance Corporation;
(3) Investments in obligations of the
United States or any agency thereof, or
securities fully guaranteed as to principal and interest thereby, which are
authorized under 12 U.S.C. 1757(7) and
which have a remaining maturity of
one year or less;
(4) Common trust investments and
similar investments in funds or securities authorized for Federal credit
unions, the objectives of which are to
provide daily liquidity for participating credit unions;
(5) Shares in the National Credit
Union Administration Central Liquidity Facility or in special share accounts authorized by § 725.7 of this part;

(6) In the case of a federally insured
state-chartered credit union, any asset
held in satisfaction of liquidity requirements imposed by applicable state
law or regulation; and
(7) Balances maintained by federally
insured credit unions in a Federal Reserve bank, or in a pass-through account to a Federal Reserve bank, pursuant to the requirements of section
19(b) of the Federal Reserve Act (12
U.S.C. 461(b)).
(i) Liquidity needs means the needs of
credit unions primarily serving natural
persons for:
(1) Short-term adjustment credit
available to assist in meeting temporary requirements for funds or to
cushion more persistent outflows of
funds pending an orderly adjustment of
credit union assets and liabilities;
(2) Seasonal credit available for
longer periods to assist in meeting seasonal needs for funds arising from a
combination of expected patterns of
movement in share and deposit accounts and loans; and
(3) Protracted adjustment credit
available in the event of unusual or
emergency circumstances of a longer
term nature resulting from national,
regional or local difficulties.
(j) Management policies means policies
of a credit union with respect to membership, shares, deposits, dividends, interest rates, lending, investing, borrowing, safeguarding of assets, hiring,
training and supervision of employees,
and general operating and control practices and procedures.
(k) Member means a Regular or Agent
member of the Facility, unless the context indicates otherwise.
(l) Member natural person credit union
means a natural person credit union
which is a member of an Agent or of
any corporate credit union in an Agent
group. Member natural person credit
unions are not members of the Facility
unless they are also Regular members
of the Facility.
(m) Natural person credit union means
a Federal or state-chartered credit
union primarily serving natural persons. A credit union is primarily serving natural persons if it is not a corporate credit union as defined in paragraph (d) of this section.

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National Credit Union Administration

§ 725.4

(n) Paid-in and unimpaired capital and
surplus means shares and deposits plus
post-closing, undivided earnings. This
does not include regular reserves or
special reserves required by law, regulation or special agreement between
the credit union and its regulator or
share insurer.
(o) Qualifying Period means:
(1) For initial qualification, any 7
months out of the 12 months immediately preceding the month in which
application is made to become a member of the Facility; and
(2) For qualification during each subsequent calendar year, any 7 months
out of the previous calendar year.
(p) Stock subscription means the stock
subscription required for membership
in the Facility. ‘‘Total subscribed Facility stock’’ is the sum of all members’ stock subscriptions.

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[44 FR 49437, Aug. 23, 1979, as amended at 53
FR 22472, June 16, 1988; 66 FR 65624, Dec. 20,
2001; 78 FR 32545, May 31, 2013; 84 FR 1608,
Feb. 5, 2019]

§ 725.3 Regular membership.
(a) A natural person credit union
may become a Regular member of the
Facility by:
(1) Making application on a form approved by the Facility;
(2) Subscribing to capital stock of the
Facility in an amount equal to one-half
of 1 percent of the credit union’s paidin and unimpaired capital and surplus,
as determined in accordance with
§ 725.5(b) of this part, and forwarding
with its completed application funds
equal to one-half of this stock subscription; and
(3) Furnishing the following reports
and documents with the completed
membership application:
(i) A copy of the credit union’s financial and statistical report for the most
recent calendar month; and
(ii) Copies of the credit union’s charter and bylaws, unless the credit union
is federally chartered.
(b) A credit union which becomes a
Regular member of the Facility after
February 23, 1980, may not receive Facility advances without approval of the
NCUA Board for a period of six months
after becoming a member. This subsection shall not apply to any credit
union which becomes a Regular mem-

ber of the Facility within six months
after such credit union is chartered, or
which has had access to Facility funds
through an Agent member of the Facility at any time within six months prior
to becoming a Regular member of the
Facility.
[44 FR 49437, Aug. 23, 1979, as amended at 47
FR 1371, Jan. 13, 1982; 84 FR 1608, Feb. 5, 2019]

