Chapter 185 Oregon Laws 1999

Session Law

AN ACT

SB 214

Relating to credit unions; creating new provisions; amending ORS 723.001, 723.012, 723.014, 723.022, 723.032, 723.042, 723.102, 723.106, 723.112, 723.116, 723.122, 723.152, 723.176, 723.196, 723.202, 723.256, 723.292, 723.326, 723.434, 723.447, 723.454, 723.512, 723.526, 723.532, 723.572, 723.582, 723.586, 723.602, 723.636, 723.676, 723.682, 723.702, 723.706 and 723.730; and repealing ORS 723.416 and 723.422.

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

SECTION 1. ORS 723.001 is amended to read:

723.001. As used in this chapter, unless the context requires otherwise:

[(1) "Capital" means shares, share certificates, any special class of shares, deposit accounts, reserves, excepting loan loss reserves referred to in ORS 723.631 (3), and undivided earnings, unless the context requires otherwise.]

(1) "Assets" means property, a right or a claim with future objectively measurable value that is owned or effectively controlled by a credit union.

(2) "Capital" means a credit union's reserves, undivided earnings and allowances for loan loss.

(3) "Corporate central credit union" means a cooperative organization whose members consist primarily of other credit unions and whose purposes are:

(a) To accumulate and prudently manage the liquidity of its member credit unions through interlending and investment services;

(b) To act as an intermediary for member credit unions to the payment systems and facilitate funds transfers between its member credit unions and other financial institutions or their agents;

(c) To obtain liquid funds from other credit union organizations, financial intermediaries and other sources; and

(d) To perform such other financial services that benefit its member credit unions and that are authorized in writing by the Director of the Department of Consumer and Business Services.

[(2)] (4) "Department" means the Department of Consumer and Business Services.

[(3)] (5) "Director" means the Director of the Department of Consumer and Business Services.

(6) "Equity" means a credit union's reserves and undivided earnings.

(7) "Home state" means the state in which the credit union is chartered.

(8) "Host state" means the state in which a credit union conducts business, but that is not the home state.

(9) "Interstate credit union" means a credit union chartered under the provisions of this chapter or under the authority of the laws of another state and operating in this state and in one or more other states.

(10) "Official" means any of the following:

(a) An individual who is or was a director or officer of the credit union; or

(b) An individual who is or was a member of a credit union's credit committee or supervisory committee.

(11) "Regular reserve" means an irrevocable reserve set aside to cover losses.

SECTION 2. ORS 723.012 is amended to read:

723.012. (1) Any seven or more residents of this state [(or other] or another appropriate jurisdiction[)], of legal age, who have a common bond referred to in ORS 723.172 may organize a credit union and become charter members thereof by complying with this section.

(2) The incorporators shall execute [in duplicate articles of incorporation and agree to the terms thereof] the documents, including the articles of incorporation, required by the Director of the Department of Consumer and Business Services to apply for a credit union charter. The articles shall state:

(a) The name, which shall include the words "credit union" and which shall not be the same as that of any other existing credit union in this state[, and].

(b) The location where the proposed credit union is to have its principal place of business.

[(b) The term of its existence, which may be perpetual.]

(d) The full name, residence and post-office address of each of the incorporators [and the number of shares subscribed to by each, which shall not be less than one share].

(e) The number of its directors, which shall not be less than five, and the names of the incorporators who shall be its directors until the first annual meeting of shareholders.

(f) The number of [the] members of the supervisory committee, which shall not be less than three, and the name, residence and post-office address of the persons who are to serve as members until the first meeting of directors.

[(g) That the credit union may exercise such incidental powers as are necessary or requisite to enable it to carry on effectively the business for which it is incorporated, and those powers which are inherent in the credit union as a legal entity.]

(3) The incorporators shall prepare and adopt bylaws for the general government of the credit union, which shall be consistent with this chapter[, and execute the bylaws in duplicate].

(4) The incorporators shall forward the articles of incorporation and the bylaws to the Director of the Department of Consumer and Business Services, together with a filing fee of $150. The director shall issue a certificate of approval if the articles and the bylaws are in conformity with this chapter and the director is satisfied that the [proposed field of operation] ability of the proposed credit union to operate successfully is favorable [to the success of the credit union and that the standing of the proposed organizers is such as to give assurance that its affairs will be properly administered]. The director shall return a copy of the bylaws and the articles to the applicants or their representatives, which shall be preserved in the permanent files of the credit union. The application shall be acted upon by the director within 60 days.

(5) The subscribers for a credit union charter shall not transact any business until formal approval of the articles and bylaws has been received.

SECTION 3. ORS 723.014 is amended to read:

723.014. The Director of the Department of Consumer and Business Services may not issue a certificate of approval under ORS 723.012 if any person named in the articles of incorporation submitted for approval:

(1) Is insolvent[, either in the sense that the person's liabilities exceed the person's assets or that the person cannot meet the person's obligations as they mature, or is in such financial condition that the person cannot continue in business with safety to the person's customers] or bankrupt;

(2) Has engaged in dishonest, fraudulent or illegal practices or conduct in any business or profession;

(3) Has willfully or repeatedly violated or failed to comply with any provision of the Oregon Bank Act, the Savings Association Act, the Oregon Credit Union Act, the Oregon Consumer Finance Act, the Oregon Securities Law, the Oregon Mortgage Lender Law or the Pawnbrokers Act, or any administrative rule or order adopted pursuant to any such Act;

(4) Has been convicted of a crime, an essential element of which is fraud;

(5) Is not qualified to conduct a credit union business on the basis of such factors as training, experience and knowledge of the business;

(6) Is permanently or temporarily enjoined by a court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the credit union business;

(7) Is the subject of an order of the director subjecting the person to a fine or other civil penalty, or removing the person from an office in any entity regulated by the director; or

(8) Is the subject of an order entered within the past five years subjecting the person to a fine or other civil penalty or removing the person from an office in a state banking institution, a national bank, a state or federal credit union, a state or federal savings association or a consumer finance company, or from a position as a securities broker or dealer, a state or federal investment adviser or a mortgage lender, that was issued by the regulatory authority of another state, or of the Federal Government, with authority over such banking institutions, credit unions, consumer finance companies, [or] savings associations, securities firms or mortgage lenders.

