Bill Text: IL SB3687 | 2023-2024 | 103rd General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Credit Union Act. Provides that a credit union regulated by the Department of Financial and Professional Regulation that is a covered financial institution under the Illinois Community Reinvestment Act shall pay an examination fee to the Department subject to the rules adopted by the Department. Provides that the aggregate of all credit union examination fees collected by the Department under the Illinois Community Reinvestment Act shall be paid and transferred promptly, accompanied by a detailed statement, into the State Treasury and shall be set apart in the Credit Union Community Reinvestment Act Fund. Provides the limits to the amounts of funds that a credit union may invest in the purchase of an investment interest in a pool of loans when the investment is greater than the net worth of the credit union. Provides that credit unions may invest funds in derivatives transactions to aid in the credit union's management of interest rate risk if certain specified conditions are satisfied. Makes changes to provisions concerning conflicts between bylaws adopted by the subscribers of a credit union and the Act. Makes changes to provisions concerning rules adopted by the Secretary of Financial and Professional Regulation and the Act. Makes other changes. Amends the State Finance Act. Creates the Credit Union Community Reinvestment Act Fund. Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2024-08-09 - Public Act . . . . . . . . . 103-1034 [SB3687 Detail]

Download: Illinois-2023-SB3687-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB3687 Introduced 2/9/2024, by Sen. David Koehler SYNOPSIS AS INTRODUCED:
30 ILCS 105/5.1015 new
205 ILCS 305/2 from Ch. 17, par. 4403
205 ILCS 305/8 from Ch. 17, par. 4409
205 ILCS 305/9 from Ch. 17, par. 4410
205 ILCS 305/12.5 new
205 ILCS 305/13 from Ch. 17, par. 4414
205 ILCS 305/39 from Ch. 17, par. 4440
205 ILCS 305/59 from Ch. 17, par. 4460
Amends the Illinois Credit Union Act. Provides that a credit union regulated by the Department of Financial and Professional Regulation that is a covered financial institution under the Illinois Community Reinvestment Act shall pay an examination fee to the Department subject to the adopted by the Department. Provides that the aggregate of all credit union examination fees collected by the Department under the Illinois Community Reinvestment Act shall be paid and transferred promptly, accompanied by a detailed statement, into the State Treasury and shall be set apart in the Credit Union Community Reinvestment Act Fund. Provides the limits to the amounts of funds that a credit union may invest in the purchase of an investment interest in a pool of loans when the investment is greater than the net worth of the credit union. Provides that credit unions may invest funds in derivatives transactions to aid in the credit union's management of interest rate risk if certain specified conditions are satisfied. Makes changes to provisions concerning conflicts between bylaws adopted by the subscribers of a credit union and the Act. Makes changes to provisions concerning rules adopted by the Secretary of Financial and Professional Regulation and the Act. Makes other changes. Amends the State Finance Act. Creates the Credit Union Community Reinvestment Act Fund. Effective immediately.
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A BILL FOR
SB3687 LRB103 38108 RTM 68240 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Finance Act is amended by adding
Section 5.1015 as follows:
(30 ILCS 105/5.1015 new)
Sec. 5.1015. The Credit Union Community Reinvestment Act
Fund.
Section 10. The Illinois Credit Union Act is amended by
changing Sections 2, 8, 9, 13, 39, and 59 and by adding Section
12.5 as follows:
(205 ILCS 305/2) (from Ch. 17, par. 4403)
Sec. 2. Organization procedure.
(1) Any 9 or more persons of legal age, the majority of
whom shall be residents of the State of Illinois, who have a
common bond referred to in Section 1.1 may organize a credit
union or a central credit union by complying with this
Section.
(2) The subscribers shall execute in duplicate Articles of
Incorporation and agree to the terms thereof, which Articles
shall state:

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(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 the location
where the proposed credit union is to have its principal
place of business;
(b) The common bond of the members of the credit
union;
(c) The par value of the shares of the credit union,
which must be at least $1;
(d) The names, addresses and Social Security numbers
of the subscribers to the Articles of Incorporation, and
the number and the value of shares subscribed to by each;
(e) That the credit union may exercise such incidental
powers as are necessary or requisite to enable it to carry
on effectively the purposes for which it is incorporated,
and those powers which are inherent in the credit union as
a legal entity;
(f) That the existence of the credit union shall be
perpetual.
(3) The subscribers shall prepare and adopt bylaws for the
general governance government of the credit union, consistent
with this Act, and execute same in duplicate. If there is a
conflict, inconsistency, or variation between the terms of
this Act and the provisions in the bylaws adopted by the credit
union, the terms of this Act shall control. A conflict,
inconsistency, or variation may not be deemed to exist if the

