This website publishes administrative rules on their effective dates, as designated by the adopting state agencies, colleges, and
universities.
| Rule |
Rule 1301:9-2-01 | Service facilities.
Effective:
November 24, 2019
(A) A credit union may provide one or
more service facilities for the transaction of any credit union business. A set
of all accounting records of the service facilities shall be maintained at the
home office of the credit union. A service facility may also include a shared
service facility. (B) No less than thirty calendar days before a credit
union closes a service facility, the credit union shall cause written
notification of the closure to be received in the office of the
superintendent.
Last updated June 17, 2024 at 10:30 AM
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Rule 1301:9-2-02 | Voting by the membership.
(A) Voting by proxy, by mail ballot, or
by electronic ballot by members is permitted if a provision for the use thereof
and minimum standards are contained in the credit union's code of
regulations. (B) The credit union must annually send
a copy of the form of any proxy or ballot to the superintendent for prior
review. The superintendent will approve or deny the proxy or ballot via written
repsonse within fifteen business days of receipt. (C) Irrespective of whether a vote is
accomplished by actual vote, mail ballot, electronic ballot, by proxy, or other
means approved by the superintendent, only qualified members may vote. Each
qualified member is entitled to one vote on each matter properly submitted to
the membership. The credit union may use any identifiable method or code unique
to the member that verifies the member's identification to vote. If a
member does not have access to an electronic ballot, the member must be
provided a paper ballot on request. (D) At a minimum, the form of the proxy
shall: (1) Provide for the date
of execution, name of member, and any identifiable method or code unique to the
member that verifies the member's identification to vote; (2) Indicate, in bold
type, whether the proxy is solicited on behalf of management; (3) Clearly and
impartially identify each matter or group of related matters intended to be
acted upon, whether proposed by the management or by shareholders;
and (4) Indicate that the
appointment of proxy will expire no later than eleven months from the time date
it is issued. (E) A proxy may confer discretionary
authority to vote with respect to any of the following matters: (1) Matters of which the
persons soliciting the proxy are unaware, provided that a specific statement to
that effect is made in the proxy statement or form of proxy. (2) Approval of the
minutes of the prior meeting if such approval does not amount to ratification
of the action taken at that meeting. (3) Matters incidental to
the conduct of the meeting. (F) At a minimum, the form of the mail
ballot shall: (1) Provide for the final
date of submission, name of member and any identifiable method or code unique
to the member that verifies the member's identification to vote; and
(2) Clearly and
impartially identify each matter or group of related matters intended to be
acted upon, whether proposed by the management or by members.
Last updated July 8, 2024 at 8:53 AM
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Rule 1301:9-2-03 | Required bond.
(A) Each credit union shall obtain and maintain a fidelity bond, subject to approval of the superintendent, that at a minimum, provides coverage for the fraud and dishonesty of all employees, directors, officers, and committee members. If a bonding company has submitted a template bond to be approved by the superintendent and such template is approved, a credit union may use this bond without the superintendent's approval provided the bond's provisions have not been altered since the time of the superintendent's review and approval. It is the responsibility of the board of directors to determine what additional coverage is needed for its particular credit union. (B) The superintendent may require additional coverage for any or all credit unions when, in his or her opinion, current coverage is insufficient. (C) All bond claims or potential bond claims shall be reported to the superintendent within three days of the filing of the claim or notice of potential claim with the bonding company. The notice to the superintendent should include a copy of the claim or notice of potential claim. (D) All bonds shall include a provision, in a form approved by the superintendent, requiring written notification by the surety to the superintendent: (1) When the bond of a credit union is terminated in its entirety and when bond coverage is terminated, by issuance of a written notice, on an employee, director, officer or committee member. The notification shall be sent to the superintendent and shall include a brief statement of cause for termination. (2) When the bond coverage is changed by the credit union or surety. The notification shall include a copy of the change in coverage. (E) The minimum amount of bond coverage under paragraph (A) of this rule shall be computed based on the credit union's total as set forth in this paragraph: | Assets | Minimum bond | | $0 to $4,000,000 | Lesser of total assets or $250,000 | | $4,000,001 to $50,000,000 | $100,000 plus $50,000 for each million or faction thereof over $1,000,000 | | $50,000,001 to $500,000,000 | $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000, to a maximum of $5,000,000 | | Over $500,000,000 | One per cent of assets, rounded to the nearest hundred million, to a maximum of $9,000,000 |
(F) The maximum amount of deductibles allowed are based on the credit union's total assets. The following table sets out the maximum deductibles: | Assets | Maximum deductible | | $0 to $100,000 | No deductible allowed | | $100,001 to $250,000 | $1,000 | | $250,001 to $1,000,000 | $2,000 | | Over $1,000,001 | $2,000 plus 1/1000 of total assets up to a maximum deductible of $200,000 |
No deductible shall exceed ten percent of the credit union's regular reserve unless the credit union creates a segregated contingency reserve for the amount of the excess. Valuation allowance accounts, such as allowance for loan losses, may not be considered part of the regular reserve when determining the maximum deductible. (G) Any proposal made by the credit union to reduce coverage or implement new deductibles must be approved by the superintendent at least twenty days in advance of the proposal's effective date.
Last updated July 8, 2024 at 8:53 AM
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Rule 1301:9-2-04 | Charge-off of uncollectible loans and other losses and reserves.
(A) The purpose of the allowance for loan
losses is to represent the management's estimate of loan losses in a
credit union's loan portfolio. The allowance for loan losses will be
charged with the amount of uncollectible loans and loan-derived assets which
have been authorized for charge-off by the board of directors: likewise,
recoveries on loans previously charged-off will be credited to this
account. (B) A record shall be maintained of all
loans charged-off. Said record shall contain the following information: account
number, name, original date, amount of original loan, security, balance at the
time of charge-off; and what, if any, recovery has been made on the security.
This record shall be kept current and made available to the examiners at each
examination. (C) Loans should be charged-off when they
are deemed uncollectible according to the credit union's loan policy. That
practice should be applied consistently in all interim financial reporting
periods. (1) A credit union with
total assets of ten million dollars or greater shall make charges for loan
losses in accordance with GAAP. (2) A credit union with
total assets of less than ten million dollars shall make charges for loan
losses in accordance with any reasonable reserve methodology (incurred loss)
provided it adequately covers known and probable losses. (D) Interest should not be accrued on
loans which are doubtful of collection. For this purpose, loans on which
payments have not been received for six months or more, should be considered as
doubtful of collection. (E) Pursuant to section 1733.31 of the Revised Code, the
superintendent has established the following as additional nonrisk
assets: (1) Prepaid share
insurance; other prepaid insurance; (2) Other prepaid and
deferred expenses; (3) Accrued income on
nonrisk assets; and (4) Deposits in corporate
credit unions with maturities of two years or less. (F) Reserves for corporate credit unions. (1) At the end of each
dividend cycle and prior to paying a dividend (or, at the option of the
corporate credit union, on a monthly basis if dividends are paid more
frequently than monthly), sums shall be set aside in a corporate reserve in
accordance with the following schedule: (a) When the credit union's corporate reserve and undivided
earnings are less than two per cent of the assets at the end of the transfer
period, the credit union shall set aside an amount equal to .0015 times the
number of days in the transfer period divided by three hundred
sixty-five. (b) When the corporate reserve and undivided earnings are equal
to or greater than two per cent of the assets but the corporate reserve is less
than four per cent of the assets, the credit union shall set aside an amount
equal to .0010 times the credit union's average daily assets for the
transfer period times the number of days in the transfer period divided by
three hundred sixty-five. (2) Charges may be made
to the corporate reserve for loan losses and for investment losses accrued by
factors other than trading losses or market fluctuations. No other charges
shall be made except as may be authorized in writing by the superintendent.
Charges shall be made in accordance with GAAP. (G) Repossessions/foreclosures. After the sale of a repossessed security, the
allowance for loan losses is to be funded in an amount equal to the deficiency
balance until the loan is charged-off.
Last updated July 8, 2024 at 8:53 AM
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Rule 1301:9-2-05 | Financial statements.
(A) Each credit union member shall:
. (1) Be furnished, at least semiannually, a statement of
accounts clearly reflecting all transactions involving the member's
account during the previous accounting period. (2) Be entitled to receive, within a reasonable time and
upon request, a statement reflecting the member's current outstanding
balances in the member's account. (B) A credit union shall: (1) Display, at all operating locations or on its website,
copies of its current and previous month's financial statements in both a
conspicuous and available manner, so as to be accessible for inspection by all
members. (2) Provide a physical copy of the credit union's
current and previous month's financial statements to a member upon
request.
Last updated July 8, 2024 at 8:53 AM
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Rule 1301:9-2-06 | Preservation/retention of records.
Effective:
November 26, 2018
A credit union shall preserve its corporate records
either as originals or by some other method in accordance with sections 1733.29
and 1733.291 of the Revised Code, GAAP, and with the following schedule. (A) Records to be maintained for six years: (1) Monthly financial
statements; (2) Litigation records; (3) Repossession records; (4) Minutes of the meetings of all committees of the board
of directors; (5) Minutes of the meetings of the credit
committee and supervisory audit committee; and (6) Subsidiary loan and share
ledgers. (B) Records to be maintained for two years: (1) Disclosure records as
required by federal truth-in-lending laws and regulations; and (2) Proxies, cancelled
checks, and other records as the superintendent may require.
Last updated June 17, 2024 at 10:30 AM
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Rule 1301:9-2-07 | Investments.
(A) For the purchase of notes of
liquidating other credit unions, notes made by individual members of a credit
union may be purchased by another credit union at a price agreed upon by the
credit unions and subject to the prior written approval of the
superintendent. (B) Authorized investments and investment
restrictions (1) A credit union may
invest funds in securities or other property not specifically authorized in
section 1733.30 of the Revised Code if the superintendent has approved of the
investment policy in writing. The credit union shall file with the
superintendent such investment policy with a copy of a resolution of the board
of directors of such credit union approving the investment policy. The
superintendent shall notify the credit union not more than fifteen business
days after the filing of the policy whether it is denied, approved, or needs
modification. If the superintendent does not respond within fifteen business
days after the filing of the policy, such policy is deemed approved.