SECTION 4. ORS 723.022 is amended to read:

723.022. (1) The articles of incorporation or the bylaws may be amended as provided in the bylaws. Amendments to the articles of incorporation or bylaws shall be submitted, together with a fee established by rule of the Director of the Department of Consumer and Business Services, to the director, who shall approve or disapprove the amendments within [60] 30 days.

(2) Amendments shall become effective upon approval in writing by the director.

SECTION 5. ORS 723.042 is amended to read:

723.042. (1) A credit union [organized and qualified as a credit union in another state may conduct business as a credit union] chartered under this chapter may operate in another state unless prohibited by the laws of the other state. Oregon is the home state for any credit union chartered under this chapter.

(2) A credit union organized under the laws of another state may conduct business as a credit union in this state with the approval of the Director of the Department of Consumer and Business Services under the conditions described in subsection (3) of this section. Oregon is the host state for any credit union chartered under the laws of any other state and conducting business as a credit union in this state. The state that charters the credit union is the home state of the credit union.

(3) The director may issue a branch certificate to a credit union chartered in another state for the purposes of operating in this state if all of the following conditions are met:

[(1)] (a) The credit union [must be] is organized under a credit union law substantially similar to this chapter[.];

[(2) A credit union organized and doing business under the laws of this state must be permitted to do business in the other state under conditions substantially similar to those in this chapter.]

[(3)] (b) The [Director of the Department of Consumer and Business Services must approve] credit union files an application [filed by the credit union, which application] that includes [shall include] an agreement to comply with all rules prescribed by the director[.];

[(4)] (c) The credit union [must agree] agrees to submit an annual or other regular report of examination from the supervising agency of the state in which it is chartered[.];

[(5)] (d) The credit union [must agree] agrees to authorize the examination of its parent credit union by the director and to pay the fee determined under ORS 723.114[.];

(e) The field of membership of the credit union meets the definition of membership as defined in ORS 723.172;

(f) The credit union acknowledges that laws of this state relating to consumer protection apply to transactions with residents of this state;

(g) The credit union has account insurance comparable to that required for credit unions incorporated under this chapter;

(h) The credit union designates and maintains an agent for the service of process in this state; and

(i) The credit union submits quarterly financial reports as required by the director.

(4) The director may suspend or revoke the certificate of any credit union for which Oregon is the host state for any violation of the provisions of this chapter or rules or orders issued by the director.

SECTION 6. ORS 723.102 is amended to read:

723.102. [(1)] In accordance with ORS 183.310 to 183.550, the Director of the Department of Consumer and Business Services may adopt rules for the purpose of carrying out this chapter.

[(2) The director shall adopt rules prescribing the minimum amount of surety bond or letter of credit coverage and casualty, liability and fire insurance required of credit unions in relation to their assets or to the money and other personal property involved, or to their exposure to risk.]

SECTION 7. ORS 723.106 is amended to read:

723.106. (1) Credit unions shall report to the Director of the Department of Consumer and Business Services annually by a date established by the director on forms supplied and in the manner specified by the director for that purpose. Additional reports may be required.

(2) A fine in an amount to be established by rule of the director, but not to exceed $1,000 for each day a report is in arrears shall be levied against the offending credit union unless it is excused for cause by the director.

SECTION 8. ORS 723.112 is amended to read:

723.112. (1) The Director of the Department of Consumer and Business Services shall examine [the condition and resources of] each credit union to determine its condition and whether the credit union is complying with the laws of this state and such other matters as the director may prescribe. For the purpose of conducting an examination or any part thereof, the director may employ an independent consultant determined by the director as qualified to conduct examinations. Except as provided in subsection (3) of this section, examinations under this subsection must be conducted not less frequently than 24 months apart.

(2) For purposes of an examination under subsection (1) of this section:

(a) Each credit union and all of its officers and agents shall be required to give to representatives of the director full access to all of the credit union's books, papers, securities, records and other sources of information under their control.

(b) The director may subpoena witnesses, administer oaths, compel the giving of testimony and require the submission of documents.

(3) Instead of an examination under subsection (1) of this section, the director may accept an examination or report made by an agency of the United States Government under statutes of the United States.

(4) A report of an examination under subsection (1) of this section shall be forwarded to the executive officer of each credit union within 60 days after completion. The report shall contain comments relative to the management of the affairs of the credit union and also as to the general condition of its assets. Within 45 days after the receipt of the report, the directors and [committeemen] supervisory committee members shall meet to consider matters contained in the report and shall report in writing to the director on the manner in which the credit union is complying or will comply with the director's recommendations.

SECTION 9. ORS 723.116 is amended to read:

723.116. [(1)] A credit union shall maintain all books, records, accounting systems and procedures in accordance with such rules as the Director of the Department of Consumer and Business Services from time to time prescribes. In prescribing such rules, the director shall consider the relative size of a credit union and its reasonable capability of compliance.

[(2) A credit union shall be liable for destroying records prior to the expiration of the record retention time prescribed by the director.]

SECTION 10. 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 11. 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.

[(9)] (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.

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

[(11)] (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.

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

[(13)] (14) Make deposits in legally chartered banks, savings banks, savings and loan associations, trust companies and credit [union organizations] unions.

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

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

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

[(17)] (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.

[(18) Perform such tasks and missions as are requested by the Federal Government or this state, or any agency or political subdivision thereof, when approved by the board of directors and not inconsistent with this chapter.]

(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, [one or more credit unions (either federal or state) or with an association of credit unions in this state, may] 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. [To accomplish any of the above-stated acts] A credit union may purchase stock of a corporation that provides the services described in this subsection. The [these activities, with such] stock purchase shall be limited to one percent of the credit union's [capital] assets.

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

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

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

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

(26) 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) 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) Exercise other powers that are necessary to carry out the credit union's purpose.

SECTION 12. ORS 723.196 is amended to read:

723.196. (1) The annual meeting and any special meetings of the members of the credit union shall be held at the time, place, and in the manner indicated by the bylaws.

(2) At all such meetings a member shall have but one vote, irrespective of the amount of that member's shareholdings. No member may vote by proxy, but a member may vote by absentee ballot if the bylaws of the credit union so provide.