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Act specifically requires that a particular matter shall be
adopted in the bylaws.
(4) The subscribers shall forward the articles of
incorporation and the bylaws to the Secretary in duplicate,
along with the required charter fee. If they conform to the
law, and such rules and regulations as the Secretary and the
Director may prescribe, if the Secretary determines that a
common bond exists, and that it is economically advisable to
organize the credit union, he or she shall within 60 days issue
a certificate of approval attached to the articles of
incorporation and return a copy of the bylaws and the articles
of incorporation to the applicants or their representative,
which shall be preserved in the permanent files of the credit
union. The subscribers shall file the certificate of approval,
with the articles of incorporation attached, in the office of
the recorder (or, if there is no recorder, in the office of the
county clerk) of the county in which the credit union is to
locate its principal place of business. The recorder or the
county clerk, as the case may be, shall accept and record the
documents if they are accompanied by the proper fee. When the
documents are so recorded, the credit union is incorporated
under this Act.
(5) The subscribers for a credit union charter shall not
transact any business until the certificate of approval has
been received.
(Source: P.A. 100-361, eff. 8-25-17.)

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(205 ILCS 305/8) (from Ch. 17, par. 4409)
Sec. 8. Secretary's powers and duties. Credit unions are
regulated by the Department. The Secretary in executing the
powers and discharging the duties vested by law in the
Department has the following powers and duties:
(1) To exercise the rights, powers, and duties set
forth in this Act or any related Act. The Director shall
oversee the functions of the Division and report to the
Secretary, with respect to the Director's exercise of any
of the rights, powers, and duties vested by law in the
Secretary under this Act. All references in this Act to
the Secretary shall be deemed to include the Director, as
a person authorized by the Secretary or this Act to assume
responsibility for the oversight of the functions of the
Department relating to the regulatory supervision of
credit unions under this Act.
(2) To adopt prescribe rules and regulations for the
administration of this Act. The provisions of the Illinois
Administrative Procedure Act are hereby expressly adopted
and incorporated herein as though a part of this Act, and
shall apply to all administrative rules and procedures of
the Department under this Act. Rules adopted by the
Secretary shall be within the statutory authority upon
which they are based. If there is a conflict,
inconsistency, or variation between the terms of this Act

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and the provisions in a rule adopted by the Secretary, the
terms of this Act shall control. A conflict,
inconsistency, or variation may not be deemed to exist if
the Act specifically delegates authority to the Secretary
to adopt by rule standards or limitations on a particular
matter, provided the rule is within the statutory
authority upon which it is based.
(3) To direct and supervise all the administrative and
technical activities of the Department including the
employment of a Credit Union Supervisor who shall have
knowledge in the theory and practice of, or experience in,
the operations or supervision of financial institutions,
preferably credit unions, and such other persons as are
necessary to carry out his functions. The Secretary shall
ensure that all examiners appointed or assigned to examine
the affairs of State-chartered credit unions possess the
necessary training and continuing education to effectively
execute their jobs.
(4) To issue cease and desist orders when in the
opinion of the Secretary, a credit union is engaged or has
engaged, or the Secretary has reasonable cause to believe
the credit union is about to engage, in an unsafe or
unsound practice, or is violating or has violated or the
Secretary has reasonable cause to believe is about to
violate a law, rule, or regulation or any condition
imposed in writing by the Department.

