Full Text of HB5342 98th General Assembly
HB5342enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 3. The Illinois Banking Act is amended by changing | 5 | | Section 48 as follows:
| 6 | | (205 ILCS 5/48)
| 7 | | Sec. 48. Secretary's powers; duties. The Secretary shall | 8 | | have the
powers and authority, and is charged with the duties | 9 | | and responsibilities
designated in this Act, and a State bank | 10 | | shall not be subject to any
other visitorial power other than | 11 | | as authorized by this Act, except those
vested in the courts, | 12 | | or upon prior consultation with the Secretary, a
foreign bank | 13 | | regulator with an appropriate supervisory interest in the | 14 | | parent
or affiliate of a state bank. In the performance of the | 15 | | Secretary's
duties:
| 16 | | (1) The Commissioner shall call for statements from all | 17 | | State banks
as provided in Section 47 at least one time during | 18 | | each calendar quarter.
| 19 | | (2) (a) The Commissioner, as often as the Commissioner | 20 | | shall deem
necessary or
proper, and no less frequently than 18 | 21 | | months following the preceding
examination, shall appoint a | 22 | | suitable person or
persons to make an examination of the | 23 | | affairs of every State bank,
except that for every eligible |
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| 1 | | State bank, as defined by regulation, the
Commissioner in lieu | 2 | | of the examination may accept on an alternating basis the
| 3 | | examination made by the eligible State bank's appropriate | 4 | | federal banking
agency pursuant to Section 111 of the Federal | 5 | | Deposit Insurance Corporation
Improvement Act of 1991, | 6 | | provided the appropriate federal banking agency has
made such | 7 | | an examination. A person so appointed shall not be a | 8 | | stockholder or
officer or employee of
any bank which that | 9 | | person may be directed to examine, and shall have
powers to | 10 | | make a thorough examination into all the affairs of the bank | 11 | | and
in so doing to examine any of the officers or agents or | 12 | | employees thereof
on oath and shall make a full and detailed | 13 | | report of the condition of the
bank to the Commissioner. In | 14 | | making the examination the examiners shall
include an | 15 | | examination of the affairs of all the affiliates of the bank, | 16 | | as
defined in subsection (b) of Section 35.2 of this Act, or | 17 | | subsidiaries of the
bank as shall be
necessary to disclose | 18 | | fully the conditions of the subsidiaries or
affiliates, the | 19 | | relations
between the bank and the subsidiaries or affiliates | 20 | | and the effect of those
relations upon
the affairs of the bank, | 21 | | and in connection therewith shall have power to
examine any of | 22 | | the officers, directors, agents, or employees of the
| 23 | | subsidiaries or affiliates
on oath. After May 31, 1997, the | 24 | | Commissioner may enter into cooperative
agreements
with state | 25 | | regulatory authorities of other states to provide for | 26 | | examination of
State bank branches in those states, and the |
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| 1 | | Commissioner may accept reports
of examinations of State bank | 2 | | branches from those state regulatory authorities.
These | 3 | | cooperative agreements may set forth the manner in which the | 4 | | other state
regulatory authorities may be compensated for | 5 | | examinations prepared for and
submitted to the Commissioner.
| 6 | | (b) After May 31, 1997, the Commissioner is authorized to | 7 | | examine, as often
as the Commissioner shall deem necessary or | 8 | | proper, branches of out-of-state
banks. The Commissioner may | 9 | | establish and may assess fees to be paid to the
Commissioner | 10 | | for examinations under this subsection (b). The fees shall be
| 11 | | borne by the out-of-state bank, unless the fees are borne by | 12 | | the state
regulatory authority that chartered the out-of-state | 13 | | bank, as determined by a
cooperative agreement between the | 14 | | Commissioner and the state regulatory
authority that chartered | 15 | | the out-of-state bank.
| 16 | | (2.1) Pursuant to paragraph (a) of subsection (6) of this | 17 | | Section, the Secretary shall adopt rules that ensure | 18 | | consistency and due process in the examination process. The | 19 | | Secretary may also establish guidelines that (i) define the | 20 | | scope of the examination process and (ii) clarify examination | 21 | | items to be resolved. The rules, formal guidance, interpretive | 22 | | letters, or opinions furnished to State banks by the Secretary | 23 | | may be relied upon by the State banks. | 24 | | (2.5) Whenever any State bank, any subsidiary or affiliate | 25 | | of a State
bank, or after May 31, 1997, any branch of an | 26 | | out-of-state bank causes to
be performed, by contract or |
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| 1 | | otherwise, any bank services
for itself, whether on or off its | 2 | | premises:
| 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 | 16 | | services" means
services such as sorting and posting of checks | 17 | | and deposits, computation
and posting of interest and other | 18 | | credits and charges, preparation and
mailing of checks, | 19 | | statements, notices, and similar items, or any other
clerical, | 20 | | bookkeeping, accounting, statistical, or similar functions
| 21 | | performed for a State bank, including but not limited to | 22 | | electronic data
processing related to those bank services.
