Senate Bill No. 477
(By Senators Manchin, Helmick and Wagner)
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[Introduced February 19, 1996; referred to the Committee
on Banking and Insurance.]
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A BILL to repeal article ten, chapter thirty-one of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; and to amend said code by adding thereto a new
chapter, designated chapter thirty-one-b, all relating
generally to providing for the organization, operation and
supervision of cooperative, nonprofit thrift and credit
associations to be known as credit unions and to define
their powers.
Be it enacted by the Legislature of West Virginia:
That article ten, chapter thirty-one of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
repealed; and that said code be amended by adding thereto a new chapter, designated chapter thirty-one-b, to read as follows:
CHAPTER 31B. CREDIT UNIONS.
ARTICLE 1. SUPERVISION AND REGULATION.
§31B-1-1. Definitions.
(a) In construing this chapter, the following definitions
shall apply unless such application would produce a result
clearly inconsistent with the context of the statutory provision.
(1) "Board of banking and financial institutions" means the
board created pursuant to section one, article three, chapter
thirty-one-a of this code and is referred to herein as "board."
(2) "Commissioner" means the West Virginia commissioner of
banking.
(3) "Corporate credit union" means a credit union whose
field of membership consists primarily of other credit unions.
(4) "Credit union" means a cooperative, nonprofit
corporation, incorporated under this chapter, for the purposes of
encouraging thrift among its members, creating a source of credit
at fair and reasonable rates of interest, and providing an
opportunity for its members to use and control their own money on
a democratic basis in order to improve their economic and social
condition.
(5) "Deposit account" means a balance held by a credit
union and established by a member, another credit union or a
governmental unit in accordance with standards specified by the
credit union including balances designated as deposits, deposit
certificates, checking accounts or other names. Ownership of a
deposit account does not confer membership or voting rights and
does not represent an interest in the equity capital of the
credit union upon dissolution or conversion to another type of
institution. A deposit account is a debt owed by the credit
union to the account holder.
(6) "Equity capital" means reserves, loan loss and
investment loss allowance accounts, and undivided earnings.
(7) "Fixed asset" means a structure, land, computer hardware
and software, furniture, office equipment and heating and cooling
equipment that is affixed to premises.
(8) "Governmental unit" means any board, agency, department,
authority, instrumentality or other unit or organizations of the
federal, state, county, municipal or other level of government.
(9) "Immediate family" means one's wife or husband, and
children, brothers, sisters or parents of the member or their
spouse. The term "children" also includes stepchildren, foster children, and adopted children.
(10) "Insolvent" means the condition that results when the
institution is unable to pay its debts to its depositors, members
and other creditors in the ordinary and usual course of business
or when it is in a state of balance sheet insolvency such that
its assets are less than its liabilities, exclusive of equity
capital. The term "about to be insolvent" means the institution
would be unable to meet the demands of its depositors or members,
or to make adequate provision for their timely payment if it were
immediately closed for the purpose of liquidation.
(11) "Insuring organization" means an organization that
provides aid and financial assistance to credit unions that are
in the process of liquidation or are incurring financial
difficulty in order that the share and deposit accounts in the
credit unions shall be protected or guaranteed against loss
either without limit or up to a specified level for each account.
(12) "Membership share" means a balance held by a corporate
credit union and established by a member in accordance with
standards specified by the corporate credit union. Ownership of
a membership share represents an interest in the capital of the
corporate credit union upon dissolution or conversion to another type of institution.
(13) "Organization" means any corporation, association,
partnership, society, firm, syndicate, trust or other legal
entity.
(14) "Person" means any natural person, organization or
governmental unit.
(15) "Reserves" means allocations of retained income and
includes regular and special reserves, except for any allowances
for loan losses and investment losses.
(16) "Risk assets" means all assets other than cash on hand,
deposits and/or shares in federally or state-insured banks,
savings and loan associations, and credit unions that have a
remaining maturity of five years or less, or which otherwise
qualify as a risk assets as set forth in 12 CFR 700.1(i) and
shall include membership shares in corporate credit unions.
(17) "Share account" or "shares" means a balance held by a
credit union and established by a member in accordance with
standards specified by the credit union including balances
designated as shares, share certificates, share draft accounts or
other names. However, it does not include membership shares
issued by a corporate credit union. Ownership of a share account confers membership and voting rights and represents an interest
in the equity capital of the credit union upon dissolution or
conversion to another type of institution.
(b) This chapter shall become effective the first day of
July, one thousand nine hundred ninety-six.
§31B-1-2. Authority of commissioner and board of banking and
financial institutions.
The commissioner of the division of banking shall be
responsible for the supervision and regulation of credit unions
incorporated under this chapter or previously incorporated under
this code. The commissioner is specifically charged with
administering the supervisory and regulatory responsibilities set
forth in this chapter, in conjunction with the board of banking
and financial institutions as set forth in section two, article
three, chapter thirty-one-a of this code.
§31B-1-3. Powers of commissioner.
(a) The commissioner may prescribe rules to implement any
provision of this chapter and to define any term not defined in
the chapter. Such rules shall serve to foster and maintain an
effective level of credit union services and the security of
member accounts.
(b) The commissioner may restrict the withdrawal of share or
deposit accounts or both from any credit union having determined
circumstances make such restriction necessary for the proper
protection of shareholders or depositors.
(c) The commissioner may issue cease and desist orders
pursuant to section four, article two, chapter thirty-one-a of
this code if a credit union is engaged or has engaged, or when
the commissioner has reasonable cause to believe the credit union
is about to engage, in an unsafe or unsound practice, or is
violating or has violated or the commissioner has reasonable
cause to believe is about to violate a material provision of any
law, rule or any condition imposed in writing by the commissioner
or any written agreement made with the commissioner.
(d) The commissioner may suspend from office and prohibit
from further participation in any manner in the conduct of the
affairs of a credit union any director, officer or committee
member who has committed any violation of a law, rule or of a
cease and desist order or who has engaged or participated in any
unsafe or unsound practice in connection with the credit union or
who has committed or engaged in any act, omission, or practice
which constitutes a breach of that person's fiduciary duty as such director, officer or committee member, when the commissioner
has determined that such action or actions have resulted or will
result in substantial financial loss or other damage that
seriously prejudices the interests of the members.
(e) The commissioner shall have the power to subpoena
witnesses, compel their attendance, require the production of
evidence, administer oaths, and examine any person under oath in
connection with any subject relating to a duty imposed upon or a
power vested in the commissioner.
(f) The commissioner may enter into cooperative,
coordinating or information-sharing agreements with any other
state or federal credit union supervisory agency or any
organization affiliated with or representing one or more credit
union supervisory agencies.
(g) The commissioner shall also in connection with the
supervision of credit unions have all powers set forth in article
two, chapter thirty-one-a of this code relating to the regulation
of credit unions as financial institutions and to any subsidiary
or affiliate organization of such credit union.
§31B-1-4. Suspension; involuntary liquidation.
(a) If it appears that any credit union is bankrupt, insolvent, about to be insolvent, or that it has willfully
violated this chapter, or is operating in an unsafe or unsound
manner, the commissioner may, without prior hearing, issue an
order temporarily suspending the credit union's operations. The
credit union's board of directors shall be given notice by
registered mail of such suspension, which notice shall include a
list of the reasons for such suspension, and a list of the
specific violations of this chapter, if any. The commissioner
shall also notify the insuring organization and the board of
banking and financial institutions of any suspension.
(b) Upon receipt of such suspension notice, the credit union
shall cease all operations, except those authorized by the
commissioner. The credit union's board of directors shall then
file with the commissioner a reply to the suspension notice
within five business days of its receipt, and must therein
request a hearing to be held within sixty days to present a plan
of corrective actions proposed if they desire to continue
operations. Alternatively, the credit union's board of directors
may request that the credit union be declared insolvent and a
liquidating agent be appointed.
(c) Upon receipt from the suspended credit union of evidence that the conditions causing the order of suspension have been
corrected, the commissioner may revoke the suspension notice,
permit the credit union to resume normal operations, and notify
the insuring organization and the board of banking and financial
institutions of such action.
(d) If the commissioner, after issuing notice of suspension
and providing an opportunity for a hearing, rejects the credit
union's plan to continue operations, or if the commissioner after
accepting or directing a plan for continued operations finds that
the credit union has failed to comply with the plan's substantive
corrective provisions; then the commissioner may issue a notice
of involuntary liquidation and appoint a liquidating agent. The
credit union shall be given at least sixty days in which to take
corrective action upon acceptance or issuance of any corrective
plan by the commissioner. The credit union may request the
appropriate court to stay execution of an involuntary liquidation
sought under this subsection. However nothing in this section
prevents the commissioner from appointing a conservator pursuant
to section three, article seven, chapter thirty-one-a of this
code, including a temporary appointment of a conservator pending
the correction of the conditions causing the suspension, nor appointing a receiver and seeking to liquidate the credit union
pursuant to section four, article seven, chapter thirty-one-a of
this code when necessary in order to protect the interest of the
credit union's members and depositors.
(e) If, within the suspension period, the credit union fails
to answer the suspension notice or request a hearing, the
commissioner may then revoke the credit union's charter, appoint
a liquidating agent and liquidate the credit union.
