H.B. 410
GENERAL ASSEMBLY OF NORTH CAROLINA
Mar 16, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH10200-BBf-1
Short Title: Credit Union Update. (Public)
Sponsors: Representative Howard.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO UPDATE THE CREDIT UNION STATUTES.
3 The General Assembly of North Carolina enacts:
4 SECTION 1. Article 14B of Chapter 54 of the General Statutes reads as rewritten:
5 "Article 14B.
6 "Supervision and Regulation.
7 …
8 "§ 54-109.14. Fees.Fees and penalties.
9 (a) Each credit union subject to supervision and examination by the Administrator of
10 Credit Unions, Administrator, including credit unions in process of voluntary liquidation, shall
11 pay into the office of the Administrator of Credit Unions twice each year, in the months of
12 January and July, supervision fees, except those credit unions which liquidate or convert its
13 charter shall pay into the office of the Administrator of Credit Unions, Administrator, to the date
14 of dissolution, pro rata supervision fees. Examination fees shall be paid promptly upon receipt of
15 the examination report and invoice.
16 The Administrator of Credit Unions, Administrator, subject to the advice and consent of the
17 Credit Union Commission, shall, on or before December 1 of each year, determine and fix the
18 scale of supervisory and examination fees to be assessed during the next calendar year.
19 No credit union shall be required to pay any supervisory fee until the expiration of 12 months
20 from the date of the issuance of a certificate of incorporation to such the credit union.
21 (b) The Administrator may charge other fees for service and supervision as approved by
22 the Commission. Moneys collected under this section shall be deposited with the State Treasurer
23 of North Carolina and expended, under the terms of the Executive Budget Act, to defray expenses
24 incurred by the office of the Administrator of Credit Unions in carrying out its supervisory and
25 auditing functions.
26 (c) All revenue derived from fees will be placed into a special account to be administered
27 solely for the operation of the Credit Union Division.
28 (d) The Administrator may waive any fee, in whole or in part, for any credit union or
29 group of credit unions at the Administrator's discretion.
30 (e) The Administrator may assess a civil penalty not to exceed five hundred dollars
31 ($500.00) for the violation of any section of Articles 14A to 15A of this Chapter or any rule
32 adopted by the Administrator. The clear proceeds of any civil penalty assessed under this
33 subsection or pursuant to any other authority in Articles 14A to 15A of this Chapter shall be
34 remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2.
35 "§ 54-109.15. Reports.
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 General Assembly Of North Carolina Session 2023
1 (a) Credit The Administrator shall cause credit unions organized under Articles 14A to
2 14L 15A of this Chapter shall, in January and in July of each year, make to make a report of
3 condition to the Administrator of Credit Unions on forms supplied for that purpose. Additional
4 reports may be required.in a manner and on a schedule as adopted by the Administrator. The
5 Administrator may also require that additional reports be filed.
6 (b) Any The Administrator may cause any credit union that neglects to make semiannual
7 reports as provided in subsection (a) of this section, or any of the other reports required by the
8 Administrator of Credit Unions at the time fixed by the Administrator, shall pay to pay a late
9 penalty to the Administrator of Credit Unions of not less than seventy-five dollars ($75.00)
10 ($75.00), nor more than seven hundred fifty dollars ($750.00) for each day the neglect continues.
11 The Administrator of Credit Unions may revoke the certificate of incorporation and take
12 possession of the assets and business of any credit union failing to pay a penalty imposed under
13 this section after serving notice of at least 15 days upon the credit union of the proposed action.
14 The clear proceeds of penalties collected pursuant to this subsection shall be remitted to the Civil
15 Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2.The Administrator shall
16 publish the late penalty amount annually by rule.
17 "§ 54-109.16. Examinations required; payment of cost.
18 (a) The Administrator of Credit Unions shall cause every credit union formed under
19 Article 14A and 15A of this Chapter to be examined once every 18 months or whenever such
20 shorter period the Administrator deems it necessary. The examiners appointed by the
21 Administrator shall be given free access to all books, papers, securities, and electronic or digital
22 records, and other sources of information in respect to the credit union; for the purpose of the
23 examination, the Administrator may subpoena and examine personally, or by one of the
24 Administrator's deputies or examiners, witnesses on oath and documents, whether the witnesses
25 are members of the credit union or not, and whether the documents are documents of the credit
26 union or not. The Administrator may designate an independent auditing firm to do the work
27 conduct such examinations under the Administrator's direction and supervision, with the cost to
28 be paid by the credit union involved.