Alternatively, the superintendent may notify the credit union in writing within
fifteen business days of the credit union's request being filed of the
need for additional documentation or information. The credit union shall have
thirty days to provide the additional documentation or information to the
superintendent. If the superintendent does not respond within fifteen business
days of receipt of the additional documentation or information, such policy is
deemed approved. (2) In addition to
investments authorized by section 1733.30 of the Revised Code, credit unions
may invest in the following, subject to paragraph (B)(1) of this
rule: (a) Government security mutual funds and government security
money market funds not to exceed in the aggregate ten per cent of its shares
and undivided earnings; (b) Shares, stocks, deposits in, or other obligations of any
organization, corporation, or association providing services associated with
the general purposes of the credit union or engaging in activities incidental
to the operations of a credit union, provided that such investments in the
aggregate do not exceed five per cent of the credit union's shares and
undivided earnings; (c) Shares, share certificates, share deposits, or other
investments of insured credit unions (including corporate credit
unions); (d) Bank accounts, bank certificates of deposit, bank
deposits; (e) Investments for the purpose of funding an employee
benefit plan, including credit union owned life insurance policies, not to
exceed in the aggregate ten per cent of its shares and undivided
earnings; (f) Any securities or other properties not specifically
described in section 1733.30 of the Revised Code and paragraph (B)(2) of this
rule, to an extent not exceeding in the aggregate five per cent of shares and
undivided earnings or fifty per cent of the net worth ratio, whichever is
greater, as of the thirty-first day of December of the previous
year. (3) Participation loans
with the prior approval of the superintendent. This division does not apply to
the purchase of an investment interest in a pool of loans. The credit union shall file with the
superintendent a copy of the credit union participation policy prior to
engaging in participation loans with other credit unions or credit union
organizations or financial institutions as defined by 15 U.S.C. 78c(a)(46), as
in effect on July 18, 2023, or any state or federal government agency and its
subdivisions. The superintendent shall notify the credit union not more than
fifteen business days after the filing of the policy whether it is denied,
approved, or needs modification. If the superintendent does not respond within
fifteen business days after the filing of the policy, it shall be deemed
approved; unless the superintendent notifies the credit union in writing within
fifteen business days of the credit union's request being filed that
additional information is required. If additional information is required, the
credit union shall have thirty days to file the additional information with the
superintendent. If the superintendent does not respond within fifteen business
days of receipt of the additional information, the request or policy shall be
deemed approved. (a) A credit union may purchase a participation interest in a
loan only if the loan is one the purchasing credit union is empowered to grant
and the following additional conditions are satisfied: (i) The purchase complies
with all regulatory requirements to the same extent as if the purchasing credit
union had originated the loan; (ii) The purchasing
credit union has executed a written loan participation agreement with the
originating lender and the agreement meets the minimum requirements for a loan
participation agreement as described in paragraph (B)(3)(c) of this
rule; (iii) The originating
lender retains an interest in each participated loan of at least five per cent
of the outstanding balance of the loan through the life of the loan;
and (iv) The purchase complies with the purchasing credit union's
internal written loan participation policy, which, at a minimum,
must: (a) Establish
underwriting standards for loan participations; (b) Establish a limit on
the aggregate amount of loan participations that may be purchased from any one
originating lender, not to exceed the greater of five million dollars or one
hundred per cent of the credit union's net worth, unless this amount is
waived by the superintendent; (c) Establish limits on
the amount of loan participations that may be purchased by each loan type, not
to exceed a specified percentage of the credit union's net worth;
and (d) Establish a limit on
the aggregate amount of loan participations that may be purchased with respect
to a single borrower, or group of associated borrowers, not to exceed fifteen
per cent of the credit union's net worth, unless waived by the
superintendent. (b) . A credit union may seek waiver from the limitations in
paragraph (B)(3)(a) of this rule if it submits a written request for a waiver
along with a complete and detailed explanation of why it is requesting a
waiver. The superintendent shall respond to the waiver request within
forty-five days of receiving the waiver request. The superintendent's
decision will be based on safety and soundness, as well as other
considerations. If the superintendent does not respond within forty-five days
to the waiver request such request is deemed approved. (c) A loan participation agreement must: (i) Be properly executed
by authorized representatives of all parties under applicable law; (ii) Be properly
authorized by the credit union's board of directors or, if the board has
so delegated in its policy, a designated committee or senior management
official, under the credit union's articles, code, or bylaws and all
applicable law; (iii) Be retained
(original or copies) in the credit union's office; and (iv) Include provisions
which, at a minimum, address the following: (a) Prior to purchase,
the identification of the specific loan participation(s) being purchased,
either directly in the agreement or through a document which is incorporated by
reference into the agreement; (b) Confirmation that the
originating lender will retain at least five per cent of the outstanding
balance of the loan through the life of the loan; (c) The location and
custodian for original loan documents; (d) An explanation of the
conditions under which parties to the agreement can gain access to financial
and other performance information about a loan, the borrower, and the servicer
so the parties can monitor the loan; (e) An explanation of the
duties and responsibilities of the originating lender, servicer, and
participants with respect to all aspects of the participation, including
servicing, default, foreclosure, collection, and other matters involving the
ongoing administration of the loan; and (f) Circumstances and
conditions under which participants may replace the servicer. (4) No investment in any securities of
the United States, any state or territory of the United States, or the District
of Columbia, or any municipal corporation may be made if the issuer has not
been in existence for at least ten years. Nor may any such aforementioned
investment be made if the issuing government has, within the preceding ten-year
period from which the investment is to be made, defaulted for more than ninety
days in the payment of any part of either principal or interest of any debt
contracted by it. (5) In addition to investments authorized
by section 1733.30 of the Revised Code, a corporate credit union may invest in
the following, subject to paragraph (B)(1) of this rule: (a) Deposits in, the sale of federal funds to, and debt
obligations of foreign banks subject to the following
requirements: (i) The bank has assets
of at least United States twenty billion dollars and the investment is rated no
lower than A-1 (or equivalent for short-term (initial maturity of one year or
less) by a rating agency recognized by the securities and exchange commission
(SEC), and not lower than AA- (or equivalent) for long-term (initial maturity
over one year) investments. The corporate credit union must divest itself of
short-term investments, if material in amount, downgraded below A-2 (or
equivalent) and long-term investments downgraded below A- (or equivalent) by
the same rating agency used when the investment was purchased. (ii) The investment is
dominated in United States dollars; (iii) The country in
which the issuing bank is located is rated AAA (or equivalent) for political
and economic stability by a SEC-recognized rating agency; (iv) The aggregate
investments in any single foreign bank is less than five per cent of the
corporate credit union's net assets. (b) Debt obligations of U.S. bank holding companies and other
U.S. chartered corporations subject to the following requirements: (i) The investments are
rated no lower than A-1 (or equivalent for short-term (initial maturity of one
year or less) investment by a SEC-recognized rating agency and not lower than
AA- (or equivalent) for long-term (initial maturity of over one year)
investments. The corporate credit union must divest itself of short-term
investments, if material in amount, downgraded below A-2 (or equivalent) and
long-term investments downgraded below A- (or equivalent) by the same rating
agency used when the investment was purchased. (ii) The aggregate
investments in the obligations of any single issuer shall not exceed five per
cent of the corporate credit union's net assets. (iii) This authority does
not apply to debt obligations that are convertible into the stock of the
corporation or the holding company. (c) Asset-backed securities subject to the following
requirements: (i) The security is rated
no lower than AAA (or equivalent) by a SEC-recognized rating agency. The
corporate credit union must divest itself of asset-backed securities, if
material in amount, downgraded below AA- (or equivalent) by the same rating
agency used when the investment was purchased; (ii) The investment in
any single security or trust shall not exceed five per cent of the corporate
credit union's net assets; and (iii) The security has an
average life at time of purchase of no more than five years. (d) Federally issued collateralized mortgage obligations (CMOs)
and real estate mortgage investment conduits (REMICs) and privately issued CMOs
and REMICs as defined in section 3(a)(41) of the Securities and Exchange Act of
1934, as in effect on September 11, 2023 subject to the following
requirements: (i) For an investment in
a fixed rate obligation, the obligation has an average life at time of purchase
and on subsequent review dates not to exceed five years given an immediate
increase of three hundred basis points in mortgage loan commitment rates
assuming market interest rates and prepayment speeds at the time the tests are
applied. Industry consensus prepayment models will be used when computing the
average life. This limitation does not apply if principal payments of the
investment are specifically matched to principal payments of the corresponding
liability. (ii) For an investment in
a variable rate obligation with a cap, the lesser of the highest interest rate
cap or the final interest rate cap during the average life at the time of
purchase must be at least two hundred basis points above the rate of the
corresponding liability that the investment is matched against. This limitation
does not apply if principal payments of the investment are specifically matched
to principal payments of the corresponding liability. (iii) The corporate
credit union divests itself of any CMO or REMIC security, if material in
amount, upon the security being downgraded below AA- (or equivalent) by the
same SEC-recognized rating agency used when the investment was
purchased; (iv) The investment in
any single issuer shall not exceed five per cent of the corporate credit
union's net assets; (e) Additional investments provided the corporate credit union
has obtained prior written approval from the superintendent. (f) The requirements of this rule to divest investments
downgraded below the minimum acceptable ratings do not apply if the expected
maturity of the downgraded investment is three months or less. The corporate
credit union has ten business days to divest itself of any investment
downgraded below the minimum credit ratings specified in this rule or to
request in writing permission from the superintendent to retain the
investment. (g) The following definitions apply for purposes of this rule for
corporate credit union investments: (i) "Capital"
means the total of regular or statutory reserves, undivided earnings, net
income, and membership capital share deposit accounts. (ii) "Material"
means an amount that exceeds five per cent or more of the corporate credit
union's capital. (iii) "Net
assets" mean total assets minus central liquidity facility (CLF) stock
subscriptions, CLF loans guaranteed by the national credit union share
insurance fund, U.S. central credit union CLF certificates, and member reverse
repurchase transactions. (6) For any investments not expressly
authorized in division (A) of section 1733.30 of the Revised Code, or paragraph
(B)(2) of this rule, the superintendent may condition approval upon the
establishment and maintenance of a reserve to be used as a reserve against
losses resulting from such investments. The superintendent may, in his
discretion, require an allowance for investment losses to be maintained based
on the degree of risk and exposure of the investment. (7) The provisions of this rule shall not
affect the propriety or legality of an investment made by any credit union
which was in accordance with the laws of this state at the time such investment
was made, nor shall this rule affect the propriety or legality of any
investment or investment policy authorized by the division of financial
institutions prior to December 31, 1975; except where a program exists which
provides for the automatic reinvestment of income or capital gains in
additional securities from which such income is derived and the reinvestment of
which income would exceed the limits of this rule. (8) In applying the provision of this
rule, membership fees and annual assessments referenced in sections 1761.01 to
1761.18 of the Revised Code shall not be considered an investment for the
purpose of this rule.
Last updated July 8, 2024 at 8:54 AM
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Rule 1301:9-2-07.1 | Derivatives authority.
