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.
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Rule 1301:9-2-02 | Voting by the membership.
Effective:
March 22, 2012
(A) Voting by proxy or by mail 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 form of any proxy or mail ballot shall have the prior written approval of the superintendent. If a credit union is using a division approved form of proxy or ballot for an annual meeting regarding the election of directors, then pre-approval is not required. The credit union must send a copy of the proxy or ballot to the superintendent. (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 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; shall, in bold type, indicate whether the proxy is solicited on behalf of management; and shall clearly and impartially identify each matter or group of related matters intended to be acted upon, whether proposed by the management or by shareholders. No appointment of a proxy shall be valid after the expiration of eleven months from the time 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 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 shall clearly and impartially identify each matter or group of related matters intended to be acted upon, whether proposed by the management or by members.
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Rule 1301:9-2-03 | Required bond.
Effective:
November 26, 2018
(A) Each credit union shall obtain and maintain a fidelity bond subject to approval of the superintendent. As a minimum, the fidelity bond must provide 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 shall be the responsibility of the board of directors to determine what coverage in excess of the minimum requirement 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 shall 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 required shall be computed based on the credit union's total assets and shall be: 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 superintendent must approve in writing any proposal made to reduce coverage at least twenty days in advance of the proposed effective date of the reduction. (G) 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. The superintendent must approve in writing any proposal made by the credit union to implement deductibles at least twenty days in advance of the proposed effective date of the deductibles.
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Rule 1301:9-2-04 | Charge-off of uncollectible loans and other losses and reserves.
Effective:
October 25, 2022
(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. That practice should be applied consistently in all
interim financial reporting periods. A credit union's loan policy shall
address when a loan is deemed uncollectible. (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) Each credit union shall establish and
maintain reserves and allowances as required by section 1733.31 of the Revised
Code, this rule, other reserves as required by GAAP, and administrative
guidelines issued by the superintendent. (F) 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. (G) 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. (H) 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 October 25, 2022 at 8:18 AM
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Rule 1301:9-2-05 | Financial statements.
Effective:
November 26, 2018
(A) Each credit union member shall be
furnished, at least semiannually, a statement of accounts. Such statement shall
clearly reflect all transactions involving the member's account during the
previous accounting period. Any member, pursuant to request, shall receive
within a reasonable time a statement reflecting the member's current
outstanding balances in the member's account. (B) A credit union shall display at all
operating locations, copies of its current and previous month's financial
statements. Such statements shall be posted in both a conspicuous and available
manner, so as to be accessible for inspection by all members. A credit union
may satisfy the requirements of this paragraph by posting the financial
statements on its website. Should a credit union post the financial statements
described in this paragraph on its website, the credit union shall make a
physical copy of the statements available to a member upon
request.
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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.
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Rule 1301:9-2-07 | Investments.
Effective:
November 26, 2018
(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) No credit union shall
invest any of its funds in any securities or other property not specifically
authorized in section 1733.30 of the Revised Code unless 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, it shall be deemed approved; unless, the
superintendent notifies the credit union in writing within fifteen business
days of the credit unions 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 fifteen business
days of receipt of the additional documentation, the policy shall be 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) 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; (e) 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 April 5, 2012, 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) To seek a waiver from any of the limitations in paragraph
(B)(3)(a) of this rule, a credit union shall submit 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) The interest that the
originating lender will retain in the loan to be participated. The retained
interest must be 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 must have
assets of at least United States twenty billion dollars and the investment must
not be rated 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 shall
be dominated in United States dollars; (iii) The country in
which the issuing bank is located shall be rated AAA (or equivalent) for
political and economic stability by a SEC-recognized rating
agency; (iv) The aggregate
investments in any single foreign bank shall not exceed 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 must
not be rated 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 must not
be rated 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 must
have 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 April 5, 2012 subject to the following
requirements: (i) An investment in a
fixed rate obligation must have 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 must divest itself of any CMO or REMIC security, if material in
amount, 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 require a reserve to be established
and maintained 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 of 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 required by sections 1761.01 to
1761.18 of the Revised Code shall not be considered an investment for the
purpose of this rule.
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Rule 1301:9-2-07.1 | Derivatives authority.