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(5) To suspend from office and to prohibit from
further participation in any manner in the conduct of the
affairs of any credit union any director, officer, or
committee member who has committed any violation of a law,
rule, or regulation or of a cease and desist order or who
has engaged or participated in any unsafe or unsound
practice in connection with the credit union or who has
committed or engaged in any act, omission, or practice
which constitutes a breach of his fiduciary duty as such
director, officer, or committee member, when the Secretary
has determined that such action or actions have resulted
or will result in substantial financial loss or other
damage that seriously prejudices the interests of the
members.
(6) To assess a civil penalty against a credit union
provided that:
(A) the Secretary reasonably determines, based on
objective facts and an accurate assessment of
applicable legal standards, that the credit union has:
(i) committed a violation of this Act, any
rule adopted in accordance with this Act, or any
order of the Secretary issued pursuant to his or
her authority under this Act; or
(ii) engaged or participated in any unsafe or
unsound practice;
(B) before a civil penalty is assessed under this

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item (6), the Secretary must make the further
reasonable determination, based on objective facts and
an accurate assessment of applicable legal standards,
that the credit union's action constituting a
violation under subparagraph (i) of paragraph (A) of
this item (6) or an unsafe and unsound practice under
subparagraph (ii) of paragraph (A) of this item (6):
(i) directly resulted in a substantial and
material financial loss or created a reasonable
probability that a substantial and material
financial loss will directly result; or
(ii) constituted willful misconduct or a
material breach of fiduciary duty of any director,
officer, or committee member of the credit union;
Material financial loss, as referenced in this
paragraph (B), shall be assessed in light of
surrounding circumstances and the relative size and
nature of the financial loss or probable financial
loss. Certain benchmarks shall be used in determining
whether financial loss is material, such as a
percentage of total assets or total gross income for
the immediately preceding 12-month period. Absent
compelling and extraordinary circumstances, no civil
penalty shall be assessed, unless the financial loss
or probable financial loss is equal to or greater than
either 1% of the credit union's total assets for the

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immediately preceding 12-month period, or 1% of the
credit union's total gross income for the immediately
preceding 12-month period, whichever is less;
(C) before a civil penalty is assessed under this
item (6), the credit union must be expressly advised
in writing of the:
(i) specific violation that could subject it
to a penalty under this item (6); and
(ii) specific remedial action to be taken
within a specific and reasonable time frame to
avoid imposition of the penalty;
(D) civil penalties assessed under this item (6)
shall be remedial, not punitive, and reasonably
tailored to ensure future compliance by the credit
union with the provisions of this Act and any rules
adopted pursuant to this Act;
(E) a credit union's failure to take timely
remedial action with respect to the specific violation
may result in the issuance of an order assessing a
civil penalty up to the following maximum amount,
based upon the total assets of the credit union:
(i) Credit unions with assets of less than $10
million................................................$1,000
(ii) Credit unions with assets of at least $10
million and less than $50 million......................$2,500
(iii) Credit unions with assets of at least

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$50 million and less than $100 million.................$5,000
(iv) Credit unions with assets of at least
$100 million and less than $500 million...............$10,000
(v) Credit unions with assets of at least $500
million and less than $1 billion......................$25,000
(vi) Credit unions with assets of $1 billion
and greater.....................................$50,000; and
(F) an order assessing a civil penalty under this
item (6) shall take effect upon service of the order,
unless the credit union makes a written request for a
hearing under 38 Ill. Adm. Code 190.20 of the
Department's rules for credit unions within 90 days
after issuance of the order; in that event, the order
shall be stayed until a final administrative order is
entered.
This item (6) shall not apply to violations separately
addressed in rules as authorized under item (7) of this
Section.
(7) Except for the fees established in this Act, to
prescribe, by rule and regulation, fees and penalties for
preparing, approving, and filing reports and other
documents; furnishing transcripts; holding hearings;
investigating applications for permission to organize,
merge, or convert; failure to maintain accurate books and
records to enable the Department to conduct an
examination; and taking supervisory actions.

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(8) To destroy, in his discretion, any or all books
and records of any credit union in his possession or under
his control after the expiration of three years from the
date of cancellation of the charter of such credit unions.
(9) To make investigations and to conduct research and
studies and to publish some of the problems of persons in
obtaining credit at reasonable rates of interest and of
the methods and benefits of cooperative saving and lending
for such persons.
(10) To authorize, foster, or establish experimental,
developmental, demonstration, or pilot projects by public
or private organizations including credit unions which:
(a) promote more effective operation of credit
unions so as to provide members an opportunity to use
and control their own money to improve their economic
and social conditions; or
(b) are in the best interests of credit unions,
their members and the people of the State of Illinois.
(11) To cooperate in studies, training, or other
administrative activities with, but not limited to, the
NCUA, other state credit union regulatory agencies and
industry trade associations in order to promote more
effective and efficient supervision of Illinois chartered
credit unions.
(12) Notwithstanding the provisions of this Section,
the Secretary shall not:

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(1) issue an order against a credit union
organized under this Act for unsafe or unsound banking
practices solely because the entity provides or has
provided financial services to a cannabis-related
legitimate business;
(2) prohibit, penalize, or otherwise discourage a
credit union from providing financial services to a
cannabis-related legitimate business solely because
the entity provides or has provided financial services
to a cannabis-related legitimate business;
(3) recommend, incentivize, or encourage a credit
union not to offer financial services to an account
holder or to downgrade or cancel the financial
services offered to an account holder solely because:
(A) the account holder is a manufacturer or
producer, or is the owner, operator, or employee
of a cannabis-related legitimate business;
(B) the account holder later becomes an owner
or operator of a cannabis-related legitimate
business; or
(C) the credit union was not aware that the
account holder is the owner or operator of a
cannabis-related legitimate business; and
(4) take any adverse or corrective supervisory
action on a loan made to an owner or operator of:
(A) a cannabis-related legitimate business

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solely because the owner or operator owns or
operates a cannabis-related legitimate business;
or
(B) real estate or equipment that is leased to
a cannabis-related legitimate business solely
because the owner or operator of the real estate
or equipment leased the equipment or real estate
to a cannabis-related legitimate business.
(Source: P.A. 102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)
(205 ILCS 305/9) (from Ch. 17, par. 4410)
Sec. 9. Reports and examinations.
(1) Credit unions shall report to the Department on forms
supplied by the Department, in accordance with a schedule
published by the Department. A recapitulation of the annual
reports shall be compiled and published annually by the
Department, for the use of the General Assembly, credit
unions, various educational institutions and other interested
parties. A credit union which fails to file any report when due
shall pay to the Department a late filing fee for each day the
report is overdue as prescribed by rule. The Secretary may
extend the time for filing a report. Invoices for a 5300 Call
Report and other reports and documents shall be paid by a
credit union no later than 20 days after the credit union
receives an invoice from the Department. If an invoice is not
paid in a timely manner, the Department shall continue to

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issue invoices to the credit union on a monthly basis
reflecting applicable late filing fees until the invoice is
paid.
(2) The Secretary may require special examinations of and
special financial reports from a credit union or a credit
union organization in which a credit union loans, invests, or
delegates substantially all managerial duties and
responsibilities when he determines that such examinations and
reports are necessary to enable the Department to determine
the safety of a credit union's operation or its solvency. The
cost to the Department of the aforesaid special examinations
shall be borne by the credit union being examined as
prescribed by rule.
(3) All credit unions incorporated under this Act shall be
examined at least biennially by the Department or, at the
discretion of the Secretary, by a public accountant registered
by the Department of Financial and Professional Regulation.
The costs of an examination shall be paid by the credit union.
The scope of all examinations by a public accountant shall be
at least equal to the examinations made by the Department. The
examiners shall have full access to, and may compel the
production of, all the books, papers, securities and accounts
of any credit union. A special examination shall be made by the
Department or by a public accountant approved by the
Department upon written request of 5 or more members, who
guarantee the expense of the same. Any credit union refusing

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to submit to an examination when ordered by the Department
shall be reported to the Attorney General, who shall institute
proceedings to have its charter revoked. If the Secretary
determines that the examination of a credit union is to be
conducted by a public accountant registered by the Department
of Financial and Professional Regulation and the examination
is done in conjunction with the credit union's external
independent audit of financial statements, the requirements of
this Section and subsection (3) of Section 34 shall be deemed
met.
(3.5) Pursuant to Section 8, the Secretary shall adopt
rules that ensure consistency and due process in the
examination process. The Secretary may also establish
guidelines that (i) define the scope of the examination
process and (ii) clarify examination items to be resolved. The
rules, formal guidance, interpretive letters, or opinions
furnished to credit unions by the Secretary may be relied upon
by the credit unions.
(4) A copy of the completed report of examination and a
review comment letter, if any, citing exceptions revealed
during the examination, shall be submitted to the credit union
by the Department. A detailed report stating the corrective
actions taken by the board of directors on each exception set
forth in the review comment letter shall be filed with the
Department within 40 days after the date of the review comment
letter, or as otherwise directed by the Department. Any credit

