Substitute Senate Bill No. 791

Public Act No. 01-9

AN ACT CONCERNING COMMUNITY REINVESTMENT BY COMMUNITY CREDIT UNIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes is repealed and the following is substituted in lieu thereof:

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

"Account". Sections 36a-155 and 36a-365.

"Advance fee". Sections 36a-510, 36a-485 and 36a-615.

"Advertise" or "advertisement". Sections 36a-485 and 36a-510.

"Agency bank". Section 36a-285.

"Alternative mortgage loan". Section 36a-265.

"Amount financed". Section 36a-690.

"Annual percentage rate". Section 36a-690.

"Annual percentage yield". Section 36a-316.

"Applicant". Section 36a-736.

"Assessment area". Section 2 of this act.

"Associate". Section 36a-184.

"Bank". Section 36a-30.

"Bankers' bank". Section 36a-70.

"Banking business". Section 36a-425.

"Billing cycle". Section 36a-565.

"Bona fide nonprofit organization". Section 36a-655.

"Branch". Sections 36a-145 and 36a-410.

"Branch or agency net payment entitlement". Section 36a-428n.

"Branch or agency net payment obligation". Section 36a-428n.

"Broker". Section 36a-510.

"Business and industrial development corporation". Section 36a-626.

"Business and property in this state". Section 36a-428n.

"Cash advance". Section 36a-564.

"Cash price". Section 36a-770.

"Certificate of organization". Section 36a-435.

"Closely related activities". Section 36a-250.

"Collective managing agency account". Section 36a-365.

"Commercial vehicle". Section 36a-770.

"Community bank". Section 36a-70.

"Community credit union". Section 2 of this act.

"Community development bank". Section 36a-70.

"Community reinvestment performance". Section 2 of this act.

"Connecticut holding company". Section 36a-410.

"Consumer". Sections 36a-155, 36a-676 and 36a-695.

"Consumer Credit Protection Act". Section 36a-676.

"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800.

"Consumer collection agency". Section 36a-800.

"Controlling interest". Section 36a-276.

"Credit". Sections 36a-645 and 36a-676.

"Creditor". Sections 36a-676, 36a-695 and 36a-800.

"Credit card", "cardholder" and "card issuer". Section 36a-676.

"Credit clinic". Section 36a-695.

"Credit rating agency". Section 36a-695.

"Credit report". Section 36a-695.

"Credit sale". Section 36a-676.

"De novo branch". Section 36a-410.

"Debt". Section 36a-645.

"Debt adjustment". Section 36a-655.

"Debt mutual fund". Section 36a-275.

"Debt securities". Section 36a-275.

"Deliver". Section 36a-316.

"Deposit". Section 36a-316.

"Deposit account". Section 36a-316.

"Deposit account charge". Section 36a-316.

"Deposit account disclosures". Section 36a-316.

"Deposit contract". Section 36a-316.

"Deposit services". Section 36a-425.

"Depositor". Section 36a-316.

"Earning period". Section 36a-316.

"Electronic payment instrument". Section 36a-596.

"Eligible account holder". Section 36a-136.

"Eligible collateral". Section 36a-330.

"Equity mutual fund". Section 36a-276.

"Federal Home Mortgage Disclosure Act". Section 36a-736.

"Fiduciary". Section 36a-365.

"Filing fee". Section 36a-770.

"Finance charge". Sections 36a-690 and 36a-770.

"Financial institution". Sections 36a-41, 36a-155, 36a-316, 36a-330 and 36a-736.

"Financial records". Section 36a-41.

"First mortgage loan". Sections 36a-485, 36a-705 and 36a-715.

"Fiscal year". Section 36a-435.

"Foreign banking corporation". Section 36a-425.

"General facility". Section 36a-580.

"Global net payment entitlement". Section 36a-428n.

"Global net payment obligation". Section 36a-428n.

"Goods". Sections 36a-535 and 36a-770.

"Graduated payment mortgage loan". Section 36a-265.

"Guardian". Section 36a-365.

"Holder". Section 36a-596.

"Home banking services". Section 36a-170.

"Home banking terminal". Section 36a-170.

"Home improvement loan". Section 36a-736.

"Home purchase loan". Section 36a-736.

