Illinois General Assembly - Full Text of HB5342
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Full Text of HB5342  98th General Assembly




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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 3. The Illinois Banking Act is amended by changing
5Section 48 as follows:
6    (205 ILCS 5/48)
7    Sec. 48. Secretary's powers; duties. The Secretary shall
8have the powers and authority, and is charged with the duties
9and responsibilities designated in this Act, and a State bank
10shall not be subject to any other visitorial power other than
11as authorized by this Act, except those vested in the courts,
12or upon prior consultation with the Secretary, a foreign bank
13regulator with an appropriate supervisory interest in the
14parent or affiliate of a state bank. In the performance of the
15Secretary's duties:
16    (1) The Commissioner shall call for statements from all
17State banks as provided in Section 47 at least one time during
18each calendar quarter.
19    (2) (a) The Commissioner, as often as the Commissioner
20shall deem necessary or proper, and no less frequently than 18
21months following the preceding examination, shall appoint a
22suitable person or persons to make an examination of the
23affairs of every State bank, except that for every eligible



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1State bank, as defined by regulation, the Commissioner in lieu
2of the examination may accept on an alternating basis the
3examination made by the eligible State bank's appropriate
4federal banking agency pursuant to Section 111 of the Federal
5Deposit Insurance Corporation Improvement Act of 1991,
6provided the appropriate federal banking agency has made such
7an examination. A person so appointed shall not be a
8stockholder or officer or employee of any bank which that
9person may be directed to examine, and shall have powers to
10make a thorough examination into all the affairs of the bank
11and in so doing to examine any of the officers or agents or
12employees thereof on oath and shall make a full and detailed
13report of the condition of the bank to the Commissioner. In
14making the examination the examiners shall include an
15examination of the affairs of all the affiliates of the bank,
16as defined in subsection (b) of Section 35.2 of this Act, or
17subsidiaries of the bank as shall be necessary to disclose
18fully the conditions of the subsidiaries or affiliates, the
19relations between the bank and the subsidiaries or affiliates
20and the effect of those relations upon the affairs of the bank,
21and in connection therewith shall have power to examine any of
22the officers, directors, agents, or employees of the
23subsidiaries or affiliates on oath. After May 31, 1997, the
24Commissioner may enter into cooperative agreements with state
25regulatory authorities of other states to provide for
26examination of State bank branches in those states, and the



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1Commissioner may accept reports of examinations of State bank
2branches from those state regulatory authorities. These
3cooperative agreements may set forth the manner in which the
4other state regulatory authorities may be compensated for
5examinations prepared for and submitted to the Commissioner.
6    (b) After May 31, 1997, the Commissioner is authorized to
7examine, as often as the Commissioner shall deem necessary or
8proper, branches of out-of-state banks. The Commissioner may
9establish and may assess fees to be paid to the Commissioner
10for examinations under this subsection (b). The fees shall be
11borne by the out-of-state bank, unless the fees are borne by
12the state regulatory authority that chartered the out-of-state
13bank, as determined by a cooperative agreement between the
14Commissioner and the state regulatory authority that chartered
15the out-of-state bank.
16    (2.1) Pursuant to paragraph (a) of subsection (6) of this
17Section, the Secretary shall adopt rules that ensure
18consistency and due process in the examination process. The
19Secretary may also establish guidelines that (i) define the
20scope of the examination process and (ii) clarify examination
21items to be resolved. The rules, formal guidance, interpretive
22letters, or opinions furnished to State banks by the Secretary
23may be relied upon by the State banks.
24    (2.5) Whenever any State bank, any subsidiary or affiliate
25of a State bank, or after May 31, 1997, any branch of an
26out-of-state bank causes to be performed, by contract or



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1otherwise, any bank services for itself, whether on or off its
3        (a) that performance shall be subject to examination by
4    the Commissioner to the same extent as if services were
5    being performed by the bank or, after May 31, 1997, branch
6    of the out-of-state bank itself on its own premises; and
7        (b) the bank or, after May 31, 1997, branch of the
8    out-of-state bank shall notify the Commissioner of the
9    existence of a service relationship. The notification
10    shall be submitted with the first statement of condition
11    (as required by Section 47 of this Act) due after the
12    making of the service contract or the performance of the
13    service, whichever occurs first. The Commissioner shall be
14    notified of each subsequent contract in the same manner.
15    For purposes of this subsection (2.5), the term "bank
16services" means services such as sorting and posting of checks
17and deposits, computation and posting of interest and other
18credits and charges, preparation and mailing of checks,
19statements, notices, and similar items, or any other clerical,
20bookkeeping, accounting, statistical, or similar functions
21performed for a State bank, including but not limited to
22electronic data processing related to those bank services.
23    (3) The expense of administering this Act, including the
24expense of the examinations of State banks as provided in this
25Act, shall to the extent of the amounts resulting from the fees
26provided for in paragraphs (a), (a-2), and (b) of this



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1subsection (3) be assessed against and borne by the State
3        (a) Each bank shall pay to the Secretary a Call Report
4    Fee which shall be paid in quarterly installments equal to
5    one-fourth of the sum of the annual fixed fee of $800, plus
6    a variable fee based on the assets shown on the quarterly
7    statement of condition delivered to the Secretary in
8    accordance with Section 47 for the preceding quarter
9    according to the following schedule: 16˘ per $1,000 of the
10    first $5,000,000 of total assets, 15˘ per $1,000 of the
11    next $20,000,000 of total assets, 13˘ per $1,000 of the
12    next $75,000,000 of total assets, 9˘ per $1,000 of the next
13    $400,000,000 of total assets, 7˘ per $1,000 of the next
14    $500,000,000 of total assets, and 5˘ per $1,000 of all
15    assets in excess of $1,000,000,000, of the State bank. The
16    Call Report Fee shall be calculated by the Secretary and
17    billed to the banks for remittance at the time of the
18    quarterly statements of condition provided for in Section
19    47. The Secretary may require payment of the fees provided
20    in this Section by an electronic transfer of funds or an
21    automatic debit of an account of each of the State banks.
22    In case more than one examination of any bank is deemed by
23    the Secretary to be necessary in any examination frequency
24    cycle specified in subsection 2(a) of this Section, and is
25    performed at his direction, the Secretary may assess a
26    reasonable additional fee to recover the cost of the



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1    additional examination; provided, however, that an
2    examination conducted at the request of the State Treasurer
3    pursuant to the Uniform Disposition of Unclaimed Property
4    Act shall not be deemed to be an additional examination
5    under this Section. In lieu of the method and amounts set
6    forth in this paragraph (a) for the calculation of the Call
7    Report Fee, the Secretary may specify by rule that the Call
8    Report Fees provided by this Section may be assessed
9    semiannually or some other period and may provide in the
10    rule the formula to be used for calculating and assessing
11    the periodic Call Report Fees to be paid by State banks.
12        (a-1) If in the opinion of the Commissioner an
13    emergency exists or appears likely, the Commissioner may
14    assign an examiner or examiners to monitor the affairs of a
15    State bank with whatever frequency he deems appropriate,
16    including but not limited to a daily basis. The reasonable
17    and necessary expenses of the Commissioner during the
18    period of the monitoring shall be borne by the subject
19    bank. The Commissioner shall furnish the State bank a
20    statement of time and expenses if requested to do so within
21    30 days of the conclusion of the monitoring period.
22        (a-2) On and after January 1, 1990, the reasonable and
23    necessary expenses of the Commissioner during examination
24    of the performance of electronic data processing services
25    under subsection (2.5) shall be borne by the banks for
26    which the services are provided. An amount, based upon a