A credit union may enter into certain derivatives
transactions, pursuant to an approved derivatives program, exclusively for the
purpose of reducing interest rate exposure. (A) "Approved derivatives
program" means a program administered by an eligible credit union that
meets the criteria established in 12 C.F.R. Part 703, subpart B, as in effect
on June 25, 2021 and that the superintendent has approved in accordance with
the procedure set out in this rule. (B) For the purpose of this rule, the
following terms contained in 12 C.F.R. Part 703, subpart B, as in effect on
June 25, 2021 have equivalent meanings to their Ohio-specific
counterparts: (1) The term
"federal credit union" has the equivalent meaning of "credit
union." (2) The terms "field
director," "field supervisor," "NCUA," "NCUA
Board," and "regional director" have the equivalent meaning of
"superintendent." (C) The superintendent shall approve or
deny a credit union's application for derivatives authority consistent
with the procedure set out in 12 .C.F.R. Part 703, subpart B, as in effect on
June 25, 2021. (D) A credit union with derivatives
authority shall comply with 12 C.F.R. Part 703, subpart B, as in effect on June
25, 2021. (E) If the superintendent denies an
application for derivatives authority or for additional products or
characteristics, or revokes a derivatives authority or orders a credit union to
terminate existing derivatives positions, as described in 12 C.F.R. Part 703,
subpart B, as in effect on June 25, 2021, the superintendent shall notify the
credit union of the basis or reason for the denial, revocation, or termination
and the credit union may request a hearing in accordance with the provisions of
sections 119.01 to 119.13 of the Revised Code.
Last updated July 8, 2024 at 8:54 AM
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Rule 1301:9-2-08 | Liquidity.
(A) Pursuant to division (C) of section 1733.31 of the Revised
Code, the superintendent defines "liquidity fund" as the sum of all
cash on hand or on deposit, plus all investments maturing within one year of
the date the calculation in paragraph (C)(1) of this rule is
performed. (B) The superintendent may require a particular
credit union or all credit unions to establish a liquidity fund greater than
five per cent of shares. Factors that could prompt such a determination by the
superintendent include, but are not limited to, elevated market risk, systemic
liquidity issues in financial institutions generally, an unsound liquidity
management program, and the amount of liabilities due within one year and
non-member deposits maturing within one year for a particular credit
union. (C) Each credit union shall: (1) Calculate its liquidity fund relative to shares on a
monthly basis, not later than the tenth day of each month; and (2) In the event the liquidity fund falls below five per
cent of shares, notify the superintendent within five business days and provide
details on how and when the credit union will replenish the liquidity fund to a
level of at least five per cent of shares. (D) The superintendent may require any additional reporting
or information related to a credit union's liquidity fund or liquidity
generally. (E) For purposes of this rule, a sound liquidity management
program encompasses the following: (1) A sound liquidity management policy that provides a
board-approved framework for managing liquidity and a list of contingent
liquidity sources that can be employed under adverse
circumstances. (2) Stress tests commensurate with the credit union's
risk profile. (3) For credit unions in excess of fifty million dollars, a
board-approved contingency funding plan. A contingency funding plan should be
commensurate with the credit union's complexity, risk profile, and scope
of operations that sets out strategies for addressing liquidity shortfalls in
emergency situations. The contingency funding plan may be a separate policy or
may be incorporated into an existing policy such as an asset/liability policy,
a funds management policy, or a business continuity policy. At a minimum, the
contingency funding plan should address the following: (a) The sufficiency of
the credit union's liquidity sources to meet normal operating
requirements as well as contingent events; (b) The identification of
contingent liquidity sources; (c) Policies to manage a
range of stress environments, identification of some possible stress events,
and identification of likely liquidity responses to such events; (d) Lines of
responsibility within the credit union to respond to liquidity events;
(e) Management processes
that include clear implementation and escalation procedures for liquidity
events; and (f) The frequency that
the credit union will test and update the plan. (F) A
credit union may seek a waiver from any provision in this rule or in division
(C) of section 1733.31 of the Revised Code if the credit union submits a
written request for a waiver along with a complete and detailed explanation of
why it is requesting a waiver. The superintendent has forty-five days from
receipt to respond to the waiver request. The superintendent's decision
will be based on safety and soundness, as well as other considerations. If the
superintendent does not respond within forty-five days to the waiver request
such request is deemed approved.
Last updated July 8, 2024 at 8:54 AM
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Rule 1301:9-2-09 | Dividends.
(A) The board of directors may approve
payment of dividends on shares from current earnings only. No dividend may be
declared or paid unless the credit union is in full compliance with section
1733.31 of the Revised Code. However, the superintendent may permit the payment
of dividends from undivided earnings upon written request submitted to the
superintendent, subject to a plan of corrective action. (B) Requests for approval of payment of
dividends from undivided earnings by the superintendent shall be made at least
ten business days before the end of the quarter, unless the credit union is
under a supervisory agreement. When the credit union is under a supervisory
agreement, the terms of the supervisory agreement shall take precedence. All
requests for approval for payment of dividends shall be made on a form
prescribed by the superintendent. The superintendent will approve or deny the
request within five business days of receiving the request. If the
superintendent does not approve or deny the request within five business days
the request is deemed approved.
Last updated July 8, 2024 at 8:54 AM
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Rule 1301:9-2-10 | Impairment.
(A) A condition of impairment exists if
the difference between total assets minus current and long-term liabilities
(not including shares) is less than the total amount of all share accounts.
Impairment also exists when a member's written intention to withdraw their
shares cannot be met. (B) Whenever it is determined that there
exists an impairment, the board of directors shall notify the superintendent of
such conditions and if the superintendent deems necessary, disclose the
impairment to all account holders.
Last updated July 8, 2024 at 8:54 AM
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Rule 1301:9-2-11 | Independent audit.
(A) Every credit union shall maintain
accounts, observe GAAP, and comply with any other accounting standards the
superintendent prescribes. (B) The superintendent may require at any time that a credit
union have its accounts audited in accordance with generally accepted auditing
standards by an outside auditor, at the expense of the credit union. Before
commencement of the independent audit, and within fifteen days of written
notice from the superintendent , the credit union shall submit in writing, the
name and address of a qualified public accountant of its choosing, for approval
by the superintendent. (C) The credit union shall file with the superintendent a copy of
the report of audit no later than fifteen days following the receipt thereof.
For the purpose of this paragraph, the term "report of audit"
includes in addition to the audit report itself and the accountant's
certificate, any special supplemental report, letter or reports to management,
or any other documents which are related to the audit or the report thereof.
Notwithstanding the foregoing, in no event shall the audit report itself and
the accountant's certificate be filed with the credit union later than
ninety days after the end of the reporting period for which the audit is
conducted unless the credit union has received a prior written extension of the
time for filing. All credit unions whose assets exceed twenty-five million
dollars as of the prior year's filing shall have its accounts audited by a
public accountant or certified public accountant licensed to do business in
Ohio and an opinion given in accordance with AICPA guidelines, unless waived by
the superintendent. The credit union shall submit such request for a waiver in
writing to the superintendent. The superintendent shall respond to the waiver
request within twenty business days of receiving the waiver request. If the
superintendent does not respond within twenty business days to the waiver
request such request is deemed approved. Such audits must be submitted to the
superintendent within thirty days of the credit union's receipt of the
audit report. (D) The form of waiver of confidentiality referenced in section
1733.322 of the Revised Code must contain the following: (1) A statement to the
effect that the waiver of confidentiality has been approved and recorded in the
minutes of the credit union and the date of the board of directors'
meeting on which the fact was recorded. (2) A certification of
the above statement of fact and a restatement of the intent to waive the
confidentiality which is usually present between the auditor and client in
order to allow discussion of the case between the auditor and the
superintendent of credit unions. This waiver must be signed by the president
and secretary of the credit union.
Last updated July 8, 2024 at 8:55 AM
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Rule 1301:9-2-12 | Reimbursement to credit unions for assembling or providing financial records.
(A) Except as provided in this rule or in
section 9.02 of the Revised Code, any party, including a governmental
authority, that requires or requests a credit union to assemble or provide a
customer's financial records shall pay the credit union for all actual and
necessary costs directly incurred in searching for, reproducing, or
transporting these records, if the financial institution is not a party to the
investigation, action, or proceeding, is not a subject of supervisory review in
the investigation, action, or proceeding, or is a party to the investigation,
action, or proceeding solely by reason of its holding of assets of another
party defendant, with no cause of action alleged against the financial
institution, in accordance with the schedule set forth in 12 C.F.R. 219.3, as
in effect on July 19, 2023. (B) A credit union is not entitled to
reimbursement under this rule for costs incurred in assembling or providing the
following records or information: (1) Security interest,
bankruptcy claims, and debt collection. Any financial records provided as an
incident to perfecting a security interest, proving a claim in bankruptcy, or
otherwise collecting on a debt owing to the credit union. (2) Nonidentifiable
information. Financial records that are not identified with or identifiable as
being derived from the financial records of a particular customer. (3) Records or
information requested by the superintendent. (C) Payment shall be limited to material
required or requested. Payment shall be made only for costs that are directly
incurred, actual, and necessary. No payment shall be made until the credit
union satisfactorily complies with the request or requirement, except that in
the case where the request or requirement is withdrawn or revoked, the credit
union shall be reimbursed for the actual and necessary costs directly incurred
in assembling financial records required or requested to be produced prior to
the time the party notifies the credit union that the request or requirement is
withdrawn or revoked. No payment shall be made unless the credit union submits
an itemized bill or invoice showing specific details concerning search and
processing, reproduction, and transportation costs. (D) For the purposes of this rule, the
term "costs directly incurred" means costs incurred solely and
necessarily as a consequence of searching for, reproducing, or transporting
books, papers, records, or other data, in order to comply with a request to
produce a customer's financial records. The term does not include any
allocation of fixed costs (overhead, equipment, depreciation, etc.). If a
credit union has financial records that are stored at an independent storage
facility that charges a fee to search for, reproduce, or transport particular
records requested, these costs are considered to be directly incurred by the
credit union. (E) Terms used in this rule have the same
meaning as set forth in section 9.02 of the Revised Code.
Last updated July 8, 2024 at 8:55 AM
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Rule 1301:9-2-13 | Compensation.
(A) As a fiduciary a director: (1) Shall act for the
benefit of the credit union; (2) Has a duty not to
profit at the expense of the credit union; (3) Has a duty not to
compete without the consent of the credit union; (4) Has a duty to make
full disclosure to, and to operate fairly when engaged in transactions with,
the credit union; (5) Must avoid all but
arms-length transactions. (B) All transactions, other than expenses reimbursement and
employee wages, between the credit union and the members of the board of
directors, committee members, employees, immediate family thereof or businesses
controlled thereby shall be disclosed annually in writing to the board of
directors and shall remain confidential. (C) The board of directors shall adopt a travel and expense
reimbursement policy. The policy and procedures shall, as a minimum,
include: (1) Board resolution
adopting policy and procedures; (2) Procedure for
monitoring compliance with the policy and IRS guidelines, which shall include
review by the credit union's accountant or audit committee; (3) Audit trail with hard
copy available for review by examiners; (4) Criteria for
reimbursement; (5) If the policy is
abused, reimbursement to the credit union by the individual or other options as
defined per credit union policy; and (6) Safety and soundness
considerations. (D) For purposes of this rule, if authorized by the board of
directors and pursuant to internal revenue service guidelines, reimbursement
for guest expenses is not considered compensation.