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union through its officers, directors, committee members or
employees, which willfully provides fraudulent or misleading
information regarding the corrective actions taken on
exceptions appearing in a review comment letter may have its
operations restricted to the collection of principal and
interest on loans outstanding and the payment of normal
expenses and salaries until all exceptions are corrected and
accepted by the Department.
(5) The Secretary may accept an examination from the
National Credit Union Administration or a private insurer of
share deposits approved by the Secretary instead of an
examination conducted by the Department or by a public
accountant registered by the Department pursuant to subsection
(3). Acceptance of an examination from the National Credit
Union Administration or an approved private insurer of share
deposits shall only be permitted on an alternating basis with
examinations that the Department or a registered public
accountant conducts.
(Source: P.A. 102-558, eff. 8-20-21; 102-858, eff. 5-13-22.)
(205 ILCS 305/12.5 new)
Sec. 12.5. Community Reinvestment Act examination fees.
(a) As used in 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.
"Examination fee" means the examination fee described in

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Section 35-15 of the Illinois Community Reinvestment Act.
(b) For the fiscal year beginning July 1, 2025, a credit
union regulated by the Department that is a covered financial
institution under the Illinois Community Reinvestment Act
shall pay an examination fee to the Department at the
frequency and rate set forth in rules adopted by the
Department implementing the Illinois Community Reinvestment
Act, unless exempted from the payment of the examination fee
by those rules. The examination fee shall be separate from and
in addition to the regulatory fees paid by credit unions
regulated by the Department as prescribed in Section 12 and
shall be exclusively used to defray the administrative and
operational expenses of the Credit Union Section of the
Department incidental to conducting the examinations required
by the Illinois Community Reinvestment Act and implementing
rules of the Department.
(c) The aggregate of all credit union examination fees
collected by the Department under the Illinois Community
Reinvestment Act shall be paid and transferred promptly,
accompanied by a detailed statement, into the State Treasury
and shall be set apart in the Credit Union Community
Reinvestment Act Fund. All earnings received from investment
of the funds in the Credit Union Community Reinvestment Act
Fund shall be deposited in the Fund and shall be used for the
same purposes as examination fees deposited into the Fund.
Moneys deposited into the Credit Union Community Reinvestment

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Act 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.
(d) The administrative and operational expenses of the
Credit Union Section of the Department in conducting
examinations shall have the same meaning and scope as the
administrative and operational expenses of the Credit Union
Section of the Department in conducting regulatory
examinations, as defined in subsection (5) of Section 12.
(e) When the balance in the Credit Union Community
Reinvestment Act Fund at the end of a fiscal year exceeds 25%
of the total administrative and operational expenses incurred
by the Department in administering and enforcing the Illinois
Community Reinvestment Act and rules of the Department in the
administration and enforcement of the Illinois Community
Reinvestment Act by conducting examinations of credit unions,
such excess shall be credited to credit unions and applied
against the credit unions' examination fees for the subsequent
fiscal year. The amount credited to each credit union shall be
in the same proportion as the examination fee paid by such
credit union for the fiscal year in which the excess is
produced bears to the aggregate amount of all examination fees
collected by the Department from credit unions under the
Illinois Community Reinvestment Act for the same fiscal year.

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(205 ILCS 305/13) (from Ch. 17, par. 4414)
Sec. 13. General powers. A credit union may:
(1) Make contracts; sue and be sued; and adopt and use
a common seal and alter the same;
(2) Acquire, lease (either as lessee or lessor), hold,
pledge, mortgage, sell and dispose of real property,
either in whole or in part, or any interest therein, as may
be necessary or incidental to its present or future
operations and needs, subject to such limitations as may
be imposed thereon in rules and regulations promulgated by
the Secretary; acquire, lease (either as lessee or
lessor), hold, pledge, mortgage, sell and dispose of
personal property, either in whole or in part, or any
interest therein, as may be necessary or incidental to its
present or future operations and needs;
(3) 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;
(4) Receive savings from its members in the form of
shares of various classes, or special purpose share
accounts; act as custodian of its members' accounts; issue
shares in trust as provided in this Act;
(5) Lend its funds to its members and otherwise as
hereinafter provided;
(6) Borrow from any source in accordance with policy

