Share Accounts Disclosure
Objective and Scope
The purpose of this share accounts disclosure is to set forth Vizo Financial Corporate Credit Union’s (Corporate’s) share and share certificate account descriptions as it pertains to dividend payments and withdrawal provisions.
Delegation of Authority
The board of directors is charged with the general supervision of all investment activities. The board has designated an asset-liability management committee (ALCO) to have charge of developing investment strategies under controls established by the board of directors. The board further designates the execution of these strategies to an internal ALCO to execute the investment strategies and transactions developed by the ALCO. Composition of the internal ALCO is delegated to the chief executive officer (CEO) and president. The internal ALCO will determine the descriptions and provisions of the Corporate’s share accounts.
I. Insurance of accounts
- A. The Corporate shall insure its member accounts, except non-perpetual capital accounts (NCA) and perpetual contributed capital (PCC), as provided by and through the National Credit Union Share Insurance Fund (NCUSIF).
II. Share account/share certificate dividend and withdrawal provision
- A. Payment of dividends on share accounts and share certificates is not guaranteed. Dividends are paid from available earnings.
- B. Settlement Account: This is an overnight transaction and settlement account. There is no minimum balance requirement for the settlement account. Transfer in and out of the account can be made on a daily basis.
- C. Premium Share Account (PSA): This is an overnight account designed for liquid funds not needed to cover daily transaction and/or settlement activity. There is no minimum balance requirement for the PSA. Transfer in and out of the account can be made on a daily basis.
- D. PSA-30: Funds deposited into the premium share account PSA-30 must be left on deposit for at least 30 days before they can be withdrawn. Funds are available to the member at any time after the minimum 30 day initial deposit period only after providing the Corporate with a seven (7) day notice. Funds withdrawn prior to meeting the initial deposit and/or the notice requirements may be subject to an early withdrawal penalty.
- E. PSA-90: Funds deposited into the PSA-90 must be left on deposit for at least 90 days before they can be withdrawn. Funds are available to the member at any time after the minimum 90 day initial deposit period only after providing the Corporate with a seven (7) day notice. Funds withdrawn prior to meeting the initial deposit and/or the notice requirements may be subject to an early withdrawal penalty.
- F. Certificates of deposit: All certificates of deposit purchased by members are anticipated to be held to maturity. Members requesting withdrawals before a certificate’s maturity date will be subject to potential principal balance market gains or losses as per the early redemption value outlined in these policies. In the event of a termination of membership in the Corporate, early withdrawal will be permitted as funds become available and upon 60-day notice.
- G. Holiday account: The holiday account was designed for use by credit unions that provide their own members holiday accounts but can also be used as another excellent short-term investment account. The account matures and pays out all funds on November 1 of each year. Its pays a variable dividend rate based on a set spread above the PSA account rate. The spread over the PSA rate narrows as the maturity shortens. Members can make additional deposits into their holiday account throughout the year. The spreads over the PSA are established at each annual renewal period.
- H. Flex account: The flex account is a no maturity investment that pays a higher rate while allowing two withdraws per month on any business day without penalty. It has a minimum balance requirement of $5 million and a maximum of $100 million.
- I. Affiliate one (1)-year notice account: A one (1)-year notice account is required for affiliate credit unions that desire to purchase a line-of-credit from the Corporate. The maximum deposit is $2.5 million and the account pays a dividend rate equal to the PSA rate. The funds may be withdrawn only after the 1-year notice waiting period has expired. Once notice is given, the credit union forfeits its line-of-credit.
- J. Redemption prior to maturity: Early redemptions are permitted if requested by the certificate holder and if the Corporate and the certificate holder can agree on an early redemption value for the certificate.
- K. Early redemption value: The early redemption value is determined by calculating the net present value of a member certificate as well as the net present value of the Corporate asset offsetting the certificate. Therefore, the principal amount of the certificate will be adjusted to reflect differences in the market rates of interest at the time of redemption and the dividend rate applicable to the certificate. The early redemption value may have a greater or lesser value than the original principal balance and, therefore, early redemptions may result in either financial gains or losses for the certificate holder. The Corporate may or may not elect to sell the corresponding asset, however, any loss that would have been associated with the sale of the asset will be factored into the early redemption value. The obligation of the Corporate to the certificate holder on a certificate shall be satisfied, in full, upon payment to the account of the certificate holder of the agreed upon early redemption amount.
- L. Partial redemptions: Partial redemptions of certificates are generally not permitted. If a partial redemption is permitted, the early redemption value and amount would be determined as described in this policy. The Corporate share certificate accounts are neither negotiable nor assignable.
- M. Share pledges: Shares and certificates may be pledged as collateral for borrowing and/or to cover daily automated settlement activity. During the term of a pledge, no withdrawals are allowed from the shares or certificates that would reduce the balance below the dollar amount of the pledge.
III. Excess balance accounts: The Corporate will employ off-balance sheet strategies to help control the size of its assets on an ongoing basis. One such account is the Federal Reserve’s Excess Balance Account (EBA) program. Under this program, the Corporate
can hold member funds at the Federal Reserve on the members’ behalf while acting in a custodial role. This account allows for a safe means of holding temporary funds for members that will not be invested without impacting assets and therefore capital ratios.
- A. The Corporate may offer members any structure and dividend rate on the EBA account(s). Regardless of structure and rate, dividends will be paid monthly on all EBA accounts. The Corporate offers an EBA, EBA-30, and EBA-90 accounts. The terms on the EBA accounts will be same as the comparable on-balance sheet deposit although the rate may be higher or lower than the rate paid to on-balance sheet account.
- B. Affiliate credit unions with settlement accounts who do not have PCC, will be required to store all excess funds in an EBA account and will not be eligible to participate in any other higher paying EBA accounts.
- C. Affiliate credit unions will have access to all certificate of deposit accounts based on the discretion of the Corporate staff, but pricing may be different than a member certificate. All certificates, member and affiliate, will all adhere to the appropriate policy sections above.