Last updated July 8, 2024 at 8:55 AM
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Rule 1301:9-2-15 | Depreciation and amortization.
Effective:
November 26, 2018
The term "depreciation" means the
systematic allocation of the cost of an asset to expense over the accounting
periods making up the asset's useful life according to GAAP.
Last updated June 17, 2024 at 10:30 AM
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Rule 1301:9-2-16 | Field of membership.
(A) The field of membership of a credit
union may include the families of members; that is, persons related by blood,
adoption or marriage to or living in the same household with a person having
the common bond, as well as surviving spouses of persons who have left the
field of membership in good standing. When the individual member of a credit
union leaves the field of membership, all persons who are members by virtue of
his or her membership may continue as members. (B) A credit union may expand its field
of membership through the submission of an application to the superintendent to
add select groups having a common bond of occupation or association or groups
within a well-defined neighborhood, community or rural district. Groups may be
found to exist within a well-defined neighborhood, community or rural district,
for purposes of this rule, on the basis of the geographic location of the
person's residence, property, worship, school attendance, or employment.
"Well-defined" means the proposed area has specific geographical
boundaries, including a political subdivision of the state, or a clearly
definable neighborhood. (C) In its application to expand its
field of membership, the applicant credit union shall submit to the
superintendent the following: (1) The articles of
incorporation and, if appropriate, the code of regulations of the applicant
credit union which authorize expansion of the field of membership to include
the proposed group; (2) A specific
description of the group to be added, including the approximate number of
persons in the group, the potential membership size of the group, the
dispersion of the group, and the general characteristics of the sponsor of the
group, if any; (3) Evidence that the
group is within the operational area of the home office or a service facility
of the applicant credit union or the applicant credit union provides evidence
of one or more of the following: (a) The associational or occupational group has expressed
its desire to obtain the credit union's services; (b) The credit union has or will have the means to service
the group; (c) The majority of the potential new members can regularly
access the credit union's services; or (d) The credit union meets any additional conditions or
considerations the superintendent may deem reasonable for approval of the
credit union's application. (4) Evidence demonstrating the credit
union is financially and organizationally sound to provide credit union service
to the group; (5) Certification of the applicant credit
union vote to approve extension of membership services to the group;
and (6) Any other information the
superintendent requires. (D) A credit union may have multiple
groups in its field of membership provided each group has its own common
bond. (E) To add multiple groups to a credit
union's field of membership the credit union shall submit, in addition to
the information in paragraph (C) of this rule : (1) Evidence that each
affected associational or occupational group has requested service from the
applicant credit union; (2) Evidence that the
applicant credit union is financially and organizationally sound to provide
credit union service to each group; (3) Evidence that the
proposal is economically feasible and advisable; (4) Evidence that each
group is within the operational area of the home office or a service facility
of the applicant credit union or the conditions of paragraphs (C)(3) to (C)(7)
of this rule have been satisfied. "Operational area" means an area
accessible by the home office, a service facility, a shared branch, shared
service facility or any other means through which the credit union provides
services that can reasonably be served by the applicant credit union as
determined by the superintendent. (F) Subject to paragraphs (D) and (E) of
this rule, the following applies, for service to underserved
communities: (1) A field of
membership may include, without regard to location, underserved communities,
which are local communities, neighborhoods, or rural districts which are
investment areas as defined in section 103(16) of the Community Development
Banking and Financial Institutions Act of 1994. More than one credit union may
serve the same underserved area. (2) Once an underserved
community has been added to the credit union's field of membership, the
credit union must establish and maintain an office or service facility in the
community. A "service facility" is defined as a place where shares
are accepted for members' accounts, loan applications are accepted and
loans are disbursed. This definition includes a credit union owned branch, a
shared branch, an office or location operated on a regularly scheduled weekly
basis, and a credit union owned electronic facility that meets these
requirements, but not including an automated teller machine. (3) The credit union
adding the underserved community shall document that the community meets the
definition of an underserved community in Ohio. The charter type of a credit
union adding such a community group may change and the credit union may be able
to receive the benefits afforded to low-income designated credit unions, such
as: (a) Expanded use of non-member deposits. (b) Access to the community development revolving loan
program for credit unions. (4) The credit union must
submit a business plan specifying how it will serve the underserved community.
The business plan at a minimum must: (a) Identify the credit, deposit, and other financial
service needs of the community. (b) Detail how the credit union plans to serve those
needs. (5) The credit union will
be expected to regularly review the business plan to determine if the community
is being adequately served. The superintendent may require periodic service
status reports from a credit union about the underserved community to ensure
that the needs of the area are being met or before the superintendent permits a
credit union to add an additional underserved community. (G) Upon receipt of an application to
expand a credit union's field of membership to an association, occupation,
or community group, the superintendent shall notify the credit union not more
than fifteen business days after the filing of the application to expand a
credit union's field of membership to an associational, occupational, or
community group whether the application is denied, approved or modified. If the
superintendent does not respond within fifteen business days after the filing
of the application it shall be deemed approved; unless the superintendent
notifies the credit union in writing within fifteen business days of the credit
union's request being filed that additional documentation is requested. If
additional documentation or information is requested, the credit union has
thirty days to file the additional documentation with the superintendent. If
the superintendent does not respond within fifteen business days of receipt of
the additional information, the application shall be deemed
approved. (H) If the superintendent denies an
application to expand a field of membership, the superintendent shall notify
the credit union of the basis or reason for the denial and the credit union may
request a hearing in accordance with the provisions of sections 119.01 to
119.13 of the Revised Code. (I) In considering whether to approve an
application for expansion of a credit union's field of membership, the
superintendent may consider the following: (1) Whether the
convenience and needs of the members of the applicant credit union will be
served by the proposed expansion; (2) Whether the
population and economic characteristics of the potential membership pool afford
reasonable promise for adequate support for the proposed
expansion; (3) Whether the policies,
condition and operation of the applicant credit union afford no basis for
supervisory objection; (4) The length of time it
will take to implement the proposed expansion ; and (5) Any other pertinent
factors relating to the field of membership expansion. (J) If the proposed group expands the
credit union's field of membership outside of Ohio, any final approval by
the superintendent will not become effective unless or until the state
supervisory authority of the state or states where the proposed group is
located also approves or gives permission for the expansion.
Last updated July 8, 2024 at 8:55 AM
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Rule 1301:9-2-18 | Disaffiliation or dual membership.
(A) Definitions (1) The term
"group" for the purposes of this rule means a "select
group" as described in division (D)(1) of section 1733.05 of the Revised
Code; however, for the purpose of a vote to disaffiliate group membership, the
term "group" does not include a member who acquires his or her
"common bond" for member status through familial
relationship. (2) "Original credit
union" for the purposes of this rule means the credit union from which the
group intends to disaffiliate. (3) "Applicant
credit union" for the purposes of this rule means the credit union with
which the group intends to affiliate. (B) Members of a group may disaffiliate
from the field of membership of a credit union by a majority vote of the
members of the group, subject to approval of the plan of disaffiliation by the
superintendent. (C) The vote to disaffiliate may be in person, by proxy, by mail
ballot, or by electronic ballot. (D) Except as provided in paragraph
(A)(1) of this rule, each member of the group is entitled to cast one vote on
the issue, irrespective of the number of shares the member owns. (1) A copy of the
disaffiliation proposal shall be distributed to all of the members of the group
on or before the date on which solicitation begins for approval of the
disaffiliation. (2) Such disaffiliation
proposal shall consist of the key points of the written plan of disaffiliation
to be submitted to the superintendent for approval. (3) The written plan of
disaffiliation shall include, but not be limited to, the
following: (a) The services, the share accounts and loans and interest
rates thereof, the size and composition of the field of membership, and the
date of incorporation of the original credit union and the applicant credit
union, if any, and in the instance of a group intending to form its own credit
union, the articles of incorporation and the regulations, pursuant to section
1733.07 of the Revised Code, of the proposed credit union. (b) The manner of disaffiliation: (i) Whether group members
intend to disaffiliate share accounts only or share accounts and
loans. (ii) If group members
intend to disaffiliate loans, whether the loans are to be sold to or refinanced
by the applicant credit union. (E) Submission of disaffiliation proposal to the
superintendent and original credit union. (1) Prior to vote to
disaffiliate, the group shall present the disaffiliation proposal to the
superintendent and the board of directors of the original credit union, in
order that such credit union be given the opportunity to voluntarily release
the group and the original credit union shall respond within thirty days to the
proposal to the group and the superintendent. (F) The majority vote of the group to approve
disaffiliation from the original credit union shall be certified and submitted
to the superintendent in conjunction with the written plan of disaffiliation,
along with such financial information as the superintendent may
require. (G) Upon submission of the plan of disaffiliation, the
superintendent may conduct whatever review he or she deems appropriate to
verify the applicant credit union's willingness and ability to serve the
group. (H) The superintendent may approve the plan of
disaffiliation provided the plan has due regard for the division of share
accounts and loans of the group seeking to disaffiliate, and such other factors
as determined by the superintendent. No undivided earnings, reserves or other
forms of equity may be divided between the original credit union and the
applicant credit union or transferred from the original credit union to the
applicant credit union. (I) Upon approval of the plan of disaffiliation, all
members of the group who votes for disaffiliation shall transfer their
membership accounts to the applicant credit union. (J) Each member of the group seeking to disaffiliate is
responsible for the identification and the maintenance of his or her share
accounts and loans with either the original or applicant credit union, as the
case may be. Each individual and association member of the group shall decide
which share accounts, in addition to the membership account, shall be included
in the disaffiliation. The plan of disaffiliation shall clearly set forth
whether the loans of the group seeking to disaffiliate shall be purchased or
refinanced by the applicant credit union or remain with the original credit
union. (K) A group may choose to be served by both the original
and applicant credit union by requesting that the original credit union give
the applicant credit union permission to serve the group. If the original
credit union approves the dual membership, this approval shall be sent to the
superintendent on the original credit union's official
letterhead.
Last updated July 8, 2024 at 8:56 AM
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Rule 1301:9-2-19 | Criteria for charter approval.
