FORT ROOTS FEDERAL CREDIT UNION TRUTH-IN- SAVINGS POLICY I. INTRODUCTION The Truth-in-Savings Act (TISA) was enacted in December 1991 as part of the Federal Deposit Insurance Corporation Improvement Act. The National Credit Union Administration (NCUA) adopted the Truth-in-Savings Regulations (Part 707) for credit unions which implement TISA. The following policy and procedures specifies how the Fort Roots Federal Credit Union will comply with the Truth-in-Savings regulations. The Credit Union will cooperate with NCUA to enforce the regulation and monitor ongoing compliance. Part 707 established rules for disclosing to members the dividend rate, annual percentage yield, all fees imposed in connection with an account, and other terms for an account upon account opening or upon the members request. There are disclosure requirements for member s periodic statements, the maturity and renewal to time accounts, and the advertisement of any deposit account. Part 707 also requires members be notified that account disclosures are available. The effective date for mandatory compliance with Truth-in-Savings is January 1, 1995. II. ACCOUNT EARNINGS The regulation requires that dividend earnings on each dividend bearing account be computed on the full amount of principal in the account each day for the dividend calculation period. A. Balance computation method 1. The Credit Union will use the daily balance method to compute dividends on the following accounts: Regular Share, Christmas Club, Checking, and Share Certificates. 2. The Account Disclosures will specify the method used for each particular account. B. Account earnings on closed account 1. Accrued but uncredited dividends will not be paid if a member closes any account prior to the time accrued dividends would be credited to the account.
C. Dividend accrual. The Credit Union s policy for dividend accrual is as follows: 1. Dividends will begin accruing when cash items are received. 2. Dividends will accrue for noncash items (i.e.share drafts or checks) deposited to all accounts on the business day the checks are deposited. D. Daily Dividend Rate The Credit Union shall calculate dividends by use of a daily rate of at least 1/365 of the dividend rate. In a leap year, a daily rate of 1/366 will be used. E. Rate information 1. Annual percentage yield (APY) The annual percentage yield is an annualized rate that reflects the relationship between the amount of dividends earned on an account and the frequency of compounding for a 365-day period. 2. APY formula The formula used to calculate the APY for purposes of responding to rate inquiries and providing maturity and renewal notices and advertising disclosures is set forth in Appendix A, Part I, to the NCUA Truth-in-Savings Regulation. The formula used to calculate the APY for periodic statements is set forth in Appendix A, Part II, to the NCUA Truth-in- Savings Regulation. 3. APY calculation For purposes of the Credit Union s TIS Account Disclosures (except periodic statements), the APY calculation will be based on: (i) an assumed term of 365 days for accounts without a stated maturity; and (ii) the actual days during the term for time accounts and Christmas Club accounts with a maturity date or time requirement. 4. Dividend Rate The Dividend Rate means the declared prospective paid on an account which does not reflect compounding. The Credit Union sets dividend rates on the following basis: For Regular Share and Christmas Club accounts, at the last board meeting in June and December for the dividend period. For checking accounts, rates are declared at the monthly meeting for that month. III. RESPONDING TO RATE INQUIRIES The Credit Union will provide members and potential members with oral rate information upon any rate inquiry received by Credit Union staff on Credit Union premises. A. Content. The oral rate information will include timely and accurate rate information as follows: 1. Annual Percentage yield for account inquired.