§ 725.4 Agent membership.
(a) A corporate credit union or a
group of corporate credit unions may
become an Agent member of the Facility by (in the case of a group of corporate credit unions, each corporate
credit union in the group must do each
of the following except for paragraph
(a)(2) of this section, which shall be
done by the Agent group representative):
(1) Making application on a form approved by the Facility;
(2) Subscribing to the capital stock of
the Facility in an amount equal to onehalf of 1 percent of the paid-in and
unimpaired capital and surplus (as determined in accordance with § 725.5(b)
of this part) of all the corporate credit
union’s or corporate credit union
group’s member natural person credit
unions, except those which are Regular
members of the Facility or which have
access to the Facility through, and are
included in the stock subscription of,
another Agent. 2 Upon approval of the
application, the Agent shall forward
funds equal to one-half of this initial
stock subscription to the Facility.
(3) Furnishing the following reports
and documents with the completed
membership application:
(i) A copy of the corporate credit
union’s financial and statistical report
for the most recent calendar month;
(ii) Copies of the corporate credit
union’s charter and bylaws, unless such
credit union is federally chartered; and
(iii) A list of all the corporate credit
union’s member natural person credit
unions.
2 A natural person credit union which is a
member of more than one Agent member of
the Facility must designate through which
Agent it will deal with the Facility, and the
designated Agent will be responsible for including the capital and surplus of such credit
union in the calculation of its stock subscription.

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§ 725.5

12 CFR Ch. VII (1–1–20 Edition)

(4) Agreeing to submit to the supervision of the NCUA Board and to comply with all regulations and reporting
requirements which the NCUA Board
shall prescribe for Agent members;
(5) Agreeing to submit to periodic unrestricted examinations by the NCUA
Board or its designee; and
(6) Obtaining the written approval of
the NCUA Board.
(b) The NCUA Board may approve a
corporate credit union or group of corporate credit unions as an Agent member of the Facility, provided the NCUA
Board is satisfied that such credit
union or credit union group meets certain criteria, including but not limited
to the following (in the case of a group
of corporate credit unions, each corporate credit union in the group must
meet these criteria):
(1) The management policies are in
writing, approved by the corporate
credit union’s board of directors, and
reviewed annually by such board;
(2) Adequate internal controls are in
place to assure accurate and timely reporting of transactions and the safeguarding of assets;
(3) The financial condition of the corporate credit union is sound with adequate reserves for losses;
(4) Surety bond coverage provides
protection for the corporate credit
union while the corporate credit union
is performing the duties of an Agent
member of Facility;
(5) Management has demonstrated its
ability to use such techniques as cash
flow analysis, budgeting, and projections of sources and uses of funds to
manage the affairs of the corporate
credit union efficiently and in conformity with sound business practices;
and
(6) There are no practices, procedures, policies, or other factors that
would result in discrimination by the
corporate credit union among natural
person credit unions or inhibit its ability to act independently in its role as
an Agent member of the Facility.
(c) Each Agent, or in the case of an
Agent group, each corporate credit
union in the group, must:
(1) Maintain records related to Facility activity in conformity with requirements prescribed by the NCUA
Board from time to time; and

(2) Submit such reports as may be required by the Facility to determine financial soundness, quality and level of
service, and conformity with established guidelines and procedures.
(d) Each Agent, or in the case of an
Agent group, each corporate credit
union in the group, must have on an
annual basis a third party independent
audit of its books and records and provide the Facility with copies of the report of such audit. The auditor selected
must be recognized by a State or territorial licensing authority as possessing
the requisite knowledge and experience
to perform audits.
(e) Within 30 days after a natural person credit union becomes a member of
a corporate credit union which is an
Agent or a member of an Agent group,
the agent, or in the case of an Agent
group, the Agent group representative,
shall subscribe to additional capital
stock of the Facility in an amount
equal to one-half of 1 percent of such
credit union’s paid-in and unimpaired
capital and surplus, and shall forward
funds equal to one-half of this stock
subscription to the Facility. This subsection shall not apply if the natural
person credit union is a Regular member of the Facility or has access to the
Facility through, and is included in the
stock subscription of, another Agent.
(f) A corporate credit union or group
of corporate credit unions which becomes an Agent member of the Facility
after February 23, 1980, may not receive
a Facility advance without approval of
the NCUA Board for a period of six
months after becoming a member. This
subsection shall not apply to any credit union which becomes an Agent member or a member of an Agent group
within six months after such credit
union is chartered or within six
months after such credit union has
been an Agent or a member of another
Agent group.
(g) Agent members will be compensated for the services they perform
for the Facility in a manner to be specified by the NCUA Board.
[44 FR 49437, Aug. 23, 1979, as amended at 84
FR 1608, Feb. 5, 2019]

