Bill Amendment: IL HB4887 | 2019-2020 | 101st General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: CREDIT UNION ACT-VARIOUS

Status: 2020-06-23 - Rule 19(b) / Re-referred to Rules Committee [HB4887 Detail]

Download: Illinois-2019-HB4887-House_Amendment_001.html

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Rep. Jay Hoffman

Filed: 3/13/2020

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AMENDMENT TO HOUSE BILL 4887
AMENDMENT NO. ______. Amend House Bill 4887 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Credit Union Act is amended by
changing Sections 12, 23, 51, 57, 59, and 64.7 and by adding
Section 20.5 as follows:
(205 ILCS 305/12) (from Ch. 17, par. 4413)
Sec. 12. Regulatory fees.
(1) For the fiscal year beginning July 1, 2007, a credit
union regulated by the Department shall pay a regulatory fee to
the Department based upon its total assets as shown by its
Year-end Call Report at the following rates or at a lesser rate
established by the Secretary in a manner proportionately
consistent with the following rates and sufficient to fund the
actual administrative and operational expenses of the
Department's Credit Union Section pursuant to subsection (4) of

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this Section:
TOTAL ASSETS REGULATORY FEE
$25,000 or less ................ $100
Over $25,000 and not over
$100,000 ....................... $100 plus $4 per
$1,000 of assets in excess of
$25,000
Over $100,000 and not over
$200,000 ....................... $400 plus $3 per
$1,000 of assets in excess of
$100,000
Over $200,000 and not over
$500,000 ....................... $700 plus $2 per
$1,000 of assets in excess of
$200,000
Over $500,000 and not over
$1,000,000 ..................... $1,300 plus $1.40
per $1,000 of assets in excess
of $500,000
Over $1,000,000 and not
over $5,000,000................. $2,000 plus $0.50
per $1,000 of assets in
excess of $1,000,000
Over $5,000,000 and not
over $30,000,000 ............... $4,540 plus $0.397
per $1,000 of assets

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in excess of $5,000,000
Over $30,000,000 and not over
$100,000,000.................... $14,471 plus $0.34
per $1,000 of assets
in excess of $30,000,000
Over $100,000,000 and not
over $500,000,000 .............. $38,306 plus $0.17
per $1,000 of assets
in excess of $100,000,000
Over $500,000,000 .............. $106,406 plus $0.056
per $1,000 of assets
in excess of $500,000,000
(2) The Secretary shall review the regulatory fee schedule
in subsection (1) and the projected earnings on those fees on
an annual basis and adjust the fee schedule no more than 5%
annually if necessary to defray the estimated administrative
and operational expenses of the Credit Union Section of the
Department as defined in subsection (5). However, the fee
schedule shall not be increased if the amount remaining in the
Credit Union Fund at the end of any fiscal year is greater than
25% of the total actual and operational expenses incurred by
the State in administering and enforcing the Illinois Credit
Union Act and other laws, rules, and regulations as may apply
to the administration and enforcement of the foregoing laws,
rules, and regulations as amended from time to time for the
preceding fiscal year. The regulatory fee for the next fiscal

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year shall be calculated by the Secretary based on the credit
union's total assets as of December 31 of the preceding
calendar year. The Secretary shall provide credit unions with
written notice of any adjustment made in the regulatory fee
schedule.
(3) A credit union shall pay to the Department a regulatory
fee in quarterly installments equal to one-fourth of the
regulatory fee due in accordance with the regulatory fee
schedule in subsection (1), on the basis of assets as of the
Year-end Call Report of the preceding calendar year. The total
annual regulatory fee shall not be less than $100 or more than
$141,875, provided that the regulatory fee cap of $141,875
shall be adjusted to incorporate the same percentage increase
as the Secretary makes in the regulatory fee schedule from time
to time under subsection (2). No regulatory fee shall be
collected from a credit union until it has been in operation
for one year. The regulatory fee shall be billed to credit
unions on a quarterly basis and it shall be payable by credit
unions on the due date for the Call Report for the subject
quarter.
(4) The aggregate of all fees collected by the Department
under this Act shall be paid promptly after they are received,
accompanied by a detailed statement thereof, into the State
Treasury and shall be set apart in the Credit Union Fund, a
special fund hereby created in the State treasury. The amount
from time to time deposited in the Credit Union Fund and shall

