GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	1 

SENATE BILL 996

Short Title:  Credit Unions/Faithful Performance Bonds.  	(Public)
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Sponsors: Senators Staton, Carpenter, Conder, Plyler; Forrester and Bryan.
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Referred to:  Banks and Thrift Institutions.
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May 27, 1992

A BILL TO BE ENTITLED
AN ACT TO ELIMINATE THE FAITHFUL PERFORMANCE COVERAGE REQUIREMENTS FOR CREDIT UNIONS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 54-109.11 reads as rewritten:
"§ 54-109.11.  Duties of Administrator.
The duties of the Administrator of Credit Unions shall be as follows:
(1)	To organize and conduct in the State Department of Economic and Community Development, a bureau of information in regard to cooperative associations and rural and industrial credits.
(2)	Upon request, to furnish, without cost, any printed information and blank forms as, in the Administrator's discretion, may be necessary for the formation and establishment of any local credit union in the State.
(3)	To maintain an educational campaign in the State looking to the promotion and organization of credit unions.  Upon the written request of 12 bona fide residents of any particular locality in this State expressing a desire to form a local credit union at or in that locality, the Administrator of Credit Unions, or one of the Administrator's assistants, shall proceed as promptly as may be convenient to that locality and make an investigation in order that the Administrator may determine whether or not a local credit union should be established according to the standards set forth and provided in this Article.  The Administrator shall notify the applicants of the Administrator's decision within 30 days after receipt of the written request.  Before refusing the establishment of a credit union, the Administrator shall give the applicants an opportunity to be heard in person or by counsel.  At least 60 days before the date set for a hearing on the matter, the Administrator shall notify in writing the applicants of the date of the hearing and assign therein the grounds for the action contemplated to be taken and as to which inquiry shall be made on the date of the hearing.  The determination of the Administrator is subject to judicial review in all respects according to Chapter 150A.
(4)	To examine as often as necessary, but not less than once a year, and more often if deemed necessary by the Administrator or the Administrator's assistant, the credit unions formed under this Article.  A report of the examination shall be filed with the State Department of Economic and Community Development, and a copy mailed to the credit union at its proper address.
(5)	To fix the amount of a blanket surety bond that is required of each credit union official, committee member and employee, irrespective of whether the official, committee member and employee receives, pays or has custody of money or other personal property owned by a credit union or in the custody or control of the credit union as collateral or otherwise.  The surety on the bond shall be a surety company authorized to do business in North Carolina.  The surety bond shall be in a form approved by the Administrator of Credit Unions with a view to providing surety coverage to the credit union with reference to loss by reason of acts of fraud or dishonesty including forgery, theft, embezzlement, wrongful abstraction or misapplication on the part of the person, directly or through connivance with others, and any other surety coverages as the Administrator of Credit Unions may determine to be reasonably appropriate or as elsewhere required by the Chapter.  The surety bond shall be in an amount in relation to the money or other personal property involved or in relation to the assets of the credit union as the Administrator may from time to time prescribe by regulation for the purpose of requiring reasonable coverage.  The Administrator may also approve the use of a form of excess coverage bond whereby a credit union may obtain an amount of coverage in excess of the basic surety coverage.  No agreement, compromise or settlement of a claim filed by a credit union with any surety or any surety company for less than the full amount of the claim may be entered into or made by the board of directors of any credit union unless the claim has been submitted to the Administrator of Credit Unions and the Administrator's advice has been given to the board of directors of the credit union.  The following schedule is considered as the minimum blanket security bond requirements only:
Assets	Minimum Coverage
$     0,000 to	$    5,000	$   1,000
      5,001 to	    10,000	    2,000
     10,001 to	    20,000	    4,000
     20,001 to	    30,000	    6,000
     30,001 to	    40,000	    8,000
     40,001 to	    50,000	   10,000
     50,001 to	    75,000	   15,000
     75,001 to	   100,000	   20,000
    100,001 to	   200,000	   30,000
    200,001 to	   300,000	   40,000
    300,001 to	   400,000	   50,000
    400,001 to	   500,000	   70,000
    500,001 to	   750,000	   85,000
    750,001 to	 1,000,000	  100,000
  1,000,001 to	50,000,000	$100,000 plus
$50,000 for each million or
	fraction thereof of assets
over $1,000,000
$50,000,001 to	$150,000,000	$ 2,500,000 plus
$25,000 for each million or
fraction thereof of assets
over $50,000,000
Over $150,000,000	$5,000,000
The board of directors of each credit union may provide bond coverage in excess of the above minimum schedule.  No person, including the treasurer, shall handle credit union funds or records before giving a proper bond with good and sufficient surety.
The Administrator may require additional coverage for any credit union when, in the Administrator's opinion, the surety bonds in force are insufficient to provide adequate surety coverage, and the board of directors of any credit union shall obtain this additional coverage within 60 days after the date of the Administrator's written notice to that board of directors.  For good cause shown, the Administrator may extend the time to obtain additional coverage."
Sec. 2.  G.S. 54-109.44 reads as rewritten:
"§ 54-109.44.  Duties of directors.
The directors shall:
(1)	Act upon applications for membership or appoint one or more membership officers to approve applications for membership under any conditions as the board prescribes.  A record of a membership officer's approval or denial of membership shall be available to the board of directors for inspection.  A person denied membership by a membership officer may appeal the denial to the board.
(2)	Purchase a blanket fidelity bond, in accordance with any rules of the Administrator, to protect the credit union against losses caused by occurrences covered therein such as fraud, dishonesty, forgery, embezzlement, misappropriation, or misapplication by a director, officer, employee, member of an official committee, attorney-at-law or other agent.
(3)	Determine from time to time the interest rates, consistent with Articles 14A to 14L of this Chapter, that are charged on loans and authorize interest refunds, if any, to members from income earned and received in proportion to the interest paid by them on the classes of loans and under the conditions as the board prescribes.
(4)	 Fix from time to time the maximum amount which may be loaned to any one member.
(5)	Declare dividends on shares in the manner and form as provided in the bylaws; and determine the interest rates that are paid on deposits.
(6)	Set the number of shares and the amount of deposits which may be owned by a member.  These limitations shall apply the same to all members.
(7)	Have charge of the investment of surplus funds, except that the board of directors may designate an investment committee or any qualified individual to have charge of making investments under controls established by the board of directors.
(8)	Authorize the employment of persons necessary to carry on the business of the credit union.
(9)	Authorize the conveyance of property.
(10)	Borrow or lend money to carry on the functions of the credit union.
(11)	Designate a depository or depositories for the funds of the credit union.
(12)	Suspend any or all members of the credit or supervisory committee for failure to perform their duties.
(13)	Appoint any special committees deemed necessary.
(14)	Perform any other duties as the members from time to time direct, and perform or authorize any action not inconsistent with Articles 14A to 14L of this Chapter and not specifically reserved by the bylaws for the members."
Sec. 3.  This act is effective upon ratification.