House Bill No. 238
Introduced By _______________________________________________________________________________
A Bill for an Act entitled: "An Act generally revising the laws relating to credit unions; conforming dividend payment provisions to federal law; increasing the trigger amount for board approval of loans to officials; revising capital accounts and capital reserve requirements for corporate credit unions to conform with federal regulations; allowing credit unions to hold funeral plan trusts; and amending sections 32-3-502, 32-3-608, 32-3-803, 32-3-804, 32-3-805, 32-3-807, 72-37-102, and 72-37-103, MCA."
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 32-3-502, MCA, is amended to read:
(1) At such the intervals and for such the periods as that the board of directors may authorize
authorizes and after provision providing for the required reserves, the board of directors may declare dividends to be paid
from the undivided earnings at such the rates and upon such the classes of shares as are determined by that the board
determines. Such The dividends shall must be paid on all paid-up shares outstanding at the close of the period for which
the dividend is declared. (2) Shares which become fully paid up during such dividend period and are outstanding at the close of the period shall be
entitled to a proportionate share of such dividend. (3) Dividend credit for a month may be accrued on shares which are or become fully paid up during the first 15 days of
Section 2. Section 32-3-608, MCA, is amended to read:
"32-3-608. Loans to officials. (1) A credit union may make loans to its directors, employees, loan officers, and credit
, and to members of its supervisory and credit committees , provided that if:
(a) the loan complies with
all lawful the requirements under of this chapter with respect to loans to other borrowers and is
not on terms more favorable than those extended to other borrowers; and
any such the loan or aggregate of loans to any one director or committee member which exceeds $2,500 that exceeds
$20,000 plus pledged shares must be reported to is approved by the board of directors. Loans to directors and committee
members may not exceed an aggregate of 20% of unimpaired capital of the credit union.
(2) A credit union may permit directors, employees, loan officers, the credit manager, and members of its supervisory and
credit committees to act as comakers, guarantors, or endorsers of loans to other members, except when
any such the loan
standing alone or when added to any outstanding loan or loans to the comaker, guarantor, or endorser exceeds $2,500
$20,000, approval of the board of directors is required."
Section 3. Section 32-3-803, MCA, is amended to read:
"32-3-803. Voting representative -- conflict of interest. (1) Each credit union that is a member of a corporate credit
union may designate one person to be its voting representative in the corporate credit union. The person must be designated
by the board of directors of the member credit union. The voting representative
must be is eligible to hold office in the
corporate credit union as if the person were a member of the corporate credit union.
(2) (a) A director, committee member, officer, agent, or employee may not in any manner participate in the deliberation or determination of any question affecting that person's personal pecuniary interest.
(b) A director, officer, agent, or employee may not in any manner participate in the determination of any matter material in amount, as defined by rule by the department, affecting the pecuniary interest of any corporation, partnership, or association, other than the corporate credit union, in which that person has a direct or indirect interest, except for matters involving payment of dividends to the membership.
(3) The department shall adopt rules implementing this section in substantial conformance with Title 12, part 704, Code of Federal Regulations."
Section 4. Section 32-3-804, MCA, is amended to read:
"32-3-804. Additional rights and powers -- department rules. (1) Except as limited by this part and rules adopted pursuant to this part, a corporate credit union has all of the rights and powers of any other credit union organized under this chapter and the additional rights and powers specified in this part.
(2) A corporate credit union may, as permitted by rules of the department, make loans to other credit unions and provide correspondent services and other financial services to other credit unions.
(3) A corporate credit union may, as permitted by rules of the department, invest in and grant loans to associations of credit unions, central funds of credit unions, or organizations chartered to provide service to credit unions.
(4) A corporate credit union may, as permitted by rules of the department, borrow and accept money from any source and issue notes or debentures.
(5) A corporate credit union may, as permitted by rules of the department, make reasonable and prudent investments.
(6) The department shall adopt rules governing corporate credit union loans, borrowing, investments, strategic planning, funds management, capital goals, and services. The rules must be in substantial conformance with Title 12, part 704, Code of Federal Regulations.
(7) A corporate credit union may issue membership capital
share deposit accounts as provided in 32-3-805.
(8) A corporate credit union with corporate shareholdings equal to or in excess of 95% of its total assets may, by vote of its board of directors, elect exemption of insurance on share accounts under the provisions of Title II of the Federal Credit Union Act."
Section 5. Section 32-3-805, MCA, is amended to read:
"32-3-805. Membership capital
share deposits accounts. (1) A corporate credit union may issue membership capital
share deposit or MCSD accounts to members.
(2) (a) For purposes of this section, "membership capital
share deposit" or "MCSD account" means a share, deposit, or
other account that:
(i) is established, at a minimum, as a
12-month 3-year notice account;
(ii) is limited to members;
(iii) is not subject to share insurance coverage by the national credit union share insurance fund or other deposit insurers; and
(iv) in the event of liquidation of the corporate credit union, is payable only after satisfaction of all liabilities of the liquidation estate, including uninsured obligations to shareholders and the national credit union share insurance fund.
An MCSD A membership capital account is not repayable until notice is given by the account holder credit union that
the account holder credit union intends to withdraw MCSD membership capital account funds from the corporate credit
union, except in the case of a credit union that is placed into liquidation, is purchased and assumed, or is merged.
An MCSD A membership capital account may not be used to pledge borrowings.
(4) Corporate credit unions that issue
MCSD membership capital accounts shall disclose at least annually to their members
the terms and conditions under which the accounts are issued."
Section 6. Section 32-3-807, MCA, is amended to read:
"32-3-807. Corporate reserves -- department rules. (1) A corporate credit union shall maintain a minimum
risk-based capital reserves to risk-weighted assets ratio according to rules adopted by the department in substantial
conformance with Title 12, part 704, Code of Federal Regulations.
(2) The department shall adopt rules for the administration of subsection (1)."
Section 7. Section 72-37-102, MCA, is amended to read:
"72-37-102. Deposit of money -- trust fund. (1) Within 30 days after receipt,
the a party to the a contract for a
prearranged funeral plan or related services holding said money in trust according to 72-37-101 shall deposit said the
money in a banking institution or invest said the money in the stock of a savings or building and loan association or in the
shares of a credit union organized under the laws of the state of Montana or of the United States of America and having its
principal place of business in the this state ,. the The deposits of the money which in a banking institution or the stock
liability investment in of which a savings or building and loan association or credit union are must be insured by an
instrumentality of the federal government.
Said The deposits or investments shall be and constitute a trust fund for the benefit of the person who has contracted for
such property and services upon his death a prearranged funeral plan or related services. Such The money shall must be
deposited in a separate account in the name of the depositor as trustee for the person who has contracted for such property
and services upon his death a prearranged funeral plan or related services."
Section 8. Section 72-37-103, MCA, is amended to read:
"72-37-103. Report of institution holding deposited money. A banking institution,
or savings or building and loan
association, or credit union receiving money in trust under 72-37-102 shall report to the department of commerce before
February 1 of each year all amounts received and held in trust. This report shall must show the name and address of each
trustee and cestui que beneficiary of a trust, the principal amount remaining, and the interest or dividends paid on each such