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1    fee structure prescribed by the Commissioner, shall be paid
2    by the banks or, after May 31, 1997, branches of
3    out-of-state banks receiving the electronic data
4    processing services along with the Call Report Fee assessed
5    under paragraph (a) of this subsection (3).
6        (a-3) After May 31, 1997, the reasonable and necessary
7    expenses of the Commissioner during examination of the
8    performance of electronic data processing services under
9    subsection (2.5) at or on behalf of branches of
10    out-of-state banks shall be borne by the out-of-state
11    banks, unless those expenses are borne by the state
12    regulatory authorities that chartered the out-of-state
13    banks, as determined by cooperative agreements between the
14    Commissioner and the state regulatory authorities that
15    chartered the out-of-state banks.
16        (b) "Fiscal year" for purposes of this Section 48 is
17    defined as a period beginning July 1 of any year and ending
18    June 30 of the next year. The Commissioner shall receive
19    for each fiscal year, commencing with the fiscal year
20    ending June 30, 1987, a contingent fee equal to the lesser
21    of the aggregate of the fees paid by all State banks under
22    paragraph (a) of subsection (3) for that year, or the
23    amount, if any, whereby the aggregate of the administration
24    expenses, as defined in paragraph (c), for that fiscal year
25    exceeds the sum of the aggregate of the fees payable by all
26    State banks for that year under paragraph (a) of subsection



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1    (3), plus any amounts transferred into the Bank and Trust
2    Company Fund from the State Pensions Fund for that year,
3    plus all other amounts collected by the Commissioner for
4    that year under any other provision of this Act, plus the
5    aggregate of all fees collected for that year by the
6    Commissioner under the Corporate Fiduciary Act, excluding
7    the receivership fees provided for in Section 5-10 of the
8    Corporate Fiduciary Act, and the Foreign Banking Office
9    Act. The aggregate amount of the contingent fee thus
10    arrived at for any fiscal year shall be apportioned
11    amongst, assessed upon, and paid by the State banks and
12    foreign banking corporations, respectively, in the same
13    proportion that the fee of each under paragraph (a) of
14    subsection (3), respectively, for that year bears to the
15    aggregate for that year of the fees collected under
16    paragraph (a) of subsection (3). The aggregate amount of
17    the contingent fee, and the portion thereof to be assessed
18    upon each State bank and foreign banking corporation,
19    respectively, shall be determined by the Commissioner and
20    shall be paid by each, respectively, within 120 days of the
21    close of the period for which the contingent fee is
22    computed and is payable, and the Commissioner shall give 20
23    days advance notice of the amount of the contingent fee
24    payable by the State bank and of the date fixed by the
25    Commissioner for payment of the fee.
26        (c) The "administration expenses" for any fiscal year



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1    shall mean the ordinary and contingent expenses for that
2    year incident to making the examinations provided for by,
3    and for otherwise administering, this Act, the Corporate
4    Fiduciary Act, excluding the expenses paid from the
5    Corporate Fiduciary Receivership account in the Bank and
6    Trust Company Fund, the Foreign Banking Office Act, the
7    Electronic Fund Transfer Act, and the Illinois Bank
8    Examiners' Education Foundation Act, including all
9    salaries and other compensation paid for personal services
10    rendered for the State by officers or employees of the
11    State, including the Commissioner and the Deputy
12    Commissioners, communication equipment and services,
13    office furnishings, surety bond premiums, and travel
14    expenses of those officers and employees, employees,
15    expenditures or charges for the acquisition, enlargement
16    or improvement of, or for the use of, any office space,
17    building, or structure, or expenditures for the
18    maintenance thereof or for furnishing heat, light, or power
19    with respect thereto, all to the extent that those
20    expenditures are directly incidental to such examinations
21    or administration. The Commissioner shall not be required
22    by paragraphs (c) or (d-1) of this subsection (3) to
23    maintain in any fiscal year's budget appropriated reserves
24    for accrued vacation and accrued sick leave that is
25    required to be paid to employees of the Commissioner upon
26    termination of their service with the Commissioner in an



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1    amount that is more than is reasonably anticipated to be
2    necessary for any anticipated turnover in employees,
3    whether due to normal attrition or due to layoffs,
4    terminations, or resignations.
5        (d) The aggregate of all fees collected by the
6    Secretary under this Act, the Corporate Fiduciary Act, or
7    the Foreign Banking Office Act on and after July 1, 1979,
8    shall be paid promptly after receipt of the same,
9    accompanied by a detailed statement thereof, into the State
10    treasury and shall be set apart in a special fund to be
11    known as the "Bank and Trust Company Fund", except as
12    provided in paragraph (c) of subsection (11) of this
13    Section. All earnings received from investments of funds in
14    the Bank and Trust Company Fund shall be deposited in the
15    Bank and Trust Company Fund and may be used for the same
16    purposes as fees deposited in that Fund. The amount from
17    time to time deposited into the Bank and Trust Company Fund
18    shall be used: (i) to offset the ordinary administrative
19    expenses of the Secretary as defined in this Section or
20    (ii) as a credit against fees under paragraph (d-1) of this
21    subsection (3). Nothing in this amendatory Act of 1979
22    shall prevent continuing the practice of paying expenses
23    involving salaries, retirement, social security, and
24    State-paid insurance premiums of State officers by
25    appropriations from the General Revenue Fund. However, the
26    General Revenue Fund shall be reimbursed for those payments



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1    made on and after July 1, 1979, by an annual transfer of
2    funds from the Bank and Trust Company Fund. Moneys in the
3    Bank and Trust Company Fund may be transferred to the
4    Professions Indirect Cost Fund, as authorized under
5    Section 2105-300 of the Department of Professional
6    Regulation Law of the Civil Administrative Code of
7    Illinois.
8        Notwithstanding provisions in the State Finance Act,
9    as now or hereafter amended, or any other law to the
10    contrary, the sum of $18,788,847 shall be transferred from
11    the Bank and Trust Company Fund to the Financial
12    Institutions Settlement of 2008 Fund on the effective date
13    of this amendatory Act of the 95th General Assembly, or as
14    soon thereafter as practical.
15        Notwithstanding provisions in the State Finance Act,
16    as now or hereafter amended, or any other law to the
17    contrary, the Governor may, during any fiscal year through
18    January 10, 2011, from time to time direct the State
19    Treasurer and Comptroller to transfer a specified sum not
20    exceeding 10% of the revenues to be deposited into the Bank
21    and Trust Company Fund during that fiscal year from that
22    Fund to the General Revenue Fund in order to help defray
23    the State's operating costs for the fiscal year.
24    Notwithstanding provisions in the State Finance Act, as now
25    or hereafter amended, or any other law to the contrary, the
26    total sum transferred during any fiscal year through