| 23 | | (3) The expense of administering this Act, including the | 24 | | expense of
the examinations of State banks as provided in this | 25 | | Act, shall to the extent
of the amounts resulting from the fees | 26 | | provided for in paragraphs (a),
(a-2), and (b) of this |
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| 1 | | subsection (3) be assessed against and borne by the
State | 2 | | banks:
| 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 | 26 | | limit the
obligation relative to examinations and reports of |
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| 1 | | any State bank, deposits
in which are to any extent insured by | 2 | | the United States or any agency
thereof, nor to limit in any | 3 | | way the powers of the Commissioner with
reference to | 4 | | examinations and reports of that bank.
| 5 | | (5) The nature and condition of the assets in or investment | 6 | | of any
bonus, pension, or profit sharing plan for officers or | 7 | | employees of every
State bank or, after May 31, 1997, branch of | 8 | | an out-of-state bank shall be
deemed to be included in the | 9 | | affairs of that State
bank or branch of an out-of-state bank | 10 | | subject to examination by the
Commissioner under the
provisions | 11 | | of subsection (2) of this Section, and if the Commissioner
| 12 | | shall find from an examination that the condition of or | 13 | | operation
of the investments or assets of the plan is unlawful, | 14 | | fraudulent, or
unsafe, or that any trustee has abused his | 15 | | trust, the Commissioner
shall, if the situation so found by the | 16 | | Commissioner shall not be
corrected to his satisfaction within | 17 | | 60 days after the Commissioner has
given notice to the board of | 18 | | directors of the State bank or out-of-state
bank of his
| 19 | | findings, report the facts to the Attorney General who shall | 20 | | thereupon
institute proceedings against the State bank or | 21 | | out-of-state bank, the
board of directors
thereof, or the | 22 | | trustees 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 | 8 | | director,
officer, employee, or agent of a State bank
or any | 9 | | subsidiary or bank holding company of the bank
or, after May | 10 | | 31, 1997, of any
branch of an out-of-state bank
or any | 11 | | subsidiary or bank holding company of the bank
shall have | 12 | | violated any law,
rule, or order relating to that bank
or any | 13 | | subsidiary or bank holding company of the bank, shall have
| 14 | | obstructed or impeded any examination or investigation by the | 15 | | Secretary, shall have engaged in an unsafe or
unsound practice | 16 | | in conducting the business of that bank
or any subsidiary or | 17 | | bank holding company of the bank,
or shall have
violated any | 18 | | law or engaged or participated in any unsafe or unsound | 19 | | practice
in connection with any financial institution or other | 20 | | business entity such that
the character and fitness of the | 21 | | director, officer, employee, or agent does not
assure | 22 | | reasonable promise of safe and sound operation of the State | 23 | | bank, the
Secretary
may issue an order of removal.
If, in the | 24 | | opinion of the Secretary, any former director, officer,
| 25 | | employee,
or agent of a State bank
or any subsidiary or bank | 26 | | holding company of the bank, prior to the
termination of his or |
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| 1 | | her service with
that bank
or any subsidiary or bank holding | 2 | | company of the bank, violated any law,
rule, or order relating | 3 | | to that
State bank
or any subsidiary or bank holding company of | 4 | | the bank, obstructed or impeded
any examination or | 5 | | investigation by the Secretary, engaged in an unsafe or unsound | 6 | | practice in conducting the
business of that bank
or any | 7 | | subsidiary or bank holding company of the bank,
or violated any | 8 | | law or engaged or participated in any
unsafe or unsound | 9 | | practice in connection with any financial institution or
other | 10 | | business entity such that the character and fitness of the | 11 | | director,
officer, employee, or agent would not have assured | 12 | | reasonable promise of safe
and sound operation of the State | 13 | | bank, the Secretary may issue an order
prohibiting that person | 14 | | from
further
service with a bank
or any subsidiary or bank | 15 | | holding company of the bank
as a director, officer, employee, | 16 | | or agent. An order
issued pursuant to this subsection shall be | 17 | | served upon the
director,
officer, employee, or agent. A copy | 18 | | of the order shall be sent to each
director of the bank | 19 | | affected by registered mail. A copy of
the order shall also be | 20 | | served upon the bank of which he is a director,
officer, | 21 | | employee, or agent, whereupon he shall cease to be a director,
| 22 | | officer, employee, or agent of that bank. The Secretary may
| 23 | | institute a civil action against the director, officer, or | 24 | | agent of the
State bank or, after May 31, 1997, of the branch | 25 | | of the out-of-state bank
against whom any order provided for by | 26 | | this subsection (7) of
this Section 48 has been issued, and |
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| 1 | | against the State bank or, after May 31,
1997, out-of-state | 2 | | bank, to enforce
compliance with or to enjoin any violation of | 3 | | the terms of the order.
