12 Cfr 741.11 (1-1-20 Ed)

National Credit Union Administration

§ 741.11

(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
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]

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§ 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.
§ 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

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§ 741.12

12 CFR Ch. VII (1–1–20 Edition)

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
and/or appeal this revocation to the
NCUA Board in accordance with the
procedures set forth in subpart B to
part 746 of this chapter.
(e) Insurance coverage. Accounts at
foreign branches are insured by the
NCUSIF only if denominated in U.S.
dollars and only if payable, by the
terms of the account agreement, at a
U.S. office of the credit union. If the
host country requires insurance from
its own system, accounts will not be
insured by the National Credit Union
Share Insurance Fund.
[68 FR 23030, Apr. 30, 2003, as amended at 82
FR 50294, Oct. 30, 2017]

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§ 741.12 Liquidity
funding plans.

and

contingency

(a) Any credit union insured pursuant to Title II of the Act that has assets of less than $50 million must maintain a basic written policy that provides a credit union board-approved
framework for managing liquidity and
a list of contingent liquidity sources
that can be employed under adverse
circumstances.

(b) Any credit union insured pursuant to Title II of the Act that has assets of $50 million or more must establish and document a contingency funding plan (CFP) that meets the requirements of paragraph (d) of this section.
(c) In addition to the requirement
specified in paragraph (b) of this section to establish and maintain a CFP,
any credit union insured pursuant to
Title II of the Act that has assets of
$250 million or more must establish and
document access to at least one contingent federal liquidity source for use in
times of financial emergency and distressed economic circumstances. These
credit unions must conduct advance
planning and periodic testing to ensure
that contingent funding sources are
readily available when needed. A credit
union subject to this paragraph may
demonstrate access to a contingent
federal liquidity source by:
(1) Maintaining regular membership
in the Central Liquidity Facility (Facility), as described in part 725 of this
chapter;
(2) Maintaining membership in the
Facility through an Agent, as described in part 725 of this chapter; or
(3) Establishing borrowing access at
the Federal Reserve Discount Window
by filing the necessary lending agreements and corporate resolutions to obtain credit from a Federal Reserve
Bank pursuant to 12 CFR part 201.
(d) Contingency Funding Plan: A
credit union must have a written CFP
commensurate with its complexity,
risk profile, and scope of operations
that sets out strategies for addressing
liquidity shortfalls in emergency situations. The CFP may be a separate policy or may be incorporated into an existing policy such as an asset/liability
policy, a funds management policy, or
a business continuity policy. The CFP
must address, at a minimum, the following:
(1) The sufficiency of the institution’s liquidity sources to meet normal
operating requirements as well as contingent events;
(2) The identification of contingent
liquidity sources;
(3) Policies to manage a range of
stress environments, identification of

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