[(3) A society, association, partnership or corporation, 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 fully authorized by the organization's governing body.]

[(4)] (3) The board of directors may establish a minimum age as a qualification of eligibility to vote at meetings of the members.

SECTION 13. ORS 723.202 is amended to read:

723.202. (1) A member desiring to withdraw from a credit union shall file a written notice of intention to withdraw.

(2) Subject to subsection (3) of this section, the board of directors may expel any member who:

(a) Has not carried out the member's engagements with the credit union[, who];

(b) Has been convicted of a criminal offense[, who];

(c) Fails to comply with the provisions of this chapter or of the credit union's articles, [or] bylaws [of the credit union, who] or policies;

(d) Threatens, harasses or abuses any member, employee, board or committee member or agent of the credit union; or

(e) Habitually neglects to pay the member's debts or [who] becomes insolvent or bankrupt.

(3) [However, no member shall] A member shall not be expelled until the member has been informed in writing of the [charges against the member and shall have] reasons for the expulsion and has had reasonable opportunity to be heard. Members of a credit union who withdraw or are expelled shall not be relieved of any liability to the credit union. The amounts paid in on shares or deposited by such members, together with any dividends credited to their shares and any interest which has accrued on their deposits, shall be repaid to them in the order of their withdrawal or expulsion, as funds become available therefor, but the credit union may deduct from such payments any sums due it from such members.

SECTION 14. ORS 723.256 is amended to read:

723.256. Within such time as the Director of the Department of Consumer and Business Services may establish, a record of the names and addresses of the members of the board, committees and all officers of the credit union shall be filed with the director on forms provided and in the manner prescribed by the director.

SECTION 15. ORS 723.292 is amended to read:

723.292. The board of directors [and the executive committee shall meet as often as necessary, but one body must] shall meet at least monthly [and the other at least quarterly].

SECTION 16. ORS 723.326 is amended to read:

723.326. (1) The supervisory committee by a unanimous vote may suspend any member of the credit committee and shall report such action to the board of directors for appropriate action.

(2) The supervisory committee by a unanimous vote may suspend any officer or member of the board of directors until the next members' meeting, which shall be held not less than seven nor more than 21 days after the suspension. At such meeting the [suspension shall be acted upon by the] members shall decide whether to remove the suspended officer or board member.

(3) Any member of the supervisory committee may be removed by the board of directors for failure to perform duties prescribed in this chapter[, the] or in the credit union's articles of incorporation, [or] bylaws or policies.

(4) A person may not serve as a director if the person has defaulted on payment of a voluntary obligation to the credit union or has otherwise caused the credit union to incur a financial loss.

SECTION 17. Sections 18 to 39 of this 1999 Act are added to and made a part of ORS chapter 723.

SECTION 18. As used in sections 18 to 39 of this 1999 Act, "credit union" means a credit union organized under this chapter, an interstate credit union doing business in this state or a federal credit union.

SECTION 19. (1)(a) If a credit union changes the terms, service charges or conditions for withdrawal of any share or deposit account, the credit union shall notify the member in writing before the change becomes effective.

(b) If a credit union decreases the interest rate on any share or deposit account, other than an account that by its terms provides for a variable or indexed rate of interest, the credit union shall notify the member in writing before the change becomes effective.

(c) With respect to share or deposit accounts that by their terms provide for a variable or indexed rate of interest, the credit union shall not be required to give notice to the member concerning changes in the interest rate other than by means of account statements provided to the member in the ordinary course of business, not less than once each calendar quarter.

(d) Any notice required by this subsection may be given to the member in person or sent by regular mail at the last address shown on the credit union's account records. In the case of accounts held in the names of two or more members, the credit union may give or send the notice to any of the members.

(2) The provisions of subsection (1) of this section shall not apply to any change in the interest rate payable upon an account as described in ORS 86.245.

SECTION 20. Any deposit to a credit union made to an account in the name of a minor shall be held for the exclusive right and benefit of the minor and free from the control or lien of all other persons, except other parties to the account and creditors, and shall be paid, in accordance with the terms of the account, together with any interest thereon, to or upon the order of the minor.

SECTION 21. (1) On the death of a member of a credit union, if the deposit to the credit of the deceased member is $25,000 or less, the credit union may, upon receipt of an affidavit from the person claiming the deposit as provided in subsection (2) of this section, pay the moneys on deposit:

(a) To the surviving spouse;

(b) If there is no surviving spouse, to the Adult and Family Services Division, on demand of the division within 60 days from the death of the member when there is a preferred claim arising under ORS 411.795, 412.600, 413.200 or 414.105, or if there is no claim by the division, to the surviving children 18 years of age or older;

(c) If there is no surviving spouse, Adult and Family Services Division claim or surviving children, to the member's surviving parents; or

(d) If there is no surviving spouse, Adult and Family Services Division claim, surviving children or surviving parents, to the member's surviving brothers and sisters 18 years of age or older.

(2) The affidavit shall:

(a) State where and when the member died;

(b) State that the total deposits of the deceased member in all financial institutions in this state do not exceed $25,000;

(c) Show the relationship of the affiant or affiants to the deceased member; and

(d) Embody a promise to pay the expenses of last sickness, funeral expenses and just debts of the deceased out of the deposit, to the full extent of the deposit if necessary.

(3) In the event the decedent died intestate without known heirs, the Director of the Division of State Lands shall be the affiant.

(4) The credit union shall determine the relationship of the affiant to the deceased member. However, payment of such moneys in good faith to the affiant or affiants shall discharge and release the transferor from any liability or responsibility for the transfer in the same manner and with the same effect as if the property had been transferred, delivered or paid to a personal representative of the estate of the decedent.

(5) A probate proceeding is not necessary to establish the right of the surviving spouse, Adult and Family Services Division claim, surviving children, surviving parents, surviving brothers and sisters or the Director of the Division of State Lands to withdraw the deposits upon the filing of the affidavit. If a personal representative is appointed in an estate where a withdrawal of deposits was made under this section, the person withdrawing the deposits shall account for them to the personal representative.

(6) When a credit union transfers moneys under subsection (1) of this section, the transferor may require the transferee to furnish the transferor with a written indemnity agreement, indemnifying the transferor against loss for moneys paid to the extent of the amount of the deposit.