Any person who has been the subject of | 4 | | an order of removal
or
an order of prohibition issued by the | 5 | | Secretary under
this subsection or Section 5-6 of the Corporate | 6 | | Fiduciary Act may not
thereafter serve as director, officer, | 7 | | employee, or agent of any State bank
or of any branch of any | 8 | | out-of-state bank,
or of any corporate fiduciary, as defined in | 9 | | Section 1-5.05 of the
Corporate
Fiduciary Act, or of any other | 10 | | entity that is subject to licensure or
regulation by the | 11 | | Division of Banking unless
the Secretary has granted prior | 12 | | approval in writing.
| 13 | | For purposes of this paragraph (7), "bank holding company" | 14 | | has the
meaning prescribed in Section 2 of the Illinois Bank | 15 | | Holding 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 | 18 | | of this Act, any rule
promulgated in accordance with this Act, | 19 | | any order of the Commissioner, or
any other action which in the | 20 | | Commissioner's discretion is an unsafe or
unsound banking | 21 | | practice.
| 22 | | (9) The Commissioner may impose civil penalties of up to | 23 | | $100
against any person for the first failure to comply with | 24 | | reporting
requirements set forth in the report of examination | 25 | | of the bank and up to
$200 for the second and subsequent | 26 | | failures to comply with those reporting
requirements.
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| 1 | | (10) All final administrative decisions of the | 2 | | Commissioner hereunder
shall be subject to judicial review | 3 | | pursuant to the provisions of the
Administrative Review Law. | 4 | | For matters involving administrative review,
venue shall be in | 5 | | either Sangamon County or Cook County.
| 6 | | (11) The endowment fund for the Illinois Bank Examiners' | 7 | | Education
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 | 9 | | Revenue Fund on behalf of the Bank and Trust Company Fund if | 10 | | the Director of Banking certifies to the Governor that there is | 11 | | an economic emergency affecting banking that requires a | 12 | | borrowing to provide additional funds to the Bank and Trust | 13 | | Company Fund. The borrowed funds shall be paid back within 3 | 14 | | years and shall not exceed the total funding appropriated to | 15 | | the Agency in the previous year. | 16 | | (Source: P.A. 96-1163, eff. 1-1-11; 96-1365, eff. 7-28-10; | 17 | | 97-333, eff. 8-12-11.)
| 18 | | Section 4. The Savings Bank Act is amended by changing | 19 | | Section 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
| 23 | | deemed necessary or expedient, the Secretary shall examine the
| 24 | | books, records, operations, and affairs of each savings bank
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| 1 | | operating under this Act. In the course of the examination, the | 2 | | Secretary may
also examine in the same manner all entities,
| 3 | | companies, and individuals which or whom the Secretary | 4 | | determines
may have a relationship with the savings bank or any | 5 | | subsidiary or
entity affiliated with it, if the relationship | 6 | | may adversely affect
the affairs, activities, and safety and | 7 | | soundness of the savings
bank, including: (i) companies | 8 | | controlled by the savings bank;
(ii) entities, including | 9 | | companies controlled by the company,
individual, or | 10 | | individuals that control the savings bank;
and (iii) the | 11 | | company or other entity which controls or owns the
savings | 12 | | bank. Notwithstanding any other provision of this Act, every | 13 | | savings bank, as defined by rule, or, if not defined, to the | 14 | | same extent as would be permitted in the case of a State bank, | 15 | | the Secretary, in lieu of the examination, may accept on an | 16 | | alternating basis the examination made by the eligible savings | 17 | | bank's appropriate federal banking agency pursuant to Section | 18 | | 111 of the Federal Deposit Insurance Corporation Improvement | 19 | | Act of 1991, provided the appropriate federal banking agency | 20 | | has 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 | 7 | | and administer this Section.
| 8 | | (d) If a savings bank, its holding company, or any of its
| 9 | | corporate subsidiaries has not been audited at least once in | 10 | | the
12 months prior to the Secretary's examination, the | 11 | | Secretary may cause an audit of the savings bank's books and | 12 | | records to be
made by an independent licensed public | 13 | | accountant. The cost of the audit
shall be paid for by the | 14 | | entity being audited.
| 15 | | (e) The Secretary or his or her examiners or other
formally | 16 | | designated agents are authorized to administer oaths and
to | 17 | | examine and to take and preserve testimony under oath as to
| 18 | | anything in the affairs or ownership of any savings bank or
| 19 | | institution or affiliate thereof.