(f) In the event of liquidation, the assets of the credit
union or the proceeds from any disposition of the assets shall be
applied and distributed in the following sequence:
(1) Secured creditors up to the value of their collateral;
(2) Costs and expenses of liquidation;
(3) Wages due the employees of the credit union;
(4) Costs and expenses incurred by creditors in successfully
opposing the release of the credit union from certain debts as
allowed by the commissioner;
(5) Taxes owed to the United States or any other
governmental unit;
(6) Debts owed to the United States;
(7) General creditors, secured creditors to the extent their claims exceed the value of their collateral and owners of deposit
accounts to the extent such accounts are uninsured;
(8) Members, to the extent of uninsured share accounts and
the organization that insured the accounts of the credit union;
and
(9) Members of a corporate credit union, to the extent of
membership shares.
As soon as the appointed liquidating agent determines that
all assets from which there is a reasonable expectancy of
realization have been liquidated and distributed as set forth in
this section, a certificate of dissolution shall be executed on
a form prescribed by the commissioner and filed with the
secretary of state, which shall after filing and indexing same,
be forwarded to the commissioner, whereupon the credit union
shall be dissolved. The liquidating agent shall return all
pertinent books and records of the liquidating credit union to
the commissioner.
§31B-1-5. Examinations.
(a) The commissioner shall annually examine or cause to be
examined each credit union. A credit union and any of its
officers and agents shall be required to give the commissioner or the commissioner's representatives full access to all books,
papers, securities, records and other sources of information
under their control.
(b) A report of such examination shall be forwarded to the
credit union's board of directors within thirty days after
completion. Said report shall contain comments relative to the
management of the affairs of the credit union and the general
condition of its assets. Within thirty days after the receipt of
such report, the directors and committee members shall meet to
consider matters contained in the report. Every official
communication from the commissioner to any such institution, or
to any officer thereof, relating to an examination or an
investigation of the affairs of such institution conducted by the
commissioner or containing suggestions or recommendations as to
the manner of conducting the business of the institution, shall
be read to the board of directors at the next meeting after the
receipt thereof, and the president, or other executive officer,
of the institution shall within fourteen days of such meeting
notify the commissioner in writing of the presentation and
reading of the communication and of any action taken thereon by
the institution.
(c) In lieu of making an examination of a credit union, the
commissioner may accept an examination or audit report of the
condition of the credit union made by the national credit union
administration.
§31B-1-6. Records.
(a) A credit union shall maintain all books, records,
accounting systems, and procedures in accordance with such rules
as the commissioner from time to time prescribes. In prescribing
such rules, the commissioner shall consider the relative size of
a credit union and its reasonable capability of compliance.
Unless otherwise required or permitted by a specific rule, credit
unions shall follow the record retention requirements set forth
in section thirty-five, article four, chapter thirty-one-a of
this code.
(b) A credit union is not liable for destroying records
after the expiration of the record retention time prescribed by
subsection (a) of this section, except for any records involved
in an official investigation or examination about which the
credit union has received notice.
(c) Reproduction of any credit union records shall be
admissible as evidence of transactions with the credit union as provided in section seven-b, article one, chapter fifty-seven;
and section thirty-five, article four, chapter thirty-one-a of
this code.
§31B-1-7. Reports.
(a) Credit unions shall report to the commissioner
semiannually during January and July of each calendar year on a
date set by the commissioner for the business periods ending the
thirtieth day of June and the thirty-first day of December
respectively on forms supplied by the commissioner for that
purpose. Additional reports may also be required.
(b) A charge of one hundred dollars shall be levied for each
day a credit union fails to provide a required report, unless it
is excused for cause by the commissioner or courts.
(c) The fiscal year of each credit union incorporated under
this chapter shall end on the last day of December.
§31A-1-8. Assessments.
The commissioner of banking shall charge and collect from
each credit union and pay into a special revenue account in the
state treasury for the department of banking an annual assessment
payable on the first day of July computed upon the total assets
of the credit union shown on the report of condition of the credit union as of the last business day in December of the
previous year as is set out in section eight, article two,
chapter thirty-one-a of this code.
ARTICLE 2. FORMATION OF CREDIT UNION.
§31B-2-1. Organization procedure.
(a) Any eight or more residents of this state, of legal age,
who share the common bond referred to in section one, article
four of this chapter, may organize a credit union and become
charter members thereof by complying with this section.
(b) The incorporators shall prepare, adopt and execute in
duplicate articles of incorporation and agree to the terms
thereof. The articles shall state:
(1) The credit union's name, and the address of the proposed
credit union's principal place of business;
(2) That the existence of the credit union shall be
perpetual;
(3) The names and addresses of the incorporators to the
articles of incorporation, and the number of shares subscribed to
by each, which for each incorporator shall be not less than one
share; and
(4) The par value of each share to be issued.
(c) The incorporators shall prepare, adopt and execute in
duplicate bylaws consistent with this chapter for the general
government of the credit union. The bylaws shall state:
(1) The conditions and qualifications of membership;
(2) The conditions upon which shares may be issued,
transferred and withdrawn;
(3) The number of directors, their powers and duties; and
the compensation and duties of all officers;
(4) The date of the annual meeting and requirements as to
notice and manner of conducting such meeting;
(5) The term of service for directors, which terms shall be
staggered so that an approximately equal number expire each year;
(6) The number and term of service for supervisory committee
members, together with their powers and duties;
(7) The number and the term of service for credit committee
members, unless the bylaws provide for the board of directors to
act as the credit committee, and their respective powers and
duties;
(8) The purposes and conditions upon which loans may be
made;
(9) The manner of a member's appeal for a loan application disapproved by a loan officer, if the bylaws provide for the
appointment of loan officers; and
(10) The par value of shares, and where applicable in
corporate credit unions, any membership shares.
(d) The incorporators shall select at least five persons who
are eligible for membership and who agree to become members and
serve on the board of directors, and at least three other persons
who are eligible for membership and who agree to become members
and serve on the supervisory committee. The persons selected to
serve on the board of directors and supervisory committee shall
execute an agreement to serve in these capacities until the first
annual meeting or until the election of their respective
successors, whichever is later.
(e) The incorporators shall provide to the commissioner an
affidavit of the expenses incurred or anticipated in the
organization of the credit union.
(f) In their application to obtain a certificate of charter
the incorporators shall forward to the commissioner the duplicate
articles of incorporation and bylaws and the agreements to serve.
The submission of these documents shall be accompanied by an
investigation fee of one hundred dollars payable to the commissioner.
§31B-2-2. Certification of charter; and certificate of
authority.
(a) The commissioner shall review the incorporation
agreement and bylaws together with other information submitted as
the commissioner may prescribe and complete the examination and
investigation on an application to charter a credit union within
ninety days, unless a written request for additional information
or disclosures are made by the commissioner, in which event, the
period of ninety days shall be extended an additional thirty
days. Upon public hearing and obtaining written approval by
order of the commissioner, the agreement and bylaws, both
executed in duplicate, together with a certified copy of the
order and applicable corporation chartering fees shall be
forwarded to the secretary of state for processing as in the case
of any other corporate charter application. A certificate of
charter shall be approved by the commissioner if the articles and
bylaws are in conformity with this chapter and the commissioner
is satisfied that:
(1) The characteristics of the common bond set forth in the
proposed bylaws are favorable to the economic viability of the proposed credit union;
(2) The proposed capital structure is adequate;
(3) Provision has been made for suitable quarters from which
to conduct the business of a credit union; and
(4) The reputation, character, and abilities of the initial
board of directors and supervisory committee provide assurance
that the credit union's affairs will be properly administered.
(b) The secretary of state shall upon receipt of any
applicable fees, file and record the incorporation charter, and
return a copy of the bylaws and one of the duplicate originals of
the articles of incorporation to the incorporators or their
representatives. The original articles and bylaws shall be
preserved in the permanent files of the credit union.
(c) Any order to grant or deny a certificate of charter
shall be accompanied by findings of fact and conclusions of law
upon which the decision was based. If a certificate of charter
is denied by the commissioner, he or she shall notify the
incorporators and provide a copy of the order, which shall set
forth reasons for the denial. The commissioner's decision may be
appealed to the board of banking and financial institutions
within thirty days, and if no appeal is made of an order to deny the application, the agreement of incorporation, the corporation
chartering fees, and any other papers filed therewith shall be
promptly returned to the attorney, agent, or other responsible
person representing the incorporators in the application.
(d) Upon receipt of a certificate of charter, the
incorporators of the credit union shall promptly apply to the
commissioner for a certificate of authority to engage in business
and comply with the provisions of section five, article two,
chapter thirty-one-a of this code, in advance to the issuance of
the credit union's certificate of authority. The incorporators
shall likewise comply with other provisions of this chapter
relating to completion of its corporate organization, and the
corporation's readiness to commence business as a credit union.
(f) Upon the credit union's application, and the
examination, approval, and receipt of a certificate of authority
from the commissioner, a credit union may commence to engage in
business. The procedure and criteria for the certificate of
authority licensure shall be those set forth in section five,
article two, chapter thirty-one-a of this code for nonbank
financial institutions.
(g) The certificate of authority shall be preserved and displayed in the place of business of the credit union.
(h) If a certificate of authority is denied by the
commissioner, he or she shall notify the applicant and set forth
reasons for the denial. The credit union may appeal the
commissioner's decision to the board of banking and financial
institutions within thirty days.
§31B-2-3. Articles and bylaws.
(a) In order to simplify the organization of credit unions,
the commissioner may cause to be prepared model articles of
incorporation and bylaws, consistent with this chapter, which may
be used by credit union incorporators for their guidance. Such
articles of incorporation and bylaws shall be available to
persons desiring to organize a credit union.
(b) The articles of incorporation and the bylaws may be
amended as provided in the articles and bylaws, respectively.
Amendments to the articles of incorporation or bylaws shall be
submitted to the commissioner who shall approve or disapprove the
proposed amendments within sixty days.
