Senate Bill sb1330er

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  1                                 

  2         An act relating to financial institutions;

  3         amending s. 655.005, F.S.; redefining the terms

  4         "imminently insolvent" and "insolvent" with

  5         respect to credit unions; creating s. 655.0201,

  6         F.S.; prescribing methods of serving process,

  7         notice, or demand on financial institutions;

  8         amending s. 655.044, F.S.; requiring all

  9         financial institutions to use the calendar year

10         as their fiscal year; amending s. 655.057,

11         F.S.; deleting obsolete provisions; amending s.

12         655.411, F.S.; conforming a cross-reference;

13         creating s. 655.4185, F.S.; authorizing

14         emergency action in cases of failing financial

15         entities; amending s. 657.002, F.S.; redefining

16         terms with respect to credit unions and

17         deleting obsolete and other terms; amending s.

18         657.005, F.S.; revising procedures applicable

19         to applying for authority to organize a credit

20         union; amending s. 657.0061, F.S.; providing

21         for disapproval of a proposed bylaw amendment

22         that is not in compliance with statutes or

23         rules; amending s. 657.008, F.S.; revising

24         provisions relating to changes of a credit

25         union's place of business and to establishing

26         branch locations; amending s. 657.021, F.S.;

27         revising duties of credit union boards of

28         directors; amending s. 657.022, F.S.; changing

29         the time within which the annual meeting of a

30         credit union board of directors must be held;

31         amending s. 657.023, F.S.; revising powers of a


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 1         credit union with respect to a member's rights

 2         and continued membership; amending s. 657.024,

 3         F.S.; deleting a requirement that distributing

 4         ballots in advance of a membership meeting must

 5         be done by mail; amending s. 657.026, F.S.;

 6         deleting obsolete provisions; revising

 7         standards for reporting by a supervisory or

 8         audit committee; amending s. 657.027, F.S.;

 9         revising duties of a credit union's credit

10         manager; amending s. 657.028, F.S.; prohibiting

11         compensation of a credit union treasurer but

12         authorizing compensation of its chief executive

13         officer; revising prerequisites for serving as

14         an officer, director, or committee member;

15         amending s. 657.031, F.S.; revising powers of

16         credit unions; amending s. 657.033, F.S.;

17         changing standards for when an account is

18         considered dormant, unclaimed, or abandoned;

19         prescribing limits on persons from whom credit

20         unions may accept deposits; allowing credit

21         unions to participate in systems that allow for

22         automated or electronic transfer, deposit, or

23         withdrawal of funds; requiring credit unions to

24         maintain certain insurance; amending s.

25         657.038, F.S.; revising credit unions' loan

26         powers, including the power to issue debit or

27         credit cards; amending s. 657.039, F.S.;

28         increasing the amount of credit that may be

29         extended to a credit union's own officers and

30         employees; amending s. 657.042, F.S.;

31         authorizing investment in stock of the Federal


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 1         Home Loan Bank; revising other limits on

 2         investments; amending s. 657.043, F.S.;

 3         revising standards for an

 4         allowance-for-loan-losses account; deleting the

 5         definition of risk assets; providing guidelines

 6         for borrowing money; deleting provisions

 7         relating to reserves and guaranty assistance

 8         agreements; amending s. 657.062, F.S.; deleting

 9         obsolete provisions; providing guidelines for

10         conservatorships; amending s. 657.063, F.S.;

11         revising provisions relating to involuntary

12         liquidation; amending s. 657.064, F.S.;

13         deleting obsolete provisions; revising

14         provisions relating to voluntary liquidation;

15         amending s. 657.065, F.S.; revising provisions

16         governing mergers of credit unions; amending s.

17         657.066, F.S.; revising provisions relating to

18         conversion of credit unions from state to

19         federal or from federal to state; repealing s.

20         657.0315, F.S., relating to contracts for

21         providing goods, products, or services, s.

22         657.051, F.S., relating to fiscal year, s.

23         657.055, F.S., relating to retention and

24         destruction of certain records, s. 657.068,

25         F.S., relating to central credit unions, and s.

26         658.43(7), F.S., relating to powers with

27         respect to failing financial entities;

28         providing an effective date.

29  

30  Be It Enacted by the Legislature of the State of Florida:

31  


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 1         Section 1.  Paragraphs (k) and (l) of subsection (1) of

 2  section 655.005, Florida Statutes, are amended to read:

 3         655.005  Definitions.--

 4         (1)  As used in the financial institutions codes,

 5  unless the context otherwise requires, the term:

 6         (k)  "Imminently insolvent" means a condition in which

 7  a financial institution has total capital accounts, or equity

 8  less the allowance for loan losses in the case of a credit

 9  union, of less than 2 percent of its total assets, after

10  adjustment for apparent losses.

11         (l)  "Insolvent" means a condition in which:

12         1.  The capital accounts, or equity less the allowance

13  for loan losses in the case of a credit union, and all assets

14  of a financial institution are insufficient to meet

15  liabilities;

16         2.  The financial institution is unable to meet current

17  obligations as they mature, even though assets may exceed

18  liabilities; or

19         3.  The capital accounts, or equity less the allowance

20  for loan losses in the case of a credit union, of a financial

21  institution are exhausted by losses and no immediate prospect

22  of replacement exists.

23         Section 2.  Section 655.0201, Florida Statutes, is

24  created to read:

25         655.0201  Service of process, notice, or demand on

26  financial institutions.--

27         (1)  Process against any financial institution

28  authorized by federal or state law to transact business in

29  this state may be served in accordance with chapter 48,

30  chapter 49, chapter 607, or chapter 608, as appropriate.

31  


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 1         (2)  Any financial institution authorized by federal or

 2  state law to transact business in this state may designate a

 3  registered agent as the financial institution's agent for

 4  service of process, notice, or demand required or permitted by

 5  law to be served on the financial institution. If the

 6  financial institution has no registered agent, or its

 7  registered agent cannot with reasonable diligence be served,

 8  service may be made to any executive officer of the financial

 9  institution at its principal place of business in this state.

10         (3)  If service cannot be made in accordance with

11  subsection (2), service may be made to any officer, director,

12  or business agent of the financial institution at its

13  principal place of business or at any other branch, office, or

14  place of business in the state.

15         (4)  This section does not prescribe the only means, or

16  necessarily the required means, of serving notice or demand on

17  a financial institution.

18         Section 3.  Subsection (5) is added to section 655.044,

19  Florida Statutes, to read:

20         655.044  Accounting practices; bad debts ineligible to

21  be carried as assets.--

22         (5)  The fiscal year of a financial institution shall

23  end on the last day of December.

24         Section 4.  Subsections (3) and (7) of section 655.057,

25  Florida Statutes, are amended to read:

26         655.057  Records; limited restrictions upon public

27  access.--

28         (3)  The provisions of this section do not prevent or

29  restrict:

30  

31  


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 1         (a)  Publishing reports required to be submitted to the

 2  office pursuant to s. 655.045(2)(a) or required by applicable

 3  federal statutes or regulations to be published.

 4         (b)  Furnishing records or information to any other

 5  state, federal, or foreign agency responsible for the

 6  regulation or supervision of financial institutions, including

 7  Federal Home Loan Banks.

 8         (c)  Furnishing records or information, in the case of

 9  a credit union, to the Florida Credit Union Guaranty

10  Corporation, Inc.

11         (c)(d)  Disclosing or publishing summaries of the

12  condition of financial institutions and general economic and

13  similar statistics and data, provided that the identity of a

14  particular financial institution is not disclosed.

15         (d)(e)  Reporting any suspected criminal activity, with

16  supporting documents and information, to appropriate law

17  enforcement and prosecutorial agencies.

18         (e)(f)  Furnishing information upon request to the

19  Chief Financial Officer or the Division of Treasury of the

20  Department of Financial Services regarding the financial

21  condition of any financial institution that is, or has applied

22  to be, designated as a qualified public depository pursuant to

23  chapter 280.

24  

25  Any confidential information or records obtained from the

26  office pursuant to this subsection shall be maintained as

27  confidential and exempt from the provisions of s. 119.07(1).

28         (7)  Materials supplied to the office or to employees

29  of any financial institution by other governmental agencies,

30  federal or state, or the Florida Credit Union Guaranty

31  Corporation, Inc., shall remain the property of the submitting


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 1  agency or the corporation, and any document request must be

 2  made to the appropriate agency.  Any confidential documents

 3  supplied to the office or to employees of any financial

 4  institution by other governmental agencies, federal or state,

 5  or by the Florida Credit Union Guaranty Corporation, Inc.,

 6  shall be confidential and exempt from the provisions of s.

 7  119.07(1).  Such information shall be made public only with

 8  the consent of such agency or the corporation.