| 20 | | (f) Pursuant to subsection (c) of this Section, the | 21 | | Secretary shall adopt rules that ensure consistency and due | 22 | | process in the examination process. The Secretary may also | 23 | | establish guidelines that (i) define the scope of the | 24 | | examination process and (ii) clarify examination items to be | 25 | | resolved. The rules, formal guidance, interpretive letters, or | 26 | | opinions furnished to savings banks by the Secretary may be |
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| 1 | | relied 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 | 4 | | changing Sections 1.1, 9, 30, 34, 39, and 46 and by adding | 5 | | Section 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, | 9 | | non-profit association, incorporated under this Act,
under the | 10 | | laws of the United States of America or under the laws
of | 11 | | another state, for the purposes of encouraging thrift among
its | 12 | | members, creating a source of credit at a reasonable rate of
| 13 | | interest, and providing an opportunity for its members to use
| 14 | | and control their own money in order to improve their economic | 15 | | and
social conditions. The membership of a credit union shall | 16 | | consist
of a group or groups each having a common
bond as set | 17 | | forth in this Act.
| 18 | | Common Bond - The term "common bond" refers to groups of | 19 | | people
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 | 12 | | form of shares
issued by a credit union and established by a | 13 | | member in accordance with
standards specified by a credit | 14 | | union, including but not limited to common
shares, share draft | 15 | | accounts, classes of shares, share certificates,
special | 16 | | purpose share accounts, shares issued in trust, custodial | 17 | | accounts,
and individual retirement accounts or other plans | 18 | | established pursuant to
Section 401(d) or (f) or Section 408(a) | 19 | | of the Internal Revenue Code, as now
or hereafter amended, or | 20 | | similar provisions of any tax laws of the United
States that | 21 | | may hereafter exist.
| 22 | | Credit Union Organization - The term "credit union | 23 | | organization" means
any organization established to serve the | 24 | | needs of credit unions, the business
of which relates to the | 25 | | daily operations of credit unions.
| 26 | | Department - The term "Department" means the Illinois |
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| 1 | | Department of Financial and Professional Regulation.
| 2 | | Secretary - The term "Secretary" means the Secretary
of | 3 | | Financial and Professional Regulation or a person authorized by | 4 | | the Secretary or this Act to act in the Secretary's stead.
| 5 | | Division of Financial Institutions - The term "Division of | 6 | | Financial Institutions" means the Division of Financial | 7 | | Institutions of the Department of Financial and Professional | 8 | | Regulation. | 9 | | Director - The term "Director of Financial Institutions" | 10 | | means the Director of the Division of Financial Institutions of | 11 | | the Department of Financial and Professional Regulation. | 12 | | Office - The term "office" means the Division of Financial | 13 | | Institutions of the Department of Financial and Professional | 14 | | Regulation. | 15 | | NCUA - The term "NCUA" means the National Credit Union | 16 | | Administration, an
agency of the United States Government | 17 | | charged with the supervision of
credit unions chartered under | 18 | | the laws of the United States of America.
| 19 | | Central Credit Union - The term "central credit union" | 20 | | means a credit union
incorporated primarily to receive shares | 21 | | from and make loans to credit unions
and directors, officers, | 22 | | committee members and employees of credit unions.
A central | 23 | | credit union may also accept as members persons who were | 24 | | members
of credit unions which were liquidated and persons from | 25 | | occupational groups
not otherwise served by another credit | 26 | | union.
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| 1 | | Corporate Credit Union - The term "corporate credit union" | 2 | | means a credit
union which is a cooperative, non-profit | 3 | | association, the membership of
which is limited primarily to | 4 | | other credit unions.
| 5 | | Insolvent - "Insolvent" means the condition that results | 6 | | when
the total of all liabilities and shares exceeds net assets | 7 | | of the credit union.
| 8 | | Danger of insolvency - For purposes of Section 61, a credit | 9 | | union is in
"danger of insolvency" if its net worth to
asset | 10 | | ratio falls below 2%. In calculating the danger of insolvency | 11 | | ratio,
secondary
capital shall be excluded. For purposes of | 12 | | Section 61, a credit union is also
in "danger of
insolvency" if | 13 | | the Department is unable to
ascertain, upon examination, the | 14 | | true financial
condition of the credit union.
| 15 | | Net Worth - "Net worth" means the retained earnings balance | 16 | | of the credit
union, as determined under generally accepted | 17 | | accounting principles, and forms
of secondary capital approved | 18 | | by the Secretary and the Director pursuant to rulemaking.
| 19 | | Charitable Donation Account – The term "charitable | 20 | | donation account" means an account owned by a credit union that | 21 | | is held in a segregated custodial account or special purpose | 22 | | entity and specifically identified as a charitable donation | 23 | | account whereby, no less frequently than every 5 years and upon | 24 | | termination of the account, at least 51% of the total return on | 25 | | assets in the account is distributed to one or more charitable | 26 | | organizations 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 | 5 | | supplied by the Department, in accordance with a
schedule | 6 | | published by the Department. A recapitulation of the annual | 7 | | reports
shall be compiled and published annually by the | 8 | | Department, for the use
of the General Assembly, credit unions, | 9 | | various educational institutions
and other interested parties. | 10 | | A credit union which fails to file any report
when due shall | 11 | | pay to the Department a late filing fee for each
day the report | 12 | | is overdue as prescribed by rule. The Secretary may extend
the | 13 | | time for filing a
report.
