Organizational/Management Plan Addressing Qualifications and Planned Training of Officials and Employees

Officials (board, supervisory committee and credit committee)

Most credit union officials volunteer their time and cannot be compensated. However, reimbursement of reasonable expenses incurred in the execution of the duties of the position is not considered compensation. Such expenses, if permitted, should be addressed in a written reimbursement policy.

In this step, identify the individuals selected to initially serve as officials of the PFCU, including:

• Board of Directors – The credit union must have an odd number of members between 5 and 15. Only one board member may be compensated as an officer of the board.
• Supervisory Committee Members – This required committee must have between 3 and 5 members.
• Credit Committee Members – If used, this committee must have an odd number of members between 3 and 7. Loan officers may be used instead of, or in conjunction with, a credit committee.

In limited cases, volunteers may serve concurrently on the board of directors and on either the supervisory committee or the credit committee. However, the Federal Credit Union Act, Federal Credit Union Bylaws, the NCUA’s Regulations, and principles of sound internal controls place restrictions on individuals from simultaneously serving in certain conflicting positions.

The NCUA has specific requirements for the board of directors. See Section 701.4 of the NCUA’s Regulations and the NCUA Letter to Federal Credit Unions 11-FCU-02, Duties of Federal Credit Union Board of Directors for additional information.

When selecting directors, be confident they possess or can quickly acquire the skills to:

• Carry out the duties of a director in good faith, in the best interests of the membership, and with such care as an ordinarily prudent person in a like position would use under similar circumstances;
• Administer the affairs of the credit union fairly, impartially, and without discrimination;
• Direct management’s operations in conformity with the Federal Credit Union Act, the NCUA’s Regulations, other applicable law, and sound business practices; and
• Have a working familiarity with basic finance and accounting practices, including the ability to read and understand the credit union’s balance sheet and income statement, and to ask, as appropriate, substantive questions of management and the internal and external auditors.

Directors should possess the requisite financial skills within six months of being appointed or elected.

Each prospective official must complete the NCUA 4012 Report of Official and Agreement to Serve form, and a resume. Submit all resumes in Phase 2 with the business plan. You will submit NCUA 4012 forms during Phase 3.

The NCUA will evaluate a prospective applicant’s competence, experience, character, and integrity to ensure his or her association with a newly chartered credit union is in the best interests of the credit union's members and the public. This evaluation is performed through a review of every individual’s NCUA 4012 form, resume, credit report, and criminal background check.

Senior Management and Credit Union Staff

Discuss the number of employees, their titles, and the anticipated compensation and benefits in this section of the business plan. Include a job description for each job title as well as a training schedule. Staff should have experience or expertise in offering and managing the products and services to be offered. The more sophisticated the products and services, the greater the experience and expertise required. Documentation must demonstrate each employee is either qualified to handle the responsibilities outlined in the job description or identify the necessary training to adequately prepare the employee prior to opening the PFCU. The training plan should also include how the employees will be trained to use the data processing system and identify the associated training costs.

Identify senior management employees. You will submit NCUA 4012 forms for all senior management employees in Phase 3. Non-senior management staff will not complete an NCUA 4012 form.

All management arrangements and agreements with third parties (such as another credit union) must be in writing and reviewed by an attorney representing the PFCU’s interest.

Be sure to incorporate all compensation (including benefits) and training costs into the pro forma financial statements.

Documentation Required for Organizational/Management Plan (addressing qualifications and planned training of officials and employees)

• Provide draft copies of lease agreements and vendor contracts, along with any attorney’s written review of a contract, if applicable. Typical contracts might include a management contract or core data processing vendor contracts.
• Provide a resume for each director, committee member, and management and summarize qualifications.

Note: After submitting the business plan in this phase, you will submit a Report of Official and Agreement to Serve (NCUA 4012 form) for every individual who intends to serve as an official and/or senior management of the PFCU. This will be done during phase 3. NCUA 4012 forms are not required for staff members or for individuals serving solely as subscribers.