Illinois General Assembly - Full Text of SB1813
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Full Text of SB1813  101st General Assembly




State of Illinois
2019 and 2020


Introduced 2/15/2019, by Sen. John G. Mulroe


205 ILCS 305/10.2 new
205 ILCS 305/15  from Ch. 17, par. 4416
205 ILCS 305/23  from Ch. 17, par. 4424
205 ILCS 305/44  from Ch. 17, par. 4445
205 ILCS 305/51  from Ch. 17, par. 4452
205 ILCS 305/57.1
205 ILCS 305/59  from Ch. 17, par. 4460
205 ILCS 305/63  from Ch. 17, par. 4464

    Amends the Illinois Credit Union Act. Provides that if the Act requires information to be written or delivered in writing, an electronic record or delivery satisfies the rule of law. Provides that if the Act requires a policy, record, notice, or other document or information to be mailed or otherwise furnished or disclosed by a credit union, electronic distribution or delivery satisfies the rule of law. Provides that a policy adopted by the board may delegate expulsion authority to senior management officials of the credit union. Provides that a member expelled by a senior management official may seek reinstatement by appealing the action within 30 days of expulsion to the board of directors, and that the board may affirm, disaffirm, or modify the action, and the board's decision is final. Provides that a credit union may invest in securities, obligations, or other instruments of or issued by entities properly registered with or licensed by the Department of Financial and Professional Regulation. Increases a credit union's aggregate loan amount and the total amount of funds not used in loans to members that may be invested in shares and stocks of Credit Union Service Organizations to 10% (instead of 3%) of the paid-in and unimpaired capital and surplus of the credit union. Modifies a credit union's investment limit in shares or stocks of Credit Union Service Organizations to not exceed 10% (instead of 3%) of the paid-in and unimpaired capital and surplus of the credit union or the amount authorized for federal credit unions. Makes other changes. Effective immediately.

LRB101 10992 HEP 56176 b





SB1813LRB101 10992 HEP 56176 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Credit Union Act is amended by
5changing Sections 15, 23, 44, 51, 57.1, 59, and 63 and by
6adding Section 10.2 as follows:
7    (205 ILCS 305/10.2 new)
8    Sec. 10.2. Electronic records.
9    (a) As used in this Section, "electronic" and "electronic
10record" have the meanings given to those terms in the
11Electronic Commerce Security Act.
12    (b) If a provision of this Act requires information to be
13written or delivered in writing, or provides for certain
14consequences if it is not, an electronic record or electronic
15delivery satisfies that rule of law.
16    (c) If a provision of this Act requires a policy, record,
17notice or other document or information to be mailed or
18otherwise furnished, posted, or disclosed by a credit union,
19electronic delivery or distribution satisfies that rule of law.
20Policies and notifications of general interest to or impact on
21the membership may be posted on a credit union's website or
22disclosed in membership newsletters or account statements, in
23addition to, or in lieu of, any other methods of notification



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1or distribution specified in this Act.
2    (205 ILCS 305/15)  (from Ch. 17, par. 4416)
3    Sec. 15. Membership defined.
4    (1) The membership of a credit union shall be limited to
5and consist of the subscribers to the articles of incorporation
6and such other persons within the common bond, as defined in
7this Act and as set forth in the credit union's articles of
8incorporation, as have been duly admitted members, have paid
9the required entrance fee or membership fee, or both, if any,
10have subscribed for one or more shares, and have paid the
11initial installment thereon, and have complied with such other
12requirements as the articles of incorporation or bylaws
13specify. Two or more persons within the common bond who have
14jointly subscribed for one or more shares under a joint account
15and have complied with all membership requirements may each be
16admitted to membership. The surviving spouse of a credit union
17member may, within 6 months of the member's death, become a
18member of the credit union by paying the required entrance fee
19or membership fee or both, if any, by subscribing for one or
20more shares and paying the initial installment thereon, and by
21complying with such other requirements as the articles of
22incorporation or bylaws specify.
23    (2) Any member may withdraw from a credit union at any time
24upon giving notice of withdrawal as required by the bylaws.
25    (3) Any member may be expelled by a 2/3 vote of the members



