Substitute Senate Bill No. 1030

Public Act No. 99-22

An Act Concerning Connecticut Credit Union Membership and Connecticut Credit Union and Out-of-State Credit Union Net Worth Restoration Plans.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes is repealed and the following is substituted in lieu thereof:

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

"Account". Sections 36a-155 and 36a-365.

"Advance fee". Sections 36a-510, 36a-485 and 36a-615.

"Agency bank". Section 36a-285.

"Alternative mortgage loan". Section 36a-265.

"Amount financed". Section 36a-690.

"Annual percentage rate". Section 36a-690.

"Annual percentage yield". Section 36a-316.

"Applicant". Section 36a-736.

"Associate". Section 36a-184.

"Bank". Section 36a-30.

"Bankers' bank". Section 36a-70.

"Banking business". Section 36a-425.

"Billing cycle". Section 36a-565.

"Bona fide nonprofit organization". Section 36a-655.

"Branch". Sections 36a-145 and 36a-410.

"Branch or agency net payment entitlement". Section 36a-428n.

"Branch or agency net payment obligation". Section 36a-428n.

"Broker". Section 36a-510.

"Business and Industrial Development Corporation". Section 36a-626.

"Business and property in this state". Section 36a-428n.

"Cash advance". Section 36a-564.

"Cash price". Section 36a-770.

"Certificate of organization". Section 36a-435.

"Collective managing agency account". Section 36a-365.

"Commercial vehicle". Section 36a-770.

"Community bank". Section 36a-70.

"Community development bank". Section 36a-70.

"Connecticut holding company". Section 36a-410.

"Consumer". Sections 36a-155, 36a-676 and 36a-695.

"Consumer Credit Protection Act". Section 36a-676.

"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800.

"Consumer collection agency". Section 36a-800.

"Controlling interest". Section 36a-276.

"Credit". Sections 36a-645 and 36a-676.

"Creditor". Sections 36a-676, 36a-695 and 36a-800.

"Credit card", "cardholder" and "card issuer". Section 36a-676.

"Credit clinic". Section 36a-695.

"Credit rating agency". Section 36a-695.

"Credit report". Section 36a-695.

"Credit sale". Section 36a-676.

"De novo branch". Section 36a-410.

"Debt". Section 36a-645.

"Debt adjustment". Section 36a-655.

"Debt mutual fund". Section 36a-275.

"Debt securities". Section 36a-275.

"Deliver". Section 36a-316.

"Deposit". Section 36a-316.

"Deposit account". Section 36a-316.

"Deposit account charge". Section 36a-316.

"Deposit account disclosures". Section 36a-316.

"Deposit contract". Section 36a-316.

"Deposit services". Section 36a-425.

"Depositor". Section 36a-316.

"Earning period". Section 36a-316.

"Electronic payment instrument". Section 36a-596.

"Eligible account holder". Section 36a-136.

"Eligible collateral". Section 36a-330.

"Equity mutual fund". Section 36a-276.

"Federal Home Mortgage Disclosure Act". Section 36a-736.

"Fiduciary". Section 36a-365.

"Filing fee". Section 36a-770.

"Finance charge". Sections 36a-690 and 36a-770.

"Financial institution". Sections 36a-41, 36a-155, 36a-316, 36a-330 and 36a-736.

"Financial records". Section 36a-41.

"First mortgage loan". Sections 36a-485, 36a-705 and 36a-715.

"Fiscal year". Section 36a-435.

"Foreign banking corporation". Section 36a-425.

"General facility". Section 36a-580.

"Global net payment entitlement". Section 36a-428n.

"Global net payment obligation". Section 36a-428n.

"Goods". Sections 36a-535 and 36a-770.

"Graduated payment mortgage loan". Section 36a-265.

["Groups having a common bond of occupation or association". Section 36a-435.]

"Guardian". Section 36a-365.

"Holder". Section 36a-596.

"Home banking services". Section 36a-170.

"Home banking terminal". Section 36a-170.

"Home improvement loan". Section 36a-736.

"Home purchase loan". Section 36a-736.

"Home state". Section 36a-410.

"Immediate family". Section 36a-435.

"Instalment loan contract". Sections 36a-535 and 36a-770.

"Instrument". Section 36a-596.

"Insurance bank". Section 36a-285.

"Insurance department". Section 36a-285.

"Interest". Section 36a-316.

"Interest rate". Section 36a-316.

"Lender". Sections 36a-510 and 36a-770.

"Lessor". Section 36a-676.

"License". Section 36a-626.