(7) This section is subject to the rights of other parties to the account under sections 25 to 37 of this 1999 Act.

SECTION 22. (1) A credit union shall be obligated to recognize an adverse claim to a deposit it holds only if the adverse claimant gives notice to the credit union of its claim and:

(a) Procures a restraining order, injunction or other appropriate process against the credit union in an action wherein the person to whose credit the deposit stands is made a party and served with summons; or

(b) Delivers to the credit union in a form, and with sureties acceptable to the credit union, a bond or an irrevocable letter of credit issued by a financial institution, as defined in ORS 706.008, indemnifying the credit union from any liability, damage or expenses on account of the payment of the adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands.

(2) This section does not apply when the person in whose name the account is carried is a fiduciary for the adverse claimant, and the affidavit of the adverse claimant states the facts constituting the fiduciary relationship and the facts showing reasonable cause of belief on the part of the claimant that the fiduciary is about to misappropriate the deposit.

(3) A credit union may, at its option, interplead a deposit that is subject to any adverse claim.

SECTION 23. If a person who owns a share or deposit account subject to check authorizes another person as agent to draw checks against the account, the credit union, in the absence of written notice to the contrary, may presume that any check drawn by the agent in the manner authorized by the terms and conditions of the account, including checks drawn to the personal order of the agent, is drawn for a purpose authorized by the principal and within the scope of the authority conferred upon the agent.

SECTION 24. A credit union may refuse to pay any check, draft or order drawn upon it when the officers or employees of the credit union have reason to believe that the person signing or indorsing the instrument was so under the influence of alcohol, drugs or controlled substances or that the person was otherwise so incapacitated as to make it reasonably doubtful whether the person was capable of transacting business at the time of signing or indorsing the check, draft or order.

SECTION 25. As used in sections 25 to 37 of this 1999 Act, unless the context requires otherwise:

(1) "Account" means a contract of deposit of funds between a member and a credit union and includes a checking account, savings account, certificate of deposit and share account.

(2) "Beneficiary" means a person named in a trust account as one for whom a party to the account is named as trustee.

(3) "Joint account" means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship.

(4) "Multiple-party account" means a joint account, a P.O.D. account or a trust account. "Multiple-party account" does not include:

(a) Accounts established for the deposit of funds of a partnership, joint venture or other association for business purposes; or

(b) Accounts controlled by one or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, charitable or civic organization, or a regular fiduciary or trust account where the relationship is established other than by deposit agreement.

(5) "Net contribution" of a party to a joint account means the sum of all deposits made to the account by or for the party, less all withdrawals made by or for the party that have not been paid to or applied to the use of any other party, plus a pro rata share of any interest or dividends included in the current balance. "Net contribution" includes any proceeds of deposit life insurance added to the account by reason of the death of the party whose net contribution is in question.

(6) "Party" means a person who, by the terms of the multiple-party account, has a present right, subject to request, to payment from a multiple-party account. A P.O.D. payee or beneficiary of a trust account is a party only after the account becomes payable to the payee or beneficiary by reason of the payee or beneficiary surviving the original party or trustee. "Party" includes a guardian, conservator, personal representative or assignee, including an attaching creditor, of a party. "Party" also includes a person identified as a trustee of an account, whether or not a beneficiary is named, but does not include any named beneficiary unless the named beneficiary has a present right of withdrawal.

(7) "Payment" of sums on deposit includes withdrawal, payment on check or other directive of a party, any pledge of sums on deposit by a party and any setoff, deduction or other disposition of all or part of an account pursuant to a pledge.

(8) "P.O.D. account" means an account payable on request:

(a) To one person during the lifetime of the person and upon the death of the person to one or more P.O.D. payees; or

(b) To one or more persons during their lifetimes and upon the death of all of them to one or more P.O.D. payees.

(9) "P.O.D. payee" means a person designated on a P.O.D. account as the person to whom the account is payable on request after the death of one or more persons.

(10) "Request" means a proper request for withdrawal, or a check or order for payment, that complies with all conditions of the account, including special requirements concerning necessary signatures and regulations of the credit union. If the credit union conditions withdrawal or payment on advance notice, for purposes of sections 25 to 37 of this 1999 Act, the request for withdrawal or payment is treated as immediately effective and a notice of intent to withdraw is treated as a request for withdrawal.

(11) "Sums on deposit" means the balance payable on a multiple-party account including interest, dividends and any deposit life insurance proceeds added to the account by reason of the death of a party.

(12) "Trust account" means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the credit union, and there is no subject of the trust other than the sums on deposit in the account. It is not essential that payment to the beneficiary be mentioned in the deposit agreement. A trust account does not include a regular trust account under a testamentary trust, a trust agreement that has significance apart from the account, or a fiduciary account arising from a fiduciary relationship such as attorney-client.

(13) "Withdrawal" includes payment to a third person pursuant to check or other directive of a party.

SECTION 26. The provisions of sections 27, 28 and 29 of this 1999 Act concerning beneficial ownership between parties or between parties and P.O.D. payees or beneficiaries of multiple-party accounts are relevant only to controversies between those persons and their creditors and other successors, and have no bearing on the power of withdrawal of those persons as determined by the terms of account contracts. The provisions of sections 31 to 36 of this 1999 Act govern the liability of credit unions that make payments pursuant thereto, and their setoff rights.

SECTION 27. (1) A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each party to the sums on deposit, unless there is clear and convincing evidence of a different intent.

(2) A P.O.D. account belongs to the original party during the lifetime of the party and not to the P.O.D. payee or payees. If two or more persons are named as original parties, during their lifetimes, rights between them are governed by subsection (1) of this section.

(3) Unless a contrary intent is manifested by the terms of the account or the deposit agreement, or there is other clear and convincing evidence of an irrevocable trust, a trust account belongs beneficially to the trustee during the lifetime of the trustee. If two or more parties are named as trustees of the account, during their lifetimes, beneficial rights between them are governed by subsection (1) of this section. If there is an irrevocable trust, the account belongs beneficially to the beneficiary.

SECTION 28. (1) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties against the estate of the decedent, unless there is clear and convincing evidence of a different intention in the credit union's account records at the time of death of the party. If there are two or more surviving parties, their respective ownerships during their lifetimes shall be in proportion to their previous ownership interests under section 27 of this 1999 Act, augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before death. The right of survivorship continues between the surviving parties.

