12 Cfr 741.8 (1-1-21 Ed)

National Credit Union Administration

§ 741.8

upon notification or the discovery of a
need for correction.
(b) Consistency with GAAP. The accounts of financial statements and reports required to be filed quarterly
under paragraph (a) of this section
must reflect GAAP if the credit union
has total assets of $10 million or greater, but may reflect regulatory accounting principles other than GAAP if the
credit union has total assets of less
than $10 million (except that a Federally insured State-chartered credit
union may be required by its state
credit union supervisor to follow GAAP
regardless of asset size).
(c) GAAP sources. GAAP means generally accepted accounting principles,
as defined in § 715.2(e) of this chapter.
GAAP is distinct from GAAS, which
means generally accepted auditing
standards, as defined in § 715.2(f) of this
chapter. Authoritative sources of
GAAP include, but are not limited to,
pronouncements of the Financial Accounting Standards Board (FASB) and
its predecessor organizations, the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants
(AICPA), the FASB’s Emerging Issues
Task Force (EITF), and the applicable
AICPA Audit and Accounting Guide.
[60 FR 58504, Nov. 28, 1995, as amended at 64
FR 41040, July 29, 1999; 67 FR 12464, Mar. 19,
2002; 71 FR 4034, Jan. 25, 2006; 74 FR 35769,
July 21, 2009; 78 FR 32545, May 31, 2013; 78 FR
64885, Oct. 30, 2013]

kpayne on VMOFRWIN702 with $$_JOB

§ 741.7 Conversion to a state-chartered
credit union.
Any federal credit union that petitions to convert to a state-chartered
federally insured credit union is required to apply to the Regional Director for continued insurance of its accounts and meet the requirements as
stated in the Act and this part. If the
application for continued insurance is
not approved, such insurance will terminate subject to the conditions set
forth in section 206(d) of the Act.
§ 741.8 Purchase of assets and assumption of liabilities.
(a) Any credit union insured by the
National Credit Union Share Insurance
Fund (NCUSIF) must receive approval
from the NCUA before purchasing loans

or assuming an assignment of deposits,
shares, or liabilities from:
(1) Any credit union that is not insured by the NCUSIF;
(2) Any other financial-type institution (including depository institutions,
mortgage banks, consumer finance
companies, insurance companies, loan
brokers, and other loan sellers or liability traders); or
(3) Any successor in interest to any
institution identified in paragraph
(a)(1) or (a)(2) of this section.
(b) Approval is not required for:
(1) Purchases of student loans or real
estate secured loans to facilitate the
packaging of a pool of loans to be sold
or pledged on the secondary market
under § 701.23(b)(1)(iii) or (iv) of this
chapter or comparable state law for
state-chartered credit unions, or purchases
of
member
loans
under
§ 701.23(b)(1)(i) of this chapter or comparable state law for state-chartered
credit unions;
(2) Assumption of deposits, shares or
liabilities as rollovers or transfers of
member retirement accounts or in
which a federally insured credit union
perfects a security interest in connection with an extension of credit to any
member.
(3) Purchases of assets, including
loans, or assumptions of deposits,
shares, or liabilities by any credit
union insured by the NCUSIF from another credit union insured by the
NCUSIF, except a purchase or assumption as a part of a merger under part
708b; or
(4) Purchases of loan participations
as defined in and meeting the requirements of § 701.22 of this chapter.
(c) A credit union seeking approval
under paragraph (a) of this section
must submit a request for approval to
the appropriate regional director. The
request must state the nature of the
transaction and include copies of all
relevant transaction documents. The
regional director will approve or disapprove the request as soon as possible
depending on the complexity of the
proposed transaction. Credit unions
should submit a request for approval in

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§ 741.9

12 CFR Ch. VII (1–1–21 Edition)

sufficient time to close the transaction.
[70 FR 75725, Dec. 21, 2005, as amended at 75
FR 34622, June 18, 2010; 78 FR 32545, May 31,
2013; 78 FR 37958, June 25, 2013; 84 FR 1608,
Feb. 5, 2019]

§ 741.9 Uninsured membership shares.
Any credit union that is insured pursuant to title II of the Act may not
offer membership shares that, due to
the terms and conditions of the account, are not eligible for insurance
coverage. This prohibition does not
apply to shares that are uninsured
solely because the amount is in excess
of the maximum insurance coverage
provided pursuant to part 745 of this
chapter.

kpayne on VMOFRWIN702 with $$_JOB

§ 741.10 Disclosure of share insurance.
Any credit union which is insured
pursuant to title II of the Act and is
permitted by state law to accept nonmember shares or deposits from
sources other than other credit unions
and public units (or, for low-income
designated credit unions, any nonmembers), shall identify such nonmember
accounts as nonmember shares or deposits on any statement or report required by the NCUA Board for insurance purposes. Immediately after a
state-chartered credit union receives
notice from NCUA that its member accounts are federally insured, the credit
union shall advise any present nonmember share and deposit holders by
letter that their accounts are not insured by the NCUSIF. Also, future nonmember share and deposit fund holders
will be so advised by letter as they
open accounts.
§ 741.11 Foreign branching.
(a) Application and prior NCUA approval required. Any credit union insured under title II of the Act must
apply for and receive approval from the
regional director before establishing a
credit union branch outside the United
States unless the foreign branch is located on a United States military instillation or embassy outside the
United States. The regional director
will have 60 days to approve or deny
the request.
(b) Contents of application. The application must include a business plan,

written approval by the state supervisory agency if the applicant is a
state-chartered credit union, and documentation evidencing written permission from the host country to establish
the branch that explicitly recognizes
NCUA’s authority to examine and take
any enforcement action, including conservatorship and liquidation actions.
(c) Contents of business plan. The written business plan must address the following:
(1) Analysis of market conditions in
the area where the branch is to be established;
(2) The credit union’s plan for addressing foreign currency risk;
(3) Operating facilities, including office space/equipment and supplies;
(4) Safeguarding of assets, bond coverage, insurance coverage, and records
preservation;
(5) Written policies regarding the
branch
(shares,
lending,
capital,
charge-offs, collections);
(6) The field of membership or portion of the field of membership to be
served through the foreign branch and
the financial needs of the members to
be served and services and products to
be provided;
(7) Detailed pro forma financial statements for branch operations (balance
sheet and income and expense projections) for the first and second year including assumptions;
(8) Internal controls including cash
disbursal procedures for shares and
loans at the branch;
(9) Accounting procedures used to
identify branch activity and performance; and
(10) Foreign income taxation and employment law.
(d) Revocation of approval. A State
regulator that revokes approval of the
branch office must notify NCUA of the
action once it issues the notice of revocation. The regional director may revoke approval of the branch office for
failure to follow the business plan in a
material respect or for substantive and
documented safety and soundness reasons. If the regional director revokes
the approval, the credit union will have
six months from the date of the revocation letter to terminate the operations
of the branch. The credit union can request reconsideration of the revocation

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