| 14 | | (2) The Secretary may require special examinations of and | 15 | | special
financial reports from a credit union or a credit
union | 16 | | organization in which a credit union loans, invests, or | 17 | | delegates
substantially all
managerial duties and | 18 | | responsibilities when he determines that such
examinations
and | 19 | | reports are necessary to enable the Department
to determine the | 20 | | safety of a credit union's operation or its solvency.
The cost | 21 | | to the Department of the aforesaid special examinations shall | 22 | | be
borne by the credit union being examined as prescribed by | 23 | | rule.
| 24 | | (3) All credit unions incorporated under this Act shall be | 25 | | examined at
least biennially by the Department or, at the |
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| 1 | | discretion of
the Secretary,
by a public accountant registered | 2 | | by the Department of Financial and Professional
Regulation. The | 3 | | costs of an examination shall be paid by the
credit union. The | 4 | | scope of all examinations by a public accountant shall
be at | 5 | | least equal to the examinations made by the Department. The | 6 | | examiners
shall have full access to, and may compel the | 7 | | production of, all the books,
papers, securities and accounts | 8 | | of any credit union. A special examination
shall be made by the | 9 | | Department or by a public accountant approved by the
Department | 10 | | upon written request of 5 or more members, who guarantee the
| 11 | | expense of the same. Any credit union refusing to submit to an | 12 | | examination
when ordered by the Department shall be reported to | 13 | | the Attorney General,
who shall institute proceedings to have | 14 | | its charter revoked. If the Secretary
determines that the | 15 | | examination of a credit
union is to be
conducted by a public | 16 | | accountant registered by the Department of Financial and
| 17 | | Professional Regulation and the examination is
done in | 18 | | conjunction
with the credit union's external independent audit | 19 | | of financial
statements, the requirements of this Section and | 20 | | subsection (3) of Section
34 shall be deemed met.
| 21 | | (3.5) Pursuant to Section 8, the Secretary shall adopt | 22 | | rules that ensure consistency and due process in the | 23 | | examination process. The Secretary may also establish | 24 | | guidelines that (i) define the scope of the examination process | 25 | | and (ii) clarify examination items to be resolved. The rules, | 26 | | formal guidance, interpretative letters, or opinions furnished |
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| 1 | | to credit unions by the Secretary may be relied upon by the | 2 | | credit unions. | 3 | | (4) A copy of the completed report of examination and a | 4 | | review comment
letter, if any, citing exceptions revealed | 5 | | during the examination, shall
be submitted to the credit union | 6 | | by the Department. A detailed report stating
the corrective | 7 | | actions taken by the board of directors on each exception
set | 8 | | forth in the review comment letter shall be filed with the | 9 | | Department
within 40 days after the date of the review comment | 10 | | letter, or as otherwise
directed by the Department. Any credit | 11 | | union through its officers, directors,
committee members or | 12 | | employees, which willfully provides fraudulent or
misleading | 13 | | information regarding the corrective actions taken on | 14 | | exceptions
appearing in a review comment letter may have its | 15 | | operations restricted to
the collection of principal and | 16 | | interest on loans outstanding and the
payment of normal | 17 | | expenses and salaries until all exceptions are corrected
and | 18 | | accepted 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 | 10 | | management official, according to guidelines established by | 11 | | the board that may include the authority to further delegate | 12 | | one 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 | 19 | | basic finance and accounting practices consistent with the size | 20 | | and complexity of the credit union operation they serve, | 21 | | including the ability to read and understand the credit union's | 22 | | balance sheet and income and expense statements and the ability | 23 | | to ask, when appropriate, substantive questions of management | 24 | | and auditors. For the purposes of this subsection (c), | 25 | | substantive questions include queries concerning financial | 26 | | services and products offered to the membership; how those |
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| 1 | | activities generate revenue for the credit union; the credit, | 2 | | liquidity, interest rate, compliance, strategic, transaction, | 3 | | and reputation risks associated with those activities; and the | 4 | | internal control structures maintained by the credit union that | 5 | | limit and manage those risks. | 6 | | A director who was elected or appointed on or after January | 7 | | 1, 2015 and who comes to the position without the requisite | 8 | | financial skills shall have until 6 months after the date of | 9 | | election or appointment to acquire the enumerated skills. | 10 | | An incumbent director who was elected or appointed before | 11 | | January 1, 2015 and does not possess the requisite financial | 12 | | skills shall have until July 1, 2015 to acquire the enumerated | 13 | | skills. | 14 | | An incumbent director or a director who is elected or | 15 | | appointed on or after January 1, 2015 who already understands | 16 | | his or her credit union's financial statements shall not be | 17 | | required to do anything further to satisfy the financial skills | 18 | | requirement set forth in subsection (c). | 19 | | It is the intent of the Department that all credit union | 20 | | directors possess a basic understanding of their credit union's | 21 | | financial condition. It is not the intent of the Department to | 22 | | subject credit union directors to examiner scrutiny of their | 23 | | financial skills. Rather, the Department shall evaluate | 24 | | whether the credit union has in place a policy to make | 25 | | available to their directors appropriate training to enhance | 26 | | their financial knowledge of the credit union. Directors may |