(c) Amendments shall become effective upon approval in
writing by the commissioner. If the commissioner disapproves any
proposed amendment, the credit union may appeal the decision to the board within thirty days.
§31B-2-4. Use of name exclusive.
(a) The name of every credit union organized under this
chapter shall include the phrase "credit union." No credit
union may adopt a name either identical to the name of any other
credit union doing business in this state or so similar to the
name of any other credit union doing business in this state as
to be misleading or to cause confusion.
(b) No person, other than a credit union incorporated under
this chapter, the federal credit union act or a credit union
authorized to do business in this state under section six,
article two of this chapter, and association of credit unions, or
an organization, corporation, or association whose membership or
ownership is primarily limited to credit unions or credit union
organizations, may use a name or title containing the phrase
"credit union" or any derivation thereof, represent itself as a
credit union, or conduct business as a credit union.
(c) Violation of this section constitutes a misdemeanor
punishable by a fine of not more than one hundred dollars for
each day of illegal use of such name, by imprisonment for not
more than one year, or both.
(d) The commissioner may petition a court of competent
jurisdiction to enjoin a violation of this section.
§31B-2-5. Branches and other service facilities.
(a) A credit union may change its principal place of
business within this state upon notice to, and approval in
writing of, the commissioner.
(b) A credit union may maintain other service facilities
and branches, including automated teller machines (ATMs), at
locations other than its principal office upon notice to and
approval in writing of the commissioner. The maintenance of
such facilities must be reasonably necessary to furnish service
to its members. The creation of such facilities must be approved
by a majority vote of the credit union's board of directors.
(c) A credit union may, upon notice and approval in writing
of the commissioner, join with one or more other credit unions or
other financial organizations in the operation of automated
teller machines (ATMs) or other service facilities. The joint
operation of such facilities must be approved by a majority of
the credit union's board of directors.
(d) To the extent that a credit union provides its members
access to their accounts through a remote service unit, e.g., ATM or point-of-sale (POS) device, the credit union shall be governed
by the same rules of the commissioner pertaining to banks
operating through customer bank communication terminals (CBCTs).
§31B-2-6. Out-of-state credit unions.
(a) A credit union organized under the laws of another state
or territory of the United States may conduct business as a
credit union through a branch or service facility in this state
with the approval by written order of the commissioner, provided
credit unions incorporated under this chapter are allowed to do
business in the other state under conditions similar to these
provisions. Unless the context clearly requires otherwise, the
term "territory of the United States" shall, as used in this
chapter, include the District of Columbia. Before granting the
approval, the commissioner must upon public hearing find that the
out-of-state credit union:
(1) Is a credit union organized under laws similar to this
chapter;
(2) Is financially solvent and has an adequate capital
structure;
(3) Has account insurance as required for credit unions
incorporated under this chapter;
(4) Has a board of directors and supervisory committee with
the reputation, character, and abilities to provide assurance
that the credit union's affairs will be properly administered;
(5) Has in connection with any office of operations in this
state made provision for suitable quarters from which to conduct
the business of a credit union;
(6) Is examined and supervised by a regulatory agency of the
state or territory in which it is organized; and
(7) Needs to conduct business in this state to adequately
serve its members in this state.
(b) No out-of-state credit union may conduct business in
this state unless it:
(1) Complies with the limits on finance charges applicable
to credit unions set forth in section two, article seven of this
chapter when making loans in this state;
(2) Complies with the consumer protection statutes and rules
applicable to credit unions incorporated under this chapter;
(3) Agrees to furnish the commissioner a copy of the report
of examination of its regulatory agency, and if deemed necessary
by the commissioner, to submit to an examination by the
commissioner, the cost of which shall be paid for by the credit union; and
(4) Designates and maintains an agent for the service of
process in this state.
(c) The commissioner may revoke the approval of a credit
union to conduct business in this state if the commissioner finds
that:
(1) The credit union no longer meets the requirement of
subsection (a) of this section;
(2) The credit union has violated the laws of this state or
lawful rules or orders issued by the commissioner;
(3) The credit union has engaged in a pattern of unsafe or
unsound credit union practices; or
(4) Continued operation by the credit union is likely to
have a substantially adverse impact on the financial, economic or
other interests of residents of this state.
§31B-2-7. Conducting business outside this state.
A credit union incorporated under this chapter may conduct
business outside of this state in other states or territories
where it is permitted to conduct business as a credit union. The
activities and records of such credit union business conducted
outside this state remain fully under the jurisdiction and supervision of the commissioner. Prior to the establishment of
any branch or service facility outside this state, a credit union
shall provide notice to, and obtain written approval of, the
commissioner. The creation of such facilities must be approved
by a majority vote of the credit union's board of directors.
§31B-2-8. Tax exemption.
(a) Any credit union organized under this or any other
credit union act and all shares and deposits therein shall be
exempt from all taxation now or hereafter imposed by this state
or any taxing authority within this state. No law which taxes
corporations in any form, or the shares or deposits thereof, or
the accumulation thereon, shall apply to any such credit union;
except that any real property and any tangible personal property
owned by any such credit union shall be subject to taxation to
the same extent as other similar property is taxed, provided that
this exception shall not permit the imposition of any sales or
use taxes on the credit union.
(b) The shares of any such credit union shall not be subject
to stock, transfer taxes, either when issued or when transferred
from one member to another.
(c) The participation by a credit union in any government program providing unemployment, social security, old age pension
or other benefits shall not be deemed a waiver of the taxation
exemption hereby granted.
§31B-2-9. Credit unions heretofore organized need not obtain new
charter; actions validated.
All credit unions which have been heretofore legally
organized under chapter thirty-six of the acts of the
Legislature, one thousand nine hundred twenty-five and which are
in existence on the effective date of this section; and all
credit unions which have been heretofore legally organized under
article ten, chapter thirty-one of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, and which are in
existence on the effective date of this section, shall upon the
effective date of this section be considered to have been
organized under the provisions of this article, and shall not be
required to obtain a new charter or to reorganize hereunder. All
acts and things done by any such credit unions, insofar as such
acts and things shall not have constituted any violation of law
as it shall heretofore have existed, shall be deemed valid and
effective.
ARTICLE 3. POWERS OF CREDIT UNION.
§31B-3-1. General powers.
In addition to the powers mentioned elsewhere in this
chapter, a credit union may:
(a) Enter into contracts necessary for the conduct of its
business as authorized under this statute;
(b) Sue and be sued;
(c) Adopt, use and display a corporate seal;
(d) Acquire, lease, hold, assign, sell, discount or
otherwise dispose of property or assets, either in whole or in
part, necessary or incidental to its operation;
(e) Borrow from any source, provided that a credit union
must obtain approval of the commissioner in writing of its
intention to borrow in excess of an aggregate of twenty percent
of its equity capital and shares, and in no event shall its
borrowing be in excess of an aggregate of fifty percent of its
equity capital and shares;
(f) Purchase the assets of another credit union;
(g) Offer related financial services, including, but not
limited to, electronic fund transfers, safe deposit boxes,
leasing and correspondent arrangements with other financial
institutions;
(h) Hold membership in other credit unions organized under
this or other acts, and in associations and organizations
controlled by or fostering the interests of credit unions,
including a central liquidity facility organized under state or
federal law;
(i) Engage in activities and programs as requested by any
governmental unit;
(j) Act as fiscal agent for and receive payments on share
and deposit accounts from a governmental unit;
(k) Make contributions to any nonprofit civic, charitable or
service organization;
(l) Receive the savings of its members either as payment on
shares, or as deposits (including the right to conduct Christmas
clubs, vacation clubs and other thrift organizations within the
membership); and
(m) Make loans for provident, productive, nonspeculative
purposes to members, including a cooperative society or other
organization having membership in the credit union.
§31B-3-2. Incidental powers.
A credit union may exercise all incidental powers that are
convenient, suitable or necessary to enable it to carry out its purposes.
§31B-3-3. Advantageous federal powers.
Unless exercise of a power is specifically denied, the
commissioner may prescribe rules authorizing credit unions to
exercise any of the powers conferred upon federal credit unions
if the commissioner deems it appropriate for the purposes of
credit unions in this state and a benefit to their members.
ARTICLE 4. MEMBERSHIP.
§31B-4-1. Membership defined.
(a) The membership of a credit union shall consist of those
persons who share a common bond set forth in the bylaws, have
been duly admitted members, have paid any required one-time or
periodic membership fee, or both, have subscribed to one or more
shares and have complied with such other requirements as the
articles of incorporation and bylaws specify.
(b) Credit union membership shall be limited to, persons
within one or more groups having a common bond or bonds of
similar occupation, employer, association or interest, and
members of the immediate family of such persons.
§31B-4-2. Organizations.
(a) Organizations comprised primarily of individuals who are eligible for membership in the credit union, and corporations
whose total number of stockholders or whose majority stockholders
are comprised primarily of such individuals, may be admitted to
membership in the same manner and under the same conditions as
individuals. Likewise, organizations one of whose principal
functions is to provide services to persons who are eligible for
membership in the credit union may be admitted to membership.
Other organizations having a commonality of interest with the
credit union may be admitted to membership with the approval of
the commissioner.
(b) Any corporate credit union organized under this chapter
may accept as a member any other credit union organized under
this or any other act.
§31B-4-3. Membership applications.
The board of directors of the credit union shall act upon
applications for membership or appoint one or more membership
officers to approve applications for membership under such
conditions as the board prescribes. A record of the actions
taken by a membership officer shall be made available in writing
to the board of directors for inspection. A person denied
membership by a membership officer may appeal the denial to the credit union's board of directors.