 9         Section 5.  Paragraph (b) of subsection (1) of section

10  655.411, Florida Statutes, is amended to read:

11         655.411  Conversion of charter.--

12         (1)  Any financial entity may apply to the office for

13  permission to convert its charter without a change of business

14  form or convert its charter in order to do business as another

15  type of financial entity in accordance with the following

16  procedures:

17         (b)  Following approval by the board of directors, the

18  conversion plan, together with a certified copy of the

19  authorizing resolution adopted by the board, must be submitted

20  to the office for approval before being submitted to the

21  members or stockholders of the financial entity.  The

22  application for conversion must be in the form prescribed by

23  the commission, contain such additional information as the

24  commission or office reasonably requires, and be accompanied

25  by a filing fee in accordance with s. 657.066(3) s. 657.066(4)

26  or s. 658.73. Additionally, the office is authorized to assess

27  any financial entity, applying to convert pursuant to this

28  section, a nonrefundable examination fee to cover the actual

29  costs of any examination required as a part of the application

30  process.

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 1         Section 6.  Section 655.4185, Florida Statutes, is

 2  created to read:

 3         655.4185  Emergency action.--

 4         (1)  Notwithstanding any other provision of the

 5  financial institutions codes or of chapter 120, if the office

 6  or the appropriate federal regulatory agency finds that

 7  immediate action is necessary in order to prevent the probable

 8  failure of one or more financial institutions, which in this

 9  subsection may be referred to as a "failing financial entity,"

10  the office may, with the concurrence of the appropriate

11  federal regulatory agency in the case of any financial

12  institution the deposits of which are insured by the Federal

13  Deposit Insurance Corporation or the National Credit Union

14  Administration, issue an emergency order authorizing:

15         (a)  The merger of any such failing financial entity

16  with an appropriate state financial entity;

17         (b)  An appropriate state financial entity to acquire

18  assets and assume liabilities of any such failing financial

19  entity, including all rights, powers, and responsibilities as

20  fiduciary in an instance in which the failing financial

21  institution is actively engaged in the exercise of trust

22  powers;

23         (c)  The conversion of any such failing financial

24  entity into a state financial entity; or

25         (d)  The chartering of a new state financial entity to

26  acquire assets and assume liabilities of any such failing

27  financial entity and to assume rights, powers, and

28  responsibilities as fiduciary in a case in which such failing

29  financial entity is engaged in the exercise of trust powers.

30         (2)  Any such finding by the office must be based upon

31  reports furnished to it by a state or federal financial


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 1  institution examiner or upon other evidence from which it is

 2  reasonable to conclude that such financial institution is

 3  insolvent or is threatened with imminent insolvency. The

 4  office may disallow illegally obtained currency, monetary

 5  instruments, funds, or other financial resources from the

 6  capitalization requirements of the financial institution

 7  codes. The stockholders of a failing bank, association, or

 8  trust company that is acquired by another bank or trust

 9  company under this section are entitled to the same procedural

10  rights and to compensation for the remaining value of their

11  shares as is provided for dissenters in s. 658.44, except that

12  they have no right to vote against the transaction. Any

13  transaction authorized by this section may be accomplished

14  through the organization of a successor institution.

15         Section 7.  Section 657.002, Florida Statutes, is

16  amended to read:

17         657.002  Definitions.--As used in this chapter:

18         (1)  "Capital" means shares, deposits, and equity.

19         (2)  "Central credit union" means a credit union the

20  membership of which includes, but is not limited to, other

21  credit unions, members of credit unions, credit union

22  employees, employees of organizations serving credit unions,

23  and the families of such members.

24         (2)(3)  "Corporate credit union" means any central

25  credit union organized pursuant to any state or federal act

26  for the purpose of serving other credit unions.

27         (4)  "The corporation" means the Florida Credit Union

28  Guaranty Corporation, Inc.

29         (3)(5)  "Correspondent" means that person designated on

30  an application to organize a credit union as the person to

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 1  whom all correspondence regarding the application should be

 2  sent.

 3         (4)(6)  "Credit union" means any cooperative society

 4  organized pursuant to this chapter.

 5         (5)(7)  "Deposits" means that portion of the money

 6  placed capital paid into the credit union by members on which

 7  a contractual rate of interest may will be paid.

 8         (6)(8)  "Equity" means undivided earnings, regular

 9  reserves, and other reserves allowance for loan losses.

10         (7)(9)  "Foreign credit union" means a credit union

11  organized and operating under the laws of another state.

12         (8)(10)  "Immediate family" means parents, children,

13  spouse, or surviving spouse of the member, or any other

14  relative by blood, marriage, or adoption.

15         (9)(11)  "Limited field of membership" means the

16  defined group of persons designated as eligible for membership

17  in the credit union who:

18         (a)  Have a similar profession, occupation, or formal

19  association with an identifiable purpose; or

20         (b)  Live or work Reside within an identifiable

21  neighborhood, community, rural district, or county; or

22         (c)  Are employed by a common employer; or

23         (d)  Are employed by the credit union; and

24  

25  members of the immediate family of persons within such group.

26         (10)(12)  "Shares" means that portion of the money

27  placed capital paid into the credit union by members on which

28  dividends may be paid.

29         (13)  "Unimpaired capital" means capital which is not

30  impaired by losses that exceed applicable reserves.

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 1         Section 8.  Section 657.005, Florida Statutes, is

 2  amended to read:

 3         657.005  Notice of intent to organize; investigation;

 4  Application for authority to organize a credit union;

 5  investigation.--

 6         (1)  The proposed organizers of the proposed credit

 7  union shall file with the office an application a notice of

 8  intent to organize, upon such form as the commission may, by

 9  rule, prescribe.

10         (2)  Any five or more residents of this state who

11  represent a limited field of membership may apply to the

12  office for permission to organize a credit union.  The fact

13  that individuals within the proposed limited field of

14  membership have credit union services available to them

15  through another limited field of membership shall not preclude

16  the granting of a certificate of authorization to engage in

17  the business of a credit union.

18         (3)  The application shall be submitted to the office

19  on forms and in the manner prescribed by rules adopted by the

20  commission and shall be accompanied by a nonrefundable filing

21  fee of $250.  Such application shall include:

22         (a)  The proposed name and the proposed location where

23  the proposed credit union is to have its principal place of

24  business and where legal service must be served.

25         (b)  Designation of the par value of each share of the

26  credit union.

27         (c)  Designation of at least five persons who agree to

28  serve on the board of directors, and at least three other

29  persons who agree to serve on the supervisory committee or

30  audit committee, with a signed agreement to serve in these

31  capacities until the first annual meeting or until the


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 1  election of their successors, whichever is later, executed by

 2  those who so agree.

 3         (d)  Any information required by the commission or

 4  office to be submitted to the National Credit Union

 5  Administration corporation or insuring agency.

 6         (e)  Bylaws of the credit union, which bylaws shall be

 7  in the form and substance as required by the commission.

 8         (4)  The office shall have the power of investigation

 9  to the extent necessary to make the finding required under

10  this section.

11         (5)  The application shall be approved if the office

12  determines that:

13         (a)  There is a showing of sufficient interest on the

14  part of the proposed limited field of membership;

15         (b)  The qualifications of the proposed board of

16  directors and committee members are such as to indicate a

17  reasonable likelihood that the affairs of the proposed credit

18  union will be administered consistently with applicable laws

19  and sound financial and credit union practices;

20         (c)  The organization of the credit union would benefit

21  its members; and

22         (d)  The limited field of membership is of sufficient

23  financial viability to indicate reasonable promise of

24  successful operation of the proposed credit union.  In

25  determining the financial viability of the proposed limited

26  field of membership and chances for reasonable promise of

27  success of the proposed credit union, the office shall

28  consider:

29         1.  The size of the proposed limited field of

30  membership, excluding potential members based upon familial

31  relationships; and


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 1         2.  Any other evidence that tends to indicate the

 2  reasonable promise of success of the proposed credit union.

 3         (6)  If the organization of a proposed credit union

 4  would result in an overlapping limited field of membership,

 5  the office may disapprove the application if it finds that the

 6  formation of the proposed credit union will result in a

 7  substantial, adverse financial impact to an existing credit

 8  union having the same or substantially the same limited field

 9  of membership.

10         (7)  Concurrently with submission of the application to

11  the office, the applicant shall apply for insurance of

12  accounts with the National Credit Union Administration.

13         (8)  The applicant shall not accept any payments for

14  credit to share or deposit accounts, or commence business

15  operations as a credit union, until the certificate of

16  authorization and the insurance certificate have been

17  delivered to the credit union.

18         (9)  The office shall perform a preopening examination

19  to verify good faith compliance with all the requirements of

20  law.  If the office finds that such requirements have been

21  met, it shall issue and deliver the certificate of

22  authorization to transact business.  Any credit union which

23  fails to open for business within 6 months after the issuance

24  of such certificate will forfeit its existence as a credit

25  union, and the certificate of authorization shall be revoked.