"Licensee". Sections 36a-510, 36a-596 and 36a-626.

"Limited branch". Section 36a-145.

"Limited facility". Section 36a-580.

"Loan broker". Section 36a-615.

"Loss". Section 36a-330.

"Made in this state". Section 36a-770.

"Managing agent". Section 36a-365.

"Member". Section 36a-435.

"Membership share". Section 36a-435.

"Money order". Section 36a-596.

"Mortgage broker". Section 36a-485.

"Mortgage insurance". Section 36a-725.

"Mortgage lender". Sections 36a-485 and 36a-705.

"Mortgage loan". Sections 36a-261 and 36a-265.

"Mortgage rate lock-in". Section 36a-705.

"Mortgage servicing company". Section 36a-715.

"Mortgagor". Section 36a-715.

"Motor vehicle". Section 36a-770.

"Multiple common bond membership". Section 36a-435, as amended by this act.

"Municipality". Section 36a-800.

"Net worth". Section 36a-596.

"Network". Section 36a-155.

"Note account". Sections 36a-301 and 36a-445.

"Office". Section 36a-316.

"Open-end credit plan". Section 36a-676.

"Open-end loan". Section 36a-565.

"Organization". Section 36a-800.

"Out-of-state holding company". Section 36a-410.

"Outstanding". Section 36a-596.

"Passbook savings account". Section 36a-316.

"Periodic statement". Section 36a-316.

"Permissible investment". Section 36a-596.

"Person". Section 36a-184.

"Post". Section 36a-316.

"Prime quality". Section 36a-596.

"Principal amount of the loan". Section 36a-510.

"Principal officer". Section 36a-485.

"Processor". Section 36a-155.

"Public deposit". Section 36a-330.

"Purchaser". Section 36a-596.

"Qualified financial contract". Section 36a-428n.

"Qualified public depository" and "depository". Section 36a-330.

"Records". Section 36a-17.

"Relocate". Section 36a-145.

"Residential property". Section 36a-485.

"Retail buyer". Sections 36a-535 and 36a-770.

"Retail credit transaction". Section 42-100b.

"Retail instalment contract". Sections 36a-535 and 36a-770.

"Retail instalment sale". Sections 36a-535 and 36a-770.

"Retail seller". Sections 36a-535 and 36a-770.

"Reverse annuity mortgage loan". Section 36a-265.

"Sales finance company". Sections 36a-535 and 36a-770.

"Savings department". Section 36a-285.

"Savings deposit". Section 36a-316.

"Secondary mortgage loan". Section 36a-510.

"Security convertible into a voting security". Section 36a-184.

"Share". Section 36a-435.

"Single common bond membership". Section 36a-435, as amended by this act.

"Social purpose investment". Section 36a-277.

"Standard mortgage loan". Section 36a-265.

"Tax and loan account". Sections 36a-301 and 36a-445.

"The Savings Bank Life Insurance Company". Section 36a-285.

"Time account". Section 36a-316.

"Transaction". Section 36a-215.

"Travelers check". Section 36a-596.

"Troubled financial institution". Section 36a-215.

"Unsecured loan". Section 36a-615.

Sec. 2. Section 36a-435 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in sections 36a-435 to [36a-474] 36a-475, inclusive, as amended by this act, unless the context otherwise requires:

(1) "Certificate of organization" means the certificate of incorporation of a Connecticut credit union and includes in the case of Connecticut credit unions in existence on July 1, 1975, articles of association, articles of incorporation and certificates of organization;

(2) "Fiscal year" means January first to December thirty-first, inclusive;

(3) "Immediate family" means any person related by blood, adoption or marriage to a person within the field of membership of the Connecticut credit union;

(4) "Member" means any person who has been admitted to membership in the Connecticut credit union in accordance with its bylaws;

(5) "Membership share" means a share, having a par value not exceeding one hundred dollars, which is part of the capital of the Connecticut credit union and which may not be withdrawn or transferred except upon termination of membership;

(6) "Multiple common bond membership" means a field of membership consisting of more than one group, each of which has, within the group, a common bond of occupation or association;

[(6)] (7) "Share" means the basic unit of the capital of the Connecticut credit union; and

[(7) "Groups having a common bond of occupation or association" means one or more employer or associational groups, provided (A) each of such groups has its own common bond and a common bond with each other such group within the field of membership, and (B) in the case of multiple group fields of membership, all of the employers and associations shall be within a well-defined geographic area as determined by the commissioner.]

(8) "Single common bond membership" means a field of membership consisting of one group that has a common bond of occupation or association.

