Credit Union Chartering & Expansion
In a position to articulate to our State Legislators, the Iowa Division of Credit Unions (Division) understands Iowa communities and provides for a regulatory environment in which Iowa credit unions can prosper, operate in a safe & sound manner, and meet the financial service needs of their members.
Any seven residents of the State of Iowa may apply to the Superintendent of Credit Unions for permission to organize a credit union [189 IAC 2) and 533.201.]
Organize a Credit Union
A state credit union shall be organized by delivering to the superintendent articles of incorporation that state all of the following: (1) The name and location of the proposed state credit union. (2) The names and addresses of the subscribers to the articles and the number of shares subscribed to by each. (3) The share structure of the state credit union. A state credit union may have more than one class of shares. The par value of the shares of the state credit union shall be established by the board of directors. [Iowa Code 533.201(2)(b)(1)(2)(3)]
- The applicants shall prepare and adopt bylaws for the general governance of the state credit union consistent with the provisions of this chapter.
- The articles and the bylaws, both executed in duplicate, shall be forwarded with a fee of ten dollars to the superintendent. [Iowa Code 533.201.(3)(4)
Any financial institution may convert to a state credit union by complying with the laws of the original chartered authority and upon the approval of the superintendent. [Iowa Code 533.402]
Conversion to an Iowa Charter
Any financial institution may convert to a state credit union by complying with the laws of the original chartered authority and upon the approval of the superintendent. As used in this section, “financial institution” means any credit union, bank, savings bank, or savings and loan association chartered under federal or state law.
Application for approval of the conversion to a state credit union shall be submitted to the superintendent in the form prescribed by the superintendent, together with the articles of incorporation and bylaws as required for organization of a state credit union pursuant to this chapter. [533.402(1)(a)]
Changes to the common bond may be made by a credit union’s Board of Directors by amending its bylaws, subject to the approval of the Superintendent before becoming effective. [189 IAC 2.5(3)) and 533.202.]
Seeking or Expanding a Field of Membership
Changes to the common bond may be made by a credit union’s Board of Directors by amending its bylaws, subject to the approval of the Superintendent before becoming effective. (189 IAC 2.5(3)) and 533.202.) Should a credit union seek to provide or extend membership services to residents in a geographic area, the following information must be submitted to the Iowa Division of Credit Unions (Division) by the credit union:
- The Board of Directors’ rationale for the field of membership request or expansion.
- An analysis of current and projected requirements to handle the requested field of membership. This strategic plan should include range of services to be provided and the estimated costs.
- A clearly defined description of the area to be served, i.e. cities, counties, or geographic boundaries. Unless otherwise approved by the Superintendent, an expansion of a geographic field of membership must proceed in a contiguous manner.
- Three years pro forma income statements and balance sheets.
Upon receipt of the above information, a thorough review of the request will be made by the Division. Items taken into consideration, in addition to the above, will be the following:
- The performance of the credit union based upon quarterly 5300 Call Reports and examinations conducted by the Division. The basis will include the credit union’s risk ratings, CAMELS ratings, and quarterly 5300 trends. A period of positive trends from historical information of the credit union should be apparent and indicative of a credit union whose operations and risk ratings are considered satisfactory. A composite CAMELS rating of 1 or 2 is required for expansion of a current field of membership.
- The credit union is not presently under a “special reserving” requirement or other regulatory administrative action which indicates the credit union is experiencing serious financial, managerial, or operational difficulties. If the information submitted supports a safe and sound proposal, the field of membership expansion will be approved.
The Division will approve or deny the field of membership request, along with the grounds for denial in that circumstance, within 60 days of receipt of the completed application. The credit union may reapply for consideration of its request at a later time when the circumstances for the denial are no longer prevalent.
When a field of membership expansion is approved by the Division, Bylaw Section 3.1 shall normally indicate “persons who reside in or who work for an entity in” the defined geographical boundaries. Any future amendments to Bylaw Section 3.1, as well as any additions to the membership by extension of service to small employee groups (SEG’s), shall be limited to those persons who are not located within the credit union’s new geographical boundaries. All persons within the geographical area as identified by the bylaws will be eligible for membership in the credit union. It is important to remember that a geographic based field of membership does not provide the credit union with an exclusive field of membership. Therefore, groups and individuals within the geographical area stated in the credit union’s field of membership may also be eligible for membership in another credit union. The name of the community credit union may be either generic in nature, be reflective of the defined field of membership, or contain appropriate wording such as “community”, “county”, etc. A name change requires the amendment of the credit union’s bylaws and Articles of Incorporation.
Contact the Division with any questions you may have.