(2) If the account is a P.O.D. account:

(a) Upon the death of one of two or more original parties, the rights to any sums remaining on deposit are governed by subsection (1) of this section.

(b) Upon the death of the sole original party or the survivor of two or more original parties, any sums remaining on deposit belong to the P.O.D. payee or payees, if surviving, or to the survivor of them if one or more die before the original party. If two or more P.O.D. payees survive, there is no right of survivorship in the event of death of a P.O.D. payee thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.

(3) If the account is a trust account:

(a) Upon the death of one of two or more trustees, the rights to any sums remaining on deposit are governed by subsection (1) of this section.

(b) Upon the death of the sole trustee or the survivor of two or more trustees, any sums remaining on deposit belong to the person or persons named as beneficiaries, if surviving, or to the survivor of them if one or more die before the trustee, unless there is clear and convincing evidence of a contrary intent. If two or more beneficiaries survive, there is no right of survivorship in the event of death of any beneficiary thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.

(4) In other cases, the death of any party to a multiple-party account has no effect on beneficial ownership of the account, other than to transfer the rights of the decedent as part of the estate of the decedent.

(5) A right of survivorship arising under this section or from the express terms of the account, a beneficiary designation in a trust account or a P.O.D. payee designation cannot be changed by will.

SECTION 29. The provisions of section 28 of this 1999 Act that apply to rights of survivorship are determined by the form of the account at the time of death of a party. Subject to satisfaction of the requirements of the credit union, the form of an account may be altered by a written order given by a party to the credit union. The order must be signed by the party, be received by the credit union during the party's lifetime, and not be countermanded by other written order of the same party during the lifetime of the party.

SECTION 30. Any transfers resulting from the application of section 28 of this 1999 Act are effective by reason of the account contracts involved and application of section 28 of this 1999 Act. The transfers are not to be considered as testamentary or subject to administration in the estate of a deceased party.

SECTION 31. Credit unions may enter into multiple-party accounts to the same extent that they may enter into single-party accounts. Any multiple-party account may be paid, on request, to any one or more of the parties. For purposes of establishing net contributions a credit union shall not be required to inquire about the source of funds received for deposit to a multiple-party account, or to inquire about the proposed application of any sum withdrawn from an account.

SECTION 32. Any sums in a joint account may be paid, on request, to any party without regard to whether any other party is incapacitated or deceased at the time the payment is requested. Payment may not be made to the personal representative or heirs of a deceased party unless:

(1) Proof of death is presented to the credit union, showing that the decedent was the last surviving party; or

(2) There is no right of survivorship under section 28 of this 1999 Act.

SECTION 33. Any P.O.D. account may be paid, on request, to any original party to the account. Payment may be made, on request, to the P.O.D. payee or to the personal representative or heirs of a deceased P.O.D. payee upon presentation to the credit union of proof of death showing that the P.O.D. payee survived all persons named as original parties. Payment may be made to the personal representative or heirs of a deceased original party if proof of death is presented to the credit union showing that the decedent was the survivor of all other persons named on the account either as an original party or as a P.O.D. payee.

SECTION 34. Any trust account may be paid, on request, to any trustee. Unless the credit union has received written notice that the beneficiary has a vested interest not dependent upon the beneficiary surviving the trustee, payment may be made to the personal representative or heirs of a deceased trustee if proof of death is presented to the credit union showing that the decedent survived all other persons named on the account as either trustee or beneficiary. Payment may be made, on request, to the beneficiary upon presentation to the credit union of proof of death showing that the beneficiary or beneficiaries survived all persons named as trustees.

SECTION 35. Payment made pursuant to section 31, 32, 33 or 34 of this 1999 Act discharges the credit union from all claims for amounts paid, whether or not the payment is consistent with the beneficial ownership of the account between parties, P.O.D. payees or beneficiaries, or their successors. The protection given by this section does not extend to payments made after a credit union has received written notice from any party able to request present payment that states that withdrawals in accordance with the terms of the account should not be permitted. Unless the notice is withdrawn by the person giving it, the successor of any deceased party must concur in any demand for withdrawal if the credit union is to be protected under this section. No other notice or any other information shown to have been available to a credit union shall affect its right to the protection provided by this section. The protection provided by this section shall have no bearing on the rights of parties in disputes between themselves or their successors concerning the beneficial ownership of funds in or withdrawn from multiple-party accounts.

SECTION 36. Without qualifying any other statutory or common law right to setoff or lien, and subject to any contractual provision, if a party to a multiple-party account is indebted to a credit union, the credit union has a right to setoff against the account in which the party has or had immediately before the death of the party a present right of withdrawal. The amount of the account subject to setoff is that proportion to which the debtor is, or was immediately before the death of the debtor, beneficially entitled and, in the absence of proof of net contributions, to an equal share with all parties having present rights of withdrawal.

SECTION 37. Nothing in ORS 723.426 or 723.432 or sections 25, 26 and 27 of this 1999 Act shall preclude a party to an account from adding the name of another person to the account with the designation of "agent." The agent shall have no present or future interest in the sums on deposit in the account, but the credit union may honor requests for payment from the accounts by the agent, unless the principal is deceased at the time the payment is requested and the credit union has actual knowledge of the death. Payments from the account by the credit union at the request of the agent shall discharge the credit union from all claims for amounts so paid.

SECTION 38. A person may not be held personally liable for an act or omission by the person in good faith and in compliance with a statute, rule or order of the Director of the Department of Consumer and Business Services under this chapter regardless of whether the statute, rule or order is later amended, rescinded or determined to be invalid by judicial or other authority.

SECTION 39. (1) The Director of the Department of Consumer and Business Services may enter into cooperative, coordinating and information sharing agreements with any other credit union supervisory agency or any organization affiliated with or representing one or more credit union supervisory agencies with respect to the periodic examination or other supervision of any branch or other office or place of business in this state of any non-Oregon institution, or any branch of a credit union that is chartered in Oregon and is located in any other state. The director may accept the supervisory agency's reports of examination and reports of investigation in lieu of conducting the director's own examinations or investigations. The agreement may resolve conflicts of laws and specify the manner in which examination, supervision and application processes shall be coordinated between this state and the home state of the non-Oregon institution. The director may also share information with the Federal Home Loan Bank and its directors.