Sec. 3. Section 36a-438 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The membership of a Connecticut credit union is limited to (1) [groups having a common bond of occupation or association or groups within a well-defined neighborhood, community or rural district and (2) members of the immediate family of all persons within such groups. Nothing in this section shall be deemed to affect the field of membership of any credit union chartered prior to October 1, 1979] single common bond membership, (2) multiple common bond membership, provided, only a group having fewer than three thousand members at the time the group is first included in the field of membership of the Connecticut credit union shall be eligible to be included in such field of membership, except as provided in subsection (b) of this section or in section 36a-439, as amended by this act, (3) persons within a well-defined local community, neighborhood or rural district, and (4) members of the immediate family or household of all persons included under subdivisions (1), (2) and (3) of this subsection. Any person who is a member of any Connecticut credit union on the effective date of this act may remain a member of such Connecticut credit union after said date. Any person who is a member on the effective date of this act of any group that constituted all or a part of the field of membership of any Connecticut credit union on said date shall continue to be eligible to become a member of such Connecticut credit union after said date for as long as such person remains a member of such group.

(b) The numerical limitations in subdivision (2) of subsection (a) of this section do not apply to:

(1) Any group that the commissioner determines in writing cannot feasibly or reasonably establish a new Connecticut credit union with a single common bond membership because (A) the group lacks sufficient volunteer and other resources to support the efficient and effective operation of a Connecticut credit union, (B) the group lacks the requirements determined by the commissioner to be necessary for success in establishing and managing a new Connecticut credit union, including, but not limited to, demographic characteristics such as geographical location of members, diversity of ages and income levels, and such other factors as determined by the commissioner that may affect the financial viability and stability of a Connecticut credit union, or (C) the group would be unlikely to operate a safe and sound Connecticut credit union; or

(2) Any group transferred from another credit union in connection with a merger approved pursuant to section 36a-470.

(c) Notwithstanding the provisions of subsection (a) of this section, the commissioner may allow a Connecticut credit union with a multiple common bond membership to include any person within a well-defined local community, neighborhood or rural district if:

(1) The commissioner determines that the well-defined local community, neighborhood or rural district is (A) an investment area as defined in Section 103(16) of the Community Development Banking and Financial Institutions Act of 1994, 12 USC Section 4702(16), and meets any additional requirements that the commissioner may impose; and (B) underserved by other depository institutions, as defined in Section 19(b)(1)(A) of the Federal Reserve Act, 12 USC Section 461(b), based on data of the commissioner and federal supervisory agencies; and

(2) The Connecticut credit union establishes and maintains an office in the well-defined local community, neighborhood or rural district at which credit union services are available.

(d) The commissioner may not approve an amendment to the certificate of organization of a Connecticut credit union to expand its field of membership unless the commissioner determines in writing that (1) the Connecticut credit union has not engaged in any material unsafe or unsound practice during the one-year period preceding the date on which the certificate of amendment is filed with the commissioner, (2) the Connecticut credit union is adequately capitalized, (3) the Connecticut credit union has the administrative capability to serve the proposed membership group and the financial resources to meet the need for additional staff and assets to serve the new membership group, (4) any potential harm that the expansion of the field of membership of the Connecticut credit union may have on any other Connecticut credit union and its members is clearly outweighed in the public interest by the probable beneficial effect of the expansion in meeting the convenience and needs of the members of the group proposed to be included in the field of membership, and (5) the Connecticut credit union has met such additional requirements as the commissioner may prescribe by regulation adopted in accordance with chapter 54.

[(b)] (e) All applications for membership shall be submitted to the membership officer, if one is appointed as provided in subdivision (5) of subsection (c) of section 36a-450, [and] who shall have authority to approve applications for membership under such conditions as the governing board [prescribe. A] prescribes. The membership officer shall submit to the governing board at its regular meeting a list of the membership applications approved or received by the membership officer subsequent to the previous report together with any other related information required by the governing board. All membership applications not approved by a membership officer shall be referred to the governing board or to the executive committee if so authorized, for action.

[(c)] (f) Notwithstanding any change in employment, occupation, residence or other condition initially controlling eligibility for membership in any Connecticut credit union, any person properly admitted to membership in a credit union may continue such person's membership therein during the person's lifetime. A Connecticut credit union may provide for the inclusion of the surviving spouse of a deceased member in its field of membership.

[(d)] (g) Any Connecticut credit union may provide for the inclusion in its field of membership of any natural person whose loan it has purchased pursuant to subdivision (15) of subsection (a) of section 36a-441.