Effective:
October 25, 2022
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 shall have equivalent meanings to their Ohio-specific
counterparts: (1) The term
"federal credit union" shall have the equivalent meaning of
"credit union." (2) The terms "field
director," "field supervisor," "NCUA," "NCUA
Board," and "regional director" shall 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 the requirements of 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 October 25, 2022 at 8:18 AM
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Rule 1301:9-2-08 | Liquidity.
Effective:
March 22, 2012
(A) Pursuant to division (C) of section 1733.31 of the Revised Code, the superintendent has permitted insured certificates of deposit with a remaining maturity of one year or less to be included in the calculation of liquidity as additional assets. (B) Liquidity fund . Pursuant to division (C) of section 1733.31 of the Revised Code, all credit unions must maintain, as a minimum, a liquidity fund equal to five per cent of its shares. Nothing herein shall prevent the superintendent from requiring a particular credit union or all credit unions to establish a liquidity fund greater than or less than five per cent of total shares unless the superintendent establishes a greater or less amount for particular credit unions or all credit unions. A credit union may request in writing that the superintendent waive this requirement.
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Rule 1301:9-2-09 | Dividends.
Effective:
March 22, 2012
(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 has satisfied the reserve requirements of 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.
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Rule 1301:9-2-10 | Impairment.
Effective:
March 22, 2012
(A) A condition of impairment shall be deemed to exist 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. If required by the superintendent, the board of directors shall disclose to all account holders the fact of the impairment.
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Rule 1301:9-2-11 | Independent audit.
Effective:
November 26, 2018
(A) Every credit union must maintain
adequate, complete and correct accounts and shall observe GAAP and anything
else 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 that an audit of the books and records
will be required, to be conducted by an independent qualified public
accountant, 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 filing requirement, 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) Pursuant to section 1733.322 of the Revised Code, the
credit union examined by an outside auditor shall waive the confidentiality
with regard to discussion of the outside audit with the superintendent. The
form of the waiver 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.
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Rule 1301:9-2-12 | Reimbursement to credit unions for assembling or providing financial records.
Effective:
November 24, 2019
(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 September 30, 2009. (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 or
requirement 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) Where terms used in the rule are
defined in section 9.02 of the Revised Code, they shall have the meaning set
forth in that section.
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Rule 1301:9-2-13 | Compensation.
Effective:
March 22, 2012
(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 superintendent and 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.
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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.
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Rule 1301:9-2-16 | Field of membership.
Effective:
March 22, 2012
(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 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 expresses 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 that the associational or occupational group, through its authorized representative, has requested service from the applicant credit union; (5) Evidence demonstrating the credit union is financially and organizationally sound to provide credit union service to the group; (6) Certification of the applicant credit union vote to approve extension of membership services to the group; and (7) 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 the following to the superintendent in addition to the requirements of 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 the applicable requirements and approval of the superintendent as identified in 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: (a) Require periodic service status reports from a credit union about the underserved community to ensure that the needs of the area are being met. (b) Require such reports 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 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 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 shall 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) Whether the proposed expansion shall occur within twelve months of approval unless the superintendent allows otherwise; 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, the state supervisory authority of the state where the proposed group is located must give permission for the expansion before final approval by the superintendent can be granted.
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Rule 1301:9-2-18 | Disaffiliation or dual membership.
Effective:
March 22, 2012
(A) Definitions (1) The term "group" for the purposes of this rule shall be as described in division (D)(1) of section 1733.05 of the Revised Code, except that for the purpose of a vote to disaffiliate group membership, shall not include a member who acquires his "common bond" for member status through familial relationship. (2) "Original credit union" for the purposes of this rule shall mean the credit union from which the group intends to disaffiliate. (3) "Applicant credit union" for the purposes of this rule shall mean 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. The group shall notify the superintendent of its intent thirty days before a membership vote. (C) The vote to disaffiliate shall be in person, by proxy or by mail ballot, and each member of the group, except as provided in paragraph (A)(1) of this rule, 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. (D) Submission of disaffiliation proposal to original credit union. (1) The group shall present the disaffiliation proposal to 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. (E) 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. (F) Upon submission of the plan of disaffiliation, the superintendent shall contact the applicant credit union to verify orally and in writing such credit union's willingness and ability to serve the group. (G) 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 shall be divided between the original credit union and the applicant credit union or transferred from the original credit union to the applicant credit union. (H) Upon approval of the plan of disaffiliation, the member of the group who votes for disaffiliation shall transfer his membership account to the applicant credit union. (I) Each member of the group seeking to disaffiliate shall be 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. (J) A group may choose to be served by both the original and applicant credit union by seeking dual membership. The group shall request 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.