In addition to the requirements set forth in
sections 1733.041, 1733.07, 1733.23 and 1733.47 of the Revised Code the
incorporators shall submit to the superintendent along with the articles of
incorporation and the code of regulations of the proposed credit union: Evidence of a common bond and the number of
potential members in the field of membership, as well as their stability of
employment or association in the common bond group and the economic
characteristics thereof; Evidence of the character and fitness of the
proposed incorporators, including proof of management experience and
bondability; Evidence of availability of credit union services
to potential members and geographic dispersion of members; The economic advisability of the establishment of
the proposed credit union, including but not be limited to: three years
forecast of financial performance and a business plan that supports a level of
capital deemed to be appropriate by the superintendent which includes proposed
operating policies; and Any other information the superintendent determines
is necessary. .
Last updated July 8, 2024 at 8:56 AM
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Rule 1301:9-2-20 | Loan authority.
(A) No credit union shall loan, directly
or indirectly, to any member or other credit union more than ten per cent of
its shares and undivided earnings. Fully share secured loans are exempt from
the ten per cent limitation. A credit union may request in writing a waiver
from the superintendent of this limit subject to a plan of participation.
Within twenty business days from receiving the waiver request the
superintendent will either grant or deny the request. If the superintendent
does not respond within twenty business days after the filing of the waiver
request, it shall be deemed approved. (B) The superintendent, in his or her discretion, may
request that all loans made to the credit union as a corporation be reported
quarterly to the superintendent by the borrowing credit union and that such
report include the following information: name of borrowing credit union, name
of lender, date of loan, repayment schedule, amount of loan and the aggregate
total of notes payable to each source.
Last updated July 8, 2024 at 8:56 AM
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Rule 1301:9-2-21 | First mortgage purchase money real estate loans and refinancing.
(A) For purposes of this rule,
"first-lien residential real estate loan" has the same meaning as in
12 C.F.R. 702.2, as in effect on November 1, 2023. (B) For purposes of this rule, a
"non-conforming loan" means a loan which the credit union knows or
has a reasonable basis to conclude is not eligible to be sold to either the
federal naional mortgage association (Fannie Mae) or the federal home loan
mortgage corporation (Freddie Mac). (C) For purposes of this rule, a credit
union has "a reasonable basis to conclude" a loan is not eligible to
be sold to Fannie Mae or Freddie Mac if either of the following: (1) The loan is in an
amount that is greater than the corresponding baseline conforming loan limit
established by the federal housing finance agency; (2) The loan fails to
satisfy any eligibility criteria specifically identified, in writing, by the
superintendent. (D) A credit union may make first-lien residential real
estate loans, provided it has, as a minimum, an approved and functioning
asset/liability management committee; and policy and procedures, based on an
asset liability management program which may include secondary market
standards. A credit union may make non-conforming loans pursuant to the credit
union's loan and risk management policies; however, no more than fifty per
cent of the entire first-lien residential real estate loan portfolio shall be
non-conforming, unless otherwise waived by the superintendent. (E) Any credit union may make first-lien residential real
estate loans secured by liens not exceeding: (1) The lesser amount of
eighty per cent of the appraised value or eighty per cent of the sale price, if
such real estate is in the process of being improved by a one to four family
dwelling; and (2) The lesser amount of
ninety-five per cent of the appraised value or ninety-five per cent of the sale
price, if such real estate is improved by a one to four family
dwelling. (F) A credit union may make first-lien residential real
estate loans secured by liens exceeding ninety-five per cent of the lesser
amount of the appraised value or sale price, provided that the credit union
files with the superintendent a copy of the loan policy and information
regarding the placement of proper private mortgage insurance on the excess
amount. The superintendent shall notify the credit union not more than ten
business days after the filing of the policy whether it is denied, approved, or
modified. If the superintendent does not respond within ten business days after
the filing of the policy, it shall be deemed approved; unless, the
superintendent notifies the credit union in writing within ten business days of
the credit union's request being filed that additional documentation is
required. If additional documentation is required, the credit union shall have
thirty days to file the additional documentation. If the superintendent does
not respond within ten business days of receipt of the additional information,
the policy shall be deemed approved. A credit union may request a waiver for
the requirement of private mortgage insurance, when modifying an existing first
mortgage real estate loan above ninety-five per cent loan to value, from the
superintendent. (G) Installment payments for all first-lien residential
real estate loans shall be sufficient to amortize the entire principal and
interest of the loan within a period of not more than forty years. (H) A loan secured by real estate shall be in the form of
an obligation or obligations secured by a mortgage, trust deed or other
instrument, which shall constitute a lien on real estate. Any credit union may
sell any obligations so secured in whole or in part. (I) The limitations and restrictions set forth in this rule
do not apply to loans made prior to the effective date of this rule, and do not
apply to: (1) Real estate loans
that are insured under the National Housing Act, 48 Stat. 1246 (1934), 12
U.S.C.A. 1441, as in effect on July 18, 2023; or (2) Real estate loans
that are insured by the secretary of agriculture of the United States pursuant
to Title I of the Bankhead-Jones Farm Tenant Act, 50 Stat 522 (1937), 7
U.S.C.A. 1000, as in effect on July 18, 2023. (J) The following are mandatory documents that shall be
obtained by the credit union for a first-lien residential real estate
loan: (1) Note or bond which
represents evidence of debt and contains the terms of repayment. This is in
addition to the drafting of a valid purchase contract and approved application
form; (2) Mortgage deed or
trust which establishes the credit union's rights to the property securing
the loan. The mortgage deed or trust shall contain detailed property
description; (3) The application which
represents a formal request for a loan detailing basic underwriting data such
as security property offered. The purpose of the loan sales price if applicable
and the borrower's capacity to repay, as a minimum of facts to be
disclosed; (4) An appraisal report
dated within six months of application. The appraisal shall be made by a
certified or licensed independent appraiser who has satisfied the requirements
of Chapter 4763. of the Revised Code and applicable rules or other comparable
statute, if the loan is greater than four hundred thousand dollars. Appraisals
or determinations of the property value for loans four hundred thousand dollars
and under shall, at a minimum, be made by qualified staff personnel who have
been approved by the board of directors and include a written report
documenting the comparable sales, other information, and documentation that
accurately reflect the appraised value. Appraisals shall be in writing, dated,
and signed. Certified or licensed independent appraisers shall be paid the same
fee whether or not the loan is granted. Sales price and loan information shall
be withheld from the independent appraiser; (5) A credit report dated
within ninety days of application; (6) Asset and liability
verification or other acceptable verification requirements; (7) Title evidence which
establishes the validity of the association's lien position through title
insurance or an attorney's opinion of validity; (8) Hazard insurance
coverage which insures the borrower and contains a loss payable clause in favor
of the credit union; (9) Termite inspection,
if required in the locality; (10) Flood insurance
coverage when the property securing a loan is or will be located in a flood
plain. Credit unions shall comply with all federal requirements including
apprising the borrower of the fact that the property is located within a flood
plain and maintaining records, placed in individual loan files, which indicate
how the credit union determined whether flood insurance is required, a copy of
the flood insurance policy, and the written acknowledgment of all parties of
compliance with the federal requirements; (11) A settlement and/or
cost statement which indicates all charges and fees paid in connection with the
loan, in compliance with "Truth in Lending Act", 82 Stat. 149 (1980),
15 U.S.C. 1606, as in effect on July 18, 2023 and the "Real Estate
Settlement Procedures Act" 88 Stat. 1724, 12 U.S.C. 2601, as in effect on
July 18, 2023, the dates, amounts, receipts of each disbursement of loan
proceeds, and evidence that the borrower received a copy of the
statement; (12) If applicable, a
construction loan agreement which constitutes an agreement between the credit
union and the borrower and/or contractor, setting forth in detail the rights
and responsibilities of the parties involved pursuant to rule 1301:9-2-22 of
the Administrative Code pertaining to construction loans; (13) A commitment letter
which specifies the terms and conditions under which the credit union promises
to lend to the applicant; and (14) If applicable, any
other documents as may be required for certain types of loans, such as loans
for land acquisition and development, or loans on developed lots and
sites. (K) The provisions of this rule shall be applicable to the
refinancing of first-lien residential real estate loans, with the exception of
the use of the sale price. (L) The superintendent may approve a less restrictive
real-lien residential estate loan policy, provided that: (1) The request is made in writing; (2) The request includes a copy of the proposed real estate
loan policy; (3) The request includes a certified copy of the resolution
of the board of directors adopting the policy; (4) The credit union substantiates that it has the
expertise, capital, management, and experience to implement the proposed
policy; and (5) The credit union files with the superintendent a copy
of the loan policy and information regarding the placement of proper private
mortgage insurance on the excess amount. The superintendent shall notify the credit
union not more than ten business days after the filing of the request or policy
whether it is denied, approved, or requires modification. If the superintendent
does not respond within ten business days after the filing of the request or
policy, it shall be deemed approved; unless, the superintendent notifies the
credit union in writing within ten business days of the credit union's
request being filed that additional documentation is required. If additional
documentation is required, the credit union shall have thirty days to file the
additional documentation with the superintendent. If the superintendent does
not respond within ten business days of receipt of the additional
documentation, the request or policy shall be deemed approved. (M) The superintendent may adopt a more restrictive
first-lien residential real estate loan policy than provided by this rule, if
it is justified as a matter of safety and soundness.
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Rule 1301:9-2-22 | Real estate construction loans.
(A) "Construction loans" are
loans made for the purpose of building on vacant land or construction additions
to existing structures. Because the incomplete structure and the land represent
the security for the loan, funds are disbursed in installments as work
progresses. One of three methods, or variants thereof, are used to ensure a
lien free, and an adequately collateralized loan throughout construction. These
three basic methods are: (1) Progress payment,
also referred to as a draw plan. Under this method, payment stages are
stipulated or specified in the construction loan agreement, and portions of the
loan proceeds are disbursed to the borrower or general contractor when
construction reaches certain stages of completion. This method provides the
least protection to the credit union since frequently no information is
obtained as to whether the borrower or general contractor is compensating the
subcontractors and materialmen; (2) Voucher method, under
which construction fund payments are usually made directly to the
subcontractors and materialmen by the credit union. Payments are made on the
basis of vouchers, supported by valid and enforceable lien waivers, that are
signed by the borrower, general contractor or other persons authorized in the
construction loan agreement. Under this method some credit unions hold back a
percentage of the payments and disburse these funds at some predetermined time
following completion of construction; and (3) Title insurance
method, under which a title company assumes responsibility for making
construction disbursements and for obtaining the necessary assurance of an
unencumbered first lien position for the lender. An updated title insurance
policy is issued with each disbursement, insuring the lender to the full amount
of the construction disbursements to date. It remains the credit union's
responsibility to ensure, through construction inspections, that work is
progressing in accordance with plans and specifications. (B) Credit unions must establish standard
procedures for the review and approval of construction loans. These procedures
should be designed to provide the credit union with adequate safeguards to
ensure lien-free construction of the improvements in accordance with approved
plans and specifications. Records shall be available that include the
following: (1) Construction loan
agreements that include: (a) Allocation of loan proceeds and methods of disbursement;
and (b) Descriptions of documents required to support requests for
reimbursement. (2) Risk analysis work
sheets; (3) Copies of feasibility
studies; (4) Construction plans
and specifications and the builder's cost estimates; (5) Appraisal reports
issued by a certified independent appraiser who has satisfied the requirements
of Chapter 4763. of the Revised Code and applicable rules or other comparable
statutes; (6) Inspection
reports; (7) General ledger
accounts for construction loans in process, and individual subsidiary ledger
accounts for each loan; (8) Construction progress
and disbursement records; (9) Reimbursement
requests, supporting vouchers, lien waivers, affidavits, releases and receipted
bills; and (10) Surveys, soil tests,
and data disclosing the availability of water, sewers and
utilities. (C) In the interest of safety and
soundness, the following safeguards to the issuance and service of all
construction loans: (1) No disbursement of
funds in advance of construction progress. As a result, the credit union will
have sufficient undisbursed loan funds to ensure project
completion; (2) Loan agreements must
include precautionary measures to avoid the filing of mechanics' liens or
stop notices; (3) Due consideration
must be given to builder's past performance on similar projects including
cost estimates to determine their accuracy and reasonableness; (4) Loan agreements must
provide for progress inspection to ensure that construction has been performed
in accordance with approved plans and specifications, and that labor and
material for which reimbursement is requested is evidenced by the construction
progress prior to disbursement; (5) Disbursement of
construction funds that are properly supported by inspection
reports; (6) Loan agreements must
provide that changes in plans and specifications can be made only with prior
approval of the credit union; and (7) Segregation of
construction loan appraisal, inspection and disbursement functions. The
disbursement function is separate and apart from appraisal and inspection, with
all procedures documented as part of the policy.
