! The Capitol Complex is closed to the public due to COVID-19. All meetings will be held virtually online. View procedures and guidelines for remote public comment

Download Zipped Amended WordPerfect SB0296S01.ZIP
[Introduced][Status][Bill Documents][Fiscal Note][Bills Directory]

First Substitute S.B. 296

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Wed, Feb 27, 2008 at 5:28 PM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Thu, Feb 28, 2008 at 11:38 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments (CORRECTED) incorporated into the bill on Fri, Feb 29, 2008 at 12:31 PM by rday. -->

Senator Curtis S. Bramble proposes the following substitute bill:


             1     
FINANCIAL INSTITUTIONS AMENDMENTS

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: Kevin S. Garn


             6      Cosponsor: Gene Davis

             7     

             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Utah Credit Union Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies restrictions on member-business loans and loans that are not
             14      member-business loans; and
             15          .    makes technical changes.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          7-9-20, as last amended by Laws of Utah 2003, Chapter 327
             23          7-9-58, as enacted by Laws of Utah 2003, Chapter 327
             24     

             25      Be it enacted by the Legislature of the state of Utah:



Text Box

- 2 -
             26
         Section 1. Section 7-9-20 is amended to read:
             27           7-9-20. Board of directors -- Powers and duties -- Loan limitations.
             28          (1) At annual meetings the members shall elect from their number a board of directors
             29      consisting of an odd number of not less than five members.
             30          (2) The bylaws may provide balloting by:
             31          (a) mail;
             32          (b) ballot box; or
             33          (c) both mail and ballot box.
             34          (3) Voting may not be by proxy.
             35          (4) [Members] A member of the board of directors shall hold office for the [terms]
             36      term prescribed in the bylaws.
             37          (5) The board of directors shall meet at least monthly.
             38          (6) The board of directors shall have the general management of the affairs, funds, and
             39      records of the credit union. In particular, the board of directors shall:
             40          (a) act upon [applications] an application for membership;
             41          (b) act upon expulsion of [members] a member;
             42          (c) fix the amount of surety bond required of each officer or employee having custody
             43      of funds;
             44          (d) determine the rate of interest or dividend allowed on shares and deposits;
             45          (e) determine the terms and conditions of credit granted to members;
             46          (f) lend money, borrow money, and pledge security for any borrowing;
             47          (g) fill [vacancies] a vacancy in the board of directors or in the credit committee, if
             48      applicable, or in the supervisory committee until the election and qualification of [officers to
             49      fill those vacancies] a person to fill the vacancy;
             50          (h) appoint up to two alternate directors as provided in the bylaws;
             51          (i) fix the amount of the entrance fee;
             52          (j) declare dividends and their amount;
             53          (k) make recommendations to meetings of the members relative to amendments to the
             54      articles of incorporation, and transact any other business of the credit union; and
             55          (l) fix the maximum amount of credit, secured and unsecured, that may be extended to
             56      any one member, up to the limitations described in Subsections (7) and (8).



Text Box

- 3 -
             57
         (7) (a) The credit that may be outstanding or available by a credit union at any one time
             58      is subject to the limitations described in this Subsection (7):
             59          (i) except as provided in Subsection (8); and
             60          (ii) except that the board of directors may:
             61          (A) set a lower limit than the limit in Subsection (7)(b)(i) or (7)(b)(ii)[(B)](A)(II); or
             62          (B) require that a person described in Subsection (7)(b)(ii)(A)(I) be a member of the
             63      credit union for more than six months before the date a member-business loan is extended.
             64          (b) (i) A credit union may not extend credit that is not a member-business loan to a
             65      member if as a result of that extension of credit the total credit that is not a member-business
             66      loan that the credit union has issued to that member exceeds at any one time:
             67          (A) for a credit union with less than $2,000,000 in capital and surplus, the greater of:
             68          (I) $1,000; or
             69          (II) 15% of capital and surplus up to a total of $25,000; or
             70          (B) for a credit union with $2,000,000 or more in capital and surplus, the greater of:
             71          (I) $25,000;
             72          (II) [1%] 4% of capital and surplus; or
             73          (III) 25% of the regular reserve.
             74          (ii) (A) Beginning March 24, 1999, a credit union may not extend a member-business
             75      loan to a person:
             76          [(A)] (I) if the credit union is a successor to or was a credit union described in
             77      Subsection 7-9-53 (2)(d) as of May 3, 1999:
             78          (Aa) if the person is a business entity, unless at least one individual having a
             79      controlling interest in that business entity has been a member of the credit union for at least six
             80      months prior to the date of the extension of the member-business loan; or
             81          [(II)] (Bb) if the person is an individual, unless the individual is a member of the credit
             82      union for at least six months prior to the date of the extension of the member-business loan; or
             83          [(B)] (II) if as a result of the extension of the member-business loan, the total amount
             84      outstanding for all member-business loans that the credit union has extended to that person at
             85      any one time exceeds the lesser of:
             86          [(I)] (Aa) 10% of the credit union's capital and surplus; or
             87          [(II)] (Bb) $250,000 adjusted as provided in Subsection (7)(b)(ii)(B).