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1present at any regular or special meeting called to consider
2the matter, but only after an opportunity has been given to the
3member to be heard.
4    (4) A member who has caused a loss to the credit union,
5failed to maintain one or more shares at the credit union, or
6violated board policy applicable to members may be expelled by
7a majority vote of a quorum of directors if the board has
8adopted a policy providing for expulsion for any of the
9following acts committed by the member: under those
11        (i) causing a loss to the credit union;
12        (ii) failing to maintain one or more shares at the
13    credit union;
14        (iii) committing fraud or any similar misdeed against
15    the credit union;
16        (iv) engaging in inappropriate behavior involving
17    another person, such as physical or verbal abuse of another
18    member or an employee of the credit union, while
19    transacting business with the credit union; or
20        (v) otherwise violating board policy applicable to
21    members.
22    In maintaining and enforcing a policy based on loss, the
23board may consider, without limitation, a member's failure to
24pay amounts due under a loan, failure to provide collected
25funds to cover withdrawals or personal share drafts or credit
26union drafts where the member is a remitter, or failure to pay



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1fees or charges due the credit union.
2    The policy may delegate the expulsion authority to the
3senior management officials of the credit union. If a member is
4expelled by a senior management official of the credit union,
5the member may, within 30 days after the expulsion, seek
6reinstatement by appealing the action in writing to the board
7of directors of the credit union. The board may affirm,
8disaffirm, or modify the action, and the board's decision is
9final. As used in this subsection (4), "senior management
10official" includes the chief management officer of the credit
11union (including the person holding the title of President or
12Chief Executive Officer, or both, or Treasurer/Manager) and
13other management officers of the credit union (including the
14persons holding the title of Chief Operating Officer, Chief
15Financial Officer, Chief Administrative Officer, Chief
16Information Officer, Chief Security Officer, Executive Vice
17President, Senior Vice President, or Vice President).
18    If a policy is adopted by the board pursuant to this
19subsection (4), written notice of the policy shall be
20distributed not fewer than 30 days before the effective date of
21the policy by: (i) mailing it and the effective date of the
22policy shall be mailed to each member of the credit union at
23the member's current address appearing on the records of the
24credit union; (ii) electronically delivering it to all members
25by posting it on the credit union's website; or (iii)
26disclosing it to all members in membership newsletters or



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1accounts statements. The policy shall be mailed to members not
2fewer than 30 days prior to the effective date of the policy.
3In addition, new members shall be provided written notice of
4the policy prior to or upon applying for membership by using
5one of the distribution methods described in this subsection
7    (5) All or any part of the amount paid on shares of a
8withdrawing member or expelled member with any declared
9dividends or interest on the date of withdrawal or expulsion
10must, after deducting all amounts due from the member to the
11credit union, be paid to him. The credit union may require not
12more than 60 days' written notice of intention to withdraw
13shares, but a notice of withdrawal does not entitle the member
14to any preferred or prior claim in the event of liquidation.
15Withdrawing or expelled members have no further rights in the
16credit union, but are not, by withdrawal or expulsion, released
17from any obligation they owe to the credit union.
18    (6) A member who has caused a loss to the credit union or
19has violated board policy applicable to members may be denied
20any or all credit union services in accordance with board
21policy, however, members who are denied services shall be
22allowed to maintain a share account and to vote on all issues
23put to a vote of the membership.
24    (7) If a member fails to maintain one fully paid share, the
25credit union, at its option, may permit the member to
26re-subscribe and pay for one or more shares within 30 days



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1after the date the member failed to maintain one fully paid
2share, without affecting the member's status or rights as a
3member during that period. A member that fails to re-subscribe
4for at least one fully paid share within the 30-day period
5shall be automatically expelled from the credit union and
6treated as an expelled member under subsection (5) of this
7Section 15.
8(Source: P.A. 97-133, eff. 1-1-12; 97-855, eff. 7-27-12.)
9    (205 ILCS 305/23)  (from Ch. 17, par. 4424)
10    Sec. 23. Compensation of officials.
11    (1) Directors and committee members No director or
12committee member may receive reasonable compensation for their
13his service as such, the amount of which shall be set by the
14board of directors. "Compensation" as used in this subsection
15(1) refers to remuneration expense to the credit union for
16services provided by a director or committee member in his or
17her capacity as director or committee member. "Compensation" as
18used in this subsection (1) does not include
19    (2) The credit union may incur the expense of providing
20reasonable life, health, accident, and similar insurance
21protection benefits for directors and a director or committee
22members member.
23    (3) (2) Directors, committee members and employees, while
24on official business of the credit union, may be reimbursed for
25reasonable and necessary expenses. Alternatively, the credit