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established by the board of directors to a maximum of 50%
of capital, surplus and reserves;
(7) Discount and sell any obligations owed to the
credit union;
(8) Honor requests for withdrawals or transfers of all
or any part of member share accounts, and any classes
thereof, in any manner approved by the credit union board
of directors;
(9) Sell all or a part of its assets or purchase all or
a part of the assets of another credit union and assume the
liabilities of the selling credit union, subject to the
prior approval of the Director, which approval shall not
be required in the case of loan transactions otherwise
authorized under applicable law;
(10) Invest surplus funds as provided in this Act;
(11) Make deposits in banks, savings banks, savings
and loan associations, trust companies; and invest in
shares, classes of shares or share certificates of other
credit unions;
(12) Assess charges and fees to members in accordance
with board resolution;
(13) Hold membership in and pay dues to associations
and organizations; to invest in shares, stocks or
obligations of any credit union organization;
(14) Declare dividends and pay interest refunds to
borrowers as provided in this Act;

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(15) Collect, receive and disburse monies in
connection with providing negotiable checks, money orders
and other money-type instruments, and for such other
purposes as may provide benefit or convenience to its
members, and charge a reasonable fee for such services;
(16) Act as fiscal agent for and receive deposits from
the federal government, this State, or any other state,
state or any agency or political subdivision thereof,
including, but not limited to, political subdivisions as
defined in subsection (b) of Section 59;
(17) Receive savings from nonmembers in the form of
shares or share accounts in the case of credit unions
serving predominantly low-income members. The term "low
income members" shall mean those members who make less
than 80% of the average for all wage earners as
established by the Bureau of Labor Statistics or those
members whose annual household income falls at or below
80% of the median household income for the nation as
established by the Census Bureau. The term "predominantly"
is defined as a simple majority;
(18) Establish, maintain, and operate terminals as
authorized by the Electronic Fund Transfer Act;
(19) Subject to Article XLIV of the Illinois Insurance
Code, act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums

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on policies issued by such company; and may receive for
services so rendered such fees or commissions as may be
agreed upon between the said credit union and the
insurance company for which it may act as agent; provided,
however, that no such credit union shall in any case
assume or guarantee the payment of any premium on
insurance policies issued through its agency by its
principal; and provided further, that the credit union
shall not guarantee the truth of any statement made by an
assured in filing his application for insurance; and
(20) Make reasonable contributions to civic,
charitable, or service organizations not organized for
profit; religious corporations; and fundraisers benefiting
persons in the credit union's service area.
(Source: P.A. 97-133, eff. 1-1-12.)
(205 ILCS 305/39) (from Ch. 17, par. 4440)
Sec. 39. Special purpose share accounts; charitable
donation accounts.
(1) If provided for in and consistent with the bylaws,
Christmas clubs, vacation clubs and other special purpose
share accounts may be established and offered under conditions
and restrictions established by the board of directors.
(2) Pursuant to a policy adopted by the board of
directors, which may be amended from time to time, a credit
union may establish one or more charitable donation accounts.

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The investments and purchases to fund a charitable donation
account are not subject to the investment limitations of this
Act, provided the charitable donation account is structured in
accordance with this Act. At their time of purchase, the book
value of the investments in all charitable donation accounts,
in the aggregate, shall not exceed 5% of the credit union's net
worth.
(a) If a credit union chooses to establish a
charitable donation account using a trust vehicle, the
trustee must be an entity regulated by the Office of the
Comptroller of the Currency, the U.S. Securities and
Exchange Commission, another federal regulatory agency, or
a State financial regulatory agency. A regulated trustee
or other person who is authorized to make investment
decisions for a charitable donation account, other than
the credit union itself, shall either be registered with
the U.S. Securities and Exchange Commission as an
investment advisor or regulated by the Office of the
Comptroller of the Currency.
(b) The parties to the charitable donation account
must document the terms and conditions controlling the
account in a written operating agreement, trust agreement,
or similar instrument. The terms of the agreement shall be
consistent with the requirements and conditions set forth
in this Section. The agreement, if applicable, and
policies must document the investment strategies of the