Last updated July 8, 2024 at 8:56 AM
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Rule 1301:9-2-23 | Home equity and second mortgage loans.
(A) A "home equity loan or a second
mortgage loan" is a loan secured by the equity in a dwelling, and is made
for a purpose other than the purchase or refinancing of the dwelling,
regardless of the lien priority. A home equity loan may be one with lines of
equity credit which are either variable or fixed-rate. Home equity loans
qualify as consumer credit. Home equity and second mortgage loans shall be made
in accordance with disclosures under the "Truth in Lending Act," 82
Stat. 149 (1980), 15 U.S.C. 1606, as in effect on July 18, 2023. (B) Adequate insurance on properties
securing home equity and second mortgage loans shall be in place and the
borrower shall furnish a copy of a fire and casualty policy in at least the
amount of any outstanding mortgage with a mortgage loss payable clause in favor
of the credit union. (C) Credit unions engaging in equity
lending shall obtain a title search of the property securing home equity and
second mortgage loans for outstanding liens and retain a copy in the
member's file. The title to the property securing a home equity or second
mortgage loan shall be in fee-simple absolute. (D) The combined aggregate amount of
first mortgage and home equity or second mortgage loans are limited to one
hundred per cent of the appraised value of the property securing the loan. An
appraisal made by a certified or licensed independent appraiser who has
satisfied the requirements of Chapter 4763. of the Revised Code and applicable
rules or other comparable statute, shall be obtained for home equity or second
mortgage loans of four hundred thousand dollars or more, or for ninety-five per
cent of appraised value. Appraisals or a determination of the property value
for home equity or second mortgage loans which are less than four hundred
thousand dollars or less than ninety-five per cent of appraised value shall, as
a minimum, be made by qualified staff personnel and include a written report
documenting the comparable sales or based on other acceptable information and
documentation that accurately reflects the appraised value. (E) A credit union may make home equity
or second mortgage loans secured by liens exceeding ninety-five per cent of the
appraised value, provided that the credit union files with the superintendent a
copy of the loan policy and information regarding the placement of proper
private mortgage insurance on the excess amount. If the superintendent fails to
notify the credit union within ten business days after the filing of the
request or policy that it is denied, needs modification, or that additional
documentation or information is being requested, then the request or policy
shall be deemed approved. If additional documentation or information is
requested, the credit union has thirty days to file the additional
documentation or information with the superintendent. If the superintendent
does not respond within ten business days of receiving the additional
documentation the request shall be deemed approved. However, nothing shall
preclude a credit union from requesting a waiver in writing for the requirement
of private mortgage insurance when modifying an existing loan above ninety five
per cent loan to value. The superintendent shall approve or deny the waiver
within ten business days of receiving the request. If the superintendent does
not respond within ten business days of receiving the waiver request it shall
be deemed approved. (F) The payment schedules for home equity and second mortgage
loans made on or after April 1, 2023 shall provide for monthly installments
that include amortization of the principal and interest within terms of the
loan agreement, and in no case shall the term exceed forty years. Home equity
and second mortgage loans made prior to April 1, 2023 may provide for no less
than quarterly installments. (G) If requested by a credit union, the superintendent may
approve a less restrictive real estate loan policy than provided by this rule.
The request shall be made in writing and include a copy of the proposed real
estate loan policy and a certified copy of the resolution of the board of
directors adopting the policy. The credit union shall substantiate that it has
the expertise, capital, management, and experience to implement the proposed
policy. The credit union shall file with the superintendent a copy of the loan
policy and information regarding the placement of proper private mortgage
insurance the excess amount. The superintendent shall notify the credit union
not more than ten business days after the filing of the request or policy
whether it is denied, approved, or needs modification. If the superintendent
does not respond within ten business days after the filing of the request or
policy, it shall be deemed approved; unless, the superintendent notifies the
credit union in writing within ten business days of the credit union's
request being filed that additional documentation or information is being
requested . If additional documentation or information is requested, the credit
union has thirty days to file the additional documentation with the
superintendent. If the superintendent does not respond within ten business days
of receipt of the additional documentation, the request or policy shall be
deemed approved. (H) The superintendent may adopt a more restrictive real estate
loan policy than provided by this rule, if it is justified as a matter of
safety and soundness.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-24 | Member business loans.
(A) A "member business loan" is
defined as any loan, line of credit or letter of credit which will be used for
commercial, corporate, business, investment property or venture, or
agricultural purpose. Exceptions to this definition are: (1) Loans fully secured
by a lien on a one-to-four-family dwelling; (2) Loans fully secured
by shares in the credit union or deposits in other financial
institutions; (3) Aggregated member
business loans to a member or an associated member for less than fifty thousand
dollars; (4) Loans fully insured
or guaranteed by the federal, state, or local government, including its
political subdivisions or by an agency of the federal, state, or local
government; and (5) Loans granted by a
corporate credit union to another credit union, a credit union to another
credit union, or a credit union to a credit union service
organization(s). (B) Unless otherwise determined by the superintendent, all
member business loans by credit unions are subject to the provisions of 12 USC
1757a, as amended and 12 CFR Part 723, effective as of September 1, 2023, in
the same manner as a credit union whose accounts are insured pursuant to 12 USC
1783, as amended in 2009. (C) If requested by a credit union, the superintendent may
approve a less restrictive member business loan policy than provided by this
rule. The request shall be made in writing and filed with the superintendent.
It shall include a copy of the proposed member business loan policy and a
certified copy of the resolution of the board of directors adopting the policy.
The credit union shall also substantiate that is has the expertise, capital,
management, and experience to implement the proposed policy. The superintendent
shall notify the credit union not more than twenty business days after the
filing of the request or policy whether it is denied, approved, or needs
modification. If the superintendent does not respond within twenty business
days after the filing of the request or policy, it shall be deemed approved;
unless, the superintendent notifies the credit union in writing within twenty
business days of the credit union's request being filed that additional
documentation is required. If additional documentation is required, the credit
union shall have thirty days to file the additional documentation with the
superintendent. If the superintendent does not respond within twenty business
days of receipt of the additional information, the request shall be deemed
approved.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-25 | Purchase of fixed assets or purchase of real estate and/or construction of an office building.
(A) As used in this rule: (1) "Fixed
assets" means any premises, furniture, fixtures, and
equipment. (2) "Furniture,
fixtures, and equipment" include all office furnishings, office machines,
computer hardware and software, automated terminals, heating and cooling
equipment and machinery. (3) "Premises" includes any parking lot, office,
branch office, service facility as defined in rule 1301:9-1-01 of the
Administrative Code, other facility, or real estate where the credit union
transacts or will transact business. (B) A credit union may purchase real
estate, including a real estate purchase that also includes the construction of
an office building, if, prior to the purchase of the real estate, the credit
union submits to the superintendent a letter notifying the superintendent of:
the location, the purpose, and the amount of the planned
investment. (C) A credit union may purchase and hold
real estate, which is being used or is intended to be used as premises and
other fixed assets.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-26 | Service fees.
A credit union may, by resolution of the board of
directors, assess reasonable fees or service charges if such charges or fees
are disclosed to the membership prior to assessment.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-27 | Interest rebate.
The board of directors may authorize the payment of
an interest rebate on loan accounts, upon reasonable terms, if: (A) The board of directors authorizes the
method of computation, payment and qualifications for participation in such
rebate; and (B) Any rebate of interest is recorded as
a reduction of the loan interest for the accounting period to which it
applies.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-28 | Credit card programs.
A credit union may enter a credit card lending
program if, prior to entering, the credit union files with the superintendent:
(A) certification by the board of directors that the implementation of a credit
card lending program will not negatively affect the operations of the credit
union on a long-term basis; and (B) a credit card lending program policy. At a
minimum the policy should address: the aggregate limit for the program, as a
percentage, in relation to the credit union's net worth; a method for
funding the program; a description of the collection procedures specific to
credit card lending; and the lending guidelines which include a limit of
aggregate unsecured credit, as a per cent of the member's gross income to
qualify for a loan. The superintendent shall notify the credit union not more
than ten business days after the filing of the certification and policy whether
it is denied, approved, or needs modification. If the superintendent does not
respond within ten business days after the filing of the certification and
policy, it shall be deemed approved; unless, the superintendent notifies the
credit union in writing within ten business days of the credit union's
request being filed that additional documentation or information is being
requested. If additional documentation is requested, the credit union shall
have thirty days to file the additional documentation with the superintendent.
If the superintendent does not respond within ten business days of the receipt
of the additional documentation, the policy is deemed approved.
Last updated July 8, 2024 at 8:57 AM
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Rule 1301:9-2-30 | Shares and share drafts.