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Rule 1301:9-2-19 | Criteria for charter approval.
Effective:
March 22, 2012
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: Commitment of share insurance as required by section 1733.041 of the Revised Code; 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 which shall include 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 which shall include 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. .
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Rule 1301:9-2-20 | Loan authority.
Effective:
March 22, 2012
(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) In the discretion of the superintendent, all loans made to the credit union as a corporation shall be reported quarterly to the superintendent by the borrowing credit union. This report shall contain 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.
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Rule 1301:9-2-21 | First mortgage purchase money real estate loans and refinancing.
Effective:
April 13, 2021
(A) First mortgage purchase money real
estate loans may be made only on a one to four family dwelling. (B) All appraisals required by rule for
loans greater than four hundred thousand dollars 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. (C) A credit union may make first
mortgage 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. However, nothing in this rule shall preclude a credit union
from making non-conforming loans pursuant to the credit unions loan and
risk management policies. No more than fifty per cent of the entire first
mortgage portfolio shall be non-conforming, unless otherwise waived by the
superintendent. (D) Any credit union may make first
mortgage 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. (E) A credit union may make first
mortgage 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 unions 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. However, nothing
shall preclude a credit union from requesting 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 if approved by the
superintendent. (F) Installment payments shall be
required that are sufficient to amortize the entire principal and interest of
the loan within a period of not more than forty years. (G) 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. (H) 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 30, 2008; 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 August 30, 1972. (I) The following are mandatory
documents that shall be obtained by the credit union for a first mortgage
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 21, 2010 and the "Real Estate
Settlement Procedures Act" 88 Stat. 1724, 12 U.S.C. 2601, as in effect on
December 22, 1974, 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. (J) The provisions of this rule shall be
applicable to the refinancing of first mortgage purchase money real estate
loans, with the exception of the use of the sale price. (K) 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 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 unions 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. (L) Nothing herein shall preclude the
superintendent from requiring a more restrictive real estate loan policy than
provided by this rule, as a matter of safety and soundness.
Last updated April 19, 2021 at 11:21 AM
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Rule 1301:9-2-22 | Real estate construction loans.
Effective:
March 22, 2012
(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, portions of the loan proceeds are disbursed to the borrower or general contractor when construction reaches certain stages of completion. These stages must be stipulated in the construction loan agreement. 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 signed by the borrower, general contractor or other persons authorized in the construction loan agreement. Vouchers should be supported by lien waivers, appropriate to the requirements for the area in which the property is located. 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) The following safeguards must be implemented to assure that construction loans are issued and serviced on a safe and sound basis: (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 shall be separate and apart from appraisal and inspection, with all procedures documented as part of the policy.
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Rule 1301:9-2-23 | Home equity and second mortgage loans.
Effective:
April 13, 2021
(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 required under the "Truth in Lending
Act," 82 Stat. 149 (1980), 15 U.S.C. 1606, as in effect on July 21,
2010. (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 must 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 shall not exceed 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. 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
unions 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 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 shall provide for monthly installments but no less than quarterly, that
include amortization of the principal and interest within terms of the loan
agreement, and in no case shall the term exceed forty years. (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 unions
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. (H) Nothing herein shall preclude the superintendent from
requiring a more restrictive real estate loan policy than provided by this
rule, as a matter of safety and soundness.
Last updated April 19, 2021 at 11:21 AM
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Rule 1301:9-2-24 | Member business loans.