"Home state". Section 36a-410.

"Immediate family". Section 36a-435.

"Installment loan contract". Sections 36a-535 and 36a-770.

"Instrument". Section 36a-596.

"Insurance bank". Section 36a-285.

"Insurance department". Section 36a-285.

"Interest". Section 36a-316.

"Interest rate". Section 36a-316.

"Lender". Sections 36a-510 and 36a-770.

"Lessor". Section 36a-676.

"License". Section 36a-626.

"Licensee". Sections 36a-510, 36a-596 and 36a-626.

"Limited branch". Section 36a-145.

"Limited facility". Section 36a-580.

"Loan broker". Section 36a-615.

"Loss". Section 36a-330.

"Made in this state". Section 36a-770.

"Managing agent". Section 36a-365.

"Member". Section 36a-435.

"Membership share". Section 36a-435.

"Money order". Section 36a-596.

"Mortgage broker". Section 36a-485.

"Mortgage insurance". Section 36a-725.

"Mortgage lender". Sections 36a-485 and 36a-705.

"Mortgage loan". Sections 36a-261 and 36a-265.

"Mortgage rate lock-in". Section 36a-705.

"Mortgage servicing company". Section 36a-715.

"Mortgagor". Section 36a-715.

"Motor vehicle". Section 36a-770.

"Multiple common bond membership". Section 36a-435.

"Municipality". Section 36a-800.

"Net worth". Section 36a-596.

"Network". Section 36a-155.

"Note account". Sections 36a-301 and 36a-445.

"Office". Section 36a-316.

"Open-end credit plan". Section 36a-676.

"Open-end loan". Section 36a-565.

"Organization". Section 36a-800.

"Out-of-state holding company". Section 36a-410.

"Outstanding". Section 36a-596.

"Passbook savings account". Section 36a-316.

"Periodic statement". Section 36a-316.

"Permissible investment". Section 36a-596.

"Person". Section 36a-184.

"Post". Section 36a-316.

"Prime quality". Section 36a-596.

"Principal amount of the loan". Section 36a-510.

"Principal officer". Section 36a-485.

"Processor". Section 36a-155.

"Public deposit". Section 36a-330.

"Purchaser". Section 36a-596.

"Qualified financial contract". Section 36a-428n.

"Qualified public depository" and "depository". Section 36a-330.

"Records". Section 36a-17.

"Relocate". Section 36a-145.

"Residential property". Section 36a-485.

"Retail buyer". Sections 36a-535 and 36a-770.

"Retail credit transaction". Section 42-100b.

"Retail deposits". Section 36a-70.

"Retail installment contract". Sections 36a-535 and 36a-770.

"Retail installment sale". Sections 36a-535 and 36a-770.

"Retail seller". Sections 36a-535 and 36a-770.

"Reverse annuity mortgage loan". Section 36a-265.

"Sales finance company". Sections 36a-535 and 36a-770.

"Savings department". Section 36a-285.

"Savings deposit". Section 36a-316.

"Secondary mortgage loan". Section 36a-510.

"Security convertible into a voting security". Section 36a-184.

"Share". Section 36a-435.

"Simulated check". Sections 36a-485 and 36a-510.

"Single common bond membership". Section 36a-435.

"Social purpose investment". Section 36a-277.

"Standard mortgage loan". Section 36a-265.

"Tax and loan account". Sections 36a-301 and 36a-445.

"The Savings Bank Life Insurance Company". Section 36a-285.

"Time account". Section 36a-316.

"Transaction". Section 36a-215.

"Travelers check". Section 36a-596.

"Troubled financial institution". Section 36a-215.

"Uninsured bank". Section 36a-70.

"Unsecured loan". Section 36a-615.

Sec. 2. (NEW) As used in sections 2 to 7, inclusive, of this act:

(1) "Assessment area" means one or more of the geographic areas as delineated by a community credit union that (A) consist of one or more metropolitan statistical areas or one or more contiguous political subdivisions, including, but not limited to, counties, cities or towns, (B) include geographies in which the community credit union has its principal office, subsidiary offices and share-taking automated teller machines, and (C) include the surrounding geographies in which the community credit union originates or purchases a substantial portion of its loans.