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1    January 10, 2011, from the Bank and Trust Company Fund to
2    the General Revenue Fund pursuant to this provision shall
3    not exceed during any fiscal year 10% of the revenues to be
4    deposited into the Bank and Trust Company Fund during that
5    fiscal year. The State Treasurer and Comptroller shall
6    transfer the amounts designated under this Section as soon
7    as may be practicable after receiving the direction to
8    transfer from the Governor.
9        (d-1) Adequate funds shall be available in the Bank and
10    Trust Company Fund to permit the timely payment of
11    administration expenses. In each fiscal year the total
12    administration expenses shall be deducted from the total
13    fees collected by the Commissioner and the remainder
14    transferred into the Cash Flow Reserve Account, unless the
15    balance of the Cash Flow Reserve Account prior to the
16    transfer equals or exceeds one-fourth of the total initial
17    appropriations from the Bank and Trust Company Fund for the
18    subsequent year, in which case the remainder shall be
19    credited to State banks and foreign banking corporations
20    and applied against their fees for the subsequent year. The
21    amount credited to each State bank and foreign banking
22    corporation shall be in the same proportion as the Call
23    Report Fees paid by each for the year bear to the total
24    Call Report Fees collected for the year. If, after a
25    transfer to the Cash Flow Reserve Account is made or if no
26    remainder is available for transfer, the balance of the



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1    Cash Flow Reserve Account is less than one-fourth of the
2    total initial appropriations for the subsequent year and
3    the amount transferred is less than 5% of the total Call
4    Report Fees for the year, additional amounts needed to make
5    the transfer equal to 5% of the total Call Report Fees for
6    the year shall be apportioned amongst, assessed upon, and
7    paid by the State banks and foreign banking corporations in
8    the same proportion that the Call Report Fees of each,
9    respectively, for the year bear to the total Call Report
10    Fees collected for the year. The additional amounts
11    assessed shall be transferred into the Cash Flow Reserve
12    Account. For purposes of this paragraph (d-1), the
13    calculation of the fees collected by the Commissioner shall
14    exclude the receivership fees provided for in Section 5-10
15    of the Corporate Fiduciary Act.
16        (e) The Commissioner may upon request certify to any
17    public record in his keeping and shall have authority to
18    levy a reasonable charge for issuing certifications of any
19    public record in his keeping.
20        (f) In addition to fees authorized elsewhere in this
21    Act, the Commissioner may, in connection with a review,
22    approval, or provision of a service, levy a reasonable
23    charge to recover the cost of the review, approval, or
24    service.
25    (4) Nothing contained in this Act shall be construed to
26limit the obligation relative to examinations and reports of



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1any State bank, deposits in which are to any extent insured by
2the United States or any agency thereof, nor to limit in any
3way the powers of the Commissioner with reference to
4examinations and reports of that bank.
5    (5) The nature and condition of the assets in or investment
6of any bonus, pension, or profit sharing plan for officers or
7employees of every State bank or, after May 31, 1997, branch of
8an out-of-state bank shall be deemed to be included in the
9affairs of that State bank or branch of an out-of-state bank
10subject to examination by the Commissioner under the provisions
11of subsection (2) of this Section, and if the Commissioner
12shall find from an examination that the condition of or
13operation of the investments or assets of the plan is unlawful,
14fraudulent, or unsafe, or that any trustee has abused his
15trust, the Commissioner shall, if the situation so found by the
16Commissioner shall not be corrected to his satisfaction within
1760 days after the Commissioner has given notice to the board of
18directors of the State bank or out-of-state bank of his
19findings, report the facts to the Attorney General who shall
20thereupon institute proceedings against the State bank or
21out-of-state bank, the board of directors thereof, or the
22trustees under such plan as the nature of the case may require.
23    (6) The Commissioner shall have the power:
24        (a) To promulgate reasonable rules for the purpose of
25    administering the provisions of this Act.
26        (a-5) To impose conditions on any approval issued by



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1    the Commissioner if he determines that the conditions are
2    necessary or appropriate. These conditions shall be
3    imposed in writing and shall continue in effect for the
4    period prescribed by the Commissioner.
5        (b) To issue orders against any person, if the
6    Commissioner has reasonable cause to believe that an unsafe
7    or unsound banking practice has occurred, is occurring, or
8    is about to occur, if any person has violated, is
9    violating, or is about to violate any law, rule, or written
10    agreement with the Commissioner, or for the purpose of
11    administering the provisions of this Act and any rule
12    promulgated in accordance with this Act.
13        (b-1) To enter into agreements with a bank establishing
14    a program to correct the condition of the bank or its
15    practices.
16        (c) To appoint hearing officers to execute any of the
17    powers granted to the Commissioner under this Section for
18    the purpose of administering this Act and any rule
19    promulgated in accordance with this Act and otherwise to
20    authorize, in writing, an officer or employee of the Office
21    of Banks and Real Estate to exercise his powers under this
22    Act.
23        (d) To subpoena witnesses, to compel their attendance,
24    to administer an oath, to examine any person under oath,
25    and to require the production of any relevant books,
26    papers, accounts, and documents in the course of and



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1    pursuant to any investigation being conducted, or any
2    action being taken, by the Commissioner in respect of any
3    matter relating to the duties imposed upon, or the powers
4    vested in, the Commissioner under the provisions of this
5    Act or any rule promulgated in accordance with this Act.
6        (e) To conduct hearings.
7    (7) Whenever, in the opinion of the Secretary, any
8director, officer, employee, or agent of a State bank or any
9subsidiary or bank holding company of the bank or, after May
1031, 1997, of any branch of an out-of-state bank or any
11subsidiary or bank holding company of the bank shall have
12violated any law, rule, or order relating to that bank or any
13subsidiary or bank holding company of the bank, shall have
14obstructed or impeded any examination or investigation by the
15Secretary, shall have engaged in an unsafe or unsound practice
16in conducting the business of that bank or any subsidiary or
17bank holding company of the bank, or shall have violated any
18law or engaged or participated in any unsafe or unsound
19practice in connection with any financial institution or other
20business entity such that the character and fitness of the
21director, officer, employee, or agent does not assure
22reasonable promise of safe and sound operation of the State
23bank, the Secretary may issue an order of removal. If, in the
24opinion of the Secretary, any former director, officer,
25employee, or agent of a State bank or any subsidiary or bank
26holding company of the bank, prior to the termination of his or