26  For good cause shown, the office may extend the opening date

27  for an additional 6 months on its own motion or at the request

28  of the credit union. Amounts credited on share accounts, less

29  expenditures authorized by law, shall be returned pro rata to

30  the respective account holders.

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 1         (10)  All preopening costs and expenses in connection

 2  with the organization of the credit union and preparation for

 3  opening for business may be paid only from funds provided by

 4  the organizers or a sponsor and may be reimbursed by the

 5  credit union only out of undivided earnings, after provision

 6  has been made for reserves and dividends.  However, the credit

 7  union may record reimburse, as an operating expense, costs for

 8  forms, and supplies, insurance, rent, and other expenses

 9  applicable to or consumed in the period after opening in

10  accordance with rules adopted by the commission.

11         (11)  The commission shall adopt and the office shall

12  provide a form certificate of authorization and bylaws

13  consistent with this chapter which shall be used by applicants

14  for credit unions.

15         Section 9.  Subsection (1) of section 657.0061, Florida

16  Statutes, is amended to read:

17         657.0061  Amendments to bylaws.--

18         (1)  All bylaw amendments must be submitted to the

19  office.  The office shall approve or disapprove bylaw

20  amendments within 60 days after receipt.  The office shall

21  approve the proposed bylaw amendment unless it finds that the

22  amendment:

23         (a)  Is not in the best interest of the membership;

24         (b)  Is not in accord with sound credit union

25  practices; or

26         (c)  Exposes the assets of the credit union to

27  unnecessary risks; or.

28         (d)  Is not in compliance with applicable statutes or

29  rules.

30         Section 10.  Subsections (1), (2), (5), (6), and (7) of

31  section 657.008, Florida Statutes, are amended to read:


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 1         657.008  Place of doing business.--

 2         (1)  Every credit union authorized to transact business

 3  pursuant to the laws of this state shall have one principal

 4  place of doing business as designated in its bylaws and where

 5  legal process may be served. A credit union may change its

 6  place of business through an amendment to its bylaws.

 7         (2)(a)  With 30 days' prior written notification to the

 8  office or within such other time as is approved by the office,

 9  a credit union operating in a safe and sound manner may

10  maintain branches at locations other than its main office or

11  relocate branches previously established if the maintenance of

12  such branches is determined by the board of directors to be

13  reasonably necessary to furnish service to its members.

14         (b)  Investments in such branch offices shall comply

15  with the limitations imposed by s. 657.042(5).

16         (b)(c)  If any branch is located outside this state,

17  the cost of examining such branch shall be borne by the credit

18  union.  Such cost shall include, but shall not be limited to,

19  examiner travel expense and per diem.

20         (5)  A credit union may change its principal place of

21  business within this state upon approval by the office.

22         (5)(6)(a)  The office may authorize foreign credit

23  unions to establish branches in Florida if all of the

24  following criteria are met:

25         1.  The state in which the foreign credit union's home

26  office is located permits Florida credit unions to do business

27  in the state under restrictions that are no greater than those

28  placed upon a domestic credit union doing business in that

29  state.  For this purpose, such restrictions shall include, but

30  are not limited to, any fees, bonds, or other charges levied

31  on domestic credit unions doing business in that state.


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 1         2.  The deposits of such foreign credit union and its

 2  proposed Florida branch shall have insurance of accounts with

 3  the National Credit Union Administration will be insured or

 4  guaranteed by an insurer or guarantor acceptable to the

 5  office. Insurance or guarantee of accounts comparable to that

 6  provided by the Florida Credit Union Guaranty Corporation is

 7  deemed to be acceptable; however, acceptance of insurance or

 8  guarantee of accounts by any insuring or guaranteeing agencies

 9  or companies shall be subject to a determination by the office

10  that the insuring or guaranteeing agency or company is in

11  sound financial condition and that its reserves with respect

12  to its insured or guaranteed accounts are no less than those

13  of the Florida Credit Union Guaranty Corporation.

14         3.  The credit union's field of membership is so

15  limited as to be within that meaning of that term as defined

16  in s. 657.002.

17         (b)  Every foreign credit union operating in Florida

18  shall keep the office informed of every location at which it

19  is operating.

20         (c)  If the office has reason to believe that a foreign

21  credit union is operating a branch in this state in an unsafe

22  and unsound manner, it shall have the right to examine such

23  branch. If, upon examination, the office finds that such

24  branch is operating in an unsafe and unsound manner, it shall

25  require the branch office to make appropriate modifications to

26  bring such branch operations into compliance with generally

27  accepted credit union operation in this state. Such foreign

28  credit union shall reimburse the office for the full cost of

29  this examination. Costs shall include examiner salaries, per

30  diem, and travel expenses.

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 1         (d)  Any foreign credit union operating in this state

 2  shall in any connection therewith be subject to suit in the

 3  courts of this state, by this state and the citizens of this

 4  state.

 5         (6)(7)  A credit union may provide, directly or through

 6  a contract with another company, off-premises armored car

 7  services to its members. Armored car services do not

 8  constitute a branch for the purposes of this section.

 9         Section 11.  Section 657.021, Florida Statutes, is

10  amended to read:

11         657.021  Board of directors; executive committee.--

12         (1)  The credit union shall have a board of directors

13  consisting of at least five directors to be elected from the

14  members in the manner and for such terms as prescribed in the

15  bylaws.

16         (2)  Directors shall hold office for such terms as the

17  bylaws provide.

18         (2)(3)  Each director, upon assuming office, shall

19  acknowledge that he or she is familiar with his or her

20  responsibilities as a director and that he or she will

21  diligently and honestly administer the affairs of such credit

22  union and will not knowingly violate, or willfully permit to

23  be violated, any of the provisions of the financial

24  institutions codes or pertinent rules of the commission. The

25  signed copy of such oath shall be filed with the office within

26  30 days after election.

27         (3)(4)  The board of directors shall fill any vacancies

28  on the board by appointment until successors are elected as

29  provided in the bylaws.

30         (4)(5)  The board of directors and the executive

31  committee shall meet as often as required in the bylaws.


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 1         (5)(6)  The board of directors must ensure that

 2  determine the general direction of the business affairs,

 3  manage the funds, and maintain the records of the credit union

 4  is managed in a manner that is consistent with safe and sound

 5  credit union practices.

 6         (6)(7)  The board of directors shall must exercise the

 7  following duties which are nondelegable:

 8         (a)  Obtain and maintain officer and director liability

 9  insurance and blanket bond coverage under such terms, amounts,

10  and limitations as are established by rules adopted by the

11  commission. Require any officer or employee who has custody of

12  or handles funds to give bond with good and sufficient surety

13  in an amount and character determined by the board of

14  directors in compliance with rules adopted by the commission.

15         (b)  Establish the maximum amount of credit which may

16  be extended to a member and establish written credit policies,

17  including, without limitation, security requirements and terms

18  of repayment.

19         (b)(c)  Establish written policies governing all areas

20  of operations loans, investments, equity, personnel,

21  collections, the conduct of officers, employees, and committee

22  members, and continuing education for directors and committee

23  members and other policies necessary for prudent credit union

24  practices in accordance with the rules of the commission.

25         (c)(d)  Declare any dividends on shares.

26         (d)(e)  Adequately provide for reserves as required by

27  this chapter or by rules or order of the commission or office

28  or as otherwise determined necessary by the board.

29         (e)(f)  Employ a chief executive officer, whose title

30  may be either president or general manager, or, in lieu

31  thereof, designate any board member the treasurer to act as


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 1  the chief executive officer and to be in active charge of the

 2  affairs of the credit union.

 3         (8)  The board of directors must exercise the following

 4  duties, which may be delegated within specific guidelines and

 5  policies established by board resolutions:

 6         (f)(a)  Act on applications for membership, or appoint

 7  one or more membership officers to approve or deny

 8  applications for membership, under such conditions as are

 9  determined by policy of the board of directors may be

10  prescribed in the bylaws. A record of a membership officer's

11  approval or denial of membership must be made available to the

12  board for inspection. A person denied membership by a

13  membership officer may appeal the denial to the board.

14         (g)(b)  Determine, from time to time, the interest rate

15  or rates which are charged on extensions of credit and

16  authorize any interest refunds to members from income earned

17  and received in proportion to the interest paid by them on

18  such classes of credit and under such conditions as the board

19  prescribes.

20         (h)(c)  Determine the interest rates which will be paid

21  on deposits and the manner of calculating those rates under

22  such conditions as the board prescribes.

23         (i)(d)  Invest funds, except that the board may

24  designate an investment committee or any qualified individual

25  to make investments pursuant to written policies established

26  by the board.

27         (j)  Designate a depository or depositories for the

28  funds of the credit union under such conditions as the board

29  prescribes.