2. Dividend Rate for account inquired. 3. For time accounts the effective date of the rate and the Credit Union s telephone number for members to call. B. Accuracy. The API and Dividend Rates will be accurate according to the Credit Union s rate setting method. C. Delivery. The following staff members will be responding to rate inquiries: Manager and Clerk IV. ACCOUNT DISCLOSURES Truth-in-savings (TIS) Disclosures for each of the Credit Union s accounts will be furnished to members and potential members upon (i) the opening of an account; and (ii) upon a member or potential member s request for account disclosures to any Credit Union staff person by mail, in person, or by telephone. A. Account Opening Documents 1. Upon opening any account, members will be furnished with a Membership And Account Agreement (Account Agreement), a Funds Availability Policy Disclosure and TIS Account Disclosure (Rate and Fee Schedule) (the Account Opening Documents ). 2. Members opening accounts in person will be given the Account Opening Documents before the account is opened. 3. Members not present when opening accounts will be sent Account Opening Documents no later than 20 calendar days after the account is opened. B. Account Disclosures Upon Request Members and potential members will be furnished TIS Account Disclosures (Rate and Fee Schedule) upon request. 1. Members and potential members requesting TIS Account Disclosures by phone or by mail will be mailed a Rate and Fee Schedule within 20 business days after the business day of the request. Members and potential members requesting TIS Account Disclosures in person will receive the Rate and Fee Schedule as soon as possible after the request. C. Format of Disclosures The TIS Account Disclosure information will be printed in a Rate and Fee Schedule in a format that is clear and conspicuous. The Rate and Fee Schedule will contain TIS Account Disclosures for all accounts (i.e. share/savings, share draft/checking and share certificate). The Rate and Fee Schedule for all accounts may be printed on one or more Schedules. D. Content of Disclosures The Rate and Fee Schedule provided to members will include the following account rate information, terms and fees for each account, as applicable:
1. Annual percentage yield 2. Dividend rate (a) (b) Fixed-rate accounts. Fixed rate accounts state that a minimum 30 calendar days advance written notice of any rate decrease will be provided before the effective date of the change. The fixed rate period will be stated. Variable rate accounts. The Credit Union has the following variable rate accounts: Regular Share, Christmas Club, Checking, and Share Certificates. 3. The TIS Account Disclosures for variable rate accounts will state the Credit Union reserves the right to change dividend rates semi-annually on Regular Share and Christmas Club accounts and monthly for checking accounts. 4. Variable rate accounts have no rate change limitations. 5. Compounding and Crediting Frequency a. The dividend period and frequency of compounding and crediting for each account offered shall be disclosed. 6. Balance information a. The minimum balance to open an account, avoid the imposition of fees or obtain the APY will be disclosed, if applicable. b. The balance computation method used f or each account will be disclosed. The Credit Union uses the daily balance for each account. c. The daily balance means the application of a daily periodic rate to the full amount of principal in the account each day. 7. Dividend accrual policy 8. Fees Whether accrued but uncredited dividends will not be paid if the account is closed prior to dividend crediting. a. The Rate and Fee Schedule will show all account service fees and activity fees categorized for each account and a broad category of all other fees assessed for all accounts. b. The Rate and Fee Schedule will include the amount and conditions for all fees to the extent known and required to be disclosed. 9. Transaction limitations Any limits on the number or dollar amounts of deposits to, withdrawals from an account for the applicable time period will be disclosed.