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1her service with that bank or any subsidiary or bank holding
2company of the bank, violated any law, rule, or order relating
3to that State bank or any subsidiary or bank holding company of
4the bank, obstructed or impeded any examination or
5investigation by the Secretary, engaged in an unsafe or unsound
6practice in conducting the business of that bank or any
7subsidiary or bank holding company of the bank, or violated any
8law or engaged or participated in any unsafe or unsound
9practice in connection with any financial institution or other
10business entity such that the character and fitness of the
11director, officer, employee, or agent would not have assured
12reasonable promise of safe and sound operation of the State
13bank, the Secretary may issue an order prohibiting that person
14from further service with a bank or any subsidiary or bank
15holding company of the bank as a director, officer, employee,
16or agent. An order issued pursuant to this subsection shall be
17served upon the director, officer, employee, or agent. A copy
18of the order shall be sent to each director of the bank
19affected by registered mail. A copy of the order shall also be
20served upon the bank of which he is a director, officer,
21employee, or agent, whereupon he shall cease to be a director,
22officer, employee, or agent of that bank. The Secretary may
23institute a civil action against the director, officer, or
24agent of the State bank or, after May 31, 1997, of the branch
25of the out-of-state bank against whom any order provided for by
26this subsection (7) of this Section 48 has been issued, and



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1against the State bank or, after May 31, 1997, out-of-state
2bank, to enforce compliance with or to enjoin any violation of
3the terms of the order. Any person who has been the subject of
4an order of removal or an order of prohibition issued by the
5Secretary under this subsection or Section 5-6 of the Corporate
6Fiduciary Act may not thereafter serve as director, officer,
7employee, or agent of any State bank or of any branch of any
8out-of-state bank, or of any corporate fiduciary, as defined in
9Section 1-5.05 of the Corporate Fiduciary Act, or of any other
10entity that is subject to licensure or regulation by the
11Division of Banking unless the Secretary has granted prior
12approval in writing.
13    For purposes of this paragraph (7), "bank holding company"
14has the meaning prescribed in Section 2 of the Illinois Bank
15Holding Company Act of 1957.
16    (8) The Commissioner may impose civil penalties of up to
17$100,000 against any person for each violation of any provision
18of this Act, any rule promulgated in accordance with this Act,
19any order of the Commissioner, or any other action which in the
20Commissioner's discretion is an unsafe or unsound banking
22    (9) The Commissioner may impose civil penalties of up to
23$100 against any person for the first failure to comply with
24reporting requirements set forth in the report of examination
25of the bank and up to $200 for the second and subsequent
26failures to comply with those reporting requirements.



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1    (10) All final administrative decisions of the
2Commissioner hereunder shall be subject to judicial review
3pursuant to the provisions of the Administrative Review Law.
4For matters involving administrative review, venue shall be in
5either Sangamon County or Cook County.
6    (11) The endowment fund for the Illinois Bank Examiners'
7Education Foundation shall be administered as follows:
8        (a) (Blank).
9        (b) The Foundation is empowered to receive voluntary
10    contributions, gifts, grants, bequests, and donations on
11    behalf of the Illinois Bank Examiners' Education
12    Foundation from national banks and other persons for the
13    purpose of funding the endowment of the Illinois Bank
14    Examiners' Education Foundation.
15        (c) The aggregate of all special educational fees
16    collected by the Secretary and property received by the
17    Secretary on behalf of the Illinois Bank Examiners'
18    Education Foundation under this subsection (11) on or after
19    June 30, 1986, shall be either (i) promptly paid after
20    receipt of the same, accompanied by a detailed statement
21    thereof, into the State Treasury and shall be set apart in
22    a special fund to be known as "The Illinois Bank Examiners'
23    Education Fund" to be invested by either the Treasurer of
24    the State of Illinois in the Public Treasurers' Investment
25    Pool or in any other investment he is authorized to make or
26    by the Illinois State Board of Investment as the State



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1    Banking Board of Illinois may direct or (ii) deposited into
2    an account maintained in a commercial bank or corporate
3    fiduciary in the name of the Illinois Bank Examiners'
4    Education Foundation pursuant to the order and direction of
5    the Board of Trustees of the Illinois Bank Examiners'
6    Education Foundation.
7    (12) (Blank).
8    (13) The Secretary may borrow funds from the General
9Revenue Fund on behalf of the Bank and Trust Company Fund if
10the Director of Banking certifies to the Governor that there is
11an economic emergency affecting banking that requires a
12borrowing to provide additional funds to the Bank and Trust
13Company Fund. The borrowed funds shall be paid back within 3
14years and shall not exceed the total funding appropriated to
15the Agency in the previous year.
16(Source: P.A. 96-1163, eff. 1-1-11; 96-1365, eff. 7-28-10;
1797-333, eff. 8-12-11.)
18    Section 4. The Savings Bank Act is amended by changing
19Section 9004 as follows:
20    (205 ILCS 205/9004)  (from Ch. 17, par. 7309-4)
21    Sec. 9004. Examination.
22    (a) At least once every 18 months or more often if it is
23deemed necessary or expedient, the Secretary shall examine the
24books, records, operations, and affairs of each savings bank



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1operating under this Act. In the course of the examination, the
2Secretary may also examine in the same manner all entities,
3companies, and individuals which or whom the Secretary
4determines may have a relationship with the savings bank or any
5subsidiary or entity affiliated with it, if the relationship
6may adversely affect the affairs, activities, and safety and
7soundness of the savings bank, including: (i) companies
8controlled by the savings bank; (ii) entities, including
9companies controlled by the company, individual, or
10individuals that control the savings bank; and (iii) the
11company or other entity which controls or owns the savings
12bank. Notwithstanding any other provision of this Act, every
13savings bank, as defined by rule, or, if not defined, to the
14same extent as would be permitted in the case of a State bank,
15the Secretary, in lieu of the examination, may accept on an
16alternating basis the examination made by the eligible savings
17bank's appropriate federal banking agency pursuant to Section
18111 of the Federal Deposit Insurance Corporation Improvement
19Act of 1991, provided the appropriate federal banking agency
20has made an examination.
21    (b) The Secretary shall examine to determine:
22        (1) Quality of financial condition, including safety
23    and soundness and investment and loan quality.
24        (2) Compliance with this Act and other applicable
25    statutes and regulations.
26        (3) Quality of management policies.