30  

31  


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 1  This subsection does not prohibit the board from delegating,

 2  within specific guidelines and policies established by board

 3  resolutions, those functions delineated in paragraphs (f),

 4  (g), (h), (i), and (j).

 5         (7)(9)  The board of directors has authority, which may

 6  not be delegated, to:

 7         (a)  Limit the number of shares and the amount of

 8  deposits which may be owned by a member, which limitation must

 9  apply to all members.

10         (b)  Designate a depository or depositories for the

11  funds of the credit union.

12         (b)(c)  Suspend and remove any member of any of its

13  committees for failure to perform his or her duties or for

14  other just cause.

15         (c)(d)  Establish any committee determined to be

16  necessary and appoint its membership.

17         (d)(e)  Call special meetings of the members.

18         (10)  The board of directors has authority, which may

19  be delegated within specific guidelines and policies

20  established by board resolutions, to:

21         (a)  Authorize the employment of persons necessary to

22  carry on the business of the credit union.

23         (b)  Authorize the purchase, lease, rental, or sale of

24  personal property necessary to carry on the business of the

25  credit union.

26         (c)  Borrow or lend money to carry on the functions of

27  the credit union.

28         (8)(11)  The board of directors may appoint an

29  executive committee that which may be authorized to act for

30  the board in all respects, subject to such conditions and

31  limitations as are prescribed by the board in writing.  The


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 1  executive committee shall be composed of the executive

 2  officers as defined in s. 657.022.

 3         Section 12.  Subsection (1) of section 657.022, Florida

 4  Statutes, is amended to read:

 5         657.022  Executive officers.--

 6         (1)  At the organizational meeting and within 31 7 days

 7  following each annual meeting of the members, the directors

 8  shall hold the annual meeting of the board of directors and

 9  elect from their own number a presiding officer, who may be

10  designated as chair of the board or president; one or more

11  vice chairs or one or more vice presidents, as the case may

12  be; a treasurer; and a secretary.  The treasurer and the

13  secretary may be the same individual. The persons so elected

14  shall be the executive officers of the organization.

15         Section 13.  Subsection (3) of section 657.023, Florida

16  Statutes, is amended to read:

17         657.023  Membership.--

18         (3)  A credit union may not restrict any member's

19  rights, except that the credit union may close the account and

20  terminate the membership of any member whose actions have

21  resulted in any financial loss to the credit union or for good

22  cause.

23         Section 14.  Subsection (2) of section 657.024, Florida

24  Statutes, is amended to read:

25         657.024  Membership meetings.--

26         (2)  Each member shall have one vote.  Mail Ballots may

27  be distributed in advance to the entire membership as

28  prescribed in the bylaws.  No person shall exercise the vote

29  of any other member.

30         Section 15.  Subsections (3) and (4) of section

31  657.026, Florida Statutes, are amended to read:


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 1         657.026  Supervisory or audit committee.--

 2         (3)  The supervisory or audit committee shall:

 3         (a)  Make or cause to be made a comprehensive annual

 4  audit of the credit union, in accordance with the rules of the

 5  commission.

 6         (b)  Make or cause to be made such supplementary audits

 7  or examinations as it deems necessary or as are requested by

 8  the board of directors or the office.

 9         (c)  Submit a report of every required audit or

10  examination within a reasonable time to the board of directors

11  with a copy to the office and, depending upon which

12  organization is applicable, a copy to the corporation or the

13  National Credit Union Administration.

14         (d)  Make a summary report, to the membership at the

15  annual meeting, of any audits or examinations conducted during

16  the preceding year.

17         (4)  The supervisory or audit committee shall notify

18  the board of directors, the office, and, as applicable, either

19  the corporation or the National Credit Union Administration of

20  any violation of this chapter, any violation of the

21  certificate of authorization or bylaws of the credit union, or

22  any practice of the credit union deemed by the supervisory or

23  audit committee to materially affect, or which may potentially

24  materially affect, the safety and soundness of the credit

25  union be unsafe, unsound, or unauthorized.

26  

27  For the purposes of this subsection, two-thirds of the members

28  of the supervisory or audit committee constitutes a quorum.

29         Section 16.  Subsection (2) of section 657.027, Florida

30  Statutes, is amended to read:

31         657.027  Credit committee and credit manager.--


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 1         (2)  In lieu of a credit committee, the board of

 2  directors may provide for a credit manager to approve or

 3  disapprove credit under written conditions prescribed by the

 4  board and as provided in the bylaws.  The board of directors

 5  may designate and empower the chief executive officer as the

 6  credit manager, or may authorize the chief executive officer

 7  to employ a credit manager, as provided in the bylaws.  In the

 8  event a credit manager is designated or employed, the

 9  procedures prescribed in subsection (1) do not apply, and no

10  credit shall be extended unless approved by the credit

11  manager; except that the credit manager may appoint one or

12  more loan officers with the power to approve or disapprove

13  credit, subject to such limitations or conditions as

14  prescribed by the chief executive officer.

15         Section 17.  Subsections (2) and (3) of section

16  657.028, Florida Statutes, are amended to read:

17         657.028  Activities of directors, officers, committee

18  members, employees, and agents.--

19         (2)  An elected officer or director or any committee

20  member, other than the treasurer or the chief executive

21  officer serving in the capacity of treasurer, may not be

22  compensated for her or his service as such.

23         (3)  A person may not serve as an officer, director, or

24  committee member of a credit union if she or he:

25         (a)  Has been convicted of a felony or of an offense

26  involving dishonesty, a breach of trust, a violation of this

27  chapter, or fraud, except with the prior approval of the

28  office upon a showing of rehabilitation;

29         (b)  Has been adjudicated bankrupt within the previous

30  7 years;

31  


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 1         (c)  Has been removed by any regulatory agency as a

 2  director, officer, committee member, or employee of any

 3  financial institution, except with the prior approval of the

 4  office upon a showing of rehabilitation and upon showing of

 5  ability to be bondable;

 6         (d)  Has performed acts of fraud or dishonesty, or has

 7  failed to perform duties, resulting in a loss which was

 8  subject to a paid claim under a fidelity bond, except with the

 9  prior approval of the office upon a showing of rehabilitation

10  and upon showing of ability to be bondable; or

11         (e)  Has been found guilty of a violation of s. 655.50,

12  relating to the Florida Control of Money Laundering in

13  Financial Institutions Act; chapter 896, relating to offenses

14  related to financial transactions; or any similar state or

15  federal law.

16         Section 18.  Section 657.031, Florida Statutes, is

17  amended to read:

18         657.031  Powers.--

19         (1)  When not in direct conflict with or superseded by

20  specific provisions of the financial institutions codes, the

21  general powers authorized to corporations in s. 607.0302

22  extend to credit unions formed under this chapter. This

23  section shall be liberally construed to accomplish the

24  purposes stated herein. Make contracts.

25         (2)  Except as provided in s. 607.0304 or specific

26  provisions of the financial institutions codes, the validity

27  of a credit union's action, including, but not limited to, any

28  conveyance, transfer, or encumbrance of real or personal

29  property to or by a credit union, may not be challenged on the

30  ground that the credit union lacks or lacked power to act. Sue

31  and be sued.


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 1         (3)  A credit union formed under this chapter shall

 2  operate as a financial institution, consistent with the

 3  provisions of chapter 655 and this chapter, and may exercise

 4  such incidental powers as are necessary or required to

 5  effectively carry out the purposes for which the credit union

 6  was organized, provided the exercise of powers is approved by

 7  rule or order of the commission or office. Acquire, lease,

 8  hold, and dispose of real and personal property necessary or

 9  incidental to its operations.

10         (4)  Incur and pay necessary and incidental operating

11  expenses.

12         (5)  Require an entrance or membership fee.

13         (6)  Receive shares and deposits from its members and

14  other credit unions; however, no credit union shall receive

15  shares or deposits from persons, other than credit unions, who

16  are not members of the credit union, except to a joint account

17  in which at least one of the tenants is a member of the credit

18  union.

19         (7)  Allow withdrawal of shares and deposits, as

20  requested by a member orally, in writing, or through any other

21  means of communication, including, but not limited to, drafts

22  drawn on the credit union for payment to the member or any

23  third party.

24         (8)  Charge fees for its services.

25         (9)  Extend credit to its members.

26         (10)  Borrow money and issue evidences of indebtedness

27  for a loan or loans in the usual course of its business and

28  secure such obligations by mortgage or pledge of any of its

29  assets. Aggregate borrowings shall not exceed 50 percent of

30  the unimpaired capital of the credit union.  However, this

31  


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 1  percentage limitation shall not apply to loans from the

 2  corporation or from the National Credit Union Administration.

 3         (11)  Discount and sell notes and obligations.

 4         (12)  Sell all or any portion of its assets to another

 5  credit union or purchase all or any portion of the assets of

 6  another credit union.

 7         (13)  Invest funds, as provided in this chapter.

