Chapter 308 Oregon Laws 2001

AN ACT

HB 2775

Relating to credit unions; amending ORS 723.122, 723.152, 723.176 and 723.406; and repealing ORS 723.457.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 723.122 is amended to read:

723.122. (1) Each credit union shall obtain and maintain a fidelity bond or irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008, which includes coverage in accordance with any rules of the Director of the Department of Consumer and Business Services, to protect the credit union against losses caused by occurrences covered therein such as fraud, dishonesty, forgery, embezzlement, misappropriation, misapplication of duty and all acts of its agents, directors, officers, committee members, employees or attorneys. The minimum amount of the bond or letter of credit shall be determined based on the amount of the credit union’s total assets in accordance with the following table:

______________________________________________________________________________

Assets Minimum Amount

of Bond

or Letter of Credit

$0 to $10,000 Coverage equal to

the credit union’s

assets.

$10,001 to $1,000,000 $10,000 for each

$100,000 or

fraction thereof.

$1,000,001 to $50,000,000 $100,000 plus

$50,000 for each $1

million or fraction

thereof over $1

million.

$50,000,001 to $295,000,000 $2.55 million plus

$10,000 for each $1

million or fraction

thereof over $50

million.

More than $295,000,000 $5 million.

______________________________________________________________________________

(2) Each bond or letter of credit shall include a faithful performance clause to cover the chief financial officer. Each bond or letter of credit shall be approved by the director who may require such additional amounts as the director considers necessary.

(3) All bond claims or claims upon a letter of credit that exceed one percent of the credit union’s reserves and undivided earnings or that are related to the errors or omissions of an officer, director or committee member shall be reported to the director.

[(4) In addition to the requirements of subsections (1) to (3) of this section, the director shall adopt rules prescribing the minimum amount of insurance and surety bond or letter of credit coverage required of credit unions in relation to their assets, personal property or exposure to risk.]

SECTION 2. ORS 723.152 is amended to read:

723.152. In addition to the powers conferred by the general corporation law a credit union may, subject to the restrictions and limitations contained in this chapter and its bylaws:

(1) Make contracts.

(2) Sue and be sued.

(3) Adopt and use a common seal and alter same.

(4) Acquire, lease, hold and dispose of property, either in whole or in part, necessary or incidental to its operations.

(5) At the discretion of the board of directors, require the payment of an entrance fee or annual membership fee, or both, of any person admitted to membership.

(6) Receive savings from its members in the form of various classes of shares, deposits or deposit certificates, deposit accounts or special-purpose thrift accounts.

(7) Receive from its members or from another credit union deposits or deposit certificates, deposit accounts or various classes of shares payable on nonnegotiable request.

(8) Lend its funds to its members and credit unions as provided in this chapter.

(9) Acquire and lease personal property at the request of a member who wishes to lease the property on terms requiring payment, during the term of the lease, of rents that exceed the total expenditures made by the credit union for the acquisition, ownership, financing and protection of the property. Rents may include residual value payments that are the obligation of a responsible third party.

(10) Borrow from any source in accordance with policy established by the board of directors and issue debentures pursuant to a plan approved by the Director of the Department of Consumer and Business Services. The debentures shall be subordinate to the shares and deposits of the credit union.

(11) Discount and sell any eligible obligations, subject to rules adopted by the Director of the Department of Consumer and Business Services.

(12) Sell all or substantially all of its assets or purchase all or substantially all of the assets of another credit union, subject to the approval of the director.

(13) Invest surplus funds as provided in this chapter.

(14) Make deposits in legally chartered banks, savings banks, savings and loan associations, trust companies and credit unions.

(15) Assess charges to members in accordance with the bylaws for failure to meet promptly their obligations to the credit union.

(16) Hold membership in other credit unions organized under this chapter or other state or federal laws, and in other associations and organizations composed of credit unions.

(17) Declare dividends, pay interest on deposit and deposit certificate accounts and pay interest refunds to borrowers as provided in this chapter.

(18) [Collect, receive and disburse moneys in connection with the sale of travelers’ checks, money orders, prepaid phone cards and other money-type instruments and products, and for such other purposes as may provide benefit or convenience to its members, and charge a reasonable fee for such services.] Offer products and services reasonably related to the purposes of a credit union as set forth in ORS 723.006.

(19) Receive deposits from the federal government or this state, or any agency or political subdivision thereof, when payable for the accounts of members.

[(20) With the approval of the director, purchase accounting services, participate in a service center or share quarters and carry on business operations either individually or jointly with one or more state or federal credit unions or with an association of credit unions in this state. A credit union may purchase stock of a corporation that provides the services described in this subsection. The stock purchase shall be limited to one percent of the credit union’s assets.]

[(21)] (20) Make donations or contributions to any civic, charitable, political or community organization as authorized by the board of directors, subject to any rules adopted by the director.

[(22)] (21) Act as a custodian of qualified pension funds of members if permitted by federal law.

[(23)] (22) Purchase or make available insurance for its directors, officers, agents, employees and members.

[(24)] (23) Allow its members to use share accounts, deposit accounts or deposit certificate accounts as share draft accounts as provided in ORS 723.434.

[(25)] (24) Provide digital signature verification or other electronic authentication services to its members.

[(26)] (25) Act as trustee or custodian for members of individual retirement accounts or other arrangements established pursuant to sections 408 and 530 of the Internal Revenue Code, deferred compensation accounts established pursuant to section 457 of the Internal Revenue Code, or any other qualified individual retirement account established pursuant to the provisions of the federal Employee Retirement Income Security Act of 1974, provided that the trust or custodial agreement establishing the arrangement requires all funds subject to the arrangement to be invested exclusively in share accounts in the credit union. The State of Oregon, or the applicable instrumentality or municipality, shall be deemed to be a member with respect to such deposits, except that the state or other instrumentality or municipality shall not be entitled to vote, hold office or otherwise participate in the management or operation of the credit union.

[(27)] (26) Indemnify its directors, officers, employees and committee members or other volunteers in accordance with the provisions of its articles, bylaws and the indemnification provisions of ORS chapter 60.

[(28)] (27) Exercise other powers that are necessary to carry out the credit union’s purpose.

SECTION 3. ORS 723.176 is amended to read:

723.176. Business and nonbusiness organizations composed of individuals who are eligible for membership, or whose employees are eligible for membership, may be admitted to membership in the same manner and under the same conditions as individuals[, but may not borrow in excess of $100,000].

SECTION 4. ORS 723.406 is amended to read:

723.406. (1) At such intervals and for such periods as the board of directors may authorize, and after provision for the required reserves, the board of directors may declare dividends to be paid on shares or share certificates. Dividends may be paid at various rates, or not paid at all, with due regard to the conditions that pertain to each class of share.

(2) Subject to the approval of the board of directors, accounts closed between dividend periods may be credited with dividends at the rate [of the last dividend, computed from the last dividend period to the date when closed] set by the board of directors.

SECTION 5. ORS 723.457 is repealed.

Approved by the Governor June 5, 2001

Filed in the office of Secretary of State June 5, 2001

Effective date January 1, 2002

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