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1        (4) Overall safety and soundness of the savings bank,
2    its parent, subsidiaries, and affiliates.
3        (5) Remedial actions required to correct and to restore
4    compliance with applicable statutes, regulations, and
5    proper business policies.
6    (c) The Secretary may promulgate regulations to implement
7and administer this Section.
8    (d) If a savings bank, its holding company, or any of its
9corporate subsidiaries has not been audited at least once in
10the 12 months prior to the Secretary's examination, the
11Secretary may cause an audit of the savings bank's books and
12records to be made by an independent licensed public
13accountant. The cost of the audit shall be paid for by the
14entity being audited.
15    (e) The Secretary or his or her examiners or other formally
16designated agents are authorized to administer oaths and to
17examine and to take and preserve testimony under oath as to
18anything in the affairs or ownership of any savings bank or
19institution or affiliate thereof.
20    (f) Pursuant to subsection (c) of this Section, the
21Secretary shall adopt rules that ensure consistency and due
22process in the examination process. The Secretary may also
23establish guidelines that (i) define the scope of the
24examination process and (ii) clarify examination items to be
25resolved. The rules, formal guidance, interpretive letters, or
26opinions furnished to savings banks by the Secretary may be



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1relied upon by the savings banks.
2(Source: P.A. 96-1365, eff. 7-28-10; 97-492, eff. 1-1-12.)
3    Section 5. The Illinois Credit Union Act is amended by
4changing Sections 1.1, 9, 30, 34, 39, and 46 and by adding
5Section 57.1 as follows:
6    (205 ILCS 305/1.1)  (from Ch. 17, par. 4402)
7    Sec. 1.1. Definitions.
8    Credit Union - The term "credit union" means a cooperative,
9non-profit association, incorporated under this Act, under the
10laws of the United States of America or under the laws of
11another state, for the purposes of encouraging thrift among its
12members, creating a source of credit at a reasonable rate of
13interest, and providing an opportunity for its members to use
14and control their own money in order to improve their economic
15and social conditions. The membership of a credit union shall
16consist of a group or groups each having a common bond as set
17forth in this Act.
18    Common Bond - The term "common bond" refers to groups of
19people who meet one of the following qualifications:
20        (1) Persons belonging to a specific association, group
21    or organization, such as a church, labor union, club or
22    society and members of their immediate families which shall
23    include any relative by blood or marriage or foster and
24    adopted children.



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1        (2) Persons who reside in a reasonably compact and well
2    defined neighborhood or community, and members of their
3    immediate families which shall include any relative by
4    blood or marriage or foster and adopted children.
5        (3) Persons who have a common employer or who are
6    members of an organized labor union or an organized
7    occupational or professional group within a defined
8    geographical area, and members of their immediate families
9    which shall include any relative by blood or marriage or
10    foster and adopted children.
11    Shares - The term "shares" or "share accounts" means any
12form of shares issued by a credit union and established by a
13member in accordance with standards specified by a credit
14union, including but not limited to common shares, share draft
15accounts, classes of shares, share certificates, special
16purpose share accounts, shares issued in trust, custodial
17accounts, and individual retirement accounts or other plans
18established pursuant to Section 401(d) or (f) or Section 408(a)
19of the Internal Revenue Code, as now or hereafter amended, or
20similar provisions of any tax laws of the United States that
21may hereafter exist.
22    Credit Union Organization - The term "credit union
23organization" means any organization established to serve the
24needs of credit unions, the business of which relates to the
25daily operations of credit unions.
26    Department - The term "Department" means the Illinois



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1Department of Financial and Professional Regulation.
2    Secretary - The term "Secretary" means the Secretary of
3Financial and Professional Regulation or a person authorized by
4the Secretary or this Act to act in the Secretary's stead.
5    Division of Financial Institutions - The term "Division of
6Financial Institutions" means the Division of Financial
7Institutions of the Department of Financial and Professional
9    Director - The term "Director of Financial Institutions"
10means the Director of the Division of Financial Institutions of
11the Department of Financial and Professional Regulation.
12    Office - The term "office" means the Division of Financial
13Institutions of the Department of Financial and Professional
15    NCUA - The term "NCUA" means the National Credit Union
16Administration, an agency of the United States Government
17charged with the supervision of credit unions chartered under
18the laws of the United States of America.
19    Central Credit Union - The term "central credit union"
20means a credit union incorporated primarily to receive shares
21from and make loans to credit unions and directors, officers,
22committee members and employees of credit unions. A central
23credit union may also accept as members persons who were
24members of credit unions which were liquidated and persons from
25occupational groups not otherwise served by another credit



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1    Corporate Credit Union - The term "corporate credit union"
2means a credit union which is a cooperative, non-profit
3association, the membership of which is limited primarily to
4other credit unions.
5    Insolvent - "Insolvent" means the condition that results
6when the total of all liabilities and shares exceeds net assets
7of the credit union.
8    Danger of insolvency - For purposes of Section 61, a credit
9union is in "danger of insolvency" if its net worth to asset
10ratio falls below 2%. In calculating the danger of insolvency
11ratio, secondary capital shall be excluded. For purposes of
12Section 61, a credit union is also in "danger of insolvency" if
13the Department is unable to ascertain, upon examination, the
14true financial condition of the credit union.
15    Net Worth - "Net worth" means the retained earnings balance
16of the credit union, as determined under generally accepted
17accounting principles, and forms of secondary capital approved
18by the Secretary and the Director pursuant to rulemaking.
19    Charitable Donation Account – The term "charitable
20donation account" means an account owned by a credit union that
21is held in a segregated custodial account or special purpose
22entity and specifically identified as a charitable donation
23account whereby, no less frequently than every 5 years and upon
24termination of the account, at least 51% of the total return on
25assets in the account is distributed to one or more charitable
26organizations or non-profit entities.



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1(Source: P.A. 97-133, eff. 1-1-12.)
2    (205 ILCS 305/9)  (from Ch. 17, par. 4410)
3    Sec. 9. Reports and examinations.
4    (1) Credit unions shall report to the Department on forms
5supplied by the Department, in accordance with a schedule
6published by the Department. A recapitulation of the annual
7reports shall be compiled and published annually by the
8Department, for the use of the General Assembly, credit unions,
9various educational institutions and other interested parties.
10A credit union which fails to file any report when due shall
11pay to the Department a late filing fee for each day the report
12is overdue as prescribed by rule. The Secretary may extend the
13time for filing a report.
14    (2) The Secretary may require special examinations of and
15special financial reports from a credit union or a credit union
16organization in which a credit union loans, invests, or
17delegates substantially all managerial duties and
18responsibilities when he determines that such examinations and
19reports are necessary to enable the Department to determine the
20safety of a credit union's operation or its solvency. The cost
21to the Department of the aforesaid special examinations shall
22be borne by the credit union being examined as prescribed by
24    (3) All credit unions incorporated under this Act shall be
25examined at least biennially by the Department or, at the



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1discretion of the Secretary, by a public accountant registered
2by the Department of Financial and Professional Regulation. The
3costs of an examination shall be paid by the credit union. The
4scope of all examinations by a public accountant shall be at
5least equal to the examinations made by the Department. The
6examiners shall have full access to, and may compel the
7production of, all the books, papers, securities and accounts
8of any credit union. A special examination shall be made by the
9Department or by a public accountant approved by the Department
10upon written request of 5 or more members, who guarantee the
11expense of the same. Any credit union refusing to submit to an
12examination when ordered by the Department shall be reported to
13the Attorney General, who shall institute proceedings to have
14its charter revoked. If the Secretary determines that the
15examination of a credit union is to be conducted by a public
16accountant registered by the Department of Financial and
17Professional Regulation and the examination is done in
18conjunction with the credit union's external independent audit
19of financial statements, the requirements of this Section and
20subsection (3) of Section 34 shall be deemed met.
21    (3.5) Pursuant to Section 8, the Secretary shall adopt
22rules that ensure consistency and due process in the
23examination process. The Secretary may also establish
24guidelines that (i) define the scope of the examination process
25and (ii) clarify examination items to be resolved. The rules,
26formal guidance, interpretative letters, or opinions furnished