 8         (14)  Maintain deposits in insured financial depository

 9  institutions.

10         (15)  Assess charges to its members.

11         (16)  Hold membership in central credit unions or

12  corporate credit unions organized under this chapter or under

13  any other state or federal acts and membership in associations

14  and organizations of credit unions.

15         (17)  Declare and pay dividends on shares, contract for

16  and pay interest on deposits, and pay refunds of interest on

17  loans.

18         (18)  Collect, receive, and disburse funds in

19  connection with the sale of negotiable and nonnegotiable

20  instruments and for such other purposes as may provide

21  benefits or conveniences to its members.

22         (19)  Perform tasks and render any services requested

23  by the Federal Government or by this state or any agency,

24  political subdivision, or municipality thereof, if approved by

25  the office.

26         (20)  Participate in, hold membership in, and pay dues

27  to any organization the services of which will benefit the

28  credit union or its membership.

29         (21)  Make donations for the members' welfare or for

30  civic, charitable, scientific, or educational purposes as

31  authorized by the board of directors.


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 1         (22)  Contract for the provision of trust services to

 2  its members with a trust company or other financial depository

 3  institution with trust powers authorized to do business in

 4  this state, with representatives of the trust company or other

 5  financial depository institution with trust powers being

 6  authorized to serve members from credit union facilities on a

 7  full-time or part-time basis.

 8         (23)  Act as trustee of funds permitted by federal law

 9  to be deposited in a credit union as a deferred-compensation

10  or tax-deferral device, including, but not limited to,

11  Individual Retirement Accounts as defined by the Internal

12  Revenue Code.

13         (24)  Purchase reasonable disability insurance,

14  including accidental death benefits, for directors and

15  committee members through insurance companies licensed to do

16  business in this state.

17         (25)  Reimburse directors and committee members for

18  reasonable and necessary expenses incurred in the performance

19  of their duties.

20         (26)  Participate in systems which allow the transfer,

21  withdrawal, or deposit of funds of credit unions or credit

22  union members by automated or electronic means and hold

23  membership in entities established to promote and effectuate

24  these systems, provided such participation is not inconsistent

25  with those rules of the commission adopted to further service

26  to the members and to protect members' funds against

27  unreasonable risks.

28         (27)  Issue credit cards and debit cards to allow

29  members to obtain access to their shares, deposits, and

30  extensions of credit, provided such issuance is not

31  inconsistent with the rules of the commission.  The commission


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 1  may, by rule, allow the use of devices similar to credit cards

 2  and debit cards to allow members to obtain access to their

 3  shares, deposits, and extensions of credit.

 4         (28)  Perform any act necessary to obtain and maintain

 5  membership in the corporation or obtain and maintain insurance

 6  of accounts through the National Credit Union Administration.

 7         (29)  Exercise such incidental powers as are necessary

 8  or requisite to effectively carry out the purposes for which

 9  it is organized, provided such exercise is approved by rule or

10  order of the commission or office.

11         Section 19.  Subsections (5) and (6) of section

12  657.033, Florida Statutes, are amended, and subsections (7),

13  (8), and (9) are added to that section, to read:

14         657.033  Accounts.--

15         (5)  When there has not been any activity generated by

16  the member on the account for 12 24 months, such account shall

17  be considered a dormant account and shall be placed under an

18  accounting control system.

19         (6)  If the owner of a dormant account, a person named

20  on the account, or the beneficiary of the account has not had

21  any activity with a credit union for 5 7 years and the

22  whereabouts of those interested parties are unknown to the

23  credit union, that account is unclaimed or abandoned property

24  and shall be maintained pursuant to chapter 717.

25         (7)  A credit union may receive shares and deposits

26  from its members and other credit unions; however, a credit

27  union may not receive shares or deposits from persons, other

28  than credit unions, who are not members of the credit union,

29  except to a joint account in which at least one of the tenants

30  is a member of the credit union.

31  


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 1         (8)  A credit union may participate in systems that

 2  allow the transfer, withdrawal, or deposit of funds of credit

 3  unions or credit union members by automated or electronic

 4  means and hold membership in entities established to promote

 5  and effectuate these systems, if such participation is not

 6  inconsistent with those rules of the commission adopted to

 7  further service to the members and to protect members' funds

 8  against unreasonable risks.

 9         (9)  A credit union shall obtain and maintain insurance

10  of accounts through the National Credit Union Administration.

11         Section 20.  Section 657.038, Florida Statutes, is

12  amended to read:

13         657.038  Loan powers.--

14         (1)  A credit union may extend credit to members for

15  such purpose and upon such security and terms as the credit

16  committee, credit manager, or loan officer approves, pursuant

17  to written loan policies established by the board of

18  directors, or as may otherwise be provided by law.

19         (2)  For credit unions that have been opened for 5

20  years or more, the total unsecured obligations outstanding

21  from any member must not exceed the greater of $500 or 15

22  percent of the equity of the credit union. However,

23         (3)  the total obligations outstanding from any member

24  must not exceed the greater of $1,000 or 25 percent of the

25  equity of the credit union. The limitations provided in this

26  subsection do not apply to loans that which are fully secured

27  by assignment of shares or deposits in the lending credit

28  union.

29         (3)  For credit unions that have been opened for less

30  than 5 years, the limitation on total obligations outstanding

31  to any member is 10 percent of the credit union's capital. The


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 1  limitations provided in this subsection do not apply to loans

 2  that are fully secured by assignment of shares or deposits in

 3  the lending credit union.

 4         (4)  A member may receive credit in installments or in

 5  one sum and may pay the whole or any part of his or her

 6  indebtedness on any day on which the office of the credit

 7  union is open for business.

 8         (4)(5)  The credit committee or credit manager may

 9  approve in advance, upon request of a member, a line of

10  credit, and disbursements may be granted to such member within

11  the limit of such line of credit.  When a line of credit has

12  been approved, no additional credit applications are required

13  as long as the aggregate obligation does not exceed the limit

14  of such line of credit; however, no additional disbursements

15  may be made to any member whose existing extensions of credit

16  are in default or are subject to adverse classification

17  without receiving current financial information.

18         (5)(6)  Loans secured by mortgages on real property

19  must be made in accordance with written policies of the board

20  of directors and rules of the commission.

21         (6)(7)  As used in this section, the term "related

22  interest" means a person's interest in a partnership as a

23  general partner, and any limited partnership, corporation, or

24  other business organization controlled by that person.  A

25  limited partnership, corporation, or other business

26  organization is controlled by a person who:

27         (a)  Owns, controls, or has the power to vote 25

28  percent or more of any class of voting securities of any such

29  business organization;

30         (b)  Controls in any manner the election of a majority

31  of the directors of any such business organization; or


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 1         (c)  Has the power to exercise a controlling influence

 2  over the management or policies of such business organization.

 3         (7)(8)  In computing the total liabilities of any

 4  person, all loans endorsed or guaranteed as to repayment by

 5  such person and by any related interest of such person must be

 6  included.

 7         (8)(9)  A loan may not be made to any corporation,

 8  except to the Florida Credit Union Guaranty Corporation, Inc.,

 9  or a corporation in which the credit union holds an equity

10  interest.

11         (9)(10)  The loan limitations stated in this section

12  shall not be enlarged by the provision of any other section of

13  this chapter.

14         (10)(11)  Any approval of extension of credit requiring

15  approval of the board of directors shall be recorded in the

16  minutes of the board, including the borrower's account number

17  or other code, the amount of the loan, the maturity of the

18  loan, and the general type of security.

19         (11)(12)  The commission may adopt rules to provide for

20  minimum documentation and safe lending procedures necessary to

21  protect the members' funds.

22         (12)(13)  A credit union may participate in extensions

23  of credit to its members jointly with other credit unions,

24  corporations, or financial institutions.

25         (13)(14)  A credit union may participate in guaranteed

26  loan programs of the federal and state governments, provided

27  the borrower is a member of the credit union.

28         (14)(15)  If approved by the board of directors, a

29  credit union may extend credit to other credit unions, or to

30  the corporation, in an amount not greater than 25 percent of

31  the unimpaired capital of the lending credit union.


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 1         (15)(16)  A credit union may purchase the conditional

 2  sales contracts, notes, and similar instruments of its

 3  members, provided that the credit union could have originally

 4  made the loan to the member.

 5         (16)  A credit union may issue credit cards and debit

 6  cards to allow members to obtain access to their shares,

 7  deposits, and extensions of credit, if such issuance is not

 8  inconsistent with the rules of the commission. The commission

 9  may, by rule, allow the use of devices similar to credit cards

10  and debit cards to allow members to obtain access to their

11  shares, deposits, and extensions of credit.