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be used to offset the ordinary administrative and operational
expenses of the Credit Union Section of the Department under
this Act. All earnings received from investments of funds in
the Credit Union Fund shall be deposited into the Credit Union
Fund and may be used for the same purposes as fees deposited
into that fund. Moneys deposited in the Credit Union Fund may
be transferred to the Professions Indirect Cost Fund, as
authorized under Section 2105-300 of the Department of
Professional Regulation Law of the Civil Administrative Code of
Illinois.
Notwithstanding provisions in the State Finance Act, as now
or hereafter amended, or any other law to the contrary, the
Governor may, during any fiscal year through January 10, 2011,
from time to time direct the State Treasurer and Comptroller to
transfer a specified sum not exceeding 10% of the revenues to
be deposited into the Credit Union Fund during that fiscal year
from that Fund to the General Revenue Fund in order to help
defray the State's operating costs for the fiscal year.
Notwithstanding provisions in the State Finance Act, as now or
hereafter amended, or any other law to the contrary, the total
sum transferred from the Credit Union Fund to the General
Revenue Fund pursuant to this provision shall not exceed during
any fiscal year 10% of the revenues to be deposited into the
Credit Union Fund during that fiscal year. The State Treasurer
and Comptroller shall transfer the amounts designated under
this Section as soon as may be practicable after receiving the

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direction to transfer from the Governor.
(5) The administrative and operational expenses for any
fiscal year shall mean the ordinary and contingent expenses for
that year incidental to making the examinations provided for
by, and for administering, this Act, including all salaries and
other compensation paid for personal services rendered for the
State by officers or employees of the State to enforce this
Act; all expenditures for telephone and telegraph charges,
postage and postal charges, office supplies and services,
furniture and equipment, office space and maintenance thereof,
travel expenses and other necessary expenses; all to the extent
that such expenditures are directly incidental to such
examination or administration.
(6) When the balance in the Credit Union Fund at the end of
a fiscal year exceeds 25% of the total administrative and
operational expenses incurred by the State in administering and
enforcing the Illinois Credit Union Act and other laws, rules,
and regulations as may apply to the administration and
enforcement of the foregoing laws, rules, and regulations as
amended from time to time for that fiscal year, such excess
shall be credited to credit unions and applied against their
regulatory fees for the subsequent fiscal year. The amount
credited to each credit union shall be in the same proportion
as the regulatory fee paid by such credit union for the fiscal
year in which the excess is produced bears to the aggregate
amount of all fees collected by the Department under this Act

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for the same fiscal year.
(6.1) Notwithstanding any provision in subsection (6) of
this Section to the contrary, there shall be no issuance of a
regulatory fee credit for fiscal years ending June 30, 2020 and
June 30, 2021. Notwithstanding any provision in subsection (2)
of this Section to the contrary, there shall be no adjustment
in the regulatory fee schedule in subsection (1) of this
Section for fiscal years ending June 30, 2020 and June 30,
2021. This subsection (6.1) is inoperative on and after June
30, 2021.
(7) (Blank).
(8) Nothing in this Act shall prohibit the General Assembly
from appropriating funds to the Department from the General
Revenue Fund for the purpose of administering this Act.
(9) For purposes of this Section, "fiscal year" means a
period beginning on July 1 of any calendar year and ending on
June 30 of the next calendar year.
(Source: P.A. 100-201, eff. 8-18-17.)
(205 ILCS 305/20.5 new)
Sec. 20.5. Appointment of associate directors.
(a) The board of directors of a credit union may, in its
discretion, appoint one or more associate directors to serve in
an advisory capacity. The board shall prescribe the duties of
an associate director and the manner in which associate
directors are appointed and removed. The board shall not

