Information and Procedure for the Organization of a State-Chartered Credit Union

New York State chartered credit union membership is limited to persons having one or, with the approval of the Superintendent of Financial Services, which approval shall not be given if it would be destructive of competition within a municipality, more than one common employer; or to persons who are members of the same trade, profession, club, union, society or association; or to persons and organizations who are residents of the same town, village or other political subdivision of the State and who in the judgment of the Superintendent of Financial Services, have a community of interest as will ensure proper administration of the credit union. Unless expressly prohibited by the by-laws, the spouses and lineal ancestors and descendants of eligible members are also eligible for membership, as are employees of the credit union.

A credit union must have a potential membership of at least the minimum number required by the National Credit Union Administration (NCUA) to qualify for NCUA insurance. You should contact the NCUA to ascertain their requirements.

Where the proposed credit union is to be sponsored by an employer or other organization, the written support and cooperation of the sponsoring organization must be secured. This support is of great benefit to a developing credit union and may manifest itself in several ways. Payroll deduction for loans and share payments, the use of rent free space, the use of equipment or a gift of cash are some of the ways in which a sponsor may help to ease the burden of start-up costs and ensure orderly growth.

State chartered credit unions are under the supervision of the New York State Department of Financial Services and are examined, at the credit union's expense, at least once in each calendar year. In addition, credit unions are subject to periodic examination by the NCUA as the insurer of state chartered credit unions. A credit union is owned and controlled by its members. Management is delegated to the following bodies:




Board of Directors

General management and policy making responsibilities.

5-15 member selected by the shareholders.

Supervisory Committee

Auditing and supervising the acts of directors, officers and credit committee.

Number fixed in the bylaws, but not less than 3 members. (A)

Credit Committee

Approve loan applications.

The same as for Supervisory Committee. (A, B).


As prescribed in the credit union's bylaws.


(A) Members of these committees are elected by the shareholders or, if the bylaws so provide, they may be appointed by the Board of Directors.

(B) If the bylaws provide, a loan officer may be appointed in lieu of a credit committee.

Members of the Supervisory Committee may not serve as a loan officer or as a member of the credit committee or as a member of the board of directors. The officials of the credit union are responsible for operating it in accordance with the provisions of the New York Banking Law and Department of Financial Services Regulations, the credit union's bylaws, and to those Rules and Regulations of the NCUA, which apply to all insured credit unions.

It is incumbent upon the organizers to ascertain that the prospective membership includes individuals who are capable of maintaining a set of business books and are willing to devote the time and effort to conscientiously perform their duties and discharge their responsibilities in a prescribed manner. The organizers should also be aware that services to the credit union may be largely voluntary. Of course, professional full-time management may be retained if desired.

The Board of Directors should recognize from the outset that applicable laws and regulations must be complied with. Directors and committee members must also be aware that the Board of Directors, the Supervisory Committee and the Credit Committee have separate and distinct duties and responsibilities, and each is equally necessary to the welfare of the credit union. Members’ shares must be insured by the NCUA. Application for share insurance must be made, and the assurances of the NCUA that it is willing to insure the proposed credit union must be received, prior to the approval and filing of the Organization Certificate by the New York State Department of Financial Services.

Among other requirements, the incorporators will be required to complete and submit fingerprints. In addition, an investigative background report is required on the incorporators. It is their responsibility to order such reports at their own expense from an acceptable independent licensed private investigation company. You may contact the New York State Department of State for a list of licensed private investigators. We will furnish a list of items that must be covered in the reports upon request. Please note that the private investigation company must provide all background investigation reports directly to the New York State Department of Financial Services.

Please note: Do not order any reports until you meet with the Department of Financial Services as discussed below.

Credit unions are considered banking organizations, and have fiduciary responsibilities and obligations to the public. It is the duty of the New York State Department of Financial Services to make certain that credit unions are fulfilling their mission to serve the public. This duty is not taken lightly. All of the requirements for organizing and operating a credit union must be completed as required by law and regulation. If you find that it would not be advantageous to organize a credit union, your group may choose to join an existing credit union in your area.

If you decide to pursue the organization of a New York State chartered credit union, write to us informing us of your decision. Your letter should include: information on the proposed field of membership (the common bond discussed above); the number of potential members (including the number expected to become immediate members); the names of the incorporators and an outline of their experience or qualifications to manage a credit union. After our review of this information, we will contact you to arrange a meeting with the proposed incorporators and/ or their representatives.

Any questions you have can be addressed at that meeting and our staff will discuss the requirements and timing of the various steps in the application process.