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1to credit unions by the Secretary may be relied upon by the
2credit unions.
3    (4) A copy of the completed report of examination and a
4review comment letter, if any, citing exceptions revealed
5during the examination, shall be submitted to the credit union
6by the Department. A detailed report stating the corrective
7actions taken by the board of directors on each exception set
8forth in the review comment letter shall be filed with the
9Department within 40 days after the date of the review comment
10letter, or as otherwise directed by the Department. Any credit
11union through its officers, directors, committee members or
12employees, which willfully provides fraudulent or misleading
13information regarding the corrective actions taken on
14exceptions appearing in a review comment letter may have its
15operations restricted to the collection of principal and
16interest on loans outstanding and the payment of normal
17expenses and salaries until all exceptions are corrected and
18accepted by the Department.
19(Source: P.A. 97-133, eff. 1-1-12.)
20    (205 ILCS 305/30)  (from Ch. 17, par. 4431)
21    Sec. 30. Duties of directors.
22    (a) It shall be the duty of the directors to:
23        (1) Review actions on applications for membership. A
24    record of the membership committee's approval or denial of
25    membership or management's approval or denial of



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1    membership if no membership committee has been appointed
2    shall be available to the board of directors for
3    inspection. A person denied membership by the membership
4    committee or credit union management may appeal the denial
5    to the board;
6        (2) Provide adequate fidelity bond coverage for
7    officers, employees, directors and committee members, and
8    for losses caused by persons outside of the credit union,
9    subject to rules and regulations promulgated by the
10    Secretary;
11        (3) Determine from time to time the interest rates, not
12    in excess of that allowed under this Act, which shall be
13    charged on loans to members and to authorize interest
14    refunds, if any, to members from income earned and received
15    in proportion to the interest paid by them on such classes
16    of loans and under such conditions as the board prescribes.
17    The directors may establish different interest rates to be
18    charged on different classes of loans;
19        (4) Within any limitations set forth in the credit
20    union's bylaws, fix the maximum amount which may be loaned
21    with and without security to a member;
22        (5) Declare dividends on various classes of shares in
23    the manner and form as provided in the bylaws;
24        (6) Limit the number of shares which may be owned by a
25    member; such limitations to apply alike to all members;
26        (7) Have charge of the investment of funds, except that



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1    the board of directors may designate an investment
2    committee or any qualified individual or entity to have
3    charge of making investments under policies established by
4    the board of directors;
5        (8) Authorize the employment of or contracting with
6    such persons or organizations as may be necessary to carry
7    on the operations of the credit union, provided that prior
8    approval is received from the Department before delegating
9    substantially all managerial duties and responsibilities
10    to a credit union organization, and fix the compensation,
11    if any, of the officers and provide for compensation for
12    other employees within policies established by the board of
13    directors;
14        (9) Authorize the conveyance of property;
15        (10) Borrow or lend money consistent with the
16    provisions of this Act;
17        (11) Designate a depository or depositories for the
18    funds of the credit union and supervise the investment of
19    funds;
20        (12) Suspend or remove, or both, any or all officers or
21    any or all members of the membership, credit, or other
22    committees whenever, in the judgment of the board of
23    directors, the best interests of the credit union will be
24    served thereby; provided that members of the supervisory
25    committee may not be suspended or removed except for
26    failure to perform their duties; and provided that removal



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1    of any officer shall be without prejudice to the contract
2    rights, if any, of the person so removed;
3        (13) Appoint any special committees deemed necessary;
4    and
5        (14) Perform such other duties as the members may
6    direct, and perform or authorize any action not
7    inconsistent with this Act and not specifically reserved by
8    the bylaws to the members.
9    (b) The board of directors may delegate to the chief
10management official, according to guidelines established by
11the board that may include the authority to further delegate
12one or more duties, all of the following duties:
13        (1) determining the interest rates on loans;
14        (2) determining the dividend rates on share accounts;
15    and
16        (3) hiring employees other than the chief management
17    official and fixing their compensation.
18    (c) Each director shall have a working familiarity with
19basic finance and accounting practices consistent with the size
20and complexity of the credit union operation they serve,
21including the ability to read and understand the credit union's
22balance sheet and income and expense statements and the ability
23to ask, when appropriate, substantive questions of management
24and auditors. For the purposes of this subsection (c),
25substantive questions include queries concerning financial
26services and products offered to the membership; how those



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1activities generate revenue for the credit union; the credit,
2liquidity, interest rate, compliance, strategic, transaction,
3and reputation risks associated with those activities; and the
4internal control structures maintained by the credit union that
5limit and manage those risks.
6    A director who was elected or appointed on or after January
71, 2015 and who comes to the position without the requisite
8financial skills shall have until 6 months after the date of
9election or appointment to acquire the enumerated skills.
10    An incumbent director who was elected or appointed before
11January 1, 2015 and does not possess the requisite financial
12skills shall have until July 1, 2015 to acquire the enumerated
14    An incumbent director or a director who is elected or
15appointed on or after January 1, 2015 who already understands
16his or her credit union's financial statements shall not be
17required to do anything further to satisfy the financial skills
18requirement set forth in subsection (c).
19    It is the intent of the Department that all credit union
20directors possess a basic understanding of their credit union's
21financial condition. It is not the intent of the Department to
22subject credit union directors to examiner scrutiny of their
23financial skills. Rather, the Department shall evaluate
24whether the credit union has in place a policy to make
25available to their directors appropriate training to enhance
26their financial knowledge of the credit union. Directors may



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1receive the training through internal credit union training,
2external training offered by the credit union's retained
3auditors, trade associations, vendors, regulatory agencies, or
4any other sources or on-the-job experience, or a combination of
5those activities. The training may be received through any
6medium, including, but not limited to, conferences, workshops,
7audit closing meetings, seminars, teleconferences, webinars,
8and other internet based delivery channels.
9(Source: P.A. 97-133, eff. 1-1-12.)
10    (205 ILCS 305/34)  (from Ch. 17, par. 4435)
11    Sec. 34. Duties of supervisory committee.
12    (1) The supervisory committee shall make or cause to be
13made an annual internal audit of the books and affairs of the
14credit union to determine that the credit union's accounting
15records and reports are prepared promptly and accurately
16reflect operations and results, that internal controls are
17established and effectively maintained to safeguard the assets
18of the credit union, and that the policies, procedures and
19practices established by the board of directors and management
20of the credit union are being properly administered. The
21supervisory committee shall submit a report of that audit to
22the board of directors and a summary of that report to the
23members at the next annual meeting of the credit union. It
24shall make or cause to be made such supplementary audits as it
25deems necessary or as are required by the Secretary or by the