12         Section 21.  Section 657.039, Florida Statutes, is

13  amended to read:

14         657.039  Loan powers; extension of credit to directors,

15  officers, committee members, and certain others employees.--

16         (1)  A credit union may extend credit to its executive

17  officers, directors, credit manager, members of its

18  supervisory, audit, and credit committees, and any other

19  person authorized to approve extensions of credit, provided:

20         (a)  The extension of credit complies with all

21  requirements under this chapter with respect to credit

22  extended to other borrowers and is not on terms more favorable

23  than those extended to other borrowers.

24         (b)  The loan or aggregate of loans to any person or

25  any related interest of any person covered by this section

26  which exceeds $20,000 $5,000, except for share-secured or

27  deposit-secured credit, is approved in advance by the board of

28  directors with any interested person abstaining from voting.

29         (c)  Approved lines of credit, such as open-end loans,

30  may be funded without further approval by the board, but all

31  extensions of credit over $20,000 $5,000 to such persons must


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 1  be reviewed at least annually by the board of directors.

 2  Closed-end loans which have been fully funded do not require

 3  annual review.

 4         (2)  As used in this section, the term "related

 5  interest" means a person's interest in a partnership as a

 6  general partner, and any limited partnership, corporation, or

 7  other business organization controlled by that person.  A

 8  limited partnership, corporation, or other business

 9  organization is controlled by a person who:

10         (a)  Owns, controls, or has the power to vote 25

11  percent or more of any class of its voting securities;

12         (b)  Controls in any manner the election of a majority

13  of its directors; or

14         (c)  Has the power to exercise a controlling influence

15  over its management or policies.

16         (3)  In computing the total liabilities of any person,

17  all loans endorsed or guaranteed as to repayment by such

18  person and by any related interest of such person must be

19  included.

20         (4)  The limitations stated in this section shall not

21  be enlarged by the provision of any other section of this

22  chapter.

23         Section 22.  Paragraph (i) of subsection (1),

24  subsection (4), and paragraph (b) of subsection (5) of section

25  657.042, Florida Statutes, are amended to read:

26         657.042  Investment powers and limitations.--A credit

27  union may invest its funds subject to the following

28  definitions, restrictions, and limitations:

29         (1)  INVESTMENTS NOT SUBJECT TO LIMITATIONS.--There is

30  no limitation with respect to the capital of the investing

31  credit union on the following investments:


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 1         (i)  Stock of the Federal National Mortgage

 2  Association, Federal Home Loan Bank, or any other similar

 3  entity designated by the office, designed to promote

 4  investment in residential mortgages, which may be purchased

 5  and retained as required in connection with mortgage

 6  transactions with the association or entity.

 7         (4)  INVESTMENT SUBJECT TO LIMITATION OF ONE PERCENT OF

 8  CAPITAL OF THE CREDIT UNION.--Up to 1 percent of the capital

 9  of the credit union or $15,000, whichever is greater, may be

10  invested in any of the following:

11         (a)  Corporate obligations of any one corporation which

12  is an affiliate or subsidiary of the credit union or a service

13  corporation, except that the total investment in all such

14  corporate obligations shall not exceed 10 percent of the

15  capital of the credit union.

16         (b)  Any capital participation instrument or evidence

17  of indebtedness issued by the Florida Black Business

18  Investment Board pursuant to the Florida Small and Minority

19  Business Assistance Act of 1985.

20         (5)  INVESTMENTS IN REAL ESTATE AND EQUIPMENT FOR THE

21  CREDIT UNION.--

22         (b)  The limitations provided by this subsection may be

23  exceeded with the prior written approval of the office. The

24  office shall grant such approval if it is satisfied that:

25         1.  The proposed investment is necessary.

26         2.  The amount thereof is commensurate with the size

27  and needs of the credit union.

28         3.  The investment will be beneficial to the members.

29         4.  A reasonable plan is developed to reduce the

30  investment to statutory limits.

31  


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 1         Section 23.  Section 657.043, Florida Statutes, is

 2  amended to read:

 3         657.043  Reserves.--

 4         (1)  ALLOWANCE FOR LOAN LOSSES ACCOUNT.--The credit

 5  union shall maintain an account for loan and lease losses. The

 6  amount in the account should be consistent with applicable

 7  United States generally accepted accounting principles and

 8  industry guidance provided by regulatory agencies or as

 9  required by the office. The account must be provided for

10  before paying a dividend. TRANSFERS TO REGULAR

11  RESERVE.--Immediately before paying each dividend, the total

12  of all income for the period shall be determined. From this

13  amount, there shall be set aside sums as a regular reserve in

14  accordance with the following schedule:

15         (a)  A credit union shall set aside:

16         1.  Five percent of the total of all income for the

17  period, until the regular reserve equals 6 percent of the risk

18  assets, then,

19         2.  Two percent of the total of all income for the

20  period, until the regular reserve equals 8 percent of the risk

21  assets.

22         (b)  Whenever the ratio of regular reserves to risk

23  assets falls below the stated percent, it shall be replenished

24  by regular contributions as provided in paragraph (a).

25         (c)  The office may decrease the reserve requirements

26  set forth in this subsection when in its opinion such a

27  decrease is necessary to preserve the fiscal soundness of the

28  credit union.

29         (2)  ALLOWANCE FOR LOAN LOSSES ACCOUNT.--The credit

30  union shall maintain an account for loan losses.  The amount

31  in the account must equal the board's estimate of losses in


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 1  the loan portfolio and be consistent with the rules of the

 2  commission.  The account must be provided for, before paying a

 3  dividend, in the manner provided by rule. This account

 4  constitutes part of the regular reserve for the purpose of

 5  determining the ratio of regular reserves to risk assets.

 6         (2)(3)  REGULAR RESERVE.--The regular reserve shall

 7  belong to the credit union and shall be used to meet losses.

 8  In the event of a decrease, the office may require additional

 9  transfers to the regular reserve above the amount required by

10  subsection (1) until the decrease has been restored. The

11  regular reserve may not be decreased without the prior written

12  approval of the office or as provided by rule of the

13  commission.

14         (4)  RISK ASSETS DEFINED.--The following assets shall

15  be considered risk assets:

16         (a)  All loans, except:

17         1.  Loans fully secured by a pledge of shares or

18  deposits in the lending credit union, equal to and maintained

19  to at least the amount of the loan outstanding.

20         2.  Loans which are purchased from liquidating credit

21  unions and guaranteed by the corporation or insured by the

22  National Credit Union Administration or other insuring

23  agencies.

24         3.  Investments in or loans to the corporation.

25         (b)  All investments that have remaining maturities

26  greater than 3 years, unless a specific reserve has been

27  established to mark the investment to current market value.

28         (c)  Uninsured or nonguaranteed deposits and shares in

29  financial depository institutions, except deposits in the

30  Federal Reserve Bank, the Federal Home Loan Bank, the

31  


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 1  Southeast Corporate Federal Credit Union, and any other

 2  corporate credit union.

 3         (d)  All investments in commercial paper and bonds.

 4         (e)  All investments in banker's acceptances.

 5         (f)  All investments in federal funds.

 6         (g)  All investments that are authorized pursuant to

 7  subsection (6) or subsection (7).

 8         (h)  Fixed assets greater than the statutory limit

 9  imposed by this chapter, unless a specific reserve has been

10  established for the excess.

11         (3)(5)  ALLOWANCE FOR INVESTMENT LOSSES.--The credit

12  union may maintain a contra asset account to provide an

13  allowance for investment losses, which will not be included in

14  the determination of equity.  The account must be maintained

15  consistent with the rules of the commission.

16         (4)(6)  SPECIAL RESERVES.--In addition to such regular

17  reserve, special reserves shall be established:

18         (a)  To protect members against losses resulting from

19  credit extended or from risk assets when required by rule, or

20  when found by the office, in any special case, to be necessary

21  for that purpose; or

22         (b)  As authorized by the board of directors.

23         (5)  BORROWING MONEY.--A credit union may borrow money

24  and issue evidences of indebtedness for a loan or loans in the

25  usual course of its business and secure such obligations by

26  mortgage or pledge of any of its assets. Aggregate borrowings

27  may not exceed 50 percent of the capital that is not impaired

28  by losses of the credit union. However, this percentage

29  limitation does not apply to loans from the National Credit

30  Union Administration.

31  


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 1         (7)  RESERVE FOR CONTINGENCIES.--The board of directors

 2  may, after the regular reserve required by this section and

 3  rules of the commission has been set aside, transfer a portion

 4  of undivided earnings to an auxiliary reserve account to

 5  provide for additional possible losses and expenses.

 6         (8)  RESERVES.--The ratio of equity to total assets for

 7  each credit union must be maintained at not less than 5

 8  percent.  At the end of the calendar quarter when this ratio

 9  is determined to be less than 5 percent, the credit union

10  shall, within 60 days thereafter, prepare and file with the

11  office for approval a plan to achieve the minimum ratio within

12  4 years, or such longer period of time approved by the office.