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| 1 | | receive the training through internal credit union training, | 2 | | external training offered by the credit union's retained | 3 | | auditors, trade associations, vendors, regulatory agencies, or | 4 | | any other sources or on-the-job experience, or a combination of | 5 | | those activities. The training may be received through any | 6 | | medium, including, but not limited to, conferences, workshops, | 7 | | audit closing meetings, seminars, teleconferences, webinars, | 8 | | and 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 | 13 | | made an annual internal audit of the books and
affairs of the | 14 | | credit union to determine that the credit union's accounting
| 15 | | records and reports are prepared promptly and accurately | 16 | | reflect operations
and results, that internal controls are | 17 | | established and effectively
maintained to safeguard the assets | 18 | | of the credit union, and that the
policies, procedures and | 19 | | practices established by the board of directors
and management | 20 | | of the credit union are being properly administered. The | 21 | | supervisory committee
shall submit a report of that audit to | 22 | | the board of directors and a summary of that report to the | 23 | | members at the next annual
meeting of the credit union. It | 24 | | shall make or cause to be made such
supplementary audits as it | 25 | | deems necessary or as are required by the Secretary
or by the |
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| 1 | | board of directors, and submit reports of these
supplementary | 2 | | audits to the Secretary or board of directors as applicable.
If | 3 | | the supervisory committee has not engaged a public accountant | 4 | | registered
by the Department of Financial and Professional | 5 | | Regulation to make the internal audit,
the supervisory | 6 | | committee or other officials of the credit union shall not
| 7 | | indicate or in any manner imply that such audit has been | 8 | | performed by a
public accountant or that the audit represents | 9 | | the independent opinion of a
public accountant. The supervisory | 10 | | committee must retain its tapes and working papers
of each | 11 | | internal audit for inspection by the Department. The report of | 12 | | this
audit must be made on a form approved by the Secretary. A | 13 | | copy of the report
must be promptly mailed to the Secretary.
| 14 | | (2) The supervisory committee shall make or cause to be | 15 | | made at least
once each year a reasonable percentage | 16 | | verification of members' share and
loan accounts, consistent | 17 | | with rules promulgated by the Secretary.
| 18 | | (3) The supervisory committee of a credit union with assets | 19 | | of
$5,000,000 or more shall engage a public accountant | 20 | | registered by the
Department of Financial and Professional | 21 | | Regulation to perform an annual external
independent audit of | 22 | | the credit union's financial statements in accordance
with | 23 | | generally accepted auditing standards. The supervisory | 24 | | committee of a
credit union with assets of $3,000,000 or more, | 25 | | but less than $5,000,000,
shall engage a public accountant | 26 | | registered by the Department of Financial and
Professional |
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| 1 | | Regulation to perform an external independent audit of the
| 2 | | credit union's financial statements in accordance with | 3 | | generally accepted
auditing standards at least once every 3 | 4 | | years. A copy of an external
independent audit shall be | 5 | | completed and mailed to the Secretary no later than 90 days | 6 | | after December 31 of each year; provided that a credit union or | 7 | | group of credit unions may obtain an extension of the due date | 8 | | upon application to and receipt of written approval from the | 9 | | Secretary. If the
annual internal audit of such a credit union | 10 | | is conducted by a public
accountant registered by the | 11 | | Department of Financial and Professional Regulation and the
| 12 | | annual internal audit is done in conjunction with the credit | 13 | | union'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 | 16 | | for loan losses account, a credit union may determine its | 17 | | historical loss rate using a defined period of time of less | 18 | | than 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
| 13 | | shall constitute a quorum.
| 14 | | (6) On an annual basis commencing January 1, 2015, the | 15 | | members of the supervisory committee shall receive training | 16 | | related to their statutory duties. Supervisory committee | 17 | | members may receive the training through internal credit union | 18 | | training, external training offered by the credit union's | 19 | | retained auditors, trade associations, vendors, regulatory | 20 | | agencies, or any other sources or on-the-job experience, or a | 21 | | combination of those activities. The training may be received | 22 | | through any medium, including, but not limited to, conferences, | 23 | | workshops, audit closing meetings, seminars, teleconferences, | 24 | | webinars, and other Internet-based delivery channels. | 25 | | (Source: P.A. 96-141, eff. 8-7-09; 96-963, eff. 7-2-10; 97-133, | 26 | | eff. 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 | 3 | | donation accounts . | 4 | | (1) If provided for in and consistent
with the bylaws, | 5 | | Christmas clubs, vacation clubs and other special purpose
share | 6 | | accounts may be established and offered under conditions and | 7 | | restrictions
established by the board of directors.