§ 725.5 Capital stock.
(a) The capital stock of the Facility
is divided into nonvoting shares having

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National Credit Union Administration

§ 725.7

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a par value of $50 each. The Facility
issues whole and fractional shares.
Shares are issued in book entry form
upon receipt of payment for such
shares, and cannot be transferred or
hypothecated except to the Facility.
(b) The capital stock subscriptions
provided for in §§ 725.3 and 725.4 shall
be:
(1) Based on an arithmetic average of
paid-in and unimpaired capital and surplus over the six months preceding application for membership, and
(2) Adjusted at the close of each calendar year in accordance with an arithmetic
average
of
paid-in
and
unimpaired capital and surplus over
the twelve months in such calendar
year. Payments for adjustments to the
capital stock subscription must be received by the Facility no later than
March 31 of the following year.
(c) That part of a member’s stock
subscription which is not paid-in shall
be held by the member on call of the
NCUA Board and shall be invested in
liquid assets.
(d) Any member may at any time
purchase additional shares of capital
stock in the Facility. Any shares in excess of the member’s required paid-in
portion of its stock subscription can be
redeemed by the member as long as the
member maintains investments in
other assets sufficient to meet the requirement of paragraph (c) of this section. The member’s required paid-in
portion of its stock subscription includes one-half of its stock subscription plus any ‘‘calls’’ that may have
been issued by the NCUA Board against
the ‘‘on-call’’ portion of such stock
subscription.
(e) Dividends will be paid on capital
stock at such times and rates as are determined by the NCUA Board. The
NCUA Board shall declare such dividends no less frequently than annually.
All issued (paid for) capital stock shall
share in dividend distributions without
preference. Payment of dividends will
be made by the issuance of capital
stock to the member in the amount of
the dividend.
[44 FR 49437, Aug. 23, 1979, as amended at 45
FR 47122, July 14, 1980; 47 FR 1371, Jan. 13,
1982; 53 FR 22472, June 16, 1988]

§ 725.6

Termination of membership.

(a) A member of the Facility whose
stock subscription constitutes less
than 5 percent of total subscribed Facility stock may withdraw from membership in the Facility six months after
notifying the NCUA Board in writing of
its intention to do so.
(b) A member of the Facility whose
stock subscription constitutes 5 percent or more of total subscribed Facility stock may withdraw from membership in the Facility twenty-four
months after notifying the NCUA
Board in writing of its intention to do
so.
(c) The NCUA Board may terminate
membership in the Facility if, after the
opportunity for a hearing, the NCUA
Board determines the member has
failed to comply with any provision of
the National Credit Union Central Liquidity Facility Act or any regulation
issued pursuant thereto. If membership
is terminated under this subsection,
the credit union will be required to obtain the approval of the NCUA Board
before becoming a member of the Facility again. Such approval will be
granted only if the NCUA Board is satisfied that the credit union will comply
with such Act and regulations.
(d)(1) If membership is terminated
under any provision of this section, the
terminated member’s stock shall be redeemed upon termination. In such
event, the Facility may retain any
amount owed to the Facility by the
member.
(2) When a member natural person
credit union withdraws from membership in a corporate credit union which
is an Agent or a member of an Agent
group, the stock subscription of the
Agent, or in the case of an Agent
group, the stock subscription of the
Agent group representative, will be adjusted after the waiting period which
would apply under paragraph (a) or (b)
of this section if the withdrawing credit union were a member of the Facility.
§ 725.7 Special share accounts in federally chartered agent members.
(a) A federally chartered Agent member of the Facility may require its
member natural person credit unions
to establish and maintain special share

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§§ 725.8–725.16

12 CFR Ch. VII (1–1–20 Edition)

accounts in the Agent member to reimburse it for the portion of the Agent’s
Facility stock subscription which is attributable
to
the
paid-in
and
unimpaired capital and surplus of each
such natural person credit union.
(b) The amount which the Agent
member requires each member natural
person credit union to maintain in
such special share accounts shall be
based on a uniform percentage of the
paid-in and unimpaired capital and surplus of such credit unions, and shall
not exceed the amount of the Agent’s
stock subscription which is attributable to the capital and surplus of
each such credit union. An Agent shall
not permit a member to maintain in a
special share account any amounts in
excess of the required amount.
(c) A natural person credit union
that withdraws from membership in an
Agent member or that becomes a Regular member of the Facility, shall be
entitled to the return of all amounts in
its special share account upon withdrawal from membership in the Agent
or upon becoming a Regular member,
as applicable.
[45 FR 47122, July 14, 1980]

§§ 725.8–725.16

[Reserved]

§ 725.17 Applications for extensions of
credit.