(2) "Community credit union" means a Connecticut credit union that has ten million dollars or more in total assets and the membership of which is limited to persons within a well-defined local community, neighborhood or rural district as provided in subsection (a) of section 36a-438 of the general statutes.

(3) "Community reinvestment performance" means the performance of a community credit union in helping to meet the credit needs of its entire community including low-income and moderate-income neighborhoods.

Sec. 3. (NEW) (a) Each community credit union shall satisfy its continuing and affirmative obligation to help meet the credit needs of its local community, including low-income and moderate-income neighborhoods, consistent with the safe and sound operation of such community credit union.

(b) Not later than six months following the effective date of this act, each community credit union shall delineate one or more assessment areas within which the Commissioner of Banking shall evaluate the community credit union's community reinvestment performance in this state and shall file such delineations with the commissioner. An assessment area shall consist only of whole geographies, and may not (1) reflect illegal discrimination, (2) arbitrarily exclude low-income or moderate-income geographies, or (3) extend substantially beyond a consolidated metropolitan statistical area boundary or beyond a state boundary, unless the assessment area is located in a multistate metropolitan statistical area. A community credit union may adjust the boundaries of its assessment areas to include only the portion of a political subdivision that it reasonably can be expected to serve. A community credit union shall immediately file an amendment with the Commissioner of Banking reflecting an adjustment of the boundaries of an assessment area.

(c) The Commissioner of Banking shall assess periodically the community reinvestment performance of a community credit union consistent with the safe and sound operation of the community credit union. The commissioner shall assess the community reinvestment performance of such community credit union based on: (1) The community credit union's record of helping to meet the credit needs of its assessment area or areas through qualified investments that benefit its assessment area or areas or a broader state-wide or regional area that includes its assessment area or areas; (2) the community credit union's record of helping to meet the credit needs of its assessment area or areas, by analyzing both the availability and effectiveness of its systems for delivering retail credit union services and the extent and innovativeness of its community development services; (3) loan-to-share ratio given the community credit union's size and financial condition, credit needs of the assessment area or areas, other lending-related activities, considering seasonal variations, as used in 12 CFR 228.26; (4) percentage of total loans and other lending-related activities within the assessment area or areas; (5) record of lending and other lending-related activities to borrowers of different income levels, and businesses and farms of different sizes; (6) geographic distribution of loans; (7) action taken in response to written complaints with respect to community reinvestment performance; (8) efforts of the community credit union to work with delinquent residential mortgage customers who are unemployed or underemployed to facilitate a resolution of the delinquency; and (9) written comments received by the commissioner.

(d) (1) Upon the completion of the assessment required under subsection (c) of this section, the commissioner shall prepare a written evaluation of the community credit union's community reinvestment performance.

(2) The performance evaluation shall (A) state the commissioner's assessment of the community reinvestment performance of the community credit union, (B) set forth and discuss the facts supporting such assessment, and (C) contain the community credit union's rating and a statement describing the basis for the rating. The rating shall be one of the following: (i) Outstanding record of meeting community credit needs; (ii) satisfactory record of meeting community credit needs; (iii) needs to improve record of meeting community credit needs; or (iv) substantial noncompliance in meeting community credit needs. The commissioner shall furnish a copy of the performance evaluation to the community credit union upon its completion.

Sec. 4. (NEW) (a) Each community credit union shall provide to the public upon request copies of the most recent community reinvestment performance evaluation prepared by the Commissioner of Banking pursuant to section 3 of this act. A community credit union may charge a reasonable fee not to exceed the cost of copying and mailing, if applicable.

(b) Each community credit union shall maintain a public file in which it shall place, not later than thirty business days after its receipt from the commissioner, a copy of the community credit union's most recent community reinvestment performance evaluation prepared by the commissioner pursuant to section 3 of this act. The community credit union may also include in the public file any response to such performance evaluation that such community credit union makes. The community credit union shall make a copy of such performance evaluation available to the public for inspection upon request and at no cost at the community credit union's principal office and at each of its subsidiary offices in this state. Any community credit union that receives a rating of needs to improve record of meeting community credit needs or of substantial noncompliance in meeting community credit needs on its most recent evaluation shall include in its public file a description of its current efforts to improve its performance in helping to meet the credit needs of its entire community. The community credit union shall update the description quarterly until such time as it receives a satisfactory record of meeting community needs or better rating from the commissioner.