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delegate to associate directors any of the duties or
responsibilities prescribed by this Act or other applicable law
to be performed by directors duly elected by their members. An
associate director shall not be deemed or considered to be a
director for any purpose under this Act.
(b) Prior to appointing an associate director, the board
shall confirm that the person meets all of the requirements to
serve as a director, including, without limitation, a working
familiarity with the financial and accounting practices of the
credit union as set forth in subsection (c) of Section 30.
(c) An associate director may participate in meetings of
the board but may not vote or otherwise act as a director. With
respect to any issue that comes before the board for
deliberation, the board may request that all associate
directors excuse themselves from the meeting of the board and
the associate directors shall immediately comply with the
request.
(d) The board shall require each associate director to sign
a confidentiality and nondisclosure agreement to ensure that
information concerning the credit union remains confidential.
(205 ILCS 305/23) (from Ch. 17, par. 4424)
Sec. 23. Compensation of officials.
(1) Directors and committee members may receive reasonable
compensation for their service as such, the amount of which
shall be set by the board of directors, in accordance with

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written policies and procedures established by the board of
directors. If the Department determines the payment of director
or committee member compensation, or both, creates a safety and
soundness issue for a credit union, the Department shall
utilize the standards set forth in its Regulatory Examination
Consistency and Due Process Rule, 38 Ill. Adm. Code 190.25, and
supplemental guidelines to address and resolve the issue. An
enforcement action taken pursuant to the Rule and guidelines
and specified by this Act shall be used to reduce or suspend
the compensation paid to the directors and committee members.
The Department shall, by rule, establish maximum rates of
reasonable compensation that are generally applicable to
credit unions considering factors the Department may establish
from time to time, including, but not limited to, total assets,
nonprofit cooperative structure, and the best interests of
members. "Compensation" as used in this subsection (1) refers
to remuneration expense to the credit union for services
provided by a director or committee member in his or her
capacity as director or committee member. The remuneration
expense is in the form of monetary payments and shall be
disclosed on an annual basis to the membership in the financial
statement that is part of the annual membership meeting
materials. The disclosure shall contain: (i) the amount paid to
each director and (ii) the amount paid to the directors as a
group. "Compensation" does not include any of the expenses
described in subsections (2) and (3).

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(2) The credit union may incur the expense of providing
reasonable life, health, accident, and similar insurance
protection benefits for directors and committee members.
(3) Directors, committee members and employees, while on
official business of the credit union, may be reimbursed for
reasonable and necessary expenses. Alternatively, the credit
union may make direct payment to a third party for such
business expenses. Reasonable and necessary expenses may
include the payment of travel costs for the foregoing officials
and one guest per official. All payment of costs shall be made
in accordance with written policies and procedures established
by the board of directors.
(4) The board of directors may establish compensation for
officers of the credit union.
(Source: P.A. 101-567, eff. 8-23-19.)
(205 ILCS 305/51) (from Ch. 17, par. 4452)
Sec. 51. Other loan programs.
(1) Subject to such rules and regulations as the Secretary
may promulgate, a credit union may participate in loans to
credit union members jointly with other credit unions,
corporations, or financial institutions. An originating credit
union may originate loans only to its own members. A
participating credit union that is not the originating lender
may participate in loans made to its own members or to members
of another participating credit union. "Originating lender"

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means the participating credit union with which the member
contracts. A master participation agreement must be properly
executed, and the agreement must include provisions for
identifying, either through documents incorporated by
reference or directly in the agreement, the participation loan
or loans prior to their sale.
(2) Any credit union with assets of $500,000 or more may
loan to its members under scholarship programs which are
subject to a federal or state law providing 100% repayment
guarantee.
(3) A credit union may purchase the conditional sales
contracts, notes and similar instruments which evidence an
indebtedness of its members. In the management of its assets,
liabilities, and liquidity, a credit union may purchase the
conditional sales contracts, notes, and other similar
instruments that evidence the consumer indebtedness of the
members of another credit union. "Consumer indebtedness" means
indebtedness incurred for personal, family, or household
purposes.
(4) With approval of the board of directors, a credit union
may make loans, either on its own or jointly with other credit
unions, corporations or financial institutions, to credit
union organizations; provided, that the aggregate amount of all
such loans outstanding shall not at any time exceed the greater
of 6% 3% of the paid-in and unimpaired capital and surplus of
the credit union or the amount authorized for federal credit