| 8 | | (2) Pursuant to a policy adopted by the board of directors, | 9 | | which may be amended from time to time, a credit union may | 10 | | establish one or more charitable donation accounts. The | 11 | | investments and purchases to fund a charitable donation account | 12 | | are not subject to the investment limitations of this Act, | 13 | | provided the charitable donation account is structured in | 14 | | accordance with this Act. At their time of purchase, the book | 15 | | value of the investments in all charitable donation accounts, | 16 | | in the aggregate, shall not exceed 5% of the credit union's net | 17 | | worth. | 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 | 5 | | purpose and upon such security and terms, including
rates of | 6 | | interest, as the credit committee, credit manager, or loan | 7 | | officer
approves.
Notwithstanding the provisions of any other | 8 | | law in connection with extensions
of credit, a credit union may | 9 | | elect to
contract for and receive interest and fees and other | 10 | | charges for extensions of
credit subject only to the provisions | 11 | | of this Act and rules promulgated under
this Act, except that | 12 | | extensions of credit secured by residential real estate
shall | 13 | | be subject to the laws applicable thereto.
The rates of | 14 | | interest to be charged on loans to members shall be
set by the | 15 | | board of directors of each individual credit union in | 16 | | accordance with Section 30 of this Act and such
rates may be | 17 | | less than, but may not exceed, the maximum rate set forth in
| 18 | | this Section. A borrower may repay his loan prior to maturity, | 19 | | in whole or
in part, without penalty. The credit contract may | 20 | | provide for the payment
by the member and receipt by the credit | 21 | | union of all costs and
disbursements, including reasonable | 22 | | attorney's fees and collection agency
charges, incurred by the | 23 | | credit union to collect or enforce the debt in the
event of a | 24 | | delinquency by the member, or in the event of a breach of any
| 25 | | obligation of the member under the credit contract. A |
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| 1 | | contingency or
hourly arrangement established under an | 2 | | agreement entered into by a credit
union with an attorney or | 3 | | collection agency to collect a loan of a member
in default | 4 | | shall be presumed prima facie reasonable.
| 5 | | (2) Credit unions may make loans based upon the security of | 6 | | any
interest or equity in real estate, subject to rules and | 7 | | regulations
promulgated by the Secretary. In any contract or | 8 | | loan which
is secured by a mortgage, deed of
trust, or | 9 | | conveyance in the nature of a mortgage, on residential real
| 10 | | estate, the interest which is computed, calculated, charged, or | 11 | | collected
pursuant to such contract or loan, or pursuant to any | 12 | | regulation or rule
promulgated pursuant to this Act, may not be | 13 | | computed, calculated, charged
or collected for any period of | 14 | | time occurring after the date on which the
total indebtedness, | 15 | | with the exception of late payment penalties, is paid
in full.
| 16 | | For purposes of this subsection (2) of this Section 46, a | 17 | | prepayment
shall mean the payment of the total indebtedness, | 18 | | with the exception of
late payment penalties if incurred or | 19 | | charged, on any date before the date
specified in the contract | 20 | | or loan agreement on which the total indebtedness
shall be paid | 21 | | in full, or before the date on which all payments, if timely
| 22 | | made, shall have been made. In the event of a prepayment of the
| 23 | | indebtedness which is made on a date
after the date on which | 24 | | interest on the indebtedness was last computed,
calculated, | 25 | | charged, or collected but before the next date on which | 26 | | interest
on the indebtedness was to be calculated, computed, |
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| 1 | | charged, or collected,
the lender may calculate, charge and | 2 | | collect interest on the indebtedness
for the period which | 3 | | elapsed between the date on which the prepayment is
made and | 4 | | the date on which interest on the indebtedness was last | 5 | | computed,
calculated, charged or collected at a rate equal to | 6 | | 1/360 of the annual
rate for each day which so elapsed, which | 7 | | rate shall be applied to the
indebtedness outstanding as of the | 8 | | date of prepayment. The lender shall
refund to the borrower any | 9 | | interest charged or collected which exceeds that
which the | 10 | | lender may charge or collect pursuant to the preceding | 11 | | sentence.