(2) The director may enter into contracts with any credit union supervisory agency that has concurrent jurisdiction over a credit union operating a branch or other office or place of business in this state, to engage the services of such agency's examiners at a reasonable rate of compensation, or to provide the services of the director's examiners to such agency at a reasonable rate of compensation. Any such contract shall be deemed exempt from competitive bidding requirements under the provisions of ORS chapter 279. The contract may resolve conflicts of laws and specify the manner in which examination, supervision and application processes shall be coordinated between this state and the home state of the non-Oregon institution.

(3) The director may enter into joint examinations or joint enforcement actions with other credit union supervisory agencies that have concurrent jurisdiction over any branch or other office or place of business in this state of a non-Oregon institution, or any branch of a credit union that is chartered in Oregon and is located in any other state, provided that the director may at any time take the actions independently if the director deems the actions to be necessary or appropriate to carry out the director's responsibilities or to ensure compliance with the laws of this state. In the case of a non-Oregon institution, the director may recognize:

(a) The exclusive authority of the credit union supervisory agency of the home state of the non-Oregon institution over corporate governance matters; and

(b) The primary responsibility of the credit union supervisory agency of the home state of the non-Oregon institution over safety and soundness matters.

(4) Any fees collected by the director from non-Oregon institutions under the provisions of this chapter may be shared with other credit union supervisory agencies or any organization affiliated with or representing one or more credit union supervisory agencies in accordance with agreements between such parties and the director.

SECTION 40. ORS 723.434 is amended to read:

723.434. (1) A credit union may allow a member holding a regular share or deposit account to use that account as a share draft account as provided in this section, subject to conditions established by the board of directors.

[(2) A credit union shall obtain insurance on shares and deposits in share draft accounts as provided in ORS 723.582.]

[(3)] (2) As used in this section:

(a) "Share draft" means a negotiable or nonnegotiable draft used to withdraw shares or deposits from a share draft account.

(b) "Share draft account" means any regular share account or deposit account from which the credit union allows shares or deposits to be withdrawn by means of a share draft or other order.

[(4)] (3) The terms "share draft" and "share draft account" may encompass accounts whether the underlying account is a share account or a deposit account, without changing the type of account.

SECTION 41. ORS 723.447 is amended to read:

723.447. [(1)] A credit union may certify a share draft issued by the credit union [by setting forth on the draft "Certified." A credit union may certify a share draft under this section only if the amount of the share draft actually stands to the credit of the drawer in a share draft account on the books of the credit union]. A credit union that certifies a share draft may immediately charge the amount of the share draft to the drawer's share draft account.

[(2) A credit union that certifies a share draft under this section waives with respect to any holder of the certified draft any defense on the draft based on insufficient funds, closed accounts or any other defense that a bank waives when it issues a certified check.]

[(3) This section authorizes credit unions to issue drafts that are equivalent in legal effect to certified checks issued by banks. The Director of the Department of Consumer and Business Services may adopt rules in order to carry into effect the purpose of this section.]

SECTION 42. ORS 723.512 is amended to read:

723.512. (1) No loan shall be made to any member in an aggregate amount in excess of $15,000, or 15 percent of the credit union's [reserves, excepting loan loss reserves referred to in ORS 723.631 (3) and undivided earnings] equity, whichever is greater. In determining the amount of loans to be made to a member, loans for which that member is a guarantor or surety shall be included, as well as loans to persons who are not individuals if the individual member is a principal or owner of the person who is not an individual or the loan is for that member's benefit.

(2) The restrictions in subsection (1) of this section do not apply to any loan fully guaranteed by shares or deposits.

SECTION 43. ORS 723.526 is amended to read:

723.526. (1) Loans to credit union members may be shared with other credit unions, corporations or financial organizations.

(2) A credit union may participate in guaranteed loan programs of the Federal Government [or], the State of Oregon or any other state.

(3) A credit union may purchase the conditional sales contracts, notes and similar instruments of its members.

(4) A credit union may purchase the leases of its members if the leases satisfy the requirements of ORS 723.152 (9).

SECTION 44. ORS 723.532 is amended to read:

723.532. (1) For the purposes of this section, "management team" means any individual who holds a position of vice president or higher or who has policymaking authority.

[(1)] (2) A credit union may make loans to its individual directors, [employees, loan officers,] members of its management team, credit [manager] managers and [to] members of its supervisory and credit committees, provided that:

(a) The loan complies with all lawful requirements under this chapter with respect to loans to other borrowers and is not on terms more favorable than those extended to other borrowers; [and]

(b) The combined aggregate amount of loans to any one such individual that exceeds five percent of the credit union's equity or $25,000, whichever is less, has been approved by the credit union's board of directors; and

[(b)] (c) The combined aggregate amount of such loans to all such individuals may not exceed 10 percent of [capital] the credit union's assets.

[(2)] (3) Except when approved by the board of directors of the credit union, no director, officer or committee member shall be permitted to become surety or guarantor for any loan or advance made by the credit union except for the spouse or children of the director, officer or committee member.

[(3)] (4) The Director of the Department of Consumer and Business Services may waive the requirements of this section by rule or order upon request of a credit union. The director may establish by rule [the] a higher amount than set in subsection (2)(b) of this section and the type of loans to directors, officers or committee members that must be approved by the board of directors of the credit union.

SECTION 45. ORS 723.572 is amended to read:

723.572. (1) A credit union may purchase or make available life savings, loan protection and other forms of insurance for its members in amounts related to their respective ages, shares, deposits or loan balances or to any combination of them.

(2) A credit union may enter into cooperative marketing arrangements to facilitate its members' voluntary purchases of [disability insurance, accident and health insurance and legal expense] insurance.

SECTION 46. ORS 723.582 is amended to read:

723.582. (1) Each credit union shall secure insurance on shares and deposits from the National Credit Union Administration under the Federal Credit Union Act or its successor, or from any other insuring organization that provides [such insurance] comparable coverages and is approved by the Director of the Department of Consumer and Business Services. Any one share of a member, as designated in the bylaws of the credit union, may be excluded from the requirement for insurance.