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1union may make direct payment to a third party for such
2business expenses. Reasonable and necessary expenses may
3include the payment of travel costs for the foregoing officials
4and one guest per official. All payment of costs shall be made
5in accordance with written policies and procedures established
6by the board of directors.
7    (4) (3) The board of directors may establish compensation
8for officers of the credit union.
9(Source: P.A. 97-133, eff. 1-1-12.)
10    (205 ILCS 305/44)  (from Ch. 17, par. 4445)
11    Sec. 44. Share accounts; garnishment; unclaimed property.
12    (1) A credit union may be subject to garnishment
13proceedings concerning the share accounts of its members.
14    (2) A credit union may be subject to the reporting and
15turnover provisions of the Revised Uniform Unclaimed Property
16Act concerning the share accounts of its members.
17Notwithstanding anything to the contrary in the Revised Uniform
18Unclaimed Property Act, a credit union shall retain the minimum
19share amount required to preserve a member's status as a member
20of the credit union.
21(Source: P.A. 97-133, eff. 1-1-12.)
22    (205 ILCS 305/51)  (from Ch. 17, par. 4452)
23    Sec. 51. Other loan programs.
24    (1) Subject to such rules and regulations as the Secretary



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1may promulgate, a credit union may participate in loans to
2credit union members jointly with other credit unions,
3corporations, or financial institutions. An originating credit
4union may originate loans only to its own members. A
5participating credit union that is not the originating lender
6may participate in loans made to its own members or to members
7of another participating credit union. "Originating lender"
8means the participating credit union with which the member
9contracts. A master participation agreement must be properly
10executed, and the agreement must include provisions for
11identifying, either through documents incorporated by
12reference or directly in the agreement, the participation loan
13or loans prior to their sale.
14    (2) Any credit union with assets of $500,000 or more may
15loan to its members under scholarship programs which are
16subject to a federal or state law providing 100% repayment
18    (3) A credit union may purchase the conditional sales
19contracts, notes and similar instruments which evidence an
20indebtedness of its members. In the management of its assets,
21liabilities, and liquidity, a credit union may purchase the
22conditional sales contracts, notes, and other similar
23instruments that evidence the consumer indebtedness of the
24members of another credit union. "Consumer indebtedness" means
25indebtedness incurred for personal, family, or household



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1    (4) With approval of the board of directors, a credit union
2may make loans, either on its own or jointly with other credit
3unions, corporations or financial institutions, to credit
4union organizations; provided, that the aggregate amount of all
5such loans outstanding shall not at any time exceed the greater
6of 10% 3% of the paid-in and unimpaired capital and surplus of
7the credit union or the amount authorized for federal credit
9(Source: P.A. 97-133, eff. 1-1-12.)
10    (205 ILCS 305/57.1)
11    Sec. 57.1. Services to other credit unions. A credit union
12may act as a representative of and enter into an agreement with
13credit unions or other organizations for the purposes of:
14        (1) sharing, utilizing, renting, leasing, purchasing,
15    selling, and joint ownership of fixed assets or engaging in
16    activities and services that relate to the daily operations
17    of credit unions; and
18        (2) providing correspondent services to other credit
19    unions or other organizations that the service provider
20    credit union is authorized to perform for its own members
21    or as part of its operations, including, but not limited
22    to, loan processing, loan servicing, member check cashing
23    services, disbursing share withdrawals and loan proceeds,
24    cashing and selling money orders, ACH and wire transfer
25    services, implementation and administrative support



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1    services related to the use of debit cards, payroll debit
2    cards, and other prepaid debit cards and credit cards, coin
3    and currency services, performing internal audits, and
4    automated teller machine deposit services.
5(Source: P.A. 99-78, eff. 7-20-15; 99-149, eff. 1-1-16;
6100-201, eff. 8-18-17.)
7    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
8    Sec. 59. Investment of funds.
9    (a) Funds not used in loans to members may be invested,
10pursuant to subsection (7) of Section 30 of this Act, and
11subject to Departmental rules and regulations:
12        (1) In securities, obligations or other instruments of
13    or issued by or fully guaranteed as to principal and
14    interest by the United States of America or any agency
15    thereof or in any trust or trusts established for investing
16    directly or collectively in the same;
17        (2) In obligations of any state of the United States,
18    the District of Columbia, the Commonwealth of Puerto Rico,
19    and the several territories organized by Congress, or any
20    political subdivision thereof; however, a credit union may
21    not invest more than 10% of its unimpaired capital and
22    surplus in the obligations of one issuer, exclusive of
23    general obligations of the issuer, and investments in
24    municipal securities must be limited to securities rated in
25    one of the 4 highest rating categories by a nationally