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(a) A Regular member may apply for
a Facility advance to meet its liquidity
needs by filing an application on a Facility-approved form, or by any other
method approved by the Facility.
(b)(1) An Agent member may apply
for a Facility advance by filing an application on a Facility-approved form,
or by any other method approved by
the Facility. 4
(2) The Agent’s application shall be
based on the following:
(i) Approved applications to the
Agent by its member natural person
credit unions for pending loans to meet
liquidity needs; or
(ii) Outstanding loans previously
made by the Agent to meet liquidity
4 If the Agent is an Agent group, the application must be filed by the Agent group representative, and any Facility advance will be
made to the Agent group representative.

needs of its member natural person
credit unions; or
(iii) Such other demonstrable liquidity needs as the NCUA Board may
specify.
(3) An Agent shall not submit an application to the Facility based on the
liquidity needs of any member natural
person credit union which has not
agreed to the repayment, security and
credit reporting terms prescribed by
the Facility for Agent loans;
(4) Any loan to meet liquidity needs
which have been or will be the basis for
an application by the Agent for a Facility advance must be applied for on
an application form approved by the
Facility.
(5) Unless approved by the Facility,
an Agent shall not submit an application to the Facility based on the liquidity needs of any credit union which
became a member natural person credit union of the Agent after February 2,
1980, unless such credit union has been
a member natural person credit union
of the Agent for six months, was chartered within six months before becoming a member natural person credit
union of the Agent, or had access to
the Facility either as a Regular member or through another Agent within
six months before becoming a member
natural person credit union of the
Agent.
(c) In emergency circumstances, the
applications for extensions of credit required under paragraph (a) and paragraphs (b)(1) and (b)(4) of this section
may be verbal, but must be confirmed
within five working days by an application as required by such subsection or
paragraphs.
(d) Applications of Regular and
Agent members shall be filed with a
Facility lending officer. Each application for credit which is completed and
properly filed will be approved or denied within five working days after the
day of receipt.
[44 FR 49437, Aug. 23, 1979, as amended at 47
FR 1371, Jan. 13, 1982]

§ 725.18 Creditworthiness.
(a) Prior to Facility approval of each
application of a Regular member for a
Facility advance, the Facility shall
consider the creditworthiness of such
member.

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National Credit Union Administration

§ 725.22

(b) Prior to an Agent’s approval of
each application of a member natural
person credit union for an extension of
credit on which an application by the
Agent to the Facility will be based, an
Agent shall consider the creditworthiness of such member natural person
credit union.
(c) Specific characteristics of an
uncreditworthy credit union include,
but are not limited to, insolvency as
defined in paragraph (1) to the definition of ‘‘insolvency in § 700.2 of this
chapter, unsatisfactory practices in extending credit, lower than desirable reserve levels, high expense ratio, failure
to repay previous Facility advances as
agreed, excessive dependence on borrowed funds, inadequate cash management policies and planning, or any
other relevant characteristics creating
a less than satisfactory condition. The
presence of one or more of these characteristics will not necessarily mean
that a credit union will be considered
uncreditworthy.
(d) A natural person credit union
(whether a Regular member of the Facility or a member natural person credit union) which does not meet the Facility’s
creditworthiness
standards
may be limited in or denied the use of
advances for its liquidity needs.
[44 FR 49437, Aug. 23, 1979, as amended at 69
FR 27829, May 17, 2004; 76 FR 60367, Sept. 29,
2011]

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§ 725.19

Collateral requirements.

(a) Each Facility advance and each
Agent loan shall be secured by a first
priority security interest in collateral
of the credit union with a net book
value at least equal to 110% of all
amounts due under the applicable Facility advance or Agent loan, or by
guarantee of the National Credit Union
Share Insurance Fund.
(b) The Facility may accept as collateral for each Facility advance to a
Regular member, a security interest in
all assets of the Regular member; provided however, that the value of any
assets in which any third party has a
perfected security interest that is superior to the security interest of the Facility shall be excluded for purposes of
complying with the requirements of
paragraph (a) of this section.