§31B-4-4. Members who cease to be eligible.
Members who cease to be eligible for membership may be
permitted to retain their membership in the credit union, under
reasonable standards established by the credit union's board of
directors.
§31B-4-5. Liability and expulsion of members.
(a) The members of the credit union shall not be personally
or individually liable for the payment of its debts solely by
virtue of holding membership.
(b) Any member may be expelled by a two-thirds vote of its
members present at any regular meeting or a special meeting
called to consider the matter, but only after an opportunity has
been given the member to be heard.
(c) The credit union's board of directors may expel a member
pursuant to a written policy adopted by it. All members shall be
given written notice of the terms of any such policy upon
becoming a member. Any person expelled by the credit union's
board of directors shall have the right to request a hearing
before it to reconsider the expulsion.
§31B-4-6. Meetings of members.
(a) The annual meeting and any special meetings of the
members of the credit union shall be held in accordance with the
bylaws.
(b) At all such meetings a member shall have but one vote,
irrespective of the member's shareholdings. No member may vote
by proxy, but a member may vote by absentee ballot, mail or other
method if the bylaws of the credit union so provide.
(c) The credit union's board of directors may establish a
minimum age, not greater than eighteen years of age, as a
qualification of eligibility to vote at meetings of the members
or to hold office, or both.
(d) An organization having membership in the credit union,
may be represented and have its vote cast by one of its members
or shareholders, provided such person has been so authorized by
the organization's governing body.
§31B-4-7. Calling of special meeting.
(a) The supervisory committee by a majority vote may call a
special meeting of the members to consider any violation of this
chapter, the credit union's articles of incorporation or bylaws,
or any practice of the credit union deemed by the supervisory
committee to be unsafe or unauthorized; and may call a special meeting to consider the suspension or removal of any officer or
director of the credit union as provided for in this chapter.
(b) The bylaws may also prescribe the manner in which a
special meeting of the members may be called by the members or by
the credit union's board of directors or both.
(c) The commissioner may also require the directors of a
credit union to call a special meeting of the members pursuant to
his or her authority under section nine, article two, chapter
thirty-one-a of this code.
ARTICLE 5. DIRECTION OF CREDIT UNION AFFAIRS.
§31B-5-1. Authority and responsibility of directors.
The credit union's board of directors shall have the
authority and responsibility for directing the business affairs,
funds, and records of the credit union. In addition to the
duties found elsewhere in this article, it shall be the special
duty of the credit union's board of directors to:
(a) Purchase adequate fidelity coverage for the chief
executive officer and for other active officers and employees
handling or having custody of funds or property.
(b) Authorize the employment and compensation of the chief
executive officer who shall hire such other persons necessary to carry on the business of the credit union.
(c) Approve an annual operating budget for the credit union.
(d) Authorize the conveyance of property.
(e) Borrow or lend money to carry on the functions of the
credit union.
(f) Appoint any special committees deemed necessary.
(g) Perform such other duties as the members from time to
time direct, and perform or authorize any action not inconsistent
with this chapter and not specifically reserved by the bylaws for
the members.
The credit union's board of directors shall meet each month.
The board may meet at other times as is necessary. Board
meetings may be conducted by means of telephone as provided in
the bylaws in a manner consistent with state law.
§31B-5-2. Election of directors and selection of supervisory and
credit committee members.
(a) The credit union's board shall consist of an odd number
of directors, at least five in number, to be elected by and from
the members. Elections shall be held at the annual meeting or in
such other manner as the bylaws provide. All members of the
credit union's board shall hold office for such terms as the bylaws provide, except that terms shall be staggered so that an
approximately equal number expire each year.
(b) A supervisory committee of not less than three persons
shall either be elected by the membership at the annual meeting
or appointed by the credit union's board of directors at the
organization meeting held within thirty days following each
annual election for such terms as the bylaws provide.
(c) At the same organization meeting, the credit union's
board of directors shall appoint a credit committee, unless the
bylaws provide for the board of directors to act as the credit
committee. The committee shall consist of an odd number, not
less than three, whose terms shall be as the bylaws provide.
§31B-5-3. Record of officials; and filing vacancies.
(a) Within twenty days after each organization meeting, a
record of the names and addresses of the members of the board and
such other committees and officials, as required by the
commissioner, shall be filed with the commissioner.
(b) The credit union's board of directors shall fill any
vacancies occurring in the board until successors elected at the
next annual election have qualified. The credit union's board
shall also fill vacancies in the credit committee and, if appointed by them, the supervisory committee. If the supervisory
committee is elected by the members, then any vacancies thereon
shall be filled by selection by the remaining supervisory
committee members.
§31B-5-4. Compensation of officials; and conflicts of interest.
(a) No officer, director or committee member, other than an
employee, may be compensated for services, except as provided in
section one, article five of this chapter. However, providing
reasonable life, health, accident and similar insurance
protection shall not be considered compensation. Directors,
officers and committee members may be reimbursed for necessary
expenses incidental to the performance of official business of
the credit union.
(b) No director, committee member, officer, agent or
employee of the credit union shall in any manner, directly or
indirectly, participate in the deliberation upon or the
determination of any question affecting that person's pecuniary
interest or the pecuniary interest of any corporation,
partnership, or association (other than the credit union) in
which that person is directly or indirectly interested.
§31B-5-5. Officers.
(a) At their organization meeting held within thirty days
following each annual election, the credit union's board of
directors shall elect from their own number a chairman of the
board, one or more vice chairmen, a treasurer and a secretary.
The office of secretary and treasurer may, if the bylaws so
provide, be held by one person. They shall also elect any other
officials that are specified in the bylaws.
(b) The terms of the officers shall be one year, or until
their successors are chosen and have been duly qualified.
(c) The duties of the officers shall be prescribed in the
bylaws.
(d) The credit union's board of directors shall appoint a
president to act as the chief executive officer of the credit
union and be in active charge of its operations.
(e) Notwithstanding any other provision of this chapter, a
credit union may use any titles it chooses for the officials
holding the positions described in this chapter, as long as such
titles are not misleading.
§31B-5-6. Executive committee.
The credit union's board of directors may appoint from its
own number an executive committee, consisting of not less than three directors, which may be authorized to act for the board in
all respects. These actions are subject to subsequent review by
the full credit union's board of directors and any other
conditions or limitations prescribed by the board of directors.
§31B-5-7. Credit committee and loan officers.
(a) The credit committee shall have the general supervision
of all loans to members. It may approve or disapprove loans,
subject to written policies established by the board of
directors.
(b) The credit committee shall meet as often as the business
of the credit union requires to consider applications for loans
and/or review the work of the loan officers. No loan shall be
made by the credit committee unless it is approved by a
disinterested majority of the committee who are present at the
meeting at which the application is considered.
(c) If the bylaws so provide, the board of directors may act
as the credit committee.
(d) The credit union's board of directors or credit
committee may appoint one or more loan officers and delegate the
power to approve or disapprove loans, subject to such limitations
or conditions as the credit committee or credit union's board of directors prescribes.
(e) A member whose application was disapproved by a loan
officer may appeal such action to the credit committee or credit
union's board of directors, as appropriate under the bylaws.
§31B-5-8. Audits.
(a) The supervisory committee shall make or cause to be made
a comprehensive annual audit of the books and affairs of the
credit union. It shall submit a report of each annual audit to
the credit union's board of directors and a summary of that
report to the members at the next annual meeting of the credit
union. Such reports shall be filed and preserved with the
records of the corporation.
(b) The supervisory committee of not less than three elected
or appointed members shall make or cause to be made such
supplementary audits, examinations, and verifications of members'
accounts as it deems necessary or as are required by the
commissioner or by the credit union's board of directors, and
submit reports of these supplementary audits to the credit
union's board of directors.
(c) The workpapers of any audit, including any materials
associated with an audit of the credit union's electronic data procedures, shall be made available to the commissioner or to the
examiners of the department of banking upon request, and will be
accorded confidentiality in conformity with section four, article
two, chapter thirty-one-a of this code.
§31B-5-9. Fidelity bonds, required oaths and hazard insurance.
(a) As a condition precedent to qualification or entry upon
the discharge of their duties, all active officers, as well as
every person appointed or elected to any position requiring the
receipt, payment or custody of money or other personal property
owned by a credit union or in its custody or control as
collateral or otherwise, shall give a bond in some responsible
corporate surety company, licensed to do business in this state,
in such sufficient amount as the credit union directors shall
require and approve. The bonds shall provide for indemnity to
the credit union on account of any losses sustained by it as the
result of any dishonest, fraudulent or criminal act or omission
by such persons acting independently or in collusion or
combination with others. The bonds may be in individual,
schedule or blanket form, and the premiums therefor shall be paid
by the credit union.
(b) No officer or employee who is required to give bond shall be deemed qualified nor shall be permitted to enter upon
the discharge of their duties until their bond shall have been
approved by a majority of the credit union's board of directors.
(c) The credit union's board of directors shall also direct
and require suitable insurance protection to the credit union
against burglary, robbery, theft, and other insurable hazards to
which the credit union may be exposed in the operations of its
business on the premises or elsewhere.
(d) The credit union's board of directors shall be
responsible for prescribing at least once each year the amount or
penal sum of the bonds or policies and the sureties or
underwriters thereon, after giving due and careful consideration
to all known elements and factors constituting such risk or
hazard. This action shall be recorded in the minutes of the
board of directors. At any time the commissioner may require
additional bond or security, when, in his or her opinion, the
bonds then executed and approved are insufficient.