The provisions of this amendatory Act of 1985 shall | 12 | | apply only to contracts
or loans entered into on or after the | 13 | | effective date of this amendatory
Act.
| 14 | | (3) Notwithstanding any other provision of this Act, a | 15 | | credit union
authorized under this Act to make loans secured by | 16 | | an interest or equity in
real estate may engage in making | 17 | | "reverse mortgage" loans to persons for
the purpose of making | 18 | | home improvements or repairs, paying insurance
premiums or | 19 | | paying real estate taxes on the homestead properties
of such | 20 | | persons. If made, such loans shall be made on such terms and
| 21 | | conditions as the credit union shall determine and as shall be | 22 | | consistent
with the provisions of this Section and such rules | 23 | | and regulations as the Secretary
shall promulgate hereunder. | 24 | | For purposes of this Section, a
"reverse mortgage" loan shall | 25 | | be a loan extended on the basis of existing
equity in homestead | 26 | | property and secured by a mortgage on such property.
Such loans |
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| 1 | | shall be repaid upon the sale of the property or upon the death
| 2 | | of the owner or, if the property is in joint tenancy, upon the | 3 | | death of the
last surviving joint tenant who had such an | 4 | | interest in the property at the
time the loan was initiated, | 5 | | provided, however, that the credit union and
its member may by | 6 | | mutual agreement, establish other repayment terms. A
credit | 7 | | union, in making a "reverse mortgage" loan, may add deferred
| 8 | | interest to principal or otherwise provide for the charging of | 9 | | interest or
premiums on such deferred interest. "Homestead" | 10 | | property, for purposes of
this Section, means the domicile and | 11 | | contiguous real estate owned and
occupied by the mortgagor.
| 12 | | (4) Notwithstanding any other provisions of this Act, a | 13 | | credit union
authorized under this Act to make loans secured by | 14 | | an interest or equity
in real property may engage in making | 15 | | revolving credit loans secured by
mortgages or deeds of trust | 16 | | on such real property or by security
assignments of beneficial | 17 | | interests in land trusts.
| 18 | | For purposes of this Section, "revolving credit" has the | 19 | | meaning defined
in Section 4.1 of the Interest Act.
| 20 | | Any mortgage or deed of trust given to secure a revolving | 21 | | credit loan may,
and when so expressed therein shall, secure | 22 | | not only the existing indebtedness
but also such future | 23 | | advances, whether such advances are obligatory or to
be made at | 24 | | the option of the lender, or otherwise, as are made within | 25 | | twenty
years from the date thereof, to the same extent as if | 26 | | such future advances
were made on the date of the execution of |
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| 1 | | such mortgage or deed of trust,
although there may be no | 2 | | advance made at the time of execution of such mortgage
or other | 3 | | instrument, and although there may be no indebtedness | 4 | | outstanding
at the time any advance is made. The lien of such | 5 | | mortgage or deed of trust,
as to third persons
without actual | 6 | | notice thereof, shall be valid as to all such indebtedness
and | 7 | | future advances form the time said mortgage or deed of trust is | 8 | | filed
for record in the office of the recorder of deeds or the | 9 | | registrar of titles
of the county where the real property | 10 | | described therein is located. The
total amount of indebtedness | 11 | | that may be so secured may increase or decrease
from time to | 12 | | time, but the total unpaid balance so secured at any one time
| 13 | | shall not exceed a maximum principal amount which must be | 14 | | specified in such
mortgage or deed of trust, plus interest | 15 | | thereon, and any disbursements
made for the payment of taxes, | 16 | | special assessments, or insurance on said
real property, with | 17 | | interest on such disbursements.
| 18 | | Any such mortgage or deed of trust shall be valid and have | 19 | | priority over
all subsequent liens and encumbrances, including | 20 | | statutory liens, except
taxes and assessments levied on said | 21 | | real property.
| 22 | | (5) Compliance with federal or Illinois preemptive laws or | 23 | | regulations
governing loans made by a credit union chartered | 24 | | under this Act shall
constitute compliance with this Act.
| 25 | | (6) Credit unions may make residential real estate mortgage | 26 | | loans on terms and conditions established by the United States |
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| 1 | | Department of Agriculture through its Rural Development | 2 | | Housing and Community Facilities Program. The portion of any | 3 | | loan in excess of the appraised value of the real estate shall | 4 | | be allocable only to the guarantee fee required under the | 5 | | program. | 6 | | (7) For a renewal, refinancing, or restructuring of an | 7 | | existing loan that is secured by an interest or equity in real | 8 | | estate, a new appraisal of the collateral shall not be required | 9 | | when the transaction involves an existing extension of credit | 10 | | at the credit union, no new moneys are advanced other than | 11 | | funds necessary to cover reasonable closing costs, and there | 12 | | has been no obvious or material change in market conditions or | 13 | | physical aspects of the real estate that threatens the adequacy | 14 | | of the credit union's real estate collateral protection after | 15 | | the 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 | 20 | | into an agreement with credit unions or other organizations for | 21 | | the 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 | 11 | | becoming law. |
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