Member Expulsion & Limitation of Services Policy

1.Purpose

This policy establishes the standards and procedures under which Homebase Credit Union (“the Credit Union”) may limit services or expel a member for cause. The purpose of this policy is to protect the Credit Union’s members, staff, assets, and reputation; ensure fair and consistent treatment; and comply with regulatory requirements, including NCUA’s Membership Expulsion Rule under the Credit Union Governance Modernization Act (CUGMA).

2. Scope

This policy applies to all members of Homebase Credit Union. It governs conduct that may result in limitation of services or expulsion from membership and outlines the rights and responsibilities of members and the Credit Union.

3. Definitions

Member in Good Standing: A member who:
- Maintains at least their minimum share, as defined within the Credit Union's bylaws;
- Has not had any account with the Credit Union closed due to abuse or negligent behavior;
- Has not engaged in fraudulent activities;
- Has not engaged in violent, belligerent, disruptive, or abusive activities such as:
- Violence, intimidation, threats, harassment, or physical or verbal abuse of duly elected or appointed officials or employees of the Credit Union, members, or agents of the Credit Union. This includes actions while on Credit Union premises and through use of telephone, mail, email or other electronic method;
- Causes or threatens damage to Credit Union property;
- Unauthorized use or access of Credit Union property;
- Knowingly disseminating incorrect, misleading, confidential, or proprietary information regarding the Credit Union; or
- Any actions that may cause material risk or financial harm to the Credit Union.

Limitation of Services: The Credit Union may limit services for any member that is not in good standing. For violent, belligerent, disruptive, or abusive activities, the Credit Union will limit services when there is a logical relationship between the activities and the services to be suspended. For example, if a member is verbally or physically abusive to a Credit Union employee or other members, the Credit Union may refuse to permit the member onto the Credit Union premises and/or may further restrict the availability of certain services to limit personal contact with Credit Union employees or members. Whether violent, belligerent, disruptive, or abusive activities has occurred will be determined in the sole discretion of the Credit Union and Credit Union's Management.
Expulsion for Cause: Removal of a member by a two‑thirds vote of a quorum of the Board for substantial or repeated violations.
Substantial Violation: A serious violation of the membership agreement or Credit Union policy that may justify initiating the expulsion process without a prior warning, and may result in immediate protective actions such as limitation of services while the expulsion process is pending.
Repeated Violation: A violation that occurs again within a two-year period after the member has received a written warning describing the conduct and notifying the member that future occurrences may result in expulsion.

4. Criteria for Limitation of Services

The Credit Union may limit a member’s services if the member:

engages in abusive, disruptive, or threatening conduct toward staff or members;
repeatedly violates policies, membership agreements, or branch rules;
causes financial, reputational, or regulatory risk to the Credit Union.

Members subject to service limitation will receive written notice specifying the nature of the limitation.

5. Criteria for Expulsion

A member may be expelled for cause if the member:

commits or attempts fraud against the Credit Union or its members;
causes a financial loss and fails to remedy or arrange acceptable repayment;
engages in illegal, violent, abusive, or threatening behavior toward Credit Union staff, members, or property;
substantially or repeatedly violates the membership agreement or this policy.

A determination that a violation is “substantial” does not eliminate the member’s right to notice, an opportunity to be heard, or a Board vote. All expulsions, including those based on substantial violations, will follow the notification, hearing, and decision-making process outlined in this policy and applicable law.

In cases involving substantial violations, the Credit Union may take immediate protective actions, including limitation or suspension of services, to protect members, employees, and assets while the expulsion process is underway.

Expulsion is a last resort and must follow required due‑process procedures.

6. Notification & Member Rights

Warning Notice: For repeated but non-substantial violations, the Credit Union will send a written warning explaining the violation and stating that future occurrences may result in expulsion.
Notice of Pending Expulsion: The member will receive written notice at least 60 calendar days before any Board vote on expulsion. The notice will include the reason(s) for the proposed action, key dates, how to respond, and the member’s right to request a hearing or submit a written statement.
Right to a Hearing (Request Window): The member may request a hearing within 60 calendar days of receipt of the Notice of Pending Expulsion. If the member does not request a hearing, membership may terminate after the 60-day period.
Hearing Review Committee (Formation and Role):
- If the member requests a hearing, the Credit Union will form a Hearing Review Committee to receive and review the member’s information.
- Composition: The committee will include two (2) members of the Board of Directors and one (1) Credit Union employee appointed by the CEO (or designee). The employee member will be a senior leader or subject matter expert appropriate to the issue (e.g., Compliance, Risk, Security, Operations).
- Purpose: The committee’s role is to ensure the member has a meaningful opportunity to be heard, to gather relevant facts, and to provide an objective summary and recommendation to the full Board.
- Process: The committee will review the notice basis, any supporting documentation, and the member’s oral or written statements. The committee may ask clarifying questions and request additional documentation as needed.
- Recordkeeping: The committee will document the hearing date, attendance, materials reviewed, and key points raised by the member.
Hearing Format: The hearing may be conducted by video conference or telephone, and the member may be allowed (or required) to submit supporting documentation in advance. The committee will not consider reasons for expulsion that were not included in the Notice of Pending Expulsion.
Board Vote (Final Decision): After the hearing is completed, the Hearing Review Committee will present a summary to the full Board. The Board will vote on expulsion within 30 calendar days after the hearing (or within 30 days after the expiration of the 60-day request period if no hearing is requested).
Notice of Decision / Expulsion: If the member is expelled, the Credit Union will provide written notice of the decision and include: effective date, account/service impacts, share payout process (less amounts owed), continued liability for debts, and how the member may request reinstatement (if applicable).
Non-Discrimination: Expulsion and limitation of services will not be used in a discriminatory or retaliatory manner, including retaliation for complaints to regulators or lawful member activity

7. Effects of Expulsion

An expelled member must have all shares refunded (minus amounts owed). Expulsion does not relieve a member of liability for outstanding balances. All accounts will be closed according to applicable law and Credit Union procedures.

8. Reinstatement

An expelled member may apply for reinstatement by written request to the Board. The Board may reinstate the member at its discretion based on demonstrated corrective behavior and risk considerations.

9. Communication of Policy

This policy will be made available on the Credit Union’s website, at branches, and in new‑member onboarding materials. All members will be notified when the Board adopts or updates this policy.

10. Review & Oversight

The Board of Directors will review this policy at least annually. Management will maintain documentation of notices, hearings, decisions, and reinstatements for a minimum of six years.