(2) The director may make available condition and examination reports to the appropriate insuring organization and may accept any report of examination made by such organization. The director may appoint the appropriate insuring organization as liquidating agent of an insured credit union.

SECTION 47. ORS 723.586 is amended to read:

723.586. A credit union may enter into cooperative marketing arrangements to facilitate its members' voluntary purchases of such goods and services as are in the interest of improving economic and social conditions of the members. Said investment shall not exceed one percent of the credit union's [capital] assets. Notwithstanding any other provision of law, the taxable income from such activities which are conducted by the credit union shall be subject to tax pursuant to ORS 317.920.

SECTION 48. ORS 723.602 is amended to read:

723.602. Funds not used in loans to members may be invested:

(1) In securities, obligations or other instruments of or issued by or fully guaranteed as to principal and interest by the United States or any agency thereof or in any trust or trusts established directly or collectively in the same.

(2) In obligations of any state of the United States, the agencies or instrumentalities of the Federal Government, the District of Columbia, the Commonwealth of Puerto Rico and the several territories organized by Congress, or any political subdivision thereof.

(3) In certificates of deposit or passbook type accounts issued by a state or national bank, mutual savings bank or savings and loan association.

(4) In loans to or in shares or deposits of other credit unions.

(5) In the [capital] shares, other ownership interests or obligations [or preferred stock issues of any agency or association organized as a stock company, or membership in a mutual association or membership corporation, provided the stockholdings or membership, as the case may be, of such agency or association are] of a corporation, limited liability company or mutual association, provided that the ownership or membership, as applicable, is primarily confined [or restricted] to credit unions[,] or organizations of credit unions, and provided the purposes for which such agency or association is organized are designed primarily to service or otherwise assist credit union operations, not to exceed one percent of assets.

(6) In shares of a credit union cooperative society organized under the laws of this state or of the laws of the United States in the total amount not exceeding one percent of the shares, deposits, and surplus of the credit union.

(7) In loans to any credit union association or corporation, national or state, of which the credit union is a member, except that such investments shall be limited to two percent of the assets of the credit union.

(8) In such other investments as approved by the Director of the Department of Consumer and Business Services by rule or order.

SECTION 49. ORS 723.636 is amended to read:

723.636. The regular reserve established under ORS 723.631 (1)[,] shall belong to the credit union [and], shall be used to meet losses [except those resulting from an excess of expenses over income] and shall not be distributed except on liquidation of the credit union, or in accordance with a plan approved by the Director of the Department of Consumer and Business Services.

SECTION 50. ORS 723.676 is amended to read:

723.676. (1) A credit union may elect to dissolve voluntarily and liquidate its affairs in the manner prescribed in this section.

(2) 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.

(3) Within 10 days after the board of directors decides to submit the question of liquidation to the members, the president or chairperson of the board shall notify the Director of the Department of Consumer and Business Services thereof in writing setting forth the reasons for the proposed action. Within 10 days after the members act on the question of liquidation, the president or chairperson of the board shall notify the director in writing as to whether or not the members approved the proposed liquidation.

(4) As soon as the board of directors decides to submit the question of liquidation to the members, payment on shares, withdrawal of shares, making any transfer of shares to loans and interest, making investments of any kind and granting loans shall be 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.

(5) 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. Where 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 to the member's last-known address at least 10 days prior to such meeting.

(6) A liquidating credit union shall continue in existence for the purpose of discharging its debts, collecting 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 adjusted.

(7) The board of directors or the liquidating agent shall use the assets of the credit union to pay: First, expenses incidental to liquidating including any surety bond that may be required; and, second, any liability due nonmembers. Assets then remaining shall be distributed to the members proportionately to the shares and deposits held by each member as of the date dissolution was voted.

(8) 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, they shall execute a certificate of dissolution on a form prescribed by the director and file the same, together with all pertinent books and records of the liquidating credit union, with the director, whereupon such credit union shall be dissolved.

SECTION 51. ORS 723.682 is amended to read:

723.682. (1) Any credit union chartered [and domiciled] in this state may, with the approval of the Director of the Department of Consumer and Business Services, merge with another credit union under the existing charter of the other credit union[, if domiciled in this state,] pursuant to any plan agreed upon by the majority of each board of directors of each credit union joining in the merger[,] and approved by the affirmative vote of a majority of the members of the merging credit union [present] voting at a meeting of its members duly called for such purpose.

(2) After agreement by the directors and approval by the members of the merging credit union, the president and secretary of the credit union shall execute a certificate of merger, which shall set forth all of the following:

(a) The time and place of the meeting of the board of directors at which the plan was agreed upon.

(b) The vote in favor of the adoption of the plan.

(d) The time and place of the meeting of the members at which the plan agreed upon was approved.

(e) The vote by which the plan was approved by the members.

(3) [Such] The certificate and a copy of the plan of merger agreed upon shall be forwarded to the director, certified by the director[,] and returned to [both] the continuing credit [unions] union within 30 days.

(4) Upon return of the certificate from the director, all property, property rights[,] and members' interest of the merged credit union shall vest in the [surviving] continuing credit union without deed, indorsement or other instrument of transfer, and all debts, obligations and liabilities of the merged credit union shall be deemed to have been assumed by the [surviving] continuing credit union under whose charter the merger was affected. The rights and privileges of the members of the merged credit union shall remain intact.

(5) This section shall be construed, whenever possible, to permit a credit union chartered under the laws of any other state or of the United States to merge with one chartered under the laws of this state, or to permit one chartered under the laws of this state to merge with one chartered under the laws of any other state or of the United States[, provided such credit unions are domiciled in this state].

SECTION 52. ORS 723.702 is amended to read:

723.702. Any central credit union may be organized and operated under this chapter with all the rights and powers of any credit union organized under this chapter, except those granted to a corporate central credit union under ORS 723.730, and shall be subject to all provisions of this chapter not inconsistent with ORS 723.702 to 723.730. Such a credit union shall use the term "central" in its official name.

SECTION 53. ORS 723.706 is amended to read:

723.706. Membership in a central credit union is limited to:

(1) Credit unions organized and operating under this chapter or under any other credit union act.

