Credit union service organization: means an entity:
(a)
that provides any of the services listed in Subsection 7-9-59(2); and
(b)
in which a credit union organized under this chapter holds an ownership interest. See Utah Code 7-9-3
Deposits: means that portion of the capital paid into the credit union by members on which a specified rate of interest will be paid. See Utah Code 7-9-3
Member-business loan: means any loan, line of credit, or letter of credit, the proceeds of which will be used for:
(i)
a commercial purpose;
(ii)
other business investment property or venture purpose; or
National Credit Union Administration: The federal regulatory agency that charters and supervises federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of federal credit unions.) Source: OCC
Nonexempt credit union: means a credit union that is a nonexempt credit union under Section 7-9-55. See Utah Code 7-9-3
service organization: means a corporation or other business entity owned or controlled by one or more financial institutions that is engaged or proposes to engage in business activities related to the business of financial institutions. See Utah Code 7-1-103
Shares: means that portion of the capital paid into the credit union by members on which dividends may be paid. See Utah Code 7-9-3
State: means , unless the context demands otherwise:
A member of the board of directors shall hold office for the term prescribed in the bylaws.
(5)
The board of directors shall meet at least monthly.
(6)
The board of directors shall have the general management of the affairs, funds, and records of the credit union. In particular, the board of directors shall:
(a)
act upon an application for membership;
(b)
act upon expulsion of a member;
(c)
fix the amount of surety bond required of each officer or employee having custody of funds;
(d)
determine the rate of interest or dividend allowed on shares and deposits;
(e)
determine the terms and conditions of credit granted to members;
(f)
lend money, borrow money, and pledge security for any borrowing;
(g)
fill a vacancy in the board of directors or in the credit committee, if applicable, or in the supervisory committee until the election and qualification of a person to fill the vacancy;
(h)
appoint up to two alternate directors as provided in the bylaws;
(i)
fix the amount of the entrance fee;
(j)
declare dividends and their amount;
(k)
make recommendations to meetings of the members relative to amendments to the articles of incorporation, and transact any other business of the credit union; and
(l)
fix the maximum amount of credit, secured and unsecured, that may be extended to any one member, up to the limitations described in Subsections (7) and (8).
(7)
(a)
The credit that may be outstanding or available by a credit union at any one time is subject to the limitations described in this Subsection (7):
(i)
except as provided in Subsection (8); and
(ii)
except that the board of directors may:
(A)
set a lower limit than the limit in Subsection (7)(b)(i) or (7)(b)(ii)(A)(II); or
(B)
require that a person described in Subsection (7)(b)(ii)(A)(I) be a member of the credit union for more than six months before the date a member-business loan is extended.
(b)
(i)
A credit union may not extend credit that is not a member-business loan to a member if as a result of that extension of credit the total credit that is not a member-business loan that the credit union has issued to that member exceeds at any one time:
(A)
for a credit union with less than $2,000,000 in capital and surplus, the greater of:
(I)
$1,000; or
(II)
15% of capital and surplus up to a total of $25,000; or
(B)
for a credit union with $2,000,000 or more in capital and surplus, the greater of:
(I)
$25,000;
(II)
4% of capital and surplus; or
(III)
25% of the regular reserve.
(ii)
(A)
Beginning March 24, 1999, a credit union may not extend a member-business loan to a person:
(I)
if the credit union is a successor to or was a credit union described in Subsection 7-9-53(2)(c) as of May 3, 1999:
(Aa)
if the person is a business entity, unless at least one individual having a controlling interest in that business entity has been a member of the credit union for at least six months prior to the date of the extension of the member-business loan; or
(Bb)
if the person is an individual, unless the individual is a member of the credit union for at least six months prior to the date of the extension of the member-business loan; or
(II)
if as a result of the extension of the member-business loan, the total amount outstanding for all member-business loans that the credit union has extended to that person at any one time exceeds the lesser of:
(Aa)
10% of the credit union’s capital and surplus; or
(Bb)
$250,000 adjusted as provided in Subsection (7)(b)(ii)(B).
(B)
The adjustment described in Subsection (7)(b)(ii)(A)(II)(Bb) shall be calculated by the commissioner as follows:
(I)
beginning May 5, 2008 with the adjustment for calendar year 2008 and for a calendar year beginning on or after January 1, 2009, the commissioner shall increase the dollar amount in Subsection (7)(b)(ii)(A)(II)(Bb) by a percentage equal to the percentage difference between the consumer price index for the preceding calendar year and the consumer price index for calendar year 2006;
(II)
after the commissioner increases the dollar amount listed in Subsection (7)(b)(ii)(B)(I), the commissioner shall round the dollar amount to the nearest whole dollar;
(III)
if the percentage difference under Subsection (7)(b)(ii)(B)(I) is zero or a negative percentage, the consumer price index increase for the year is zero; and
(IV)
for purposes of this Subsection (7)(b)(ii)(B), the commissioner shall calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
(c)
(i)
Beginning March 24, 1999, a credit union may not extend a member-business loan if as a result of that member-business loan the credit union’s aggregate member-business loan amount calculated under Subsection (7)(c)(ii) at any one time exceeds 1.25 times the sum of:
(A)
the actual undivided earnings; and
(B)
the actual reserves other than the regular reserves.