(e) Upon their election or appointment each director,
officer and member of a committee shall individually make an oath
that they will, as far as the duty devolves upon them, diligently
and honestly administer the affairs of the credit union, and will not knowingly violate, or willingly permit to be violated, any of
the provisions of law applicable to the credit union, and that
they are each the owner in good faith in their own right on the
books of the credit union of at least one share therein. This
oath shall be subscribed by the individual making it, and be
certified by the officer before whom it was taken, and shall
immediately be transmitted to the commissioner and filed and
preserved in his or her office.
§31B-5-10. Suspension and removal of officials.
(a) The supervisory committee by a two-thirds vote of the
entire committee may suspend any member of the credit committee
and shall report such action to the credit union's board of
directors. The credit union's board of directors shall meet not
less than seven nor more than twenty-one days after such
suspension to take appropriate action.
(b) The supervisory committee by a two-thirds vote of the
entire committee may recommend suspension of any officer or
member of the credit union's board of directors. A meeting of a
quorum of the remaining board members shall convene in person and
take action on the recommendation, which meeting shall be held
not less than seven nor more than twenty-one days after such proposed suspension. The suspension matter shall be acted upon
at the board meeting and the person shall either be removed for
cause, or restored to office. If the supervisory committee is
not satisfied with the board's action, it may call a special
meeting of the members or elect to bring the matter before the
next member's regular meeting, and the issue will be acted upon
at the meeting by the members and the person shall either be
removed for cause, or reaffirmed to office. At any such member's
meeting the person at issue shall have the right to appear and be
heard.
(c) Any member of the supervisory committee or of the credit
committee may be suspended or removed for cause by the board of
directors by a two-thirds vote of those present at a meeting for
failure to perform duties in accordance with this chapter, the
articles of incorporation, or the bylaws. The committee member
shall have the right to appear and be heard at such meeting.
ARTICLE 6. ACCOUNTS.
§31B-6-1. Share accounts and membership shares.
(a) Share accounts and membership shares (if any) shall be
subscribed to and paid for in such a manner as the bylaws
prescribe.
(b) A corporate credit union may require its members to
subscribe to and make payments on membership shares.
(c) The par value of shares and any membership shares shall
be as prescribed in the bylaws. Par value of shares shall not
be less than one dollar nor more than ten dollars per share.
(d) Membership shares may not be pledged as security on any
loan.
(e) A credit union may limit the number of shares which may
be owned by a member, but any such limit shall apply alike to all
members.
§31B-6-2. Dividends.
(a) The credit union's board of directors shall establish
the dividend period. Rates of dividends and the terms of payment
may be established in advance by action of the board of
directors. Dividends may be paid at various rates with due
regard to the conditions that pertain to each type of account
such as minimum balance, notice and time requirements.
(b) The commissioner may, if circumstances warrant,
establish the maximum dividend that a credit union or corporate
credit union may pay in each classification of its savings.
§31B-6-3. Deposit accounts.
(a) A credit union may accept deposit accounts from its
members, other credit unions and governmental units subject to
the terms, rates and conditions established by the board of
directors.
(b) Interest may be paid on deposit accounts at various
rates with due regard to the conditions that pertain to each type
of account such as minimum balance, notice and time requirements.
(c) Funds in share and deposit accounts may be withdrawn for
payment to the account holder or to third parties, in such manner
and in accordance with such procedures as are established by the
board of directors, subject to any rules the commissioner
prescribes.
(d) Share and deposit accounts shall be subject to any
withdrawal notice requirement which is imposed pursuant to the
bylaws.
(e) A membership share may not be redeemed or withdrawn
except subject to the terms set forth by the corporate credit
union.
§31B-6-4. Minor accounts.
Payments on share and deposit accounts may be received from
a minor who may withdraw funds from such accounts including the dividends and interest thereon. Payments on share and deposit
accounts by a minor and withdrawals thereof by the minor shall be
valid in all respects. For such purposes a minor is deemed of
full majority age.
§31B-6-5. Joint accounts.
(a) A member may designate any person or persons to own a
share or deposit account with the member in joint tenancy with
the right of survivorship, as a tenant in common or under any
other form of joint ownership permitted by law, but no coowner,
unless a member in own right, shall be permitted to vote, obtain
loans, or hold office or be required to pay a membership fee.
(b) Payment of part or all of such accounts to any of the
coowners shall, to the extent of such payment discharge the
liability to all unless: (1) The account agreement contains a
prohibition or limitation on such payment; or unless (2) the
credit union had received notice in writing signed by any one of
such joint tenants not to pay such deposit in accordance with the
terms thereof, prior to its payment. The commissioner may
promulgate rules regarding notice to joint account holders of
their rights and liabilities under this section.
§31B-6-6. Trust accounts.
(a) Share and deposit accounts may be owned by a member in
trust for a beneficiary, or owned by a nonmember in trust for a
beneficiary who is a member.
(b) Beneficiaries may be minors, but no beneficiary unless
a member in that person's own right, shall be permitted to vote,
obtain loans, hold office or be required to pay a membership fee.
(c) Payment of part or all of such a trust account to the
party in whose name the account is held shall, to the extent of
such payment, discharge the liability of the credit union to that
party and to the beneficiary, and the credit union shall be under
no obligation to see to the application of such payment.
(d) In the event of the death of the party who owns a trust
account, if the credit union has been given no other written
notice of the existence or terms of any trust and has not
received a court order as to disposition of the account, account
funds and any dividends or interest thereon shall be paid to the
beneficiary.
(e) The operation of trust accounts as permitted in this
section does not constitute engaging in a trust business as set
forth in chapter thirty-one-a of this code.
§31B-6-7. Payable-on-death accounts.
Notwithstanding any other provision of law a credit union
may establish share and deposit accounts payable to one or more
persons during their lifetimes and on the death of all of them to
one or more payable-on-death payees. An account established
under this section must be identified as a "payable-on-death"
account or abbreviated as a "p.o.d." account. Any transfer to a
payable-on-death payee is effective by reason of the account
contract and shall not be considered to be a testamentary
transfer.
§31B-6-8. Liens.
The credit union shall have a general lien on the share
accounts, any membership shares, and accumulated dividends of a
member for any sum owed the credit union by said member and for
any loan endorsed by that member. The credit union shall also
have a right of immediate setoff with respect to every deposit
account. The credit union may also refuse to allow withdrawals
from any share or deposit account. The credit union may waive
its rights to a lien, to immediate setoff, to restrict
withdrawals, or to any combination of such rights with respect to
any share or deposit account or groups of such accounts.
§31B-6-9. Share and deposit insurance.
(a) Before the incorporators of a credit union forward the
corporate documents to the commissioner under subsection (d),
section two, article two of this chapter they shall apply for
insurance on share and deposit accounts from the National Credit
Union Administration under Title II of the Federal Credit Union
Act (12 U.S.C. §1781 et. seq).
(b) A credit union which has lost its commitment for such
insurance shall within thirty days commence steps to either
liquidate, or merge with an insured credit union, or apply in
writing to the commissioner for additional time to obtain another
insurance commitment. The commissioner may grant one or more
extensions of time to obtain the insurance commitment upon
satisfactory evidence that the credit union has made or is making
a substantial effort to achieve the conditions precedent to
issuance of the commitment.
(c) No persons shall be granted a certificate of authority
to engage in business by the commissioner to operate a credit
union unless they have obtained a commitment for insurance of its
share and deposit accounts.
(d) The commissioner may make available reports of condition
and examination findings to the appropriate insuring organization and may accept any report of examination made on behalf of such
organization.
(e) A state-chartered corporate credit union must only apply
for and maintain share and deposit insurance in the amounts and
of the same kind as would be required for a similarly situated
federally chartered corporate credit union.
§31B-6-10. Reduction in shares.
(a) Whenever the losses of any credit union, resulting from
a depreciation in value of its loans or investments or otherwise,
exceed the aggregate of its undivided earnings, reserves and
membership shares if any, so that the estimated value of its
assets is less than the total amount of share accounts, and the
board of directors determines that the credit union may be
subject to involuntary liquidation, the credit union board may
propose a reduction in shares. The credit union may by a
three-fourths majority vote of those voting on the proposition
order a reduction in the share accounts of each of its
shareholders to divide the loss in proportion to the
shareholdings held by shareholders in their respective share
accounts.
(b) If the credit union thereafter realizes from such assets a greater amount than was fixed by the order of reduction, such
excess shall be proportionately restored to the shareholders
whose assets were reduced, but only to the extent of such
reduction.
ARTICLE 7. LOANS.
§31B-7-1. Purpose and conditions of loans.
A credit union may loan to members for such purposes and
upon such conditions as the bylaws may provide. The board of
directors shall establish written policies with respect to the
granting of loans and the extending of lines of credit, including
the terms, conditions and acceptable forms of security.
§31B-7-2. Finance charge.
The finance charges imposed by the credit union on loans
shall be determined by the credit union's board of directors,
subject to the limitations established by this state. Unless
otherwise permitted or prescribed by this code, the finance
charge rate shall not exceed one and one-half percent per month,
computed on unpaid balances.
§31B-7-3. Additional charges.
(a) In addition to interest on loans, a credit union may
charge members reasonable expenses in connection with the making,
closing, disbursing, extending or renewing of loans.
(b) A credit union may assess charges to members, in
accordance with the bylaws, for failure to meet their obligations
to the credit union in a timely manner. A credit union may also
assess charges for other benefits, including insurance, as
allowed for lenders under law.
(c) Any charges in connection with a consumer loan,
including late charges and deferral charges, permitted under this
section shall conform and be limited to those allowed under
article three, chapter forty-six-a of this code.