(2) Officers, directors, committee members and employees of such credit unions; officials and employees of any association of credit unions; and employees of federal or state governmental agencies responsible for the supervision of credit unions in this state.

(3) Organizations and associations of those persons or organizations enumerated in subsection (1) or (2) of this section.

(4) Employees of an employer with insufficient numbers to form or conduct the affairs of a [separate] credit union that would provide substantially similar services and facilities.

(5) Persons in the field of membership of liquidated credit unions or of credit unions that have entered into or are about to enter into voluntary or involuntary liquidation proceedings.

(6) Members of the immediate families of all members qualified above.

SECTION 54. ORS 723.730 is amended to read:

723.730. Membership in a corporate central credit union[, to which only] shall be limited to credit unions organized under federal law or under the [state] laws of [Oregon, Washington, Idaho, Alaska or any other state designated by the Director of the Department of Consumer and Business Services by rule] states listed in the bylaws of the corporate central credit union, and to subsidiaries of any such credit unions, associations of any such credit unions and affiliates of such associations [are eligible for membership, may be established in this state and shall be known as a corporate central credit union]. A corporate central credit union shall have all the powers, rights and obligations imposed upon or granted central credit unions under this chapter, except:

(1) It shall be exempt from the regular reserve requirements of ORS 723.631, but shall be required to establish and maintain [an equity reserve which shall be used as provided by rules adopted by the director. At the close of each accounting period there shall be set aside to the equity reserve a portion of the gross income for such period in an amount equal to two percent of gross income] a minimum capital to assets ratio as set by the Director of the Department of Consumer and Business Services by rule.

(2) It shall be exempt from the bond or letter of credit requirements of ORS 723.122, but shall be required to obtain and maintain a fidelity bond in accordance with any rules adopted by the director.

[(3) It may buy or sell investment securities which are evidences of indebtedness and corporate bonds which are evidences of indebtedness. The buying and selling of such investment securities and corporate bonds, however, shall be limited to buying and selling without recourse marketable obligations evidencing indebtedness of any corporation; the United States or its agencies and instrumentalities; this state; any other state; and any county, city, school district, port district or other public body in the United States. Except with respect to the obligations of the United States, its agencies and instrumentalities, the obligations shall be rated in one of the four highest grades by a recognized investment service organization that has been engaged regularly and continuously for a period of not less than 10 years in rating such obligations. The total amount of the investment securities of any one obligor or maker held by the corporate central credit union shall at no time exceed two percent of the shares, undivided earnings and reserves of the corporate central credit union except that this limit shall not apply to obligations of the United States, its agencies and instrumentalities. The aggregate total of the investment securities and corporate bonds held by the corporate central credit union shall not exceed 15 percent of the shares, undivided earnings and reserves of the corporate central credit union.]

(3) It may buy and sell any form of marketable debt obligations of domestic corporations or of federal, state or local government units in accordance with an investment plan approved by the director prior to the purchase or sale of the obligation.

(4) A corporate central credit union may make loans or establish lines of credit to a member without regard to the limit set in ORS 723.512. Notwithstanding ORS 723.502 or any other provision of law limiting allowable interest on a loan, a corporate central credit union and a member may agree in writing on the rate of interest that shall be charged on such loans.

(5) A corporate central credit union may issue membership capital share accounts as provided by rule.

SECTION 55. ORS 723.032 is amended to read:

723.032. (1) A credit union may establish a place of business[, establish additional places of business] or change its place of business within this state upon written notice to the Director of the Department of Consumer and Business Services.

(2) A credit union may establish additional places of business upon written application to the Director of the Department of Consumer and Business Services. The application shall be accompanied by a $500 fee. The fee shall be paid only with applications for the establishment of new places of business. The fee is not required to be paid with applications relating to the acquisition or relocation of existing places of business. The director may approve or disapprove the application. If the director does not disapprove an application within 30 days after a completed application is received, the application shall be considered approved.

(3) The director may limit or restrict the ability of a credit union to establish additional places of business upon written notice to the credit union if the director determines that the safety and soundness of the credit union would be adversely affected by any addition. [If a credit union has been notified of a limitation or restriction under this subsection, any subsequent notice given by the credit union to the director regarding establishment of additional places of business shall be accompanied by a fee of $500. The fee shall be paid until the limitation or restriction is removed by subsequent notice by the director.]

[(2)] (4) A credit union may share office space with one or more credit unions and contract with any person or corporation to provide facilities or personnel.

SECTION 56. ORS 723.176 is amended to read:

723.176. [Societies, and partnerships] Business and nonbusiness organizations composed of individuals who are eligible [to] for membership, [and corporations] or whose employees are eligible [to] 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 57. ORS 723.454 is amended to read:

723.454. The credit union shall have a lien on all funds of a member or joint owner on deposit with the credit union in any individual or joint account [of the member, for any sum past due the credit union from said member or for any loan indorsed by the member] held in any capacity, for any obligation of the member or joint owner to the credit union.

SECTION 58. ORS 723.416 and 723.422 are repealed.

SECTION 59. (1) The amendments to ORS 723.012, 723.014 and 723.042 by sections 2, 3 and 5 of this 1999 Act apply to applications for certificates of approval made on or after the effective date of this 1999 Act.

(2) The amendments to ORS 723.152 by section 11 of this 1999 Act apply to activities occurring on or after the effective date of this 1999 Act.

(3) The amendments to ORS 723.202 by section 13 of this 1999 Act apply to activities occurring on or after the effective date of this 1999 Act.

(4) Sections 18 to 39 of this 1999 Act apply to accounts existing on and after the effective date of this 1999 Act and to accounts created on or after the effective date of this 1999 Act.

(5) The amendments to ORS 723.512, 723.526 and 723.532 by sections 42 to 44 of this 1999 Act apply to loans made on or after the effective date of this 1999 Act.

(6) The amendments to ORS 723.730 by section 54 of this 1999 Act apply to corporate central credit unions organized prior to, on or after the effective date of this 1999 Act.

(7) The amendments to ORS 723.032 by section 55 of this 1999 Act apply to establishments of or changes in places of business occurring on or after the effective date of this 1999 Act.

Approved by the Governor May 5, 1999

Filed in the office of Secretary of State May 5, 1999

Effective date October 23, 1999

__________