13  Once achieved, each credit union must maintain a ratio of

14  equity to total assets of not less than 5 percent, unless

15  otherwise authorized by the office. The commission, by rule,

16  shall prescribe the information, types of restrictions and

17  limitations on operations, reporting requirements, and other

18  criteria that are required to be included in an acceptable

19  plan.  An acceptable plan must recognize the unique

20  characteristics and risk differences for the individual credit

21  union.

22         (9)  GUARANTY ASSISTANCE AGREEMENT.--The amount of any

23  liability arising out of a guaranty assistance agreement with

24  the corporation or National Credit Union Administration must

25  be maintained as a reserve and be included in the

26  determination of undivided earnings of the credit union.

27         Section 24.  Section 657.062, Florida Statutes, is

28  amended to read:

29         657.062  Conservatorship Assumption of control by

30  guarantor or insurer.--

31  


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 1         (1)  The office may appoint direct the corporation or

 2  the National Credit Union Administration as conservator over a

 3  credit union to take possession and, whichever is applicable,

 4  to assume control of the property, assets, and business of its

 5  member credit union and to operate it subject to the

 6  directions of the office whenever:

 7         (a)  Whenever The office finds that the credit union:

 8         1.  Is engaging or has engaged in an unsafe or unsound

 9  practice;

10         2.  Is violating or has violated any provision of this

11  chapter; or

12         3.  Is violating or has violated any commission rule,

13  office order, or written agreement entered into with the

14  office,

15  

16  in such a manner that the credit union is threatened with

17  imminent insolvency.

18         (b)  Whenever A majority of the members of the board of

19  directors of the credit union have been removed by the office

20  or the National Credit Union Administration or shall have

21  resigned.

22         (c)  The credit union is significantly undercapitalized

23  and has no reasonable prospect of becoming adequately

24  capitalized. The commission may define by rule criteria for

25  determining if a credit union is undercapitalized or

26  adequately capitalized. In defining such criteria, the

27  commission shall consider the definitions contained in s. 216,

28  the Federal Credit Union Act, codified at 12 U.S.C. 1790d.

29         (2)  Except when prohibited by federal or state law, in

30  the event of conservatorship assumption of control, the

31  conservator guarantor or insurer may appoint elect the board


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 1  of directors and the operating committees and may, without

 2  penalty or liability, prepay any deposit accounts; terminate

 3  any contracts or agreements with employees, independent

 4  contractors, or consultants; terminate any contract or

 5  agreement with any person to provide goods, products, or

 6  services if the performance of such contract would adversely

 7  affect the safety or soundness of the credit unions or if such

 8  contract was entered into in violation of s. 657.0315(1); and

 9  terminate or assign any lease for property.  The authority of

10  the conservator guarantor or insurer to continue operation of

11  a credit union shall continue for a period not to exceed 180

12  days, unless extended by the office for an additional period

13  or periods, not to exceed 180 days each, at the request of the

14  conservator guarantor or insurer, or unless involuntary

15  liquidation proceedings have been initiated by the office.  In

16  the event that the conservator guarantor or insurer does

17  assume control pursuant to the direction of the office, a

18  meeting of the credit union shall be called within 180 days,

19  or within the period of extension as approved by the office,

20  for the specific purpose of electing a new board of directors,

21  who shall take office when the conservator guarantor or

22  insurer surrenders control, or considering such other

23  recommendations as the conservator guarantor or insurer and

24  the office may make.

25         Section 25.  Subsections (1), (2), and (3) of section

26  657.063, Florida Statutes, are amended to read:

27         657.063  Involuntary liquidation.--

28         (1)  If the office finds that any credit union is

29  bankrupt or insolvent or imminently insolvent;, or is

30  transacting its business in an unsound, unsafe, or

31  unauthorized manner such that it is threatened with imminent


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 1  insolvency, and liquidation is in the best interest of the

 2  members; or is undercapitalized and has no reasonable prospect

 3  of becoming adequately capitalized, the office may, in its

 4  discretion, order the credit union placed in involuntary

 5  liquidation and designate and appoint a liquidator to take

 6  charge of the assets and affairs of the credit union.  The

 7  order shall set forth the specific findings and reasons for

 8  the action taken. The commission may define by rule criteria

 9  for determining if a credit union is undercapitalized or

10  adequately capitalized. In defining such criteria, the

11  commission shall consider the definitions contained in s. 216,

12  the Federal Credit Union Act, codified at 12 U.S.C. 1790d.

13         (2)  The liquidator must be appointed by the office.

14  The corporation or the National Credit Union Administration,

15  whichever is applicable, must be given the right of first

16  refusal. The office may appoint another entity if refused by

17  the primary guarantor or insurer.

18         (3)  Upon appointment and in accordance with the

19  directions of the office, the liquidator shall take possession

20  and charge of all of the assets, books, and records of the

21  credit union and shall take charge of the affairs, business,

22  and operations of the credit union and shall have all of the

23  powers of the board of directors, credit committee, credit

24  manager, and supervisory committee of the credit union.  The

25  liquidator shall continue the business operation of the credit

26  union for a period not to exceed 180 days, subject to the

27  direction of the office. The liquidator shall have full

28  authority to make loans and investments and to permit deposits

29  to or withdrawals from accounts by members, except that during

30  the period of such operation by the liquidator, no withdrawal

31  from any account or accounts which are not fully insured or


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 1  guaranteed shall be permitted.  Except when prohibited by

 2  federal or state law, the liquidator may, without penalty or

 3  liability, prepay any deposit accounts; terminate any

 4  contracts or agreements with employees, independent

 5  contractors, or consultants; terminate any contract or

 6  agreement with any person to provide goods, products, or

 7  services if the performance of such contract would adversely

 8  affect the safety or soundness of the credit union that was

 9  entered into in violation of s. 657.0315(1) or s. 657.062(2);

10  and terminate or assign any lease for property.  The

11  liquidator shall proceed with a liquidation of assets by sale

12  or transfer of assets and conversion of assets into cash or

13  liquid investments in preparation for distribution to members

14  on account of shares and deposits. The liquidator shall have

15  specific authority to sell loan assets. The liquidator may

16  enter into agreements for the sale or transfer of loans and

17  other assets with the assumption of outstanding share and

18  deposit accounts, which assumption constitutes full and

19  complete distribution to members on account of shares and

20  deposits.

21         Section 26.  Subsections (1), (4), (5), and (7) of

22  section 657.064, Florida Statutes, are amended to read:

23         657.064  Voluntary liquidation.--A credit union may

24  elect to dissolve voluntarily and liquidate its affairs in the

25  following manner:

26         (1)  Before considering any resolution pertaining to

27  voluntary liquidation by the board of directors, the credit

28  union must inform the office and the corporation or the

29  National Credit Union Administration, whichever is applicable,

30  of the time and place of the meeting of the board of

31  


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 1  directors. The notification must be transmitted at least 10 5

 2  days before the board of directors meets.

 3         (4)  Upon adoption by the board of directors of a

 4  resolution recommending that the credit union be voluntarily

 5  liquidated, the office corporation or the National Credit

 6  Union Administration, whichever is applicable, may restrict

 7  control or give directions with respect to the continued

 8  business of the credit union pending consideration of the

 9  voluntary liquidation by the members.  During such period, no

10  member shall withdraw an aggregate amount in excess of the

11  insurance or guaranty covered by the credit union. No new

12  extensions of credit shall be funded during the period between

13  the board of directors' adoption of the resolution

14  recommending the voluntary liquidation and the membership

15  meeting called to consider the voluntary liquidation, except

16  for loans fully secured by a pledge of shares and for the

17  funding of outstanding loan commitments approved before the

18  board of directors adopts the resolution.

19         (5)  The notice required by subsection (3) shall also

20  be mailed to the office and the National Credit Union

21  Administration within 5 days after the action of the board of

22  directors.  Within 10 days after the meeting of the

23  membership, the board of directors shall notify the office and

24  the corporation or the National Credit Union Administration,

25  whichever is applicable, in writing of the action taken by the

26  members.

27         (7)  The corporation or the National Credit Union

28  Administration, whichever is applicable, shall have the right

29  of first refusal to be appointed as liquidator of any

30  liquidating credit union which it guarantees or insures. The

31  liquidator shall have all of the powers provided in s. 657.063


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 1  regarding involuntary liquidation.  If the corporation or the

 2  National Credit Union Administration declines shall decline to

 3  serve as liquidator, the board of directors shall appoint a

 4  reasonable person as liquidator and specify the extent of

 5  responsibilities and authority delegated to the liquidator.

 6         Section 27.  Section 657.065, Florida Statutes, is

 7  amended to read:

 8         (Substantial rewording of section. See

 9         s. 657.065, F.S., for present text.)