Text Box

- 4 -
             88
         (B) The adjustment described in Subsection (7)(b)(ii)(A)(II)(Bb) shall be calculated by
             89      the commissioner as follows:
             90          (I) beginning May 5, 2008 with the adjustment for calendar year 2008 and for a
             91      calendar year beginning on or after January 1, 2009, the commissioner shall increase the dollar
             92      amount in Subsection (7)(b)(ii)(A)(II)(Bb) by a percentage equal to the percentage difference
             93      between the consumer price index for the preceding calendar year and the consumer price
             94      index for calendar year 2006;
             95          (II) after the commissioner increases the dollar amount listed in Subsection
             96      (7)(b)(ii)(B)(I), the commissioner shall round the dollar amount to the nearest whole dollar;
             97          (III) if the percentage difference under Subsection (7)(b)(ii)(B)(I) is zero or a negative
             98      percentage, the consumer price index increase for the year is zero; and
             99          (IV) for purposes of this Subsection (7)(b)(ii)(B), the commissioner shall calculate the
             100      consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
             101          (c) (i) Beginning March 24, 1999, a credit union may not extend a member-business
             102      loan if as a result of that member-business loan the credit union's aggregate member-business
             103      loan amount calculated under Subsection (7)(c)(ii) at any one time exceeds 1.25 times the sum
             104      of:
             105          (A) the actual undivided earnings; and
             106          (B) the actual reserves other than the regular reserves.
             107          (ii) For purposes of Subsection (7)(c)(i), the aggregate member-business loan amount
             108      of a credit union equals:
             109          (A) the sum of the total amount financed under all member-business loans outstanding
             110      at the credit union; minus
             111          (B) the amount of the member-business loans described in Subsection (7)(c)(ii)(A):
             112          (I) that is secured by share or deposit savings in the credit union; or
             113          (II) for which the repayment is insured or guaranteed by, or there is an advance
             114      commitment to purchase by an agency of the federal government, a state, or a political
             115      subdivision of the state.
             116          (d) (i) A credit union service organization may extend credit to a member of a credit
             117      union holding an ownership interest in the credit union service organization only if the credit
             118      union in which the person is a member is not prohibited from extending that credit to that



Text Box

- 5 -
             119
     member under:
             120          (A) this Subsection (7) and Subsection (8); or
             121          (B) Section 7-9-58 .
             122          (ii) For purposes of determining whether under this Subsection (7) and Subsection (8) a
             123      credit union may extend credit, the total amount outstanding of credit extended by a credit
             124      union service organization to a person shall be treated as if the credit was extended by the
             125      credit union in which the person is a member.
             126          (iii) If a person seeking an extension of credit from a credit union service organization
             127      is a member of more than one credit union holding an ownership interest in the credit union
             128      service organization, the person shall specify the credit union to which the extension of credit
             129      is attributed under Subsection (7)(d)(ii).
             130          (iv) This Subsection (7)(d) effects only an extension of credit:
             131          (A) that is extended on or after May 5, 2003; and
             132          (B) by:
             133          (I) a credit union service organization; or
             134          (II) a credit union organized under this chapter.
             135          (e) Notwithstanding the other provisions of this section, a nonexempt credit union may
             136      not extend credit that the nonexempt credit union is prohibited from extending under Section
             137      7-9-58 .
             138          (8) (a) A credit union may extend credit that is not a member-business loan in an
             139      amount that exceeds the limits described in Subsection (7)(b)(i) only if the excess portion is
             140      fully secured by share or deposit savings in the credit union.
             141          (b) (i) Except as provided in Subsection (8)(b)(ii), a credit union may extend a
             142      member-business loan in an amount that exceeds the limits described in Subsection
             143      (7)(b)(ii)[(B)](A)(II) only if:
             144          (A) that portion that is in excess of the limits described in Subsection
             145      (7)(b)(ii)[(B)](A)(II) is secured by share or deposit savings in the credit union; or
             146          (B) the repayment of that portion that is in excess of the limits described in Subsection
             147      (7)(b)(ii)[(B)](A)(II) is insured or guaranteed by, or there is an advance commitment to
             148      purchase that excess portion by, an agency of:
             149          (I) the federal government;