(A) A credit union may offer joint
membership shares under the following circumstances: (1) The credit union
complies with its membership requirements; (2) The credit union
discloses to the joint owners the requirements and benefits of joint ownership
in a membership share account; (3) The credit union
maintains and verifies member service eligibility for members who have a joint
membership; and (4) The member listed
first on the joint membership share account shall be the member qualified to
vote as provided by law, the articles or the regulations. (B) Notwithstanding paragraph (A)(4) of this rule, each
joint owner under a joint account is entitled to a vote as a qualified member
if each has subscribed to a membership share, as provided for in the
regulations. (C) A credit union is authorized to receive funds for
deposit in various types of accounts pursuant to division (A) of section
1733.24 of the Revised Code. Classes of shares are authorized pursuant to
division (B) of section 1733.24 of the Revised Code. (D) Share and share accounts may be of one or more classes,
as designated by the board of directors, subject to approval of the
superintendent, based upon assurance of equitable distribution of dividends
among the classes, and other appropriate standards of fairness. (E) As a part of the examination process, the number and
classes of shares may be reviewed and submitted along with the examination
report to the superintendent for approval. (F) A registry of all shares shall be kept, including all
of the transactions of the credit union pertaining to such shares. (G) All other transactions concerning shares and share
accounts shall be executed in accordance with divisions (H) and (I) of section
1733.24 of the Revised Code. (H) A credit union may maintain share draft accounts in
accordance with division (E) of section 1733.24 of the Revised
Code. (I) The board of directors shall certify in writing to the
superintendent, that the implementation of a share draft program will not
negatively affect the operation of the credit union on a long-term
basis.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-31 | Credit union service contracts.
(A) Credit unions may act as a
representative of and enter into a contractual agreement with one or more
credit unions or other organizations for the purpose of sharing, utilizing,
renting, leasing, purchasing, selling, and/or jointly owning fixed assets, or
engaging in activities and/or services which relate to the daily operations of
credit unions. Agreements must be in writing and advise all parties subject to
the agreement that the goods and services provided may be subject to approval
by the superintendent. (B) Where any agreement calls for or
requires payment in advance of the actual or estimated charges for more than
three months, such payment shall be deemed an investment in a credit union
service organization and subject to the limitations in rule 1301:9-2-32 of the
Administrative Code.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-32 | Credit union service organizations.
(A) A "Credit Union Service
Organization" (CUSO) means any entity in which a credit union has an
ownership interest or to which a credit union has extended a loan, and that
entity is engaged primarily in providing products or services to credit unions
or credit union members. A CUSO also includes any entity in which a CUSO has an
ownership interest of any amount, if that entity is engaged primarily in
providing products or services to credit unions or credit union
members. (B) A credit union may invest in CUSOs in
an aggregate amount not exceeding ten per cent of the credit union's net
worth, unless otherwise approved by the superintendent prior to making the
investment. (C) A credit union may make loans to CUSOs in an aggregate amount
not exceeding ten per cent of the credit union's net worth, which
percentage is independent of the ten per cent investment limit, unless
otherwise approved by the superintendent prior to making the loan. (D) A credit union may invest in or loan
to a CUSO by itself, with other credit unions, or with non-credit union
parties. (E) A credit union may invest in or loan
to a CUSO only if the CUSO is structured as a corporation, limited liability
company, or limited partnership. A credit union may participate in a limited
partnership only as a limited partner. (F) (1) A credit union and a
CUSO should be operated in a manner that demonstrates the separate corporate
existence of the credit union and the CUSO, including: (a) The business transactions, accounts, and records of
each are not intermingled; (b) Each observes the formalities of its separate corporate
procedures; (c) Each is adequately financed as a separate unit in the
light of normal obligations reasonably foreseeable in a business of its size
and character; (d) Each is held out to the public as a separate
enterprise; (e) The credit union does not dominate the CUSO to the
extent that the CUSO is treated as a department of the credit union;
and (f) Unless the credit union has guaranteed a loan obtained
by the CUSO, all borrowings by the CUSO indicate that the credit union is not
liable. (2) A credit union making
an investment in or loan to a CUSO shall, prior to making the investment or
loan, obtain written legal advice from independent legal counsel as to whether
the CUSO is established in a manner that will limit the credit union's
potential exposure to no more than the loss of funds invested in or loaned to
the CUSO. (G) A credit union may invest in or lend
to a CUSO only if the CUSO primarily serves credit unions, its membership, or
the membership of credit unions contracting with the CUSO. (H) The superintendent preapproves CUSOs
to participate in the following activities or services: (1) Checking and currency
services: check cashing; coin and currency services; money order, savings
bonds, travelers checks, and purchase and sale of U.S. mint commemorative coins
services; and stored value products; (2) Clerical,
professional and management services: accounting services; courier services;
credit analysis; facsimile transmissions and copying services; internal audits
for credit unions; locator services; management and personnel training and
support; marketing services; research services; supervisory committee audits;
and employee leasing services. (3) Electronic
transaction services: automated teller machine (ATM) services; credit card and
debit card services; data processing; electronic fund transfer (EFT) services;
electronic income tax filing; payment item processing; wire transfer services;
and cyber financial services. (4) Financial counseling
services: developing and administering individual retirement accounts (IRA),
Keogh, deferred compensation, and other personnel benefit plans; estate
planning; financial planning and counseling; income tax preparation; investment
counseling; retirement counseling; and business counseling and consultant
services. (5) Fixed asset services:
management, development, sale, or lease of fixed assets; and sale, lease, or
servicing of computer hardware or software. (6) Insurance brokerage
or agency: agency for sale of insurance; provision of vehicle warranty
programs; provision of group purchasing programs; and real estate settlement
services. (7) Leasing: personal
property; and real estate leasing of excess CUSO property. (8) Loan support
services: debt collection services; loan processing, servicing, and sales; sale
of repossessed collateral; real estate settlement services; purchase and
servicing of non-performing loans; and referral and processing of loan
applications for members whose loan applications have been denied by the credit
union. (9) Record retention,
security and disaster recovery services: alarm-monitoring and other security
services; disaster recovery services; microfilm, microfiche, optical and
electronic imaging, CD-ROM data storage and retrieval services; provision of
forms and supplies; and record retention and storage. (10) Securities brokerage
services. (11) Shared credit union
branch (service center) operations. (12) Trust and
trust-related services: acting as administrator for prepaid legal service
plans; acting as trustee, guardian, conservator, estate administrator, or in
any other fiduciary capacity; and trust services. (13) Real estate
brokerage services. (14) Payroll processing
services. (15) Loan origination,
including originating, purchasing, selling, and holding any type of loan
permissible for credit unions to originate, purchase, sell, and hold, including
the authority to purchase and sell participation interests that are permissible
for credit unions to purchase and sell. (I) In connection with providing a
permissible service, a CUSO may invest in a non-CUSO service provider. The
amount of the CUSO's investment is limited to the amount necessary to
participate in the service provider, or a greater amount if necessary to
receive a reduced price for goods or services. (J) The provisions in 12 CFR 712.8, effective as of January
16, 2024, regarding transaction and compensation limits, apply to credit unions
to the same extent as if such a credit union were a federal credit union, or
FCU. (K) A credit union must account for its investments in or
loans to a CUSO in conformity with GAAP. (L) A credit union must obtain a written agreement from a
CUSO, prior to investing in or lending to the CUSO, that the CUSO
will: (1) Follow
GAAP; (2) Render financial
statements (balance sheet and income statement) at least quarterly and obtain
an annual audit of the financial statement by a public accountant or certified
public accountant licensed to do business in this state and provide copies of
such to the affiliated credit union; (3) Provide the
superintendent or the superintendent's representatives with complete
access to any books and records of the CUSO, as deemed necessary in order to
carry out the superintendent's responsibilities. (M) CUSOs are not permitted to acquire
control of, either directly or indirectly, another depository financial
institution, nor invest in shares, stocks, or obligations of an insurance
company, trade association, liquidity facility or similar organization,
corporation, or association. (N) The superintendent may expand the activities or services a
CUSO can offer beyond those listed in paragraph (H) of this rule. Any such
request shall be filed with the superintendent prior to the credit union
investing in or loaning to the CUSO and shall include an explanation of the
activity or services and how that activity or service relates to the daily
operation of the credit union, is incidental to the operation of the credit
union, or is being offered as a benefit to the members of the credit union. The
superintendent shall notify the credit union not more than fifteen business
days after the filing of the request for expansion of services or policy
whether it is denied, approved, or requires modification. If the superintendent
does not respond within fifteen business days after the filing of the request
or policy, it shall be deemed approved; unless, the superintendent notifies the
credit union in writing within fifteen business days of the credit
union's request being filed that additional documentation or information
is being requested. If additional documentation is requested, the credit union
has thirty days to file the additional documentation with the superintendent.
If the superintendent does not respond within fifteen business days of receipt
of the additional documentation, the request or policy shall be deemed
approved. (O) Except as otherwise provided in
paragraphs (B), (C), and (N) of this rule, approval by the superintendent is
not required for a credit union to invest in or loan to a CUSO. (P) CUSOs are subject to the reporting
requirements set forth in 12 CFR 712.3(d)(4), effective as of January 16, 2024,
and shall report to the superintendent in the same manner as would be reported
to the national credit union administration. (Q) CUSOs are expected to comply with
applicable federal, state, and local laws and be sufficiently bonded and
insured for their specific operations. The superintendent may at any time,
based upon supervisory, legal, or safety and soundness reasons limit any CUSO
activities or services, or refuse to permit any CUSO activities or
services.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-33 | Sale and leaseback.
Effective:
March 22, 2012
Credit unions may enter into a valid sale and leaseback arrangement, which is consistent with safe and sound practices, subject to the prior written approval of the superintendent.
Last updated June 17, 2024 at 10:30 AM
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Rule 1301:9-2-34 | Other real estate owned.
Effective:
March 22, 2012
Credit unions shall report annually to the superintendent a list of other real estate owned pursuant to division (B)(4) of section 1733.04 of the Revised Code and carried on their books in accordance with GAAP. The report shall include the date the property was acquired, address of the property, amount of the purchase or mortgage balance, and appraised value of the property, name of the insurance company and specification of coverage.
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Rule 1301:9-2-36 | Voluntary dissolution.
Effective:
November 26, 2018
Upon adoption of a resolution by the credit
union's board of directors to present a proposal of dissolution to the
members, the resolution and a request to file a certificate of dissolution
shall be sent to the superintendent for approval a minimum of ten business days
prior to the mailing of the notice of vote and meeting to the membership. If
the superintendent does not approve or deny the request within ten business
days the request is deemed approved.
Last updated June 17, 2024 at 10:31 AM
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Rule 1301:9-2-37 | Suspicious activity reports.
(A) All credit unions shall report any
crime or suspected crime that occurs at its office(s), on the "Suspicious
Activity Report" (SAR) form provided by the "Financial Crimes
Enforcement Network" (FinCEN), within thirty calendar days after discovery
of a suspicious activity, including the following: (1) Insider abuse involving any amount; (2) Violations aggregating five thousand dollars or more
where a suspect can be identified; (3) Violations aggregating twenty-five thousand dollars or
more regardless of a potential suspect; (4) Transactions aggregating five thousand dollars or more
that involve potential money laundering or violations of the Bank Secrecy
Act. (B) SARs are to be filed with FinCEN. The failure to file
a SAR in accordance with the instructions accompanying the SAR may subject the
credit union, its officers, directors, agents or other institution-affiliated
parties to the assessment of civil money penalties or other administrative
actions.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-38 | Powers and duties of liquidating agents.