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unions.
(Source: P.A. 97-133, eff. 1-1-12.)
(205 ILCS 305/57) (from Ch. 17, par. 4458)
Sec. 57. Group purchasing and marketing.
(a) A credit union may, consistent with rules and
regulations promulgated by the Secretary, enter into
cooperative marketing arrangements to facilitate its members'
voluntary purchase of such goods and services as are in the
interest of improving economic and social conditions of the
members.
(b) A credit union may create and use descriptive and brand
references to promote and market its identity, services, and
products to its members. In the case of a merger pursuant to
Section 63, the surviving credit union may identify the merging
credit union as a division, branch, unit, or other descriptive
reference that ensures the members understand they are dealing
with one credit union rather than multiple credit unions as of
the effective date of the merger.
(Source: P.A. 100-361, eff. 8-25-17.)
(205 ILCS 305/59) (from Ch. 17, par. 4460)
Sec. 59. Investment of funds.
(a) Funds not used in loans to members may be invested,
pursuant to subsection (7) of Section 30 of this Act, and
subject to Departmental rules and regulations:

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(1) In securities, obligations or other instruments of
or issued by or fully guaranteed as to principal and
interest by the United States of America or any agency
thereof or in any trust or trusts established for investing
directly or collectively in the same;
(2) In obligations of any state of the United States,
the District of Columbia, the Commonwealth of Puerto Rico,
and the several territories organized by Congress, or any
political subdivision thereof; however, a credit union may
not invest more than 10% of its unimpaired capital and
surplus in the obligations of one issuer, exclusive of
general obligations of the issuer, and investments in
municipal securities must be limited to securities rated in
one of the 4 highest rating categories by a nationally
recognized statistical rating organization;
(3) In certificates of deposit or passbook type
accounts issued by a state or national bank, mutual savings
bank or savings and loan association; provided that such
institutions have their accounts insured by the Federal
Deposit Insurance Corporation or the Federal Savings and
Loan Insurance Corporation; but provided, further, that a
credit union's investment in an account in any one
institution may exceed the insured limit on accounts;
(4) In shares, classes of shares or share certificates
of other credit unions, including, but not limited to
corporate credit unions; provided that such credit unions

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have their members' accounts insured by the NCUA or other
approved insurers, and that if the members' accounts are so
insured, a credit union's investment may exceed the insured
limit on accounts;
(5) In shares of a cooperative society organized under
the laws of this State or the laws of the United States in
the total amount not exceeding 10% of the unimpaired
capital and surplus of the credit union; provided that such
investment shall first be approved by the Department;
(6) In obligations of the State of Israel, or
obligations fully guaranteed by the State of Israel as to
payment of principal and interest;
(7) In shares, stocks or obligations of other financial
institutions in the total amount not exceeding 5% of the
unimpaired capital and surplus of the credit union;
(8) In federal funds and bankers' acceptances;
(9) In shares or stocks of Credit Union Service
Organizations in the total amount not exceeding the greater
of 6% 3% of the unimpaired capital and surplus of the
credit union or the amount authorized for federal credit
unions;
(10) In corporate bonds identified as investment grade
by at least one nationally recognized statistical rating
organization, provided that:
(i) the board of directors has established a
written policy that addresses corporate bond

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investment procedures and how the credit union will
manage credit risk, interest rate risk, liquidity
risk, and concentration risk; and
(ii) the credit union has documented in its records
that a credit analysis of a particular investment and
the issuing entity was conducted by the credit union, a
third party on behalf of the credit union qualified by
education or experience to assess the risk
characteristics of corporate bonds, or a nationally
recognized statistical rating agency before purchasing
the investment and the analysis is updated at least
annually for as long as it holds the investment;
(11) To aid in the credit union's management of its
assets, liabilities, and liquidity in the purchase of an
investment interest in a pool of loans, in whole or in part
and without regard to the membership of the borrowers, from
other depository institutions and financial type
institutions, including mortgage banks, finance companies,
insurance companies, and other loan sellers, subject to
such safety and soundness standards, limitations, and
qualifications as the Department may establish by rule or
guidance from time to time;
(12) To aid in the credit union's management of its
assets, liabilities, and liquidity by receiving funds from
another financial institution as evidenced by certificates
of deposit, share certificates, or other classes of shares