10. Time account features the Rate and Fee Schedule for share certificate accounts will state: a. The term or maturity date. b. Any early withdrawal penalties that may be imposed. Also, the conditions under which an early withdrawal penalty will be assessed. c. If dividends may be withdrawn the fact that the APY assumes that dividends remain on deposit until maturity and that a withdrawal reduces earnings on the account. d. Renewal policies (1) The Credit Union s renewal policy. (2) Automatically renewable time accounts will have up to a 15 day grace period to withdrawal or close the account. V. MATURITY AND RENEWAL NOTICES FOR TIME ACCOUNTS Maturity notices will be provided to members nonrenewable time accounts. Renewal notices will be provided to members with automatically renewable accounts. A. Renewal Notices 1. Disclosure delivery policy a. For all time accounts, the Renewal Notice and current TIS Account Disclosures (Rate and Fee Schedule) will be mailed or delivered to account holders at least 30 days before maturity. 2. Contents of Renewal Notice a. The Renewal Notice will contain the appropriate account disclosures specified in regulation and a cross reference to the TIS Account Disclosure (Rate and Fee Schedule) for time accounts. b. The Renewal Notice will also contain: (1) The date the existing account matures; (2) A statement that the rates have not yet been determined;
(3) The maturity date of the renewed account; (4) The date when the dividend rate and APY will be determined; and (5) The Credit Union s phone number to call for dividend rate and APY. VI. PERIODIC STATEMENTS The regulation requires certain information to be included on or with each periodic statement to the extent a statement is provided. This requirement applies to all accounts that receive a statement on a regular basis four or more times a year. A. Accounts affected Periodic statement disclosures will be made to existing and new member deposit accounts opened no later than the mandatory compliance date. The Credit Union will provide the required disclosure to all affected accounts. B. Periodic statements disclosures The Credit Union s periodic statement will state the following for each affected account; the annual percentage yield earned, amount of dividends, fees, and length of the statement period, as applicable. 1. The annual percentage yield earned (APYE) reflects the relationship between the actual dividends earned during the statement period and the average daily balance of the same period. It does not reflect any fees imposed, bonuses, or extraordinary dividends earned. a. The formula for calculating the APYE is contained in Appendix A, Part II, of the regulation. 2. Amount of dividends a. Dividends are calculated based on the number of days in the statement period. b. The dollar amount of dividends earned during the statement period will be the figure that is shown on the periodic statement. c. The daily balance method is used to calculate the amount of dividends for all accounts. 3. Any maintenance or activity fee assessed in connection with the account will be disclosed on the periodic statement. Such fees will be itemized by type and shown as incurred or as a total figure by type of fee. 4. The length of the statement period will be shown by disclosing the total number of days in the period, the beginning and the ending date for the period, or both.
VII. NOTICE TO EXISTING ACCOUNTS The Credit Union will inform existing account holders that they can request account disclosures. A. A one-time disclosure notice will be sent to existing account holders on the first periodic statement as of the effective date. B. The Credit Union s one-time disclosure notice furnished to all periodic statement accounts holders will be printed on the periodic statement. C. Any member who requests Account Disclosures will be furnished the applicable Account Disclosure(s) requested within a reasonable time, but no later than twenty business days after the business day the request is received. VIII. ADVERTISING The Credit Union will not make any misleading or inaccurate advertising. Advertising referring to a dividend rate or annual percentage yield will reflect additional required disclosures in the advertisement. A. Advertising disclosures The statement of a dividend rate or annual percentage yield will require the following items to be disclosed where appropriate in ads, solicitations or announcements. 1. The APY figure calculated for the account according to Appendix A, Part I, of the regulation shown to two decimal places and rounded to the nearest one-hundredth of one percent. The accuracy tolerance is.05 above or below the correct rate. 2. The period of time the APY is offered. The Credit Union s advertisement will state the rate currently offered as of a specified date. 3. Any minimum balance required to earn the API. 4. Any minimum opening deposit if the amount is greater than the minimum necessary to earn the advertised API. 5. A statement of fees could reduce earnings on the account. 6. For variable rate accounts, a statement that the rate may change after the account is opened. B. Special media coverage 1. Only limited advertising disclosures will be provided when a dividend rate or annual percentage yield is mentioned in certain special media. a. Certain advertising disclosures are not required when using: (1) Broadcast media; (2) Electronic media;
