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A state-chartered credit
union is a nonprofit, member-owned cooperative financial institution incorporated
to encourage thrift among its members, create a source of credit at a
reasonable rate and provide an opportunity for members to improve their
economic and social conditions. The Department encourages the formation
of new Illinois state-chartered credit unions and is an active participant
in the chartering process. The initial step in organizing a credit union
is completion of an application to the Credit Union Section. The Department
and credit union organizers then discuss compliance with common bond requirements,
the economic viability of the proposed credit unions, and the development
of a projected budget for first year operations. Following a favorable
investigation of these areas, the proposed new credit union will draft
a statement of incorporation, adopt standard bylaws, and provide the Department
with a commitment letter providing share insurance from either the
National Credit Union Administration or American
Share Insurance, Inc. The Director of the Department holds approval authority
for the granting of new charters.
Steps to Chartering Your Own Financial Institutions
Credit Union
Read the
Facts
A credit union is a
group of people who share a common bond such as working together, living
in the same neighborhood, belonging to the same church, union, or similar
organization, who....
- desire to own and
operate their own financial institution.
- agree to pool their
savings and use the deposits to make loans to fellow members and buy
government securities or other approved investments.
- share mutually in
the net income, via dividends, after deducting operating expenses and
required reserves.
A Board of Directors is
elected annually by the credit union members. Share balances are fully insured.
Operating policies and procedures are determined by the Board of Directors
but implemented by credit union employees and can include almost any kind
of consumer financial services.
An Illinois state-chartered credit union is regulated by the Division of Financial Institutions in accordance with the Illinois Credit Union
Act. DFI examines and supervises all chartered Illinois credit unions
to assure the safety and soundness of the financial institutions.
Is a Credit
Union Right for You?
- Credit unions are
owned by their members. They are created to meet the members’ financial
needs.
Over 2 millions
Illinois citizens belong to credit unions.
- Credit unions create
a source of credit at reasonable rates and provide an opportunity for
members to improve their economic and social conditions.
Since inception
of the credit union regulation in 1925, over 1,000 credit union charters
have been granted in Illinois.
- Credit unions help
members save. Most sponsoring organizations provide payroll deductions
where deposits and loan payments are made automatically during each
payroll period, at the member’s request.
Over 80% of
credit union savings are in occupational (common employer) credit
unions.
- Credit unions are
nonprofit corporations. Earnings after expenses are returned to the
members as dividends. Regulations do not limit the dividend rates paid
to members.
- Credit unions provide
loans at low rates.
The average
yield on credit union loans are generally lower than other financial
institutions.
Take Action
- Inform DFI of your
interest.
- Meet with individuals
from your group and sponsoring organization to determine if a credit
union will meet your needs.
- Obtain chartering
forms and other legal documents required to make an application.
- Identify and contact
other organizations for advice and assistance, including trade associations
and nearby credit unions.
- Hold an organizational
meeting to review the operating policies and projected budgets to ensure
that the proposed credit union is economically viable.
- Upon satisfactory
completion of state requirements, the Director will issue a charter
authorizing your group to operate its own financial institution.
What You’ll Need
for Your Credit Union 
- A completed Articles
of Incorporation and Application Form.
- A detailed business
plan.
- Proposed lending,
collection and investment policies.
- Resumes of all proposed
Board of Director members.
- Evidence of a commitment
for share insurance.
The organization of
a state-chartered credit union requires extensive planning and the intention
to devote the necessary time and effort to make the credit union a safe
and sound financial institution.
To learn more, telephone or write:
- Division of Financial Institutions
Credit Union Section
100 W. Randolph Street, Suite 15-700
Chicago, Illinois 60601
312/814-2010
or
- 320 W. Washington
Springfield, IL 62786
217/782-2834
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