Effective:
March 22, 2012
(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 an owner occupied 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) Definitions. (1) "Associated member" means any member with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower. (2) Specific to this rule, " immediate family member" means a spouse or other family member living in the same household. (3) "Loan-to-value" (LTV) ratio means the quotient of the aggregate amount of all sums borrowed including outstanding balances plus any unfunded commitment or line of credit from all sources on an item of collateral divided by the market value of the collateral used to secure the loan. (4) "Construction or development loan" means a financing arrangement for the purpose of acquisition of property or rights to property, including land or structures, with the intent of conversion into income-producing property including residential housing for rental or sale, commercial, industrial use, or similar use. (C) For member business loans made other than to an individual , the credit union's records shall indicate the intended source of repayment and the borrower's capacity to service the debt. As a minimum, the credit union shall obtain financial statements of the business and tax returns for the three years immediately preceding the application for credit. Where there is security other than real estate, the file shall contain documentation indicating that a security interest has been created and perfected in favor of the lender. Financing statements are evidence of perfection for most types of collateral used in commercial financing. Credit unions may make working capital or seasonal loans which provide temporary capital in excess of normal needs and are repaid at the end of the cycle or season, by converting inventory and accounts receivable into cash. If a credit union engages in this type of lending, sufficient accounts receivable and/or inventory shall be pledged as collateral. (D) Term member business loans granted for the purpose of acquiring capital assets such as plant and equipment shall be secured, and require amortization because of the time involved and the greater amount of risk inherent in such loans. Loan agreements on such credit shall contain certain restrictive covenants during the life of the loan. (E) The board of directors shall adopt specific written member business loan policies, which shall be reviewed by the board at least annually. The policies shall take into consideration, and address the following: (1) Particular types of member business loans which the credit union may make; (2) The credit union's trade area for member business loans; (3) Maximum amount of credit union assets, in relation to net worth, that may be invested in member business loans, and maximum amount to be invested in given categories or type of member business loans; (4) Maximum amount of credit union assets in relation to reserves that may be lent to any individual member or group of associated members; (5) An objective appraisal of the ability of the borrower to repay the loan; (6) Qualifications and experience of personnel involved in making and administering business loans with a minimum of two years direct experience in business loans; (7) Balance sheet data; trend and structure analysis; ratio analysis of cash flow income and expenses; leveraging; comparison with industry averages; receipt of and periodic updating of financial statements; and other documentation including tax returns; (8) Collateral requirements, including loan to value ratios which shall not exceed the lesser amount of eighty per cent of the appraised value or eighty per cent of the sale price; appraisals; title search and insurance requirements; steps to be taken to secure various types of collateral; and how often the value and marketability of collateral is re-evaluated; (9) Identification by position of those individuals prohibited from receiving member business loans; No credit union shall make member business loans to the following non-volunteer senior management employees or to any associated member or immediate family member of such employees: (a) The credit union's chief executive officer; (b) Any assistant chief executive officer; (c) The chief financial officer; or (d) The chief lending officer. (10) Provision for periodic disclosure to the credit union's members, of the aggregate dollar amount of business loans made by the credit unions; (11) Loan monitoring, servicing and follow-up procedures, including collection practices; (12) Loans shall be granted on a fully secured basis by collateral as follows: (a) Second lien for LTV ratios of up to eighty per cent; (b) First lien for LTV ratios of up to eighty per cent; (c) First lien with an LTV ratio in excess of eighty per cent shall be granted only where the value in excess of eighty per cent is covered through acquisition of private mortgage or equivalent type insurance provided by an insurer acceptable to the credit union and the superintendent or insurance or guarantees by or subject to advance commitment to purchase by an agency of the federal, state or local government, and in no event shall the LTV ratio exceed ninety-five per cent. (13) Guidelines for purchase and sale of business loans and business loan participations, if the credit union engages in that activity. (F) Unless prior written approval is granted by the superintendent, allowing a greater amount to be lent to an individual member or a group of associated members, the aggregate business loans to such member or group shall not exceed fifteen per cent of the credit union's reserves (less allowance for loan losses account) net worth or one hundred thousand dollars, whichever is greater. If any portion of a member business loan is secured by shares in the credit union, or deposits in another financial institution, or fully or partially insured or guaranteed by the federal, state or local government including its political subdivisions, or by any agency of the federal, state or local government, such portion shall not be calculated in determining the fifteen per cent limit. (G) Maturities on member business loans shall be consistent with the purpose, security, creditworthiness of the borrower, and sound lending policies. (H) Construction and development loans granted under this rule to finance the construction or development of commercial or residential property shall be subject to the following additional provisions: (1) The aggregate of all such loans, excluding any portion of a loan secured by shares