§31B-7-4. Applications.
Except as provided for in section six, article seven of this
chapter, every application for a loan shall be made in writing
upon a form prescribed by the credit union and shall state the
purpose of the loan as well as the security or collateral
offered, if any. Each loan shall be evidenced by a written
document.
§31B-7-5. Loan limit; collateral requirements; and repayment.
(a) The aggregate of loans to any one member shall be
limited to ten percent of the credit union's assets. This limit
shall not apply to loans which are fully secured by assignments
of shares or deposits in the credit union.
(b) Loans to members which in the aggregate exceed the
amount shown in the schedule below shall be secured by such
collateral having a value which is at least equal to any amount
exceeding the limits in the following schedule, except that all
loans exceeding five thousand dollars not subject to collateral
shall be supported by a sworn financial statement:
(1) Five hundred dollars, in credit unions with assets of
less than five thousand dollars;
(2) One thousand dollars in credit unions with assets of
five thousand dollars and less than twenty-five thousand dollars;
(3) Two thousand dollars in credit unions with assets of
twenty-five thousand dollars and less than one hundred thousand
dollars;
(4) Five thousand dollars in credit unions with assets of
one hundred thousand dollars and less than five hundred thousand
dollars;
(5) Seven thousand dollars in credit unions with assets of
five hundred thousand dollars and less than one million dollars;
and
(6) Ten thousand dollars in credit unions with assets of one
million dollars or more.
(c) A borrower may pay the whole or part of the borrower's
loan on any day the credit union is open for business.
§31B-7-6. Line of credit.
(a) Upon written application by a member, the credit
committee or loan officer may approve a line of credit, and loan
advances may be granted to the member within the limit of such
line of credit. Access to the line of credit may be by use of a
lender credit card. Where a line has been approved, no
additional credit application is required as long as the
aggregate indebtedness does not exceed the approved limit.
(b) Lines of credit shall be subject to periodic review by
the credit union, in accordance with the written policies of the
credit union's board of directors, and approved or disapproved as
to the granting of further loan advances.
§31B-7-7. Participation loans.
A credit union may participate in loans to credit union
members jointly with other credit unions, credit union
organizations or other organizations pursuant to written policies
established by the credit union's board of directors. A credit
union which originates such a loan shall retain an interest of at
least ten percent of the face amount of the loan.
§31B-7-8. Other loan programs.
(a) A credit union may participate in any guaranteed loan
program of the federal or state government under the terms and
conditions specified in the law under which such a program is
provided.
(b) A credit union may purchase the conditional sales
contracts, notes and similar instruments of its members.
(c) A credit union may finance for any person the sale of
its personal property, including property obtained as a result of
defaults in obligations owed to it, under the terms, conditions
and rates provided by this chapter.
§31B-7-9. Loans to officials.
(a) A credit union may permit officers, directors and
members of its supervisory and credit committees to act as
comakers, guarantors or endorsers of loans to other members,
subject to the requirements of subsection (b) of this section.
(b) A credit union may make loans to its officers, directors
and members of its supervisory and credit committees, provided
that:
(1) The loan complies with all requirements of this chapter
and is not on terms more favorable than those extended to other borrowers; and
(2) The aggregate of loans to or guaranteed by all such
officials combined, excepting those secured by shares or
deposits, may not exceed twenty percent of the credit union's
assets, and shall be shown in aggregate as a separate item in the
reports rendered by the credit union and filed with the
commissioner pursuant to section seven, article one of this
chapter.
(c) No credit union officer, director, or member of its
supervisory or credit committee may participate in making a
credit approval of a loan in which they have a self-interest. If
any member of the credit committee makes an application to borrow
money from the credit union or becomes surety for any other
member whose application for a loan is under consideration, the
supervisory committee shall appoint a substitute to act on the
credit committee in place of that member, during the
consideration of the application.
ARTICLE 8. OTHER MEMBER SERVICES.
§31B-8-1. Insurance for members.
A credit union may purchase or make available credit life or
other credit insurance for its members either on an individual or group basis.
§31B-8-2. Indemnification of officers.
A credit union may indemnify its officers, directors or
employees by purchase of insurance or otherwise, to the extent
that such indemnification is permitted to that institution under
federal law. Indemnification articles or bylaws must conform to,
or be more restrictive than, that set forth in section nine,
article one, chapter thirty-one of this code. The commissioner
reserves the right to prohibit or limit, by regulation or order,
any indemnification payment for reasons of safety and soundness
or nonconformity to the credit union's articles of incorporation
or bylaws or to the restrictions placed on indemnification
contained in this section or other applicable state law.
§31B-8-3. Group purchasing.
A credit union may enter into marketing arrangements and
joint ventures with other credit unions, organization or
financial institutions to facilitate its members' voluntary
purchase of goods, insurance and other services from third
parties, consistent with the purposes of the credit union. A
credit union may be compensated for services so provided.
§31B-8-4. Money-type instruments.
A credit union may collect, receive and disburse moneys in
connection with the providing of negotiable checks, money orders,
travelers' checks and other money-type instruments, and the
providing of these services through automated teller machines
(ATMs) and for such other purposes as may provide benefit or
convenience to its members. A credit union may charge fees for
such services.
§31B-8-5. Retirement accounts and trust authority.
A credit union may provide pension savings programs and
deferred income accounts, including individual retirement
accounts.
In order to carry out its authority under this section, a
credit union may:
(a) Contract for the provision of trust services to its
members with a trust company or other organization with trust
powers authorized to do business in this state. For this
purpose, the trust company or other organization with trust
powers may serve credit union members at credit union facilities
on a full-time or part-time basis; and may
(b) Act as trustees of member funds permitted by federal law
to be deposited in a credit union in the form of share deposits either as a deferred compensation or tax-deferral device,
provided the credit union obtains the prior approval to conduct
such activity from the board of banking and financial
institutions upon hearing and written order.
ARTICLE 9. INVESTMENTS AND RESERVE ALLOCATIONS.
§31B-9-1. Investment and deposit of funds.
(a) The credit union's board of directors shall have charge
of the investment of funds, except that they may designate an
investment committee or investment officer to make investments in
its behalf, under written investment policies established by the
credit union's board.
(b) The credit union's board of directors shall designate a
depository or depositories for the funds of the credit union.
§31B-9-2. Authorized investments.
Funds not used in loans to members may be invested:
(a) In securities, obligations, or other instruments of or
issued by or fully guaranteed as to principal and interest by the
United States of America or any agency or instrumentality thereof
or in any trust or trusts established for investing directly or
collectively in the same.
(b) In securities, obligations or other instruments of any state of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, and the several territories
organized by Congress, or any political subdivision thereof.
(c) In deposits, obligations or other accounts of banking
institutions organized under state or federal law.
(d) In loans to or in shares or deposits of other credit
unions or corporate credit unions.
(e) In deposits in, loans to, or shares of any federal
reserve bank or of any central liquidity facility established
under state or federal law.
(f) In shares, stocks, deposits in, loans to or other
obligations of any organization, corporation, or association
providing services associated with the general purposes of the
credit union or engaging in activities incidental to the
operations of a credit union. Such investments in the aggregate
may not exceed two percent of the credit union's equity capital
and shares without written permission of the commissioner.
(g) In any investment legal for banking institutions or
trust funds chartered in this state.
(h) In participation loans with other credit unions, credit
union organizations or other organizations.
(i) In fixed assets, not to exceed five percent of the
credit union's equity capital and shares, unless with the prior
written approval of the commissioner.
§31B-9-3. Reserve funds.
(a) At the end of each accounting period the credit union
shall determine its gross income and from this amount shall set
aside and transfer to a regular reserve. The credit union shall
transfer to the reserve amounts as required under a schedule set
by the national credit union administration ("NCUA") or its
successor. If no such schedule is set, then the reserve shall
be at a rate of ten percent of gross income until such time as
the reserve fund reaches five percent of risk assets; then the
formula is decreased to seven percent of gross income until such
time as the reserve fund reaches six percent of risk assets; and
then the formula is decreased to five percent of gross income
until the reserve fund attains a maximum of seven percent of risk
assets, with subsequent transfers required only to maintain the
seven percent maximum. The reserves established under this
section shall belong to the credit union and shall be held to
meet contingencies or losses in its business.
(b) Special reserves to protect the interest of members may be required by the commissioner by rule, or when found by the
credit union's board of directors or by the commissioner, in any
special case, to be necessary for that purpose. These may
include allowances for loan losses and investment losses.
ARTICLE 10. CHANGE IN CORPORATE STATUS.
§31B-10-1. Voluntary liquidation.
(a) A credit union may elect to dissolve voluntarily and
liquidate its affairs in the manner prescribed in this section.
(b) If it decides to begin the procedure, the board of
directors shall adopt a resolution recommending the credit union
be dissolved voluntarily, and directing that the question of
liquidation be submitted to the members.
(c) Within ten days after the board of directors decides to
submit the question of liquidation to the members, the president
shall notify the commissioner and the insuring organization in
writing, setting forth the reasons for the proposed liquidation.
Within ten days after the members act on the question of
liquidation, the president shall notify the commissioner and the
insuring organization in writing as to the action of the members
on the proposal.
(d) As soon as the board of directors decides to submit the question of liquidation to the members, payments on, withdrawal
of, and making any transfer of share and deposit accounts to
loans and interest, making investments of any kind, and granting
loans may be restricted or suspended pending action by members on
the proposal to liquidate. On approval by the members of such
proposal, all such business transactions shall be permanently
discontinued. Necessary expenses of operation shall, however,
continue to be paid on authorization of the board of directors or
liquidating agent during the period of liquidation.