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1board of directors, and submit reports of these supplementary
2audits to the Secretary or board of directors as applicable. If
3the supervisory committee has not engaged a public accountant
4registered by the Department of Financial and Professional
5Regulation to make the internal audit, the supervisory
6committee or other officials of the credit union shall not
7indicate or in any manner imply that such audit has been
8performed by a public accountant or that the audit represents
9the independent opinion of a public accountant. The supervisory
10committee must retain its tapes and working papers of each
11internal audit for inspection by the Department. The report of
12this audit must be made on a form approved by the Secretary. A
13copy of the report must be promptly mailed to the Secretary.
14    (2) The supervisory committee shall make or cause to be
15made at least once each year a reasonable percentage
16verification of members' share and loan accounts, consistent
17with rules promulgated by the Secretary.
18    (3) The supervisory committee of a credit union with assets
19of $5,000,000 or more shall engage a public accountant
20registered by the Department of Financial and Professional
21Regulation to perform an annual external independent audit of
22the credit union's financial statements in accordance with
23generally accepted auditing standards. The supervisory
24committee of a credit union with assets of $3,000,000 or more,
25but less than $5,000,000, shall engage a public accountant
26registered by the Department of Financial and Professional



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1Regulation to perform an external independent audit of the
2credit union's financial statements in accordance with
3generally accepted auditing standards at least once every 3
4years. A copy of an external independent audit shall be
5completed and mailed to the Secretary no later than 90 days
6after December 31 of each year; provided that a credit union or
7group of credit unions may obtain an extension of the due date
8upon application to and receipt of written approval from the
9Secretary. If the annual internal audit of such a credit union
10is conducted by a public accountant registered by the
11Department of Financial and Professional Regulation and the
12annual internal audit is done in conjunction with the credit
13union's annual external audit, the requirements of subsection
14(1) of this Section shall be deemed met.
15    (4) In determining the appropriate balance in the allowance
16for loan losses account, a credit union may determine its
17historical loss rate using a defined period of time of less
18than 5 years, provided that:
19        (A) the methodology used to determine the defined
20    period of time is formally documented in the credit union's
21    policies and procedures and is appropriate to the credit
22    union's size, business strategy, and loan portfolio
23    characteristics and the economic environment of the areas
24    and employers served by the credit union;
25        (B) supporting documentation is maintained for the
26    technique used to develop the credit union loss rates,



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1    including the period of time used to accumulate historical
2    loss data and the factors considered in establishing the
3    time frames; and
4        (C) the external auditor conducting the credit union's
5    financial statement audit has analyzed the methodology
6    employed by the credit union and concludes that the
7    financial statements, including the allowance for loan
8    losses, are fairly stated in all material respects in
9    accordance with U.S. Generally Accepted Accounting
10    Principles, as promulgated by the Financial Accounting
11    Standards Board.
12    (5) A majority of the members of the supervisory committee
13shall constitute a quorum.
14    (6) On an annual basis commencing January 1, 2015, the
15members of the supervisory committee shall receive training
16related to their statutory duties. Supervisory committee
17members may receive the training through internal credit union
18training, external training offered by the credit union's
19retained auditors, trade associations, vendors, regulatory
20agencies, or any other sources or on-the-job experience, or a
21combination of those activities. The training may be received
22through any medium, including, but not limited to, conferences,
23workshops, audit closing meetings, seminars, teleconferences,
24webinars, and other Internet-based delivery channels.
25(Source: P.A. 96-141, eff. 8-7-09; 96-963, eff. 7-2-10; 97-133,
26eff. 1-1-12.)



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1    (205 ILCS 305/39)  (from Ch. 17, par. 4440)
2    Sec. 39. Special purpose share accounts; charitable
3donation accounts.
4    (1) If provided for in and consistent with the bylaws,
5Christmas clubs, vacation clubs and other special purpose share
6accounts may be established and offered under conditions and
7restrictions established by the board of directors.
8    (2) Pursuant to a policy adopted by the board of directors,
9which may be amended from time to time, a credit union may
10establish one or more charitable donation accounts. The
11investments and purchases to fund a charitable donation account
12are not subject to the investment limitations of this Act,
13provided the charitable donation account is structured in
14accordance with this Act. At their time of purchase, the book
15value of the investments in all charitable donation accounts,
16in the aggregate, shall not exceed 5% of the credit union's net
18        (a) If a credit union chooses to establish a charitable
19    donation account using a trust vehicle, the trustee must be
20    an entity regulated by the Office of the Comptroller of the
21    Currency, the U.S. Securities and Exchange Commission,
22    another federal regulatory agency, or a State financial
23    regulatory agency. A regulated trustee or other person who
24    is authorized to make investment decisions for a charitable
25    donation account, other than the credit union itself, shall



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1    either be registered with the U.S. Securities and Exchange
2    Commission as an investment advisor or regulated by the
3    Office of the Comptroller of the Currency.
4        (b) The parties to the charitable donation account must
5    document the terms and conditions controlling the account
6    in a written operating agreement, trust agreement, or
7    similar instrument. The terms of the agreement shall be
8    consistent with the requirements and conditions set forth
9    in this Section. The agreement, if applicable, and policies
10    must document the investment strategies of the charitable
11    donation account trustee or other manager in administering
12    the charitable donation account and provide for the
13    accounting of all aspects of the account, including its
14    distributions and liquidation, in accordance with
15    generally accepted accounting principles.
16        (c) A credit union's charitable donation account
17    agreement, if applicable, and policies shall provide that
18    the charitable organization or non-profit entity
19    recipients of any charitable donation account funds must be
20    identified in the policy and be exempt from taxation under
21    Section 501(c)(3) of the Internal Revenue Code.
22        (d) Upon termination of a charitable donation account,
23    the credit union may receive a distribution of the
24    remaining assets in cash, or a distribution in kind of the
25    remaining assets, but only if those assets are permissible
26    investments for credit unions pursuant to this Act.