29 (b) At the discretion of the Administrator, an independent audit, the examination of a peer
30 state regulatory agency, or the examination of a deposit insurer may be accepted in lieu of an
31 examination by the Division to satisfy the examination requirements of this Chapter.
32 "§ 54-109.17. Records.
33 (a) A credit union shall maintain all books, records, accounting systems and procedures
34 in accordance with such rules as the Administrator from time to time prescribes. adopted by the
35 Administrator. In prescribing such adopting these rules, the Administrator shall consider the
36 relative size of a credit union and its reasonable capability of compliance.
37 (b) A credit union is not liable for destroying records after the expiration of the record
38 retention time prescribed adopted by the Administrator.
39 (c) A photostatic or photographic reproduction of any credit union records shall be
40 admissible as evidence of transactions with the credit union.Any credit union may cause any or
41 all records kept by it to be recorded, copied, or reproduced by any photographic, reproduction,
42 electronic, or digital process or method, or by any other records retention technology approved
43 by rule or order of the Administrator, of a kind that is capable of accurately converting the records
44 into tangible form within a reasonable time. Each converted tangible form of record also is
45 deemed a record.
46 "§ 54-109.18. Selection of attorneys to handle loan-closing proceedings.
47 The Administrator of Credit Unions shall establish rules and regulations relating to selection
48 of attorneys-at-law to handle credit union loan closing proceedings.
49 "§ 54-109.18A. Hearings and appeals.
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1 (a) Unless otherwise stated in this Chapter, administrative hearings required or permitted
2 to be held by the Administrator shall be conducted in accordance with Article 3A of Chapter
3 150B of the General Statutes.
4 (b) After a hearing under subsection (a) of this section, a party or person aggrieved may
5 appeal the decision or order of the Administrator or other suitable person designated by the
6 Administrator to the Credit Union Commission for appellate review by filing with the
7 Administrator a written notice of appeal no later than 30 days after the day that the
8 Administrator's decision or order is served. Upon receipt of a notice of appeal, the Administrator
9 shall, within 30 days of the notice, certify to the Commission the record on appeal. The notice of
10 appeal shall state the grounds for the appeal and set forth in numbered order the assignments of
11 error for review by the Commission. Failure to state the grounds for the appeal and assignments
12 of error shall constitute grounds to dismiss the appeal. Failure to comply with the briefing
13 schedule provided by the Commission shall also constitute grounds to dismiss the appeal. The
14 Commission shall review the record on appeal, hear oral arguments by the parties, and make a
15 written final decision or order no later than 60 days after the date of oral arguments.
16 (c) Any party to a proceeding before the Commission under subsection (b) of this section
17 is entitled to judicial review of the decision or order in accordance with Article 4 of Chapter 150B
18 of the General Statutes.
19 (d) Notwithstanding other provisions of law, the hearing officer at administrative
20 hearings conducted under subsection (a) of this section may be the Administrator or other suitable
21 person designated by the Administrator to serve as a hearing officer.
22 "§ 54-109.19. Removal of officers.
23 (a) The Administrator of Credit Unions shall have the right and is hereby empowered to
24 serve a written notice of his intention to remove from office any If the Administrator finds that
25 an officer, director, committeeman committee member, or employee of any credit union doing
26 business under Articles 14A through 15A of this Chapter who shall be found to be dishonest,
27 incompetent, is dishonest, deceitful, convicted of a felony, convicted of a misdemeanor involving
28 fraud or dishonesty, incompetent, grossly negligent, or reckless in the management of the affairs
29 of the credit union, has breached the trust of the members, or who has persistently violates
30 violated the laws of this State or the lawful orders, instructions and regulations issued
31 instructions, or rules issued or adopted by the Administrator and/or the State Credit Union
32 Commission.or the Credit Union Commission, the Administrator may take one or both of the
33 following actions:
34 (1) Remove the director, officer, committee member, or employee from office.
35 (2) Prohibit the director, officer, committee member, or employee from
36 participating in the conduct of the affairs of a credit union or credit union
37 service organization.