in the credit union, or deposits in another financial institution, or fully or partially insured or guaranteed by, or subject to an advance commitment to purchase by the federal, state or local government, its political subdivision or by any agency of the federal, state, or local government, shall not exceed fifteen per cent of net worth; (2) The borrower shall have a minimum of: (a) Thirty per cent equity interest in the project being financed if the loan is for land development; or (b) Twenty-five per cent equity interest in the project being financed if the loan is for construction or a combination of construction and development; (3) Funds for such projects shall be released following on-site inspections by independent, qualified personnel in accordance with a preapproved draw schedule and any other conditions as set forth in the loan documentation. (I) No credit union shall grant a member business loan where a portion of the amount of income to be received by the credit union in conjunction with the loans is tied to the profit of the business or commercial endeavor for which the loan is made. A credit union shall not take an equity interest in the commercial endeavor in lieu of payment. (J) All loans, lines of credit, or letters of credit, the proceeds of which may be used for a commercial, corporate, business, investment property or venture, or agricultural purpose, shall be separately identified in the records of the credit union and reported as such in financial and statistical reports required by the superintendent. (K) All member business loans shall be secured by collateral in accordance with this section, except the following: (1) A credit card line of credit granted to nonnatural persons that is limited to routine purposes normally made available under such lines of credit; (2) A loan made by a credit union if: (a) The amount of the loan does not exceed one hundred thousand dollars; the aggregate of all unsecured member business loans does not exceed ten percent of the credit unions net worth; and (b) The credit union has a net worth of at least seven percent. (L) Unless otherwise determined by the national credit union administration or the superintendent, a credit union whose accounts are insured pursuant to 12 USC 1783, as amended in 2009 are subject to the provisions of 12 USC 1757a, as amended in 1998 and 12 CFR Part 723, effective as of 2012. (M) 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 unions 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.
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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.
Effective:
November 24, 2019
(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) In the case of a purchase of real
estate, including when the real estate purchase also includes the construction
of an office building, prior to the purchase of the real estate the credit
union shall submit to the superintendent a letter notifying the superintendent
of the purchase. The letter shall include, at minimum, all of the following:
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.
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Rule 1301:9-2-26 | Service fees.
Effective:
August 3, 1993
By resolution of the board of directors, reasonable fees or service charges may be assessed, and such charges or fees shall be subject to proper disclosure to the membership.
Supplemental Information
Authorized By:
–
Amplifies:
–
Five Year Review Date:
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Rule 1301:9-2-27 | Interest rebate.
Effective:
August 3, 1993
The board of directors may authorize the payment of an interest rebate on loan accounts upon such reasonable terms as are consistent with the following provisions: (A) The board of directors shall authorize the method of computation, payment and qualifications for participation in such rebate; and (B) Any rebate of interest shall be recorded as a reduction of the loan interest for the accounting period to which it applies.
Supplemental Information
Authorized By:
–
Amplifies:
–
Five Year Review Date:
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Rule 1301:9-2-28 | Credit card programs.
Effective:
March 22, 2012
Prior to entering a credit card lending program, a credit union shall file 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. The credit union shall also file a credit card lending program policy with the superintendent. 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 unions 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 the receipt of the additional documentation, the policy is deemed approved.
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Rule 1301:9-2-30 | Shares and share drafts.
Effective:
March 22, 2012
(A) In the case of a joint membership share the credit union shall do the following: (1) Comply with membership requirements of the credit union; (2) Disclose to the joint owners the requirements and benefits of joint ownership in a membership share account; (3) Maintain and verify member service eligibility for members who have a joint membership; and (4) Comply with paragraph (B) of this rule. (B) 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. (C) If each joint owner, under a joint account, has subscribed to a membership share, as provided for in the regulations, each shall have a vote as a qualified member. (D) 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. (E) 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. A disproportionately high rate may not be paid on large accounts to the detriment of smaller accounts. (F) As a part of the examination process, the number and classes of shares shall be reviewed and submitted along with the examination report to the superintendent for approval. (G) A registry of all shares shall be kept, including all of the transactions of the credit union pertaining to such shares. (H) 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. (I) A credit union may maintain share draft accounts in accordance with division (E) of section 1733.24 of the Revised Code. (J) 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.
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Rule 1301:9-2-31 | Credit union service contracts.
Effective:
March 22, 2012
(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 shall advise all parties subject to the agreement that the goods and services provided shall 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.
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Rule 1301:9-2-32 | Credit union service organizations.