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1(Source: P.A. 97-133, eff. 1-1-12.)
2    (205 ILCS 305/46)  (from Ch. 17, par. 4447)
3    Sec. 46. Loans and interest rate.
4    (1) A credit union may make loans to its members for such
5purpose and upon such security and terms, including rates of
6interest, as the credit committee, credit manager, or loan
7officer approves. Notwithstanding the provisions of any other
8law in connection with extensions of credit, a credit union may
9elect to contract for and receive interest and fees and other
10charges for extensions of credit subject only to the provisions
11of this Act and rules promulgated under this Act, except that
12extensions of credit secured by residential real estate shall
13be subject to the laws applicable thereto. The rates of
14interest to be charged on loans to members shall be set by the
15board of directors of each individual credit union in
16accordance with Section 30 of this Act and such rates may be
17less than, but may not exceed, the maximum rate set forth in
18this Section. A borrower may repay his loan prior to maturity,
19in whole or in part, without penalty. The credit contract may
20provide for the payment by the member and receipt by the credit
21union of all costs and disbursements, including reasonable
22attorney's fees and collection agency charges, incurred by the
23credit union to collect or enforce the debt in the event of a
24delinquency by the member, or in the event of a breach of any
25obligation of the member under the credit contract. A



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1contingency or hourly arrangement established under an
2agreement entered into by a credit union with an attorney or
3collection agency to collect a loan of a member in default
4shall be presumed prima facie reasonable.
5    (2) Credit unions may make loans based upon the security of
6any interest or equity in real estate, subject to rules and
7regulations promulgated by the Secretary. In any contract or
8loan which is secured by a mortgage, deed of trust, or
9conveyance in the nature of a mortgage, on residential real
10estate, the interest which is computed, calculated, charged, or
11collected pursuant to such contract or loan, or pursuant to any
12regulation or rule promulgated pursuant to this Act, may not be
13computed, calculated, charged or collected for any period of
14time occurring after the date on which the total indebtedness,
15with the exception of late payment penalties, is paid in full.
16    For purposes of this subsection (2) of this Section 46, a
17prepayment shall mean the payment of the total indebtedness,
18with the exception of late payment penalties if incurred or
19charged, on any date before the date specified in the contract
20or loan agreement on which the total indebtedness shall be paid
21in full, or before the date on which all payments, if timely
22made, shall have been made. In the event of a prepayment of the
23indebtedness which is made on a date after the date on which
24interest on the indebtedness was last computed, calculated,
25charged, or collected but before the next date on which
26interest on the indebtedness was to be calculated, computed,



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1charged, or collected, the lender may calculate, charge and
2collect interest on the indebtedness for the period which
3elapsed between the date on which the prepayment is made and
4the date on which interest on the indebtedness was last
5computed, calculated, charged or collected at a rate equal to
61/360 of the annual rate for each day which so elapsed, which
7rate shall be applied to the indebtedness outstanding as of the
8date of prepayment. The lender shall refund to the borrower any
9interest charged or collected which exceeds that which the
10lender may charge or collect pursuant to the preceding
11sentence. The provisions of this amendatory Act of 1985 shall
12apply only to contracts or loans entered into on or after the
13effective date of this amendatory Act.
14    (3) Notwithstanding any other provision of this Act, a
15credit union authorized under this Act to make loans secured by
16an interest or equity in real estate may engage in making
17"reverse mortgage" loans to persons for the purpose of making
18home improvements or repairs, paying insurance premiums or
19paying real estate taxes on the homestead properties of such
20persons. If made, such loans shall be made on such terms and
21conditions as the credit union shall determine and as shall be
22consistent with the provisions of this Section and such rules
23and regulations as the Secretary shall promulgate hereunder.
24For purposes of this Section, a "reverse mortgage" loan shall
25be a loan extended on the basis of existing equity in homestead
26property and secured by a mortgage on such property. Such loans



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1shall be repaid upon the sale of the property or upon the death
2of the owner or, if the property is in joint tenancy, upon the
3death of the last surviving joint tenant who had such an
4interest in the property at the time the loan was initiated,
5provided, however, that the credit union and its member may by
6mutual agreement, establish other repayment terms. A credit
7union, in making a "reverse mortgage" loan, may add deferred
8interest to principal or otherwise provide for the charging of
9interest or premiums on such deferred interest. "Homestead"
10property, for purposes of this Section, means the domicile and
11contiguous real estate owned and occupied by the mortgagor.
12    (4) Notwithstanding any other provisions of this Act, a
13credit union authorized under this Act to make loans secured by
14an interest or equity in real property may engage in making
15revolving credit loans secured by mortgages or deeds of trust
16on such real property or by security assignments of beneficial
17interests in land trusts.
18    For purposes of this Section, "revolving credit" has the
19meaning defined in Section 4.1 of the Interest Act.
20    Any mortgage or deed of trust given to secure a revolving
21credit loan may, and when so expressed therein shall, secure
22not only the existing indebtedness but also such future
23advances, whether such advances are obligatory or to be made at
24the option of the lender, or otherwise, as are made within
25twenty years from the date thereof, to the same extent as if
26such future advances were made on the date of the execution of



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1such mortgage or deed of trust, although there may be no
2advance made at the time of execution of such mortgage or other
3instrument, and although there may be no indebtedness
4outstanding at the time any advance is made. The lien of such
5mortgage or deed of trust, as to third persons without actual
6notice thereof, shall be valid as to all such indebtedness and
7future advances form the time said mortgage or deed of trust is
8filed for record in the office of the recorder of deeds or the
9registrar of titles of the county where the real property
10described therein is located. The total amount of indebtedness
11that may be so secured may increase or decrease from time to
12time, but the total unpaid balance so secured at any one time
13shall not exceed a maximum principal amount which must be
14specified in such mortgage or deed of trust, plus interest
15thereon, and any disbursements made for the payment of taxes,
16special assessments, or insurance on said real property, with
17interest on such disbursements.
18    Any such mortgage or deed of trust shall be valid and have
19priority over all subsequent liens and encumbrances, including
20statutory liens, except taxes and assessments levied on said
21real property.
22    (5) Compliance with federal or Illinois preemptive laws or
23regulations governing loans made by a credit union chartered
24under this Act shall constitute compliance with this Act.
25    (6) Credit unions may make residential real estate mortgage
26loans on terms and conditions established by the United States



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1Department of Agriculture through its Rural Development
2Housing and Community Facilities Program. The portion of any
3loan in excess of the appraised value of the real estate shall
4be allocable only to the guarantee fee required under the
6    (7) For a renewal, refinancing, or restructuring of an
7existing loan that is secured by an interest or equity in real
8estate, a new appraisal of the collateral shall not be required
9when the transaction involves an existing extension of credit
10at the credit union, no new moneys are advanced other than
11funds necessary to cover reasonable closing costs, and there
12has been no obvious or material change in market conditions or
13physical aspects of the real estate that threatens the adequacy
14of the credit union's real estate collateral protection after
15the transaction.
16(Source: P.A. 96-141, eff. 8-7-09; 97-133, eff. 1-1-12.)
17    (205 ILCS 305/57.1 new)
18    Sec. 57.1. Services to other credit unions.
19    (a) A credit union may act as a representative of and enter
20into an agreement with credit unions or other organizations for
21the purpose of:
22        (1) sharing, utilizing, renting, leasing, purchasing,
23    selling, and joint ownership of fixed assets or engaging in
24    activities and services that relate to the daily operations
25    of credit unions; and



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1        (2) providing correspondent services to other credit
2    unions that the service provider credit union is authorized
3    to perform for its own members or as part of its
4    operations, including, but not limited to, loan
5    processing, loan servicing, member check cashing services,
6    disbursing share withdrawals and loan proceeds, cashing
7    and selling money orders, ACH and wire transfer services,
8    coin and currency services, performing internal audits,
9    and automated teller machine deposit services.
10    Section 99. Effective date. This Act takes effect upon
11becoming law.