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1    recognized statistical rating organization;
2        (3) In certificates of deposit or passbook type
3    accounts issued by a state or national bank, mutual savings
4    bank or savings and loan association; provided that such
5    institutions have their accounts insured by the Federal
6    Deposit Insurance Corporation or the Federal Savings and
7    Loan Insurance Corporation; but provided, further, that a
8    credit union's investment in an account in any one
9    institution may exceed the insured limit on accounts;
10        (4) In shares, classes of shares or share certificates
11    of other credit unions, including, but not limited to
12    corporate credit unions; provided that such credit unions
13    have their members' accounts insured by the NCUA or other
14    approved insurers, and that if the members' accounts are so
15    insured, a credit union's investment may exceed the insured
16    limit on accounts;
17        (5) In shares of a cooperative society organized under
18    the laws of this State or the laws of the United States in
19    the total amount not exceeding 10% of the unimpaired
20    capital and surplus of the credit union; provided that such
21    investment shall first be approved by the Department;
22        (6) In obligations of the State of Israel, or
23    obligations fully guaranteed by the State of Israel as to
24    payment of principal and interest;
25        (7) In shares, stocks or obligations of other financial
26    institutions in the total amount not exceeding 5% of the



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1    unimpaired capital and surplus of the credit union;
2        (8) In federal funds and bankers' acceptances;
3        (9) In shares or stocks of Credit Union Service
4    Organizations in the total amount not exceeding the greater
5    of 10% 3% of the unimpaired capital and surplus of the
6    credit union or the amount authorized for federal credit
7    unions;
8        (10) In corporate bonds identified as investment grade
9    by at least one nationally recognized statistical rating
10    organization, provided that:
11            (i) the board of directors has established a
12        written policy that addresses corporate bond
13        investment procedures and how the credit union will
14        manage credit risk, interest rate risk, liquidity
15        risk, and concentration risk; and
16            (ii) the credit union has documented in its records
17        that a credit analysis of a particular investment and
18        the issuing entity was conducted by the credit union, a
19        third party on behalf of the credit union qualified by
20        education or experience to assess the risk
21        characteristics of corporate bonds, or a nationally
22        recognized statistical rating agency before purchasing
23        the investment and the analysis is updated at least
24        annually for as long as it holds the investment;
25        (11) To aid in the credit union's management of its
26    assets, liabilities, and liquidity in the purchase of an



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1    investment interest in a pool of loans, in whole or in part
2    and without regard to the membership of the borrowers, from
3    other depository institutions and financial type
4    institutions, including mortgage banks, finance companies,
5    insurance companies, and other loan sellers, subject to
6    such safety and soundness standards, limitations, and
7    qualifications as the Department may establish by rule or
8    guidance from time to time;
9        (12) To aid in the credit union's management of its
10    assets, liabilities, and liquidity by receiving funds from
11    another financial institution as evidenced by certificates
12    of deposit, share certificates, or other classes of shares
13    issued by the credit union to the financial institution;
14    and
15        (13) In the purchase and assumption of assets held by
16    other financial institutions, with approval of the
17    Secretary and subject to any safety and soundness
18    standards, limitations, and qualifications as the
19    Department may establish by rule or guidance from time to
20    time.
21        (14) In securities, obligations, or other instruments
22    of or issued by entities properly registered with or
23    licensed by the Department, including, without limitation,
24    entities properly registered or licensed under the
25    Residential Mortgage License Act of 1987, the Consumer
26    Installment Loan Act, and the Sales Finance Agency Act.