(e) For a credit union to enter voluntary liquidation,
approval by a majority of the members in writing or by a
two-thirds majority of the members present at a regular or
special meeting of the members is required. When authorization
for liquidation is to be obtained at a meeting of the members,
notice in writing shall be given to each member, by first class
mail, at least ten days prior to such meeting.
(f) A liquidating credit union shall continue in existence
for the purpose of discharging its debts, collecting on loans and
distributing its assets, and doing all acts required in order to
wind up its business and may sue and be sued for the purpose of
enforcing such debts and obligations until its affairs are fully concluded.
(g) The board of directors or the liquidating agent shall
distribute the assets of the credit union or the proceeds of any
disposition of the assets in the sequence described in subsection
(f), section four, article one of this chapter.
(h) As soon as the board of directors or the liquidating
agent determines that all assets from which there is a reasonable
expectancy of realization have been liquidated and distributed as
set forth in this section, a certificate of dissolution shall be
executed on a form prescribed by the commissioner and filed with
the secretary of state, which shall after filing and indexing
same, be forwarded to the commissioner, whereupon such credit
union shall be dissolved. The liquidating agent shall return all
pertinent books and records of the liquidating credit union to
the commissioner.
§31B-10-2. Merger of credit unions.
(a) A credit union organized under this chapter may, with
the approval of the commissioner and regardless of common bond,
merge with one or more other credit unions organized under this
chapter, the laws of another state or territory of the United
States, or the laws of the United States.
(b) When two or more credit unions merge, they shall either
designate one of them as the continuing credit union, or they
shall structure a totally new credit union and designate it as
the new credit union. If the latter procedure is followed, the
new credit union shall be organized under article two of this
chapter. All participating credit unions other than the
continuing or new credit union shall be designated as merging
credit unions.
(c) Any merger of credit unions shall be done according to
a plan of merger. After approval by the boards of directors of
all participating credit unions, the plan shall be submitted to
the commissioner for review and hearing to grant preliminary
approval. If the plan includes the creation of a new credit
union, all documents required by section one, article two of this
chapter shall be submitted as part of the plan. In addition to
any other documents or information required by the commissioner,
each participating credit union shall submit the following:
(1) The time and place of the meeting of the board of
directors at which the plan was agreed upon;
(2) The vote of the directors in favor of the adoption of
the plan; and
(3) A copy of the resolution or other action by which the
plan was agreed upon.
The commissioner shall after review and hearing, grant
preliminary approval by written order, if: (i) The plan has been
approved properly by each board of directors; (ii) the
documentation required to form a new credit union, if any,
complies with section one, article two of this chapter; (iii) the
action would not result or tend to create a monopoly, or
substantially lessen competition, or otherwise further a
restraint of trade, unless the anticompetitive effects of the
proposed action are clearly outweighed in the public interest by
the probable effect of the action in meeting the convenience and
needs of the members to be served; and (iv) taking into
consideration the financial and managerial resources and further
prospects of the credit unions concerned, the action would not be
contrary to the best interests of the community whose shares are
affected by such action, nor detrimental to the safety and
soundness of the credit union to be acquired.
(d) After the commissioner grants preliminary approval, each
merging credit union shall, unless waived by the commissioner,
conduct a membership vote on its participation in the plan. The vote shall be conducted either at a special membership meeting
called for that purpose or by mail ballot. If a majority of the
members voting approve the plan, the credit union shall submit a
record of that fact to the commissioner indicating the vote by
which the members approved the plan and either the time and place
of the membership meeting or the mailing date and closing date of
the mail ballot.
(e) The commissioner may waive the membership vote described
in subsection (d) of this section for any credit union upon
determining that the credit union is insolvent or about to be
insolvent.
(f) The commissioner shall grant final approval of the plan
of merger after determining that the requirements of subsection
(d) of this section in the case of each merging credit union have
been met. If the plan of merger includes the creation of a new
credit union, the commissioner must approve the organization of
the new credit union under section two, article two of this
chapter as part of the approval of the plan of consolidation.
The commissioner shall notify all participating credit unions of
the approval of the plan.
(g) Upon final approval of the plan by the commissioner and the filing of the proper documents with the office of the
secretary of state, all property, property rights, and members'
interests in each merging credit union shall vest in the
continuing or new credit union as applicable without deed,
endorsement, or other instrument of transfer, and all debts,
obligations, and liabilities of each merging credit union shall
be deemed to have been assumed by the continuing or new credit
union. The rights and privileges of the members of each
participating credit union shall remain intact; however, if a
person is a member of more than one of the participating credit
unions, that person shall be entitled to only a single set of
membership rights in the continuing or new credit union.
(h) If the surviving or new credit union created by the
transaction is chartered by another state or territory of the
United States, it shall, in addition to the criteria set forth in
subsection (c) of this section, be subject to the requirements of
section six, article two of this chapter. No merger resulting in
an out-of-state credit union acquiring a West Virginia credit
union shall be permitted unless that other state or territory
permits a West Virginia credit union to merge or acquire credit
unions in their state or territory on terms that are, on the whole, substantially no more restrictive than those established
under the terms of this section: Provided, That no such merger
shall be approved where the West Virginia credit union to be
acquired has been in operation for less than two years.
(i) Notwithstanding any other provision of law, the
commissioner may, without prior hearing, authorize a merger or
consolidation of a credit union which is insolvent or is about to
be insolvent with any other credit union or may authorize a
credit union to purchase any of the assets of, or assume any of
the liabilities of, any other credit union which is insolvent or
about to be insolvent if the commissioner is satisfied that:
(1) An emergency requiring expeditious action exists with
respect to such other credit union;
(2) Other alternatives are not reasonably available; and
(3) The public interest would best be served by approval of
such merger, consolidation, purchase or assumption.
(j) Notwithstanding any other provision of law, the
commissioner may authorize an institution whose deposits or
accounts are insured by the federal deposit insurance corporation
to purchase any of the assets of, or assume any of the
liabilities of, a credit union which is insolvent or about to be insolvent, except that prior to exercising this authority the
commissioner should consider attempting to effect a merger or
consolidation with, or purchase and assumption by, another credit
union as provided in subsection (i) of this section; and
(k) For purposes of the authority contained in subsection
(j) of this section, insured share and deposit accounts of the
credit union may upon consummation of the purchase and assumption
be converted to insured deposits or other comparable accounts in
the acquiring institution, and the commissioner and the insuring
organization shall be absolved of any liability to the credit
union's members with respect to those accounts.
§31B-10-3. Conversion.
(a) A credit union incorporated under the laws of this state
may be converted to a credit union organized under the laws of
any other state or under the laws of the United States, by
complying with the following requirements:
(1) The proposition for such conversion shall first be
approved, and a date set for a vote thereon by the members,
(either at a meeting to be held on such date or by written ballot
to be filed on or before such date), by a majority of the
directors of the said West Virginia state credit union. Written notice of the proposition and of the date set for the vote shall
then be delivered in person to each member, or mailed to each
member at the address for such member appearing on the records of
the credit union, not more than thirty or less than seven days
prior to such date. Approval of the proposition for conversion
shall be by the affirmative vote of two thirds of the members, in
person or in writing;
(2) A statement of the results of the vote, verified by the
affidavits of the president or vice president and the secretary,
shall be filed with the commissioner of banking within ten days
after the vote is taken. However, no West Virginia state
chartered credit union may convert its charter to that of another
state, unless: (i) The conversion is approved by the
commissioner of banking in writing after notice and hearing on
the matter; (ii) the other state allows conversions of its credit
unions to a West Virginia state charter on a reciprocal basis;
and (iii) the majority, or in the event the credit union operates
offices in more than two states, the plurality, of the credit
union's members are residents of that other state. To the extent
that an out-of-state credit union created by conversion seeks to
conduct business through a branch or service facility in West Virginia, the provisions of section six, article two of this
chapter shall apply;
(3) Promptly after the vote approving the conversion is
taken, or after approval of the commissioner of banking, where
such approval is required, and in no event later than ninety days
thereafter, the credit union shall take such action as may be
necessary under the applicable federal or state law to make it a
federal credit union or credit union of another state, and within
ten days after receipt of the federal credit union charter or
out-of-state credit union charter there shall be filed with the
commissioner of banking a copy of the charter thus issued. Upon
such filing, the credit union shall cease to be a West Virginia
state chartered credit union;
(4) The successor federal credit union or out-of-state
chartered credit union shall be vested with all the assets and
shall continue to be responsible for all of the obligations of
the West Virginia state credit union to the same extent as though
the conversion had not taken place.
(b) A credit union organized under the laws of the United
States or of any other state may convert to a credit union
incorporated under the laws of this state. To effect such a conversion, a credit union must comply with all the requirements
of the jurisdiction under which it was originally organized and
the requirements of the laws and rules of this state, and file
proof of such compliance with the commissioner. The commissioner
shall generally treat the conversion to a West Virginia state
chartered credit union as a formation of a new credit union
pursuant to article two of this chapter, and the procedures and
requirements therein shall be followed to the extent applicable.
ARTICLE 11. CORPORATE CREDIT UNION.
§31B-11-1. Incorporation.
A corporate credit union may be incorporated under this
article. All parts of this chapter not inconsistent with this
article shall apply to it.
§31B-11-2. Purposes.