(3) Outdoor media; and (4) Telephone response machines. b. For special media, only the following advertising disclosures are required: (1) The minimum balance requirements; (2) The term for a time account; and (3) Certain bonus disclosures, if applicable. 2. For accounts advertised in the Credit Union s newsletter or on an inside sign (lobby displays facing inside the office), two required disclosures will be given: a. The newsletter or inside sign will disclose the APY of the advertised account; and b. The ad or inside display will contain the statement: Ask an employee for further information about the fees and terms applicable to the advertised accounts. C. Any oral quotes provided to members or potential members will be expressed as an Annual Percentage Yield with optional information about the dividend rate. This covers in-person, live telephone and recorded telephone rate quotes given in response to a rate inquiry. D. Regulatory compliance All advertising, support materials and sales activities of the Credit Union will comply with all applicable federal and state regulations. IX. CONTROLS Management controls have been implemented to monitor Truth-in-Savings compliance and protect inadvertent and unintentional errors. A. The Compliance Officer will monitor compliance and report to the Board annually on the effectiveness of the Credit Union s Truth-in-Savings compliance efforts. B. The Compliance Officer is responsible for coordinating and monitoring interdepartmental compliance. The Compliance Officer will: 1. Develop policies and procedures to ensure compliance with the NCUA Truth-in Savings regulation; 2. Follow and implement policies or procedures for any changes to the Truthin-Savings regulation;
3. Assist all employees regarding interpreting and implementing the Truth-in-Savings regulation; 4. Routinely check all disclosure responsibilities and disclosure statements to determine the level of compliance; 5. Periodically check advertisements to determine the level of compliance; X. TRAINING 6. Routinely check TIS Account Disclosures to confirm current and accurate rate information; 7. Coordinate an annual Credit Union-wide review of Truth-in-Savings compliance; 8. Engage a third-party service to conduct a Truth-in-savings regulation annual review; 9. Report annual compliance findings to the Board of Directors; and 10. Update the Truth-in-savings regulation policy and procedures as required. The Credit Union will provide ongoing training to ensure compliance with the Truth-in- Savings regulation. A. Annual training will be conducted for member service staff who furnish member account information to members and potential members. B. Periodic training will be provided to support functions such as operations and data processing when needed. C. The annual third-party review findings will provide the facts and information to determine if support training is required. XI. RECORD RETENTION The Credit Union s record retention policy incorporates the specific record-keeping requirements of the Truth-in-Savings regulation. The record retention policy specifies how long documents are retained, where they are stored, who has access to the records, and when they are destroyed. A. Copies of all printed advertisements and the text or tapes of broadcast or electronic advertisements must be kept for two years. B. Microfiche, microfilm or other copies of periodic statements will be kept for two years. C. TIS Account Disclosures will be retained in a disclosure log to demonstrate compliance. Copies of each disclosure given to members will not be retained.
D. Members opening accounts will acknowledge that they have received an Account Disclosure by signing the Account Card. E. A copy of the one-time Notice of Availability of Disclosures furnished to account holders will be retained for a period of two years. F. Other information, forms and sample documents will be retained on microfiche or other storage techniques for a period of two years. G. The Operations Department is responsible for filming, storing and maintaining the appropriate records. The Compliance Officer and Operations Officer will both oversee destroying the documents.
FORT ROOTS FEDERAL CREDIT UNION BOARD OF DIRECTORS TRUTH-IN-SAVINGS RESOLUTION WHEREAS, Congress passed the Federal Deposit Insurance Corporation Improvement Act in 1991, which included the Truth-in-Savings Act, WHEREAS, the statute directed the National Credit Union Administration to publish Truth-in-Savings rules, which specify mandatory compliance by July 1, 1994, WHEREAS, our Credit Union believes that Credit Union account advertising should not be misleading, inaccurate or misrepresentative, WHEREAS, members should be given complete Account Disclosures regarding rates, terms, conditions, fees, methods of calculating dividends and other disclosures, WHEREAS, the Board directs management to implement comprehensive Truth-in-Savings regulation compliance policies and procedures conduct periodic tests and an annual compliance audit, and report its findings yearly to the Board, WHEREAS, our Credit Union will comply with the NCUA Truth-in-Savings regulation and cooperate with our NCUA to ensure enforcement BE IT RESOLVED the Board adopts the attached Truth-in-Savings policy and procedure submitted to the Board for approval. President Secretary Date