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charitable donation account trustee or other manager in
administering the charitable donation account and provide
for the accounting of all aspects of the account,
including its distributions and liquidation, in accordance
with generally accepted accounting principles.
(c) A credit union's charitable donation account
agreement, if applicable, and policies shall provide that
the charitable organization or non-profit entity
recipients of any charitable donation account funds must
be identified in the policy and be exempt from taxation
under Section 501(c)(3) or Section 501(c)(19) of the
Internal Revenue Code.
(d) Upon termination of a charitable donation account,
the credit union may receive a distribution of the
remaining assets in cash, or a distribution in kind of the
remaining assets, but only if those assets are permissible
investments for credit unions pursuant to this Act.
(3) Pursuant to subsection (20) of Section 13 authorizing
a credit union to make reasonable contributions to civic,
charitable, service, or religious corporations and to avoid
the cost, administrative expenses, and reporting requirements
associated with establishing its own private foundation, a
credit union may establish one or more donor-advised fund
accounts. The credit union shall maintain the account on its
books and records under a name it selects, which may identify
the account as a charitable or grant fund or other name that

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reflects the charitable nature of the account. The account
shall be subject to the terms and restrictions set forth in
this subsection.
(a) Transfers from a donor-advised fund account shall
be limited to foundations exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code.
(b) Distributions by a foundation receiving
donor-advised funds from the credit union shall be:
(i) based upon specific grant recommendations of
the credit union; and
(ii) limited to public charities exempt from
taxation under Section 501(c)(3) of the Internal
Revenue Code.
(c) Transfers by a credit union from its donor-advised
fund account to a foundation irrevocably conveys all
right, title, and interest in the funds to the foundation,
subject only to the continuing right of the credit union
to designate the entity or entities that will receive the
grant funds. Grants may not be used to satisfy any
obligation of the credit union and no goods or services
may be received by the credit union from the recipient
organization in consideration of the grant.
(Source: P.A. 102-774, eff. 5-13-22.)
(205 ILCS 305/59) (from Ch. 17, par. 4460)
Sec. 59. Investment of funds.

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(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:
(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 investment grades 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

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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
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% of the unimpaired capital and surplus of the
credit union or the amount authorized for federal credit
unions;

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(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
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 in the total
amount not exceeding 150% of the net worth of the credit

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union, so long as the credit union has received a
composite rating of 1 or 2 under the CAMELS supervisory
rating system at the time of the purchase of the
investment interest. The limit is increased to 175% of the
net worth of the credit union if it has received a
management rating of 1 under the CAMELS supervisory rating
system at the time of the purchase of the investment
interest. A credit union that satisfies the criteria for
the 175% limit may request approval from the Secretary for
an exception to the 175% limit up to a limit of 200% of the
net worth of the credit union, 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
issued by the credit union to the financial institution;
(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;
(14) In the shares, stocks, or obligations of

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community development financial institutions as defined in
regulations issued by the U.S. Department of the Treasury
and minority depository institutions as defined by the
National Credit Union Administration; however the
aggregate amount of all such investments shall not at any
time exceed 5% of the paid-in and unimpaired capital and
surplus of the credit union; and
(15)(A) In shares, stocks, or member units of
financial technology companies in the total amount not
exceeding 2.5% of the net worth of the credit union, so
long as:
(i) the credit union would remain well capitalized
as defined by 12 CFR 702.102 if the credit union
reduced its net worth by the full investment amount at
the time the investment is made or at any point during
the time the investment is held by the credit union;
(ii) the credit union and the financial technology
company are operated in a manner that demonstrates to
the public the separate corporate existence of the
credit union and financial technology company; and
(iii) the credit union has received a composite
rating of 1 or 2 under the CAMELS supervisory rating
system.
(B) The investment limit in subparagraph (A) of this
paragraph (15) is increased to 5% of the net worth of the
credit union if it has received a management rating of 1