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issued by the credit union to the financial institution;
and
(13) In the purchase and assumption of assets held by
other financial institutions, with approval of the
Secretary and subject to any safety and soundness
standards, limitations, and qualifications as the
Department may establish by rule or guidance from time to
time.
(b) As used in this Section:
"Political subdivision" includes, but is not limited to,
counties, townships, cities, villages, incorporated towns,
school districts, educational service regions, special road
districts, public water supply districts, fire protection
districts, drainage districts, levee districts, sewer
districts, housing authorities, park districts, and any
agency, corporation, or instrumentality of a state or its
political subdivisions, whether now or hereafter created and
whether herein specifically mentioned or not.
"Financial institution" includes any bank, savings bank,
savings and loan association, or credit union established under
the laws of the United States, this State, or any other state.
(c) A credit union investing to fund an employee benefit
plan obligation is not subject to the investment limitations of
this Act and this Section and may purchase an investment that
would otherwise be impermissible if the investment is directly
related to the credit union's obligation under the employee

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benefit plan and the credit union holds the investment only for
so long as it has an actual or potential obligation under the
employee benefit plan.
(d) If a credit union acquires loans from another financial
institution or financial-type institution pursuant to this
Section, the credit union shall be authorized to provide loan
servicing and collection services in connection with those
loans.
(Source: P.A. 100-361, eff. 8-25-17; 100-778, eff. 8-10-18;
101-567, eff. 8-23-19.)
(205 ILCS 305/64.7)
Sec. 64.7. Network credit unions.
(a) Two or more credit unions merging pursuant to Section
63 of this Act may elect to request a network credit union
designation for the surviving credit union from the Secretary.
The request shall be set forth in the plan of merger and
certificate of merger executed by the credit unions and
submitted to the Secretary pursuant to subsection (4) of
Section 63. The Secretary's approval of a certificate of merger
containing a network credit union designation request shall
constitute approval of the use of the network designation as a
brand or other identifier of the surviving credit union. If the
surviving credit union desires to include the network
designation in its legal name, make any other change to its
legal name, or both, it shall proceed with an amendment to the

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articles of incorporation and bylaws of the surviving credit
union pursuant to Section 4 of this Act.
(b) A network credit union is a cooperative business
structure comprised of 2 or more merging credit unions with a
collective goal of efficiently serving their combined
membership and gaining economies of scale through common
vision, strategy and initiative. The merging credit unions
shall be identified as divisional credit unions, branches, or
units of the network credit union or by other descriptive
references that ensure the members understand they are dealing
with one credit union rather than multiple credit unions.
Descriptive and brand references may also be created and used
to promote the identity, services, and products of the network
credit union to its members.
(c) Each divisional credit union may have an advisory board
of directors and a chief management official to assist in
maintaining and leveraging its respective local identity for
the benefit of the surviving credit union. The divisional
credit union advisory boards shall be appointed by the network
credit union board of directors. Each divisional credit union's
advisory board of directors may appoint a divisional credit
union chief management official and may also appoint one of its
directors to serve on the network credit union's nominating
committee. A divisional credit union may determine to identify
its advisory board as a committee and its divisional chief
management official with a title it deems reasonable and

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appropriate. The network credit union board of directors shall
require each advisory board member to sign a confidentiality
and nondisclosure agreement to ensure that information
concerning the credit union remains confidential.
(d) The network credit union is the surviving legal entity
in the merger and supervision, examination, audit, reporting,
governance, and management shall be conducted or performed at
the network credit union level. All share insurance, safety and
soundness, and statutory and regulatory requirements and
limitations shall be evaluated at the network credit union
level.
(Source: P.A. 99-614, eff. 7-22-16; 100-361, eff. 8-25-17.)
Section 99. Effective date. This Act takes effect upon
becoming law.".