Effective:
November 26, 2018
(A) A "Credit Union Service
Organization" (CUSO) means any organization, as determined by the
superintendent, in which a credit union can invest in and make loans if the
CUSO primarily serves credit unions, its membership, or the membership of other
credit unions and whose business relates to the daily or routine operation of
the credit unions it serves, are incidental to the credit union, are provided
for the benefit of the members of the credit union or whose activities or
services are approved by the superintendent. A credit union may invest in or
loan to a CUSO by itself, with other credit unions or with non-credit union
parties. (B) A credit union may invest in shares,
stock or obligations of a CUSO in amounts not exceeding ten per cent of the
credit union's total net worth, unless otherwise approved by the
superintendent. (C) A credit union may make loans to a CUSO in amounts 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. (D) A credit unions maximum investment and loans in CUSOs
may not exceed, in the aggregate, twenty per cent of its net worth, unless
otherwise approved by the superintendent. (E) A CUSO chartered as a corporation, a limited liability
company, or a cooperative must be adequately capitalized and operated as a
separate entity. A credit union making an investment in or loan to a CUSO
structured as a limited liability company shall obtain written legal advice as
to whether such organization 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 lent to the CUSO. (F) A credit union may participate only as a limited partner in a
CUSO structured as a limited partnership. As such, the credit union shall not
engage in those activities which may cause the credit union to lose its status
as a limited partner, and correspondingly its limited ability, and thereby be
treated as a general partner. A credit union shall obtain written legal advice
to ensure it will not be treated as a general partner. (G) A credit union may invest in or lend
to a CUSO only if the organization primarily serves credit unions and/or the
membership of affiliated credit unions. (H) Investments in or loans to CUSOs
shall be limited to organizations which engage in activities or services which
relate to the daily operation of credit unions, are incidental to the credit
union, are for the benefit of their members, or have been approved by the
superintendent. The following are examples of activities or services in which a
CUSO may participate: (1) Operational services:
credit card and debit card services; check cashing and wire transfers; internal
audits for credit unions; ATM services; EFT services; accounting services; data
processing; shared credit union branch (service center) operations; sale of
repossessed collateral; management, development, sale or lease of fixed assets;
sale, lease or servicing of computer hardware or software; management and
personnel training and support; payment item processing; locator services;
marketing services, research services; record retention and storage; microfilm,
microfiche, optical and electrical imaging, CD-ROM data storage and retrieval
services; alarm-monitoring and other security services; debt collection
services; credit analysis; consumer mortgage loan origination; loan processing,
servicing and sales, coin and currency services, and provision of forms and
supplies; money orders; savings bonds; travelers checks; purchase and sale of
U.S. mint commemorative coins services; courier services; facsimile
transmissions and copying services; supervisory committee audits; electronic
income tax filing; and cyber financial services; (2) Financial services:
financial planning and counseling; retirement counseling; investment
counseling; securities brokerage services; estate planning; income tax
preparation; acting as administrator for prepaid legal service plan; developing
and administering IRA, Keough, deferred compensation, and other personnel
benefit plans; trust services; acting as trustee, guardian, conservator, estate
administrator, or in any other fiduciary capacity; real estate brokerage
services; travel agency services; agent or agency for sale of insurance;
personal property leasing; and provision of vehicle warranty programs;
provision of vehicle warranty programs; provision of group purchasing program;
real estate leasing of excess credit union service organization property;
alarm-monitoring and other security services; disaster recovery services;
student loan origination; all telephone and telecommunication services; and
business loan origination. (3) In connection with
providing a permissible service, a credit union may invest in a non-credit
union service organization service provider. The amount of the credit
unions 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. (4) The superintendent
may expand the range of services, beyond those set forth in paragraph (H) of
this rule or as otherwise determined by the superintendent, for purposes of
investments in or loans to CUSOs as set forth in paragraph (N) of this rule.
Such approval shall be obtained from the superintendent in
writing. (I) Individuals who serve as officials
of, or are employed by, an affiliated credit union, and immediate family
members of such individuals, may not receive any salary, commission, investment
income, other income, or compensation from a CUSO either directly or
indirectly, or from any person being served through the CUSO. This provision
does not prohibit an official or employee of a credit union from assisting in
the operation of a CUSO, provided the individual is not compensated by the
CUSO. Further the CUSO may reimburse the credit union for the services provided
by the individual. (J) A credit union must follow GAAP in
its involvement with CUSOs. (K) An affiliated credit union must
obtain written agreements from a CUSO, prior to investing in or lending to the
organization that the organization 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 his representatives with complete access to any books and
records of the CUSO, as deemed necessary by the superintendent in carrying out
his responsibilities. (L) As used in this rule: "Official" means directors or committee
members. (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 range of activities and
services a CUSO can offer for purposes of a credit union investing in or
lending to the CUSO. Any request to expand the range of services shall be filed
with the superintendent 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 unions 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 fifteen business days of receipt of the additional
documentation, the request or policy shall be deemed approved.