10         657.065  Merger.--

11         (1)  Upon the filing of an application with the office

12  by the constituent credit unions, and upon approval by the

13  office, credit unions may be merged with a surviving state

14  credit union, as prescribed in this code, except that the

15  action by a merging federal credit union must be taken in the

16  manner prescribed by, and is subject to, any limitations or

17  requirements imposed by federal law and regulations. The

18  application must be accompanied by a merger plan and agreement

19  together with a certified copy of the authorizing resolutions

20  of the board of directors of constituent credit unions showing

21  approval by a majority of the entire board of directors of

22  each credit union, as provided in this section, and a

23  nonrefundable application fee of $500. The fee may be waived

24  by the office for a merger under subsection (6).

25         (2)  Nothing in the law of this state shall restrict

26  the right of a state credit union to merge with a surviving

27  federal credit union. In such case, the action to be taken by

28  a merging state credit union, and its rights and liabilities

29  and those of its members, shall be the same as those

30  prescribed for merging federal credit unions at the time of

31  the action by applicable federal law or regulations.


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 1         (3)  If the resulting credit union will be a state

 2  credit union, the merging credit unions shall adopt a merger

 3  plan and agreement stating the method, terms, and conditions

 4  of the merger, including all agreements concerning the merger.

 5  The board of directors of each constituent credit union must,

 6  by majority vote of the entire board, approve the merger plan

 7  and agreement, which shall contain:

 8         (a)  The name and address of the merging and surviving

 9  credit unions;

10         (b)  The date, time, and place of the meeting where the

11  merger plan and agreement was approved by the merging and the

12  surviving credit unions' boards of directors;

13         (c)  The name and address of the main office of the

14  surviving credit union and each continuing branch office;

15         (d)  The names, terms, and board positions of the

16  surviving credit union's board of directors;

17         (e)  The name and title of each executive officer;

18         (f)  A list of any needed amendments to the surviving

19  credit union's bylaws, if applicable, and, attached to the

20  agreement, copies of the amendments;

21         (g)  A statement that the merger and the merger plan

22  and agreement are subject to approval by the office and the

23  National Credit Union Administration; and

24         (h)  Such additional provisions not contrary to law as

25  are agreed upon by the constituent credit unions and such

26  other provisions as the office requires to enable it to

27  discharge its duties with respect to the merger.

28         (4)  The office shall approve the application and the

29  merger plan and agreement if it finds that:

30         (a)  The surviving credit union's net worth is

31  adequate; and


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 1         (b)  The merger will not impair the ongoing viability

 2  of the surviving credit union.

 3  

 4  If the office disapproves a merger plan and agreement, it

 5  shall state its objections and, chapter 120 notwithstanding,

 6  give an opportunity to the merging and surviving credit unions

 7  to amend the merger plan and agreement to eliminate such

 8  objections.

 9         (5)  Approval by the office, by final order or

10  otherwise, of the application and merger plan and agreement

11  shall be deemed subject to approval by the membership of the

12  merging credit union who vote on the merger at a meeting duly

13  called for that purpose. Such approval shall be documented by

14  the submission of a copy of:

15         (a)  The notice of intent to merger given to the

16  surviving credit union;

17         (b)  The notice to the members of the merging credit

18  union of the meeting duly called to consider the merger. Such

19  notice must disclose the purpose of the meeting and the date,

20  time, and place of the meeting; and

21         (c)  The resolution adopted by the membership

22  confirming the vote on the merger.

23  

24  Unless the approval of the merging credit union has been

25  obtained and proper evidence thereof submitted to the office

26  within 6 months after the approval by the office, the approval

27  by the office of the merger and merger plan and agreement

28  shall be deemed to be revoked and terminated; however, the

29  office on its own motion, or at the request of the merging or

30  surviving credit unions for good cause shown, may extend the

31  time for a period not to exceed 6 months.


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 1         (6)  Notwithstanding any other provision of this

 2  chapter or of chapter 120, a credit union may merge without

 3  the vote of the membership when the office determines that the

 4  credit union is in danger of insolvency or that the credit

 5  union is significantly undercapitalized, as defined in s. 216,

 6  the Federal Credit Union Act, codified at 12 U.S.C. 1790d and

 7  the merger will enable the credit union to avoid liquidation.

 8         (7)  A merger with a resulting state credit union may

 9  not take place or be effective unless approved by the National

10  Credit Union Administration and the office issues a

11  certificate of merger. Upon consummation of the merger, the

12  certificate of authorization of the merged credit union shall

13  be returned to the proper authority to be canceled. Also, at

14  consummation, all property and property rights of, and

15  members' interest in, the merged credit union shall vest in

16  the surviving credit union without deed, endorsement, or other

17  instrument of transfer, and all debts, obligations, and

18  liabilities of the merged credit union must be assumed by the

19  surviving credit union under the certificate of authorization

20  under which the merger was affected. All members of the

21  surviving credit union have the same rights, privileges, and

22  responsibilities after the merger is completed. The

23  certificate of merger must be recorded in the public records

24  of all counties in which the merging credit union owned any

25  real property at the effective date of the merger.

26         Section 28.  Section 657.066, Florida Statutes, is

27  amended to read:

28         657.066  Conversion from state credit union to federal

29  credit union and conversely.--Any credit union organized under

30  this chapter may convert into a federal credit union and any

31  federal credit union may convert into a credit union organized


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 1  pursuant to this chapter upon approval of the authority under

 2  the supervision of which the converted credit union will

 3  operate and upon compliance with applicable laws.

 4         (1)  Any action by the board of directors proposing

 5  conversion shall be by resolution and shall require the

 6  affirmative vote of an absolute majority of the board of

 7  directors. Upon adoption of a resolution relating to

 8  conversion, a copy of the resolution shall be mailed to each

 9  member, together with a notice setting forth the time,

10  location, and purpose of a meeting of the membership which

11  shall be held not less than 10 nor more than 30 days following

12  the mailing of the notice.

13         (2)  A ballot allowing an affirmative or negative vote

14  on the proposed conversion shall also be mailed to each

15  member. Any ballot received by the credit union prior to the

16  meeting called to consider the conversion shall be counted

17  along with the votes cast at the meeting.  Each member shall

18  have but one vote.  A majority of the votes cast by the

19  members shall be required to approve the conversion.

20         (2)(3)  Within 10 days after the approval of the

21  membership, The board of directors shall cause to be

22  transmitted to the authority under the supervision of which

23  the converted credit union will operate a copy of the

24  resolution adopted by the board of directors and a conversion

25  application approved by the membership.

26         (3)(4)  Upon the written approval of the authority

27  under the supervision of which the converting credit union is

28  to operate, the converting credit union shall become a credit

29  union under this chapter or under the laws of the United

30  States, as the case may be, and thereupon all assets shall

31  become the property of the converted credit union, subject to


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 1  all existing liabilities against the credit union.  All shares

 2  and deposits shall remain intact. Any federal credit union

 3  seeking to convert to a state-chartered credit union shall pay

 4  a nonrefundable filing fee of $500.  The office may conduct an

 5  examination of any converting federal credit union before

 6  approving the conversion and the converting credit union shall

 7  pay a nonrefundable examination fee as provided in s.

 8  655.411(1)(b).

 9         (4)  Upon the approval of the authority under the

10  supervision of which the converted credit union will operate,

11  a copy of the resolution shall be provided to each member,

12  together with a notice setting forth the time, location, and

13  purpose of a meeting of the membership which shall be held not

14  less than 10 or more than 30 days following the transmission

15  of the notice.

16         (5)  A ballot allowing an affirmative or negative vote

17  on the proposed conversion shall also be provided to each

18  member. Any ballot received by the credit union prior to the

19  meeting called to consider the conversion shall be counted

20  along with the votes cast at the meeting. Each member shall

21  have one vote. A majority of the votes cast by the members is

22  required to approve the conversion.

23         (6)  Within 10 days after the approval by the

24  membership, the board of directors shall cause to be

25  transmitted to the authority under the supervision of which

26  the converted credit union will operate a copy of the

27  resolution adopted by the board of directors and approved by

28  the membership with confirmation of the vote.

29         (7)(5)  Every conversion must be completed within 90

30  days after the approval of the authority under the supervision

31  of which the converted credit union will operate.  Upon


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 1  receiving its certificate of authorization or charter from the

 2  authority under the supervision of which the converted credit

 3  union will operate, the old certificate of authorization or

 4  charter shall be returned to the proper authority and shall be

 5  canceled.

 6         (8)(6)  In consummation of the conversion, the old

 7  credit union may execute, acknowledge, and deliver to the

 8  newly chartered credit union the instruments of transfer

 9  necessary to accomplish the transfer of any property and all

10  right, title, and interest therein.

11         Section 29.  Sections 657.0315, 657.051, 657.055, and

12  657.068 and subsection (7) of section 658.43, Florida

13  Statutes, are repealed.

14         Section 30.  This act shall take effect July 1, 2005.

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CODING: Words stricken are deletions; words underlined are additions.