[(e)] (h) The governing board may expel any member who has not carried out the member's obligations with the Connecticut credit union or who has neglected or refused to comply with the provisions of sections 36a-435 to [36a-474] 36a-475, inclusive, or the bylaws. No member may be expelled by the governing board until the member has been informed in writing of the charges against the member and has had a reasonable opportunity to be heard thereon. A member desiring to withdraw from a Connecticut credit union shall give notice of the member's intention to withdraw.

[(f)] (i) A Connecticut credit union may cancel the shares of any member who withdraws or is expelled, applying the value thereof to the member's indebtedness to the Connecticut credit union. A member of a Connecticut credit union who has withdrawn or been expelled shall not be relieved of any liability to the Connecticut credit union. The amounts paid in on shares by such member, together with any dividends credited to the member's shares, shall be repaid to the member in the order of the member's withdrawal or expulsion, as funds become available therefor, except that the Connecticut credit union may deduct from such payments any sums due it from such member.

Sec. 4. Section 36a-439 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may approve a change in the field of membership of any Connecticut credit union without regard for the common bond or the numerical limitation in subdivision (2) of subsection (a) of section 36a-438, as amended by this act, whenever the commissioner determines that a merger with another Connecticut credit union or a federal credit union is not feasible and that continued operation of the Connecticut credit union without the requested change may result in liquidation of the Connecticut credit union.

Sec. 5. Subsection (a) of section 36a-445 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As used in this section:

(1) "Tax and loan account" means an account, the balance of which is subject to the right of immediate withdrawal, established for receipt of payments of federal taxes and certain United States obligations. Such accounts are not shares as defined in subdivision [(6)] (7) of section 36a-435, as amended by this act; and

(2) "Note account" means a note, subject to the right of immediate call, evidencing funds held by depositories electing the note option under applicable United States Treasury Department regulations. Note accounts are not shares, as defined in subdivision [(6)] (7) of section 36a-435, as amended by this act.

Sec. 6. Section 36a-463 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A Connecticut credit union shall annually submit a written report to the commissioner within thirty-one days after the end of its fiscal year. The report shall be in the form prescribed by the commissioner, list the assets and liabilities of the Connecticut credit union, and contain any other information the commissioner may require. The information shall be verified under oath by any two of the following officers: The president, chairman, vice president, vice chairman or treasurer of the Connecticut credit union. The Connecticut credit union shall also provide the commissioner with such other reports and information as may be required by the commissioner. Each Connecticut credit union that fails to file any report required by this section shall pay to the state one hundred dollars for each day that it fails to file such report.

(b) A Connecticut credit union shall file with the commissioner within ten days after the organization meeting and annual meetings a list of the names and addresses of all directors, officers and members of the credit committee and the supervisory committee, and shall notify the commissioner within ten days after any changes which occur therein.

(c) A Connecticut credit union that is required under federal law to submit a net worth restoration plan to the board of the National Credit Union Administration shall simultaneously submit a final signed copy of such plan to the commissioner.

[(c)] (d) A Connecticut credit union shall preserve all of its records in accordance with regulations adopted by the commissioner pursuant to chapter 54. The manner and form of record-keeping shall be subject to the commissioner's approval.

[(d)] (e) The franchise and filing fee payable to the Secretary of the State upon the incorporation of a Connecticut credit union under the laws of this state, or for the filing of a certificate of amendment to the certificate of organization or a certificate of merger and the fee for certification by the Secretary of the State of the copy of the certificate of organization or certificate of amendment or merger shall be thirteen dollars.

Sec. 7. Section 36a-473 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The commissioner may require any out-of-state credit union doing business in this state pursuant to section 36a-472 to submit an annual audit report to the commissioner.

(b) An out-of-state credit union doing business in this state that is required under federal law to submit a net worth restoration plan to the board of the National Credit Union Administration shall simultaneously submit a final signed copy of such plan to the commissioner.

[(b)] (c) The commissioner may examine any such out-of-state credit union or may enter into an agreement with the banking commissioner or similar official of the state in which it is organized to insure that such out-of-state credit union is effectively examined and supervised.

[(c)] (d) The commissioner may, after giving notice and an opportunity to be heard to such out-of-state credit union, revoke or suspend the approval given such out-of-state credit union to do business in this state if the commissioner determines that such approval would not be granted if such out-of-state credit union were required to apply for such approval at any time subsequent to the date of initial approval.

Sec. 8. This act shall take effect from its passage.

Approved May 12, 1999

TOP