Text Box

Corrected Senate 3rd Reading Amendments 2-28-2008 rd/po

- 6 -
Senate 2nd Reading Amendments 2-27-2008 rd/po
             150
         (II) a state; or
             151          (III) a political subdivision of the state.
             152          (ii) Notwithstanding Subsection (8)(b)(i), a credit union may not extend a
             153      member-business loan if the total amount financed by the credit union exceeds $1,000,000.
             154          (c) For a member-business loan that is extended through a loan participation
             155      arrangement in accordance with Subsection 7-9-5 (12):
             156          (i) in applying the limitation of Subsection (8)(b), each credit union participating in the
             157      member-business loan may extend up to $1,000,000 of the amount financed; and
             158          (ii) the requirement of Subsection (7)(b)(ii)(A)(I) applies to membership in [any] a
             159      credit union that:
             160          (A) participates in the loan participation arrangement for the member-business loan;
             161      S. [ and ] .S
             162           (B) S. is organized under this chapter; and
             162a      (C) .S is a successor to or was a credit union described in Subsection 7-9-53 (2) S. (d) .S as of May
             163      3, 1999.
             164          (9) As provided in this chapter or in the credit union bylaws, the board of directors:
             165          (a) within 30 days following the annual meeting of the members, shall appoint a
             166      supervisory committee consisting of not less than three members;
             167          (b) within 30 days after the annual meeting of the members, shall appoint:
             168          (i) a credit committee consisting of not less than three members; or
             169          (ii) a credit manager in lieu of a credit committee;
             170          (c) shall appoint a president to serve as general manager;
             171          (d) shall have an executive committee;
             172          (e) may appoint an investment officer;
             173          (f) shall elect a secretary;
             174          (g) may appoint other officers and committees that it considers necessary;
             175          (h) shall establish written credit policies, loan security requirements, loan investment,
             176      personnel, and collection policies; and
             177          (i) on or before January 31 of each year, shall provide for:
             178          (i) share insurance for the shares and deposits of the credit union from the National
             179      Credit Union Administration or successor federal agency; or
             180          (ii) security expressly pledged for the payment of the shares and deposits in accordance



Text Box

- 7 -
             181
     with Section 7-9-45 .
             182          (10) A person may not be a member of more than one committee except as otherwise
             183      provided in this chapter or in the credit union bylaws.
             184          (11) The president and secretary may not be the same person.
             185          Section 2. Section 7-9-58 is amended to read:
             186           7-9-58. Limitations on credit extended by nonexempt credit unions.
             187          (1) Notwithstanding the other provisions of this chapter, beginning on May 5, 2003, a
             188      nonexempt credit union may not:
             189          (a) (i) extend a member-business loan;
             190          (ii) renew a member-business loan that is extended before May 5, 2003; or
             191          (iii) extend the maturity date or increase the amount of a member-business loan that is
             192      extended before May 5, 2003;
             193          (b) originate, participate in, or obtain any interest in a co-lending arrangement,
             194      including a loan participation arrangement; or
             195          (c) subject to Subsection (2), extend credit that is not a member-business loan if as a
             196      result of the extension of credit the total credit that is not a member-business loan that the
             197      nonexempt credit union has issued to that member exceeds at any one time $250,000 adjusted
             198      as provided in Subsection (1)(d).
             199          (d) The adjustment described in Subsection (1)(c) shall be calculated by the
             200      commissioner as follows:
             201          (i) beginning July 1, 2008 and for a calendar year beginning on or after January 1,
             202      2009, the commissioner shall increase or decrease the dollar amount in Subsection (1)(c) by a
             203      percentage equal to the percentage difference between the consumer price index for the
             204      preceding calendar year and the consumer price index for calendar year 2007;
             205          (ii) after the commissioner increases the dollar amount listed in Subsection (1)(c), the
             206      commissioner shall round the dollar amount to the nearest whole dollar;
             207          (iii) if the percentage difference under Subsection (1)(d)(i) is zero or a negative
             208      percentage, the consumer price index increase for the year is zero; and
             209          (iv) for purposes of this Subsection (1)(d), the commissioner shall calculate the
             210      consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
             211          (2) Notwithstanding Subsection (1)(c), a nonexempt credit union may extend credit in



Text Box

- 8 -
             212
     an amount that exceeds the limits provided in Subsection (1)(c) to a member if:
             213          (a) the excess portion of the credit described in Subsection (1)(c) is fully secured by the
             214      member's share or deposit savings in the nonexempt credit union; or
             215          (b) the credit is extended to a member of the nonexempt credit union:
             216          (i) for the purpose of:
             217          (A) paying amounts owed by the member to purchase a one- to four-family dwelling
             218      that is the primary residence of that member; or
             219          (B) refinancing the balance of amounts owed by the member for the purchase of a one-
             220      to four-family dwelling that is the primary residence of that member; and
             221          (ii) the credit extended under this Subsection (2)(b) is less than or equals $1,000,000.
             222          (3) In accordance with Subsection 7-9-20 (7)(d), a credit union service organization
             223      may not extend credit to a member of a nonexempt credit union holding an ownership interest
             224      in the credit union service organization if it would be a violation of this section for the
             225      nonexempt credit union to extend the credit to the member.
             226          (4) This section may not prevent a nonexempt credit union from servicing a loan
             227      extended before May 5, 2003.


[Bill Documents][Bills Directory]