(A) As soon as practicable after taking
possession, the liquidating agent shall inventory the assets of such credit
union as of the date of taking possession. The inventory shall show the value
of the assets carried on the books of the credit union, and the security
therefor, if any; contain a brief description of the assets and any security;
and a list of the credit union's creditor and accounts liabilities. A copy
of such inventory shall be furnished to the superintendent upon
completion. (B) The liquidating agent shall promptly
publish a notice to the credit union's creditors to present their claims,
together with proof, to the liquidating agent by a date specified in the
notice. This date shall be not less than ninety days after the publication of
the notice. The liquidating agent shall republish such notice approximately one
and two months, respectively, after the initial publication. At the time of
initial publication, the liquidating agent shall mail a notice similar to the
published notice to any creditor shown on the credit union's books at the
last address appearing therein. If the liquidating agent discovers the name of
a creditor whose name does not appear on the credit union's books, a
notice similar to the published notice shall be mailed to such creditor within
thirty days after the discovery of the name and address. (C) Any party may submit a claim against
the liquidated credit union by submitting a written proof of claim in
accordance with the requirements set forth in the notice to creditors. Failure
to submit a written claim within the time provided in the notice to creditors
constitutes a waiver of said claim and the claimant forfeits rights or remedies
with respect to such claim. The liquidating agent may require submission of
supplemental evidence by the claimant and by interested parties in the event of
a dispute concerning a claim against any asset of the liquidated credit union.
The liquidating agent shall determine whether to allow or disallow a claim and
shall notify the claimant within one hundred eighty days from the date a claim
against a credit union is filed. Failure by the liquidating agent to determine
a claim and notify the claimant within the one hundred eighty day period shall
be deemed a denial of the claim. (D) It is the liquidating agent's
duty to collect all obligations and money due such credit union and may, to the
extent consistent with its appointment, do all things desirable or expedient in
its discretion to wind up the affairs of the credit union including, but not
limited to, the following: (1) Exercise all rights
and powers of the credit union including, but not limited to, any rights and
powers under any mortgage, deed of trust, chose in action, option, collateral
note, contract, judgment or decree, or instrument of any nature; (2) Institute, prosecute,
maintain, defend, intervene, and otherwise participate in any and all actions,
suits, or other legal proceedings by and against the liquidating agent or the
credit union or in which the liquidating agent, the credit union, or its
creditors or shareholders shall have an interest, and in every way to represent
the credit union, its shareholders and creditors; (3) Employ on a salary or
fee basis such persons as in the judgment of the liquidating agent are
necessary or desirable to carry out its responsibilities and functions,
including, but not limited to, appraisers, certified public accountants and
attorneys; (4) Execute, acknowledge,
and deliver any and all deeds, contracts, leases, assignments, bills of sale,
releases, extensions, satisfactions, and other instruments necessary or proper
for any purposes, including, but not limited to, the effectuation, termination,
or transfer of real, personal or mixed property, or which shall be necessary or
proper to liquidate the credit union, and any deed or other instrument executed
pursuant to the authority hereby given shall be as valid and effective for all
purposes as if the same had been executed as the act and deed of the credit
union; (5) Disaffirm or
repudiate any contract or lease to which the credit union is a party, the
performance of which the liquidating agent, in his sole discretion, determines
to be burdensome, and which disaffirmance or repudiation in the liquidating
agent's sole discretion will promote the orderly administration of the
credit union's affairs; (6) Deposit, withdraw, or
transfer funds, and otherwise exercise complete control over all investment or
depository accounts maintained by or for the credit union at financial
depositories or similar institutions; and (7) Exercise such other
authority as is conferred by the laws of this state. (E) The liquidating agent has the
authority to: (1) Pay all costs and
expenses of the liquidation, subject to the approval of the
superintendent; (2) Pay off and discharge
taxes and liens; (3) Pay out and expend
such sums as are deemed necessary or advisable for or in connection with the
preservation, maintenance, conservation, protection, remodeling, repair,
rehabilitation, or improvement of any asset or property of any nature of the
credit union or the liquidating agent; (4) Pay off and discharge
any assessments, liens, claims, or charges of any kind against any asset or
property of any nature on which the credit union or the liquidating agent has a
lien by way of mortgage, deed of trust, pledge, or otherwise, or in which the
credit union or liquidating agent has any interest; (5) Settle, compromise,
or obtain the release of, for cash or other consideration, claims and demands
against the credit union or the liquidating; (6) Sell for cash or on terms, exchange,
assign, or otherwise dispose of, in whole or in part, any or all of the assets
and property of the credit union, real, personal and mixed, tangible and
intangible, of any nature, including any mortgage, deed of trust, chose in
action, bond, note, contract, judgment, or decree, share or certificate of
share of stock or debt, owing to the credit union or the liquidating agent;
and (7) Surrender, abandon, and release any
chose in action, or other assets or property of any nature, whether the subject
of pending litigation or not, and settle, compromise, modify, or release, for
cash or other consideration, claims and demands in favor of the credit union or
the liquidating agent.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-39 | Charter conversion.
(A) Any conversion of a state chartered
credit union to a federally chartered credit union or a federally chartered
credit union to a state chartered credit union is subject to the approval of
the superintendent. (B) A state chartered credit union
seeking to convert to a federally chartered credit union must: (1) Submit the following
to the superintendent: (a) A letter requesting conversion and stating the reasons
for the conversion; (b) A copy of the application to convert submitted to the
national credit union administration; (c) A resolution adopted by a majority of the board of
directors of the credit union stating its intention to convert; (d) A certified copy of the results of the membership
vote; (e) A copy of the national credit union
administration's final approval to convert; and (f) Any other information the superintendent
requires. (2) Pay all supervisory
or other fees due to the division of financial institutions before the proposed
date of the conversion. (3) If applicable, comply
with the national credit union administration's rules and regulations for
conversion of insurance. (C) A federally chartered credit union
seeking to convert to a state chartered credit union must: (1) Submit the following
to the superintendent: (a) The items listed in paragraphs (B)(1)(a) to (B)(1)(e)
of this rule; (b) A competed application for a federally chartered credit
union to convert to a state chartered credit union by means prescribed by the
superintendent; (c) A copy of the credit union's bylaws; (d) The proposed initial articles of incorporation and code
of regulations; (e) All items listed in the conversion application;
and (f) Any other information the superintendent
requires. (2) Pay all supervisory
or other fees due to the division of financial institutions before the proposed
date of the conversion. (3) If applicable, comply
with the national credit union administration's rules and regulations for
conversion of insurance. (D) A credit union which applies to the division for a
charter conversion may appeal an adverse decision by the superintendent in
accordance with sections 119.01 to 119.13 of the Revised Code.
Last updated July 8, 2024 at 8:58 AM
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Rule 1301:9-2-40 | Trustee or custodian.
A credit union may act as a trustee or custodian,
for which reasonable compensation may be received, under any written trust
instrument or custodial agreement created or organized in the United States and
forming part of a tax-advantaged savings plan that qualifies for specific tax
treatment under sections 223, 401(d), 408, 408A, and 530 of the Internal
Revenue Code, 26 U.S.C. 223, as in effect on July 28, 2023, 401(d), as in
effect on July 28, 2023, 408, as in effect on July 28, 2023, 408A, as in effect
on July 28, 2023, and 530, as in effect on June 17, 2008, for its members or
groups of its members, provided that the funds of such plans are invested in
share accounts or share certificate accounts of the credit union. These
services include, but are not limited to, acting as a trustee or custodian for
member retirement, education, or health savings accounts.
Last updated July 8, 2024 at 8:59 AM
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Rule 1301:9-2-41 | Merger.
(A) As used in this rule: (1) "Continuing
credit union" means the credit union which will continue to be in
operation after the merger. (2) "Merging credit
union" means the credit union that will cease to exist as an operating
credit union at the time of the merger. (B) Any state chartered credit union may,
with approval of the superintendent, merge with or into another state chartered
or federally chartered credit union. Any federally chartered credit union may,
with approval of the superintendent, merger with or into a state chartered
credit union. (C) The merging and continuing credit
unions must submit the following documents to the superintendent for approval
to merge with a state chartered credit union or federally chartered credit
union: (1) A letter requesting
approval to merge which states the proposed merger partners and the reasons for
the merger; (2) A completed merger
application in a form approved by the division; (3) A resolution adopted
by a majority of the board of directors for both the merging and continuing
credit unions stating their intention to merge; (4) A certified copy of
the results of the membership vote for the merging and continuing credit unions
unless waived by the superintendent; (5) The merger agreement
between the continuing and merging credit unions; (6) The primary
insurer's approval of the merger. If the merger involves an insurance
conversion, the credit union should reference the national credit union
administration rules and regulations for guidance; (7) Financial statements of the merging and continuing
credit unions including projected net worth calculations for the combined
credit unions; (8) Analysis of the allowance for loan and lease loss
reserves for the merging and continuing credit unions and a probable asset to
share ratio calculation; (9) The means by which the continuing credit union will
notify the merging credit union's membership of services, locations, and
any other pertinent information relating to the merger; and (10) Any other information the superintendent
requests. (D) The superintendent shall not approve any proposed
merger involving a state chartered credit union if: (1) The superintendent
has not received all of the required documents; or (2) Any state chartered
credit union has not paid all supervisory or other fees due to the division of
before the proposed date of the merger. (E) Within ten business days after receiving an application
referenced in paragraph (C)(2) of this rule, the superintendent shall determine
whether to accept the application. If the superintendent does not respond
within ten business days of receipt of the application, it shall be deemed
accepted. If the transaction is with a credit union doing business under
authority granted by a regulatory authority other than the superintendent, the
superintendent shall notify the regulatory authority under which the credit
union is doing business of the application and solicit that regulatory
authority's comments. Within ninety days after accepting an application
required under paragraph (B) of this rule, the superintendent shall approve or
disapprove the application. If the superintendent does not respond within
ninety days after accepting the application, the application shall be deemed
approved. (F) The superintendent may condition approval of an
application under paragraph (F) of this rule in any manner the superintendent
considers appropriate.
Last updated July 8, 2024 at 8:59 AM
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Rule 1301:9-2-42 | Conducting business out of state.
A credit union organized and doing business under
the laws of this state is permitted to do business in such other state or
territory of the United States under supervisory and regulatory conditions
similar to the laws of this state, subject to approval by such other state or
territory's supervisory agency.
Last updated July 8, 2024 at 8:59 AM
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