(ii)
For purposes of Subsection (7)(c)(i), the aggregate member-business loan amount of a credit union equals:
(A)
the sum of the total amount financed under all member-business loans outstanding at the credit union; minus
(B)
the amount of the member-business loans described in Subsection (7)(c)(ii)(A):
(I)
that is secured by share or deposit savings in the credit union; or
(II)
for which the repayment is insured or guaranteed by, or there is an advance commitment to purchase by an agency of the federal government, a state, or a political subdivision of the state.
(d)
(i)
A credit union service organization may extend credit to a member of a credit union holding an ownership interest in the credit union service organization only if the credit union in which the person is a member is not prohibited from extending that credit to that member under:
For purposes of determining whether under this Subsection (7) and Subsection (8) a credit union may extend credit, the total amount outstanding of credit extended by a credit union service organization to a person shall be treated as if the credit was extended by the credit union in which the person is a member.
(iii)
If a person seeking an extension of credit from a credit union service organization is a member of more than one credit union holding an ownership interest in the credit union service organization, the person shall specify the credit union to which the extension of credit is attributed under Subsection (7)(d)(ii).
(iv)
This Subsection (7)(d) effects only an extension of credit:
(A)
that is extended on or after May 5, 2003; and
(B)
by:
(I)
a credit union service organization; or
(II)
a credit union organized under this chapter.
(e)
Notwithstanding the other provisions of this section, a nonexempt credit union may not extend credit that the nonexempt credit union is prohibited from extending under Section 7-9-58.
(8)
(a)
A credit union may extend credit that is not a member-business loan in an amount that exceeds the limits described in Subsection (7)(b)(i) only if the excess portion is fully secured by share or deposit savings in the credit union.
(b)
(i)
Except as provided in Subsection (8)(b)(ii), a credit union may extend a member-business loan in an amount that exceeds the limits described in Subsection (7)(b)(ii)(A)(II) only if:
(A)
that portion that is in excess of the limits described in Subsection (7)(b)(ii)(A)(II) is secured by share or deposit savings in the credit union; or
(B)
the repayment of that portion that is in excess of the limits described in Subsection (7)(b)(ii)(A)(II) is insured or guaranteed by, or there is an advance commitment to purchase that excess portion by, an agency of:
(I)
the federal government;
(II)
a state; or
(III)
a political subdivision of the state.
(ii)
Notwithstanding Subsection (8)(b)(i), a credit union may not extend a member-business loan if the total amount financed by the credit union exceeds $1,000,000.
(c)
For a member-business loan that is extended through a loan participation arrangement in accordance with Subsection 7-9-5(12):
(i)
in applying the limitation of Subsection (8)(b), each credit union participating in the member-business loan may extend up to $1,000,000 of the amount financed; and
(ii)
the requirement of Subsection (7)(b)(ii)(A)(I) applies to membership in a credit union that:
(A)
participates in the loan participation arrangement for the member-business loan;
(B)
is organized under this chapter; and
(C)
is a successor to or was a credit union described in Subsection 7-9-53(2)(c) as of May 3, 1999.
(9)
As provided in this chapter or in the credit union bylaws, the board of directors:
(a)
within 30 days following the annual meeting of the members, shall appoint a supervisory committee consisting of not less than three members;
(b)
within 30 days after the annual meeting of the members, shall appoint:
(i)
a credit committee consisting of not less than three members; or
(ii)
a credit manager in lieu of a credit committee;
(c)
shall appoint a president to serve as general manager;
(d)
shall have an executive committee;
(e)
may appoint an investment officer;
(f)
shall elect a secretary;
(g)
may appoint other officers and committees that it considers necessary;
(h)
shall establish written credit policies, loan security requirements, loan investment, personnel, and collection policies; and
(i)
on or before January 31 of each year, shall provide for:
(i)
share insurance for the shares and deposits of the credit union from the National Credit Union Administration or successor federal agency; or
(ii)
security expressly pledged for the payment of the shares and deposits in accordance with Section 7-9-45.
(10)
A person may not be a member of more than one committee except as otherwise provided in this chapter or in the credit union bylaws.
(11)
The president and secretary may not be the same person.