38 (b) A notice of intention to remove removal of a director, officer, committee member or
39 employee from office shall contain a statement of the alleged facts constituting the grounds
40 therefor for it and shall fix a time and place at which a hearing before the Credit Union
41 Commission will be held thereon. Such hearing shall be fixed for a date not earlier than 30 days
42 nor later than 60 days after the date of service of such notice unless an earlier or a later date is
43 set by the Commission at the request of such director, officer, committee member or employee
44 and for good cause shown. Pending this hearing, the Administrator may remove the alleged
45 violator if he finds that it is essential to the continued well-being of the credit union or the public
46 to do so. Unless, of course, such director, officer, committee member or employee shall appear
47 at the hearing in person or by a duly authorized representative, he shall be deemed to have
48 consented to the issuance of an order of such removal. In the event of such consent, or if upon
49 the record made at any such hearing the Credit Union Commission shall find that any of the
50 grounds specified in such notice has been determined by the greater weight of the evidence, the
51 Commission may issue such orders of removal from office as it may deem appropriate. Any such
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1 order shall become effective at the expiration of 30 days after service upon such credit union and
2 the director, officer, committee member or employee concerned (except in the case of an order
3 issued upon consent, which shall become effective at the time specified therein). Such order shall
4 remain effective and enforceable except to such extent as it is stayed, modified, terminated or set
5 aside by action of the Credit Union Commission or a reviewing court.information on how the
6 removed party may appeal the removal to the Commission, including contact information to
7 initiate an appeal. The notice of removal is effective immediately upon service.
8 (c) A director, officer, committee member, or employee served written notice of removal
9 has the right to a hearing before the Commission and shall request a hearing within 30 days of
10 the service of the notice of removal.
11 (d) The hearing shall be fixed for a date no later than 30 days after service of the notice
12 for request for hearing unless a later date is set by the Commission at the request of the director,
13 officer, committee member, or employee and for good cause shown. If the removed party does
14 not seek a hearing within the 30-day time frame, the removed party is deemed to have consented
15 to the removal and the removal is deemed final.
16 (e) Upon a request for hearing, or upon scheduling a discretionary hearing on its own
17 initiative, the Commission shall review the facts of the case and hear from the Administrator and
18 the removed party. The Commission shall determine whether the preponderance of the evidence
19 supports removal. Upon completion of the hearing, the Commission shall issue an order that does
20 one of the following:
21 (1) Overturns the removal and reinstates the removed party.
22 (2) Upholds the removal in full.
23 (3) Modifies the removal into a suspension of a defined period. The order shall
24 remain effective and enforceable except to the extent that it is stayed,
25 modified, terminated, or set aside by a later action of the Commission or a
26 reviewing court.
27 "§ 54-109.20. Additional authorities of the Administrator.
28 (a) In the event of a natural disaster or other national, regional, State, or local emergency,
29 the Administrator may temporarily waive or suspend requirements for compliance by one or
30 more credit unions with any provisions of this Chapter or with any rules if the Administrator
31 deems it in the public interest.
32 (b) The Administrator may issue and serve upon a credit union an order to cease and
33 desist from one or more unsafe or unsound practices or violations if, in the opinion of the
34 Administrator, a credit union is engaging or has engaged, or there is reasonable cause to believe
35 is about to engage, in an unsafe or unsound practice, or is violating or has violated, or there is
36 reasonable cause to believe is about to violate, this Chapter or any other applicable law, rule,
37 regulation, or order. An order to cease and desist shall contain a statement of the facts constituting
38 the alleged violations or unsafe or unsound practices, and the order may require, in terms that
39 may be mandatory or otherwise, a credit union, its officers, directors, employees, or agents to
40 cease and desist from the practices or violations. The order shall specify its effective date and
41 shall contain a notice to the credit union of its right to a hearing on the order in accordance with
42 rules adopted by the Administrator.
43 (c) The Administrator may conduct an investigation, including conducting background
44 checks, of any credit union employee, officer, director, or committee member when considering
45 applications for new charters, changes to those positions in credit unions in a troubled condition,
46 a managing agent or manager in a conserved credit union, or when the Administrator has reason
47 to believe the credit union employee, director, or committee member affected or is likely to affect
48 the safety or soundness of the credit union."
49 SECTION 2. Article 14C of Chapter 54 of the General Statutes reads as rewritten:
50 "Article 14C.
51 "Powers of Credit Union.
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1 "§ 54-109.21. General powers.
2 (a) A credit union may:
3 (1) Make contracts;contracts.
4 (2) Sue and be sued;sued.
5 (3) Adopt and use a common seal and alter the seal;seal.
6 (4) Acquire, lease, hold and dispose of property, either in whole or in part,
7 necessary or incidental to its operations;present and future operations.
8 (5) At the discretion of the board of directors, require the payment of an entrance
9 fee or annual membership fee, or both, of any person admitted to
10 membership;membership.
11 (6) Receive savin