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under the CAMELS supervisory rating system at the time a
specific investment is made and at all times during the
term of the investment. A credit union that satisfies the
criteria in subparagraph (A) of this paragraph (15) and
this subparagraph may request approval from the Secretary
for an exception to the 5% limit up to a limit of 10% of
the net worth of the credit union, subject to such safety
and soundness standards, limitations, and qualifications
as the Department may establish by rule or guidance from
time to time. The request shall be in writing and
substantiate the need for the higher limit, describe the
credit union's record of investment activity, and include
financial statements reflecting a sound fiscal history.
(C) Before investing in a financial technology
company, the credit union shall obtain a written legal
opinion as to whether the financial technology company is
established in a manner that will limit potential exposure
of the credit union to no more than the loss of funds
invested in the financial technology company and the legal
opinion shall:
(i) address factors that have led courts to
"pierce the corporate veil", such as inadequate
capitalization, lack of separate corporate identity,
common boards of directors and employees, control of
one entity over another, and lack of separate books
and records; and

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(ii) be provided by independent legal counsel of
the credit union.
(D) Before investing in the financial technology
company, the credit union shall enter into a written
investment agreement with the financial technology company
and the agreement shall contain the following clauses:
(i) the financial technology company will: (I)
provide the Department with access to the books and
records of the financial technology company relating
to the investment made by the credit union, with the
costs of examining those records borne by the credit
union in accordance with the per diem rate established
by the Department by rule; (II) follow generally
accepted accounting principles; and (III) provide the
credit union with its financial statements on at least
a quarterly basis and certified public accountant
audited financial statements on an annual basis; and
(ii) the financial technology company and credit
union agree to terminate their contractual
relationship: (I) upon 90 days' written notice to the
parties by the Secretary that the safety and soundness
of the credit union is threatened pursuant to the
Department's cease and desist and suspension authority
in Sections 8 and 61; (II) upon 30 days' written notice
to the parties if the credit union's net worth ratio
falls below the level that classifies it as well

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capitalized as defined by 12 CFR 702.102; and (III)
immediately upon the parties' receipt of written
notice from the Secretary when the Secretary
reasonably concludes, based upon specific facts set
forth in the notice to the parties, that the credit
union will suffer immediate, substantial, and
irreparable injury or loss if it remains a party to the
investment agreement.
(E) The termination of the investment agreement
between the financial technology company and credit union
shall in no way operate to relieve the financial
technology company from repaying the investment or other
obligation due and owing the credit union at the time of
termination.
(F) Any financial technology company in which a credit
union invests pursuant to this paragraph (15) that
directly or indirectly originates, purchases, facilitates,
brokers, or services loans to consumers in Illinois shall
not charge an interest rate that exceeds the applicable
maximum rate established by the Board of the National
Credit Union Administration pursuant to 12 CFR
701.21(c)(7)(iii)-(iv). The maximum interest rate
described in this subparagraph that may be charged by a
financial technology company applies to all consumer loans
and consumer credit products; and .
(16) In derivatives transactions, to aid in the credit

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union's management of interest rate risk. Before entering
into a derivatives transaction, and at all times during
its management of a derivatives transactions program, a
credit union shall satisfy and comply with all the
requirements set forth in 12 CFR 703.101 et seq. All
definitional terms and operational standards shall have
the meanings given to them in 12 CFR 703.101 et seq.,
except references to federal credit unions shall be
construed to mean Illinois-chartered credit unions, and
references to the National Credit Union Administration and
Regional Director shall be respectfully construed to mean
the Department and the Secretary. A credit union with
assets of at least $500 million and a CAMELS management
component rating of 1 or 2 need not obtain prior approval
from the Department before engaging in derivative
transactions
but shall notify the Secretary in writing or
by electronic mail within 5 business days after entering
into its first derivatives transaction.
(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

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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.
"Financial technology company" includes any corporation,
partnership, limited liability company, or other entity
organized under the laws of Illinois, another state, or the
United States of America:
(1) that the principal business of which is the
provision of financial products or financial services, or
both, that:
(i) currently relate or may prospectively relate
to the daily operations of credit unions;
(ii) are of current or prospective benefit to the
members of credit unions; or
(iii) are of current or prospective benefit to
consumers eligible for membership in credit unions;
and
(2) that applies technological interventions,
including, without limitation, specialized software or
algorithm processes, products, or solutions, to improve
and automate the delivery and use of those financial
products or financial services.
(c) A credit union investing to fund an employee benefit

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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 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. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22;
102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)