(c) The Facility may accept as collateral for each Facility advance to an
Agent member, a security interest in
the Agent loans for which the Facility
advance was made; provided however,
that the collateral for such Agent loan
meets the requirements of paragraph
(a) of this section.
[62 FR 67550, Dec. 29, 1997]

§ 725.20 Repayment, security and credit reporting agreements; other
terms and conditions.
(a) Regular and Agent members, or in
the case of an Agent group, the Agent
group representative, shall sign the repayment, security and credit reporting
agreements prescribed by the Facility,
and all Facility advances to Regular
and Agent members shall be governed
by the terms and conditions of such
agreements.
(b) All Agent loans shall be made
subject to the repayment, security and
credit reporting terms prescribed by
the Facility for Agent loans.
(c) Other terms and conditions applicable to Facility advances and Agent
loans will be specified in confirmations
of credit provided in connection with
such advances and loans, and/or in operating circulars of the Facility.
§ 725.21

Modification of agreements.

The repayment, security, and credit
reporting terms under which Facility
advances and Agent loans will be made,
as provided in § 725.20 of this part, shall
be subject to modification from time to
time as the NCUA Board may determine. Any change in such terms shall
be published in the FEDERAL REGISTER
and shall apply to all advances disbursed by the Facility after the effective date of the change.
§ 725.22 Advances to insurance organizations.
(a) In accordance with policies established by the NCUA Board, the Facility
may advance funds to a State credit
union share or deposit insurance corporation, guaranty credit union, guaranty association, or similar organization. Requests for such advances shall
be supported by an application which
sets forth and supports the need for the
advance.

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§ 725.23

12 CFR Ch. VII (1–1–20 Edition)

(b) Advances under paragraph (a)
shall be subject to the approval of the
NCUA Board and shall be made subject
to the following terms:
(1) The advance shall be fully secured,
(2) The maturity of the advance shall
not exceed 12 months,
(3) The advance shall not be renewable at maturity, and
(4) The funds advanced shall not be
relent at an interest rate exceeding
that imposed by the Facility.
§ 725.23 Other advances.
(a) The NCUA Board may authorize
extensions of credit to members of the
Facility for purposes other than liquidity needs if the NCUA Board, the Board
of Governors of the Federal Reserve
System, and the Secretary of the
Treasury concur in a determination
that such extensions of credit are in
the national economic interest.
(b) Extensions of credit approved
under the conditions of paragraph (a)
of this section shall be subject to such
terms and conditions as shall be established by the NCUA Board.

PART 740—ACCURACY OF ADVERTISING AND NOTICE OF INSURED
STATUS
Sec.
740.0 Scope.
740.1 Definitions.
740.2 Accuracy of advertising.
740.3 Advertising of excess insurance.
740.4 Requirements for the official sign.
740.5 Requirements for the official advertising statement.
AUTHORITY: 12 U.S.C. 1766, 1781, 1785, and
1789.

kpayne on VMOFRWIN702 with $$_JOB

SOURCE: 68 FR 23382, May 2, 2003, unless
otherwise noted.

§ 740.0 Scope.
This part applies to all federally insured credit unions. It prescribes the
requirements for the official sign insured credit unions must display and
the requirements with regard to the official advertising statement insured
credit unions must include in their advertisements. It requires that all other
kinds of advertisements be accurate. It
also establishes requirements for advertisements of excess insurance.

§ 740.1

Definitions.

(a) Account or accounts as used in this
part means share, share certificate or
share draft accounts (or their equivalent under state law, as determined by
the Board in the case of insured state
credit unions) of a member (which includes other credit unions, public
units, and nonmembers where permitted under the Act) in a credit union
of a type approved by the Board which
evidences money or its equivalent received or held by a credit union in the
usual course of business and for which
it has given or is obligated to give
credit to the account of the member.
(b) Advertisement as used in this part
means a commercial message, in any
medium, that is designed to attract
public attention or patronage to a
product or business.
(c) Insured credit union and federally
insured credit union as used in this part
mean a credit union with National
Credit Union Administration share insurance.
(d) Nonfederally insured credit union as
used in this part means a credit union
with either no account insurance or
with primary account insurance provided by some entity other than the
National Credit Union Administration.
[68 FR 23382, May 2, 2003, as amended at 74
FR 9348, Mar. 4, 2009; 76 FR 30523, May 26,
2011]

§ 740.2

Accuracy of advertising.

No insured credit union may use any
advertising (which includes print, electronic, or broadcast media, displays
and signs, stationery, and other promotional material) or make any representation which is inaccurate or deceptive in any particular, or which in
any way misrepresents its services,
contracts, or financial condition, or
which violates the requirements of
§ 707.8 of this subchapter, if applicable.
This provision does not prohibit an insured credit union from using a trade
name or a name other than its official
charter name in advertising or signage,
so long as it uses its official charter
name in communications with NCUA
and for share certificates or certificates of deposit, signature cards, loan
agreements,
account
statements,

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