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1    (b) As used in this Section:
2    "Political subdivision" includes, but is not limited to,
3counties, townships, cities, villages, incorporated towns,
4school districts, educational service regions, special road
5districts, public water supply districts, fire protection
6districts, drainage districts, levee districts, sewer
7districts, housing authorities, park districts, and any
8agency, corporation, or instrumentality of a state or its
9political subdivisions, whether now or hereafter created and
10whether herein specifically mentioned or not.
11    "Financial institution" includes any bank, savings bank,
12savings and loan association, or credit union established under
13the laws of the United States, this State, or any other state.
14    (c) A credit union investing to fund an employee benefit
15plan obligation is not subject to the investment limitations of
16this Act and this Section and may purchase an investment that
17would otherwise be impermissible if the investment is directly
18related to the credit union's obligation under the employee
19benefit plan and the credit union holds the investment only for
20so long as it has an actual or potential obligation under the
21employee benefit plan.
22    (d) If a credit union acquires loans from another financial
23institution or financial-type institution pursuant to this
24Section, the credit union shall be authorized to provide loan
25servicing and collection services in connection with those



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1(Source: P.A. 100-361, eff. 8-25-17; 100-778, eff. 8-10-18.)
2    (205 ILCS 305/63)  (from Ch. 17, par. 4464)
3    Sec. 63. Merger and consolidation.
4    (1) Any two or more credit unions, regardless of whether or
5not they have the same common bond, may merge or consolidate
6into a single credit union. A merger or consolidation may be
7with a credit union organized under the laws of this State or
8of another state or of the United States and is subject to the
9approval of the Secretary. It must be made on such terms as
10have been agreed upon by a vote of a majority of the board of
11directors of each credit union, and approved by an affirmative
12vote of a majority of the members of the merging credit union
13being absorbed present at a meeting, either in person or by
14proxy, duly called for that purpose, except as hereinafter
15specified. Notice of the meeting stating the purpose must be
16sent by the Secretary of each merging credit union being
17absorbed to each member by mail at least 45 but no more than 90
187 days before the date of the meeting.
19    (2) One of the merging credit unions may continue after the
20merger or consolidation either as a surviving credit union
21retaining its identity or as a new credit union as has been
22agreed upon under the terms of the merger. At least 9 members
23of the new proposed credit union must apply to the Department
24for permission to organize the new credit union. The same
25procedure shall be followed as provided for the organization of



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1a new credit union.
2    (3) After approval by the members of the credit union which
3is to be absorbed by the merger or consolidation, the chairman
4or president and the secretary of each credit union shall
5execute a certificate of merger or consolidation, which shall
6set forth all of the following:
7        (a) The time and place of the meeting of each board of
8    directors at which the plan was agreed upon;
9        (b) The vote in favor of the adoption of the plan;
10        (c) A copy of each resolution or other action by which
11    the plan was agreed upon;
12        (d) The time and place of the meeting of the members of
13    the absorbed credit union at which the plan agreed upon was
14    approved; and,
15        (e) The vote by which the plan was approved by the
16    members of the absorbed credit union.
17    (4) Such certificate and a copy of the plan of merger or
18consolidation agreed upon shall be mailed to the Secretary for
19review. If the provisions of this Act have been complied with,
20the certificate shall be approved by him, and returned to the
21credit unions which are parties to the merger or consolidation
22within 30 days. When so approved by the Secretary the
23certificate shall constitute the Department's certificate of
24approval of the merger or consolidation.
25    (5) Upon issuance of the certificate of approval, each
26merging credit union which was absorbed shall cease operation.



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1Each party to the merger shall file the certificate of approval
2with the Recorder or County Clerk of the county in which the
3credit union has or had its principal office.
4    (6) Each credit union absorbed by the merger or
5consolidation shall return to the Secretary the original
6statement of incorporation, certificate of approval of
7incorporation, and the bylaws of the credit union. The
8surviving credit union shall continue its operation under its
9existing certificate of approval, articles of incorporation,
10and the bylaws or if a new credit union has been formed, under
11the new certificate of approval, articles of incorporation, and
13    (7) All rights of membership in and any obligation or
14liability of any member to any credit union which is party to a
15consolidation or merger are continued in the surviving or new
16credit union without reservation or diminution.
17    (8) A pending action or other judicial proceeding to which
18any of the consolidating or merging credit unions is a party
19does not abate by reason of the consolidation or merger.
20(Source: P.A. 97-133, eff. 1-1-12.)
21    Section 99. Effective date. This Act takes effect upon
22becoming law.