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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.
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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
unions 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.
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Rule 1301:9-2-37 | Suspicious activity reports.
Effective:
November 26, 2018
(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. Each credit union shall follow the instructions and
reporting requirements accompanying the SAR. (B) A SAR shall be completed following
the discovery of: (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. (C) 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. (D) All credit unions shall maintain a copy of any SAR that
it files and the original of all attachments to the report for a period of five
years from the date of the report.
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Rule 1301:9-2-38 | Powers and duties of liquidating agents.
Effective:
November 26, 2018
(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 wishing to submit a claim
against the liquidated credit union must submit a written proof of claim in
accordance with the requirements set forth in the notice to creditors. A
failure to submit a written claim within the time provided in the notice to
creditors shall be deemed a waiver of said claim and the claimant shall have no
further 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) The liquidating agent shall 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 shall have
power 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.
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Rule 1301:9-2-39 | Charter conversion.
Effective:
March 22, 2012
(A) Any state chartered credit union may convert to a federally chartered credit union and any federally chartered credit union domiciled in Ohio may convert to a state chartered credit union subject to the approval of the superintendent. (B) A credit union must submit the following documents to the superintendent for approval to convert to a federally chartered credit union: (1) A letter requesting conversion and stating the reasons for the conversion; (2) A copy of the application to convert submitted to the national credit union administration; (3) A resolution adopted by a majority of the board of directors of the credit union stating its intention to convert; (4) A certified copy of the results of the membership vote; (5) A copy of the national credit union administration's final approval to convert to a federal or state charter; and (6) Any other information the superintendent requires. (C) If a credit union is federally chartered and converting to a state chartered credit union, the following information shall be submitted in addition to the items listed in paragraph (B) of this rule: (1) A completed application for a federally chartered credit union to convert to a state chartered credit union by means prescribed by the superintendent; and (2) Additional supporting documents including: (a) A copy of the credit union's bylaws; (b) The proposed initial articles of incorporation and code of regulations; (c) All items listed in the conversion application; and (d) Any other information the superintendent requires. (D) If the proposed conversion also involves an insurance conversion, the credit union shall refer to the national credit union administration's rules and regulations for conversion of insurance. (E) The superintendent shall not approve any proposed conversion by a state chartered credit union if: (1) The superintendent has not received all of the required documents; or (2) The credit union has not paid all supervisory or other fees due to the division of financial institutions before the proposed date of the conversion. (F) 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.
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Rule 1301:9-2-40 | Trustee or custodian.
Effective:
November 26, 2018
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 31, 2015, 401(d), as in
effect on December 19, 2014, 408, as in effect on December 18, 2015, 408A, as
in effect on December 23, 2008, 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.
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Rule 1301:9-2-41 | Merger.
Effective:
March 22, 2012
(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 credit union may, with approval of the superintendent, merge with or into another state chartered or federally 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 for federally chartered or state chartered credit unions to merge with and into another state chartered credit union; (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 insurers 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; and (7) Any other information the superintendent requires. (D) In addition to the items listed in paragraph (C) of this rule, the continuing and merging credit unions shall submit the following additional supporting items: (1) Financial statements of the merging and continuing credit unions including projected net worth calculations for the combined credit unions; (2) 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; and (3) The means by which the continuing credit union will notify the merging credit unions membership of services, locations, and any other pertinent information relating to the merger. (E) The superintendent shall not approve any proposed merger by a state chartered credit union if: (1) The superintendent has not received all of the required documents; or (2) The credit union has not paid all supervisory or other fees due to the division of before the proposed date of the merger. (F) Within ten business days after receiving an application required under paragraph (B) 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 authoritys 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. (G) The superintendent may condition approval of an application under paragraph (F) of this rule in any manner the superintendent considers appropriate.
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Rule 1301:9-2-42 | Conducting business out of state.
Effective:
March 22, 2012
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 and are required to meet such other conditions as determined by such other state or territory's supervisory agency.
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