The purposes of the corporate credit union are to:
(a) Accumulate and prudently manage the liquidity of its
member credit unions through interlending and investment
services;
(b) Act as an intermediary for credit union funds between
members and other corporate credit unions;
(c) Obtain liquid funds from other credit union organizations, financial intermediaries and other sources;
(d) Foster and promote in cooperation with other state,
regional, and national corporate credit unions and credit union
organizations or associations the economic security, growth and
development of member credit unions;
(e) Provide payment systems and correspondent services to
its members; and
(f) Perform such other services of benefit to its members
which are authorized by the commissioner.
§31B-11-3. Membership.
(a) Membership in the corporate credit union shall consist
of and be limited to the credit union subscribers to the articles
of incorporation, credit unions incorporated under this chapter,
the federal credit union act or any other credit union act,
organizations or associations of credit unions, and such other
organizations provided for in the articles of incorporation or
bylaws.
(b) A member of the corporate credit union shall designate
one person to be its authorized representative to attend meetings
of the corporate credit union and to vote on behalf of the
member. A credit union member of the corporate credit union may only designate as its authorized representative a member of its
own credit union.
§31B-11-4. Organization.
(a) Application to form a corporate credit union shall be
made in writing to the commissioner. The application shall
contain the names of at least ten of the credit unions in the
proposed field of membership, but in no case less than fifty
credit unions that have agreed to subscribe to shares in the
corporate credit union at the time the application is made.
(b) The application shall be accompanied by articles of
incorporation and bylaws.
(c) The bylaws shall provide for the selection of a board of
directors of at least five persons, all of whom shall be
authorized representatives of members. The bylaws shall require
those applying for membership to subscribe to membership shares
or other shares, or both, in a minimum amount as specified in the
bylaws.
§31B-11-5. Powers and privileges.
(a) The corporate credit union shall enjoy the powers and
privileges of any other credit union incorporated under this
chapter in addition to those powers enumerated in this article, notwithstanding any limitations or restrictions found elsewhere
in this chapter.
(b) The corporate credit union may:
(1) Accept funds, either as shares or deposits, from a
member and from any credit union incorporated by this state, by
another state or territory of the United States, or by the United
States, whether or not such credit union is a member of the
corporate credit union, or from a similar institution
incorporated under the laws of another country;
(2) Make loans to or invest in a member or in any credit
union incorporated by this state, by another state or territory
of the Unites States, or by the United States, whether or not
such credit union is a member of the corporate credit union;
(3) Make loans to or place deposits in a bank, savings bank,
trust company, or savings and loan association incorporated by
this state, by another state or territory of the United States,
or by the United States;
(4) Provide payment systems and correspondent services for
the benefit of its members;
(5) Participate with any credit union incorporated by this
state, another state or territory of the United States, or the United States in making loans to its members or to members of any
other participating credit union, under the terms and conditions
to which the participating credit unions agree;
(6) Purchase, sell and hold investment securities which are
marketable obligations in the form of bonds, notes or debentures
which are salable under ordinary circumstances with reasonable
promptness at a fair value. All investments and related
contracts and agreements shall be made in accordance with written
investment policies established by the board of directors and
shall conform to those investments permitted under section two,
article nine of this chapter;
(7) Borrow from any source, at the discretion of its board
of directors;
(8) Authorize its board of directors to delegate the
authority to set interest rates on loans and deposits and to
determine dividends on shares;
(9) Contract for penalties for payment of loans prior to
their scheduled maturity;
(10) Sell all or a part of its assets to another depository
financial institution, purchase all or part of the assets of
another depository financial institution and assume the liabilities of the selling depository financial institution and
those of its members or depositors. To the extent that the
action results in a merger, the commissioner shall direct that
the appropriate provisions of section two, article ten of this
chapter be followed;
(11) Act as intermediary for the funds of members, credit
unions and other corporate credit unions;
(12) Act as agent for members, other credit unions and
credit union organizations in paying, receiving, transferring the
assets and liabilities received and invested as permitted in this
article;
(13) Receive and hold in safekeeping the securities and
other assets of its members and, in connection therewith, make
such disposition of such assets as may be agreed to or directed
by the member; and
(14) Exercise all incidental powers that are convenient,
suitable or necessary to enable it to carry out its purposes.
(c) The corporate credit union may exercise the powers or
privileges granted a federal corporate credit union, subject to
the approval of the commissioner.
§31B-11-6. Participation in central system.
The corporate credit union may enter into agreements and
subscribe to any required shares for the purpose of participation
in the National Credit Union Administration Central Liquidity
Facility created by Public Law 95-630 or any other state or
federal central liquidity facility or central financial system
available to credit unions. It may also enter into agreements
with any third parties to aid credit unions to obtain additional
sources of liquidity.
§31B-11-7. Security interest.
The corporate credit union may require and accept security
for loans to a member in the form of a pledge, assignment,
hypothecation or mortgage of any assets of the member or a
guarantor.
§31B-11-8. Meetings.
The board of directors of the corporate credit union shall
meet each month. The board may meet at other times as is
necessary. Board meetings may be conducted by means of telephone
as provided in the bylaws in a manner consistent with state law.
§31B-11-9. Fees.
Corporate credit unions shall pay the assessment and fees
set for credit unions under this code to defray the costs to the commissioner and board for their supervision, examination, and
administration. The assessments and operating fees established
by the commissioner or Legislature may make allowances for the
special purposes and operations of the corporate credit union.
§31B-11-10. Reserves.
(a) The corporate credit union shall be exempt from the
regular reserve requirements of subsection (a), section three,
article nine of this chapter but at the end of each accounting
period and prior to paying a dividend or interest refund (or, at
the option of the credit union, on a monthly basis if dividends
or interest refunds are paid more frequently than monthly) sums
shall be set aside in a regular reserve in accordance with the
following schedule:
(1) When the credit union's regular reserve and undivided
earnings are less than two percent of assets at the end of the
transfer period, the credit union shall set aside an amount equal
to .0015 times the credit union's average daily assets for the
transfer period, times the number of days in the transfer period,
divided by three hundred sixty-five.
(2) When the regular reserve and undivided earnings are
equal to or greater than two percent of assets, but the regular reserve is less than four percent of assets, the credit union
shall set aside an amount equal to .0010 times the credit union's
average daily assets for the transfer period, times the number of
days in the transfer period, divided by three hundred sixty-five.
(b) Charges may be made to the regular reserve for loan
losses and for investment losses caused by factors other than
trading losses or market fluctuations. Other charges to the
regular reserve may only be made with the prior approval of the
commissioner.
(c) Additional reserves for corporate credit unions may be
required by the commissioner when in his or her discretion,
circumstances make such additional reserves necessary and prudent
for the protection of shareholders and depositors.
§31B-11-11. Annual audit.
(a) The supervisory committee of the corporate credit union
shall cause an annual audit to be made by an independent
certified public accountant and shall submit the annual audit
report to the board of directors. A summary of the audit report
shall be submitted to the membership at the next annual meeting.
(b) A copy of the audit report shall be submitted to the
commissioner within thirty days after receipt by the board of directors.
§31B-11-12. Securities exemption.
The corporate credit union shall be exempt from the
securities laws of this state.
ARTICLE 12. PENALTIES.
§31B-12-1. Criminal liability.
Any credit union officer, director, employee or agent, who
willfully does any of the following shall be deemed guilty of a
felony, and, may upon conviction thereof, be fined not more than
ten thousand dollars or imprisoned not less than one year nor
more than five years, or both:
(a) With intent to deceive, falsifies any books of account,
report, statement, record or other document of a credit union
whether by alteration, false entry, omission or otherwise;
(b) Signs, issues, publishes or transmits to a government
agency any book of account, report, statement, record or other
document which that person knows to be false;
(c) By means of deceit, obtains a signature to a writing
which is the subject of forgery; or
(d) With intent to deceive, destroys any credit union book
of account, report, statement, record or other document.
§31B-12-2. Penalty for false reports.
Whoever maliciously and knowingly spreads false reports
about the management or finances of any credit union shall be
fined not less than twenty-five dollars, nor more than two
hundred dollars or be imprisoned for not less than thirty days
nor more than one year, or both.
§31B-12-3. Civil penalties.
Any person who violates this chapter, the rules issued
pursuant thereto, or any orders lawfully entered by the
commissioner or board of banking and financial institutions may
be subject to civil penalties in an action brought by the
commissioner or board in an amount not less than fifty dollars
nor more than five thousand dollars for each violation.
§31B-12-4. Severability.
If any provision or clause of this chapter or application
thereof to any person or circumstances is held invalid, such
invalidity shall not affect any other provisions or clauses or
applications of this chapter which can be given effect without
the invalid provision or clause or application, and to this end,
the provisions of this chapter are declared to be severable.
NOTE: The purpose of this bill is to better provide for the
organization, operation, and supervision of cooperative,
nonprofit thrift and credit associations to be known as credit
unions and to define their powers. The bill will clarify the
ability and the procedure for credit unions to establish branches
and corporate credit unions. The bill specifies the ability of
credit unions to offer payable-on-death accounts and certain
trust accounts including individual retirement accounts. The
bill also provides for applicability and conformity with the
consumer protection provisions of chapter 46A of this code to
credit unions. The bill allows for civil penalties to be sought
by the Commissioner of Banking for violations, and establishes
greater loan limits based upon credit union assets. The bill
sets forth the ability of credit unions to indemnify officers,
directors and employees in a manner allowed for banking
institutions. The bill also provides for interstate business and
branching by West Virginia state credit unions on a reciprocal
basis; and generally amends the credit union code to meet the
changing needs of such financial institutions so as to provide
their customers with better services.
This chapter is new; therefore, strike-throughs and
underscoring have been omitted.