Sec. 5. (NEW) Each community credit union shall provide in the public lobby of its principal office and each of its subsidiary offices in this state a public notice substantially similar to the following:

STATE OF CONNECTICUT

COMMUNITY REINVESTMENT NOTICE

The Commissioner of Banking evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The Commissioner of Banking may also consider this record when deciding on certain applications submitted by us.

Your involvement is encouraged.

You may review today our most recent community reinvestment performance evaluation prepared by the Commissioner of Banking.

You may send written comments about our community reinvestment performance to the Commissioner of Banking (address). Your comments, together with any response by us, will be considered by the Commissioner of Banking in evaluating our community reinvestment performance and may be made public.

You may ask to look at any comments received by the Commissioner of Banking.

Sec. 6. (NEW) The Commissioner of Banking may consider the community reinvestment performance of a community credit union in connection with (1) an approval of an amendment to the certificate of organization pursuant to subsection (g) of section 36a-437 of the general statutes, as amended by this act, in connection with the establishment or change of location of an office or change in the field of membership; (2) an approval of an expansion of its field of membership pursuant to subsection (d) of section 36a-438 of the general statutes, as amended by this act; and (3) an approval of a merger pursuant to section 36a-470 of the general statutes, as amended by this act. The commissioner may withhold approval of or condition an issuance of approval of such amendment, expansion or merger pursuant to this section.

Sec. 7. (NEW) The Commissioner of Banking shall annually prepare and submit to the State Treasurer a list of community credit unions that the commissioner rated in a community reinvestment performance evaluation prepared pursuant to section 3 of this act as: (1) Needs to improve record of meeting community credit needs; or (2) substantial noncompliance in meeting community credit needs. No community credit union included in such list may receive funds under the provisions of section 4-33 or 7-402 of the general statutes.

Sec. 8. Subsection (g) of section 36a-437 of the general statutes is repealed and the following is substituted in lieu thereof:

(g) (1) (A) The certificate of organization of a Connecticut credit union may, with the approval of the commissioner, be amended at any time by the adoption of an amendment resolution by two-thirds of the members of the governing board at any meeting. Written notice of such meeting, together with the text of the proposed amendment shall be given to each director at least seven days prior to the meeting. [(2)] (B) A certificate of amendment shall be filed in triplicate with the commissioner. The certificate of amendment shall set forth: [(A)] (i) The name of the Connecticut credit union; [(B)] (ii) the amendment; and [(C)] (iii) a statement of the number of directors' votes required to take such action and the number of votes cast in favor of the amendment. [(3)] (C) The commissioner, upon determining that the certificate of organization, as amended, meets the requirements of sections 36a-435 to 36a-475, inclusive, shall endorse the commissioner's approval thereon, retain one copy, file one copy with the Secretary of the State and return one copy, certified by the Secretary of the State, to the Connecticut credit union.

(2) The commissioner may withhold approval of an amendment sought by a community credit union, as defined in section 2 of this act, in connection with the establishment or change of location of an office or change in the field of membership under this subsection or condition such approval pursuant to the provisions of section 6 of this act.

Sec. 9. Subsection (d) of section 36a-438 of the general statutes is repealed and the following is substituted in lieu thereof:

(d) (1) The commissioner may not approve an amendment to the certificate of organization of a Connecticut credit union to expand its field of membership unless the commissioner determines in writing that [(1)] (A) the Connecticut credit union has not engaged in any material unsafe or unsound practice during the one-year period preceding the date on which the certificate of amendment is filed with the commissioner, [(2)] (B) the Connecticut credit union is adequately capitalized, [(3)] (C) the Connecticut credit union has the administrative capability to serve the proposed membership group and the financial resources to meet the need for additional staff and assets to serve the new membership group, [(4)] (D) any potential harm that the expansion of the field of membership of the Connecticut credit union may have on any other Connecticut credit union and its members is clearly outweighed in the public interest by the probable beneficial effect of the expansion in meeting the convenience and needs of the members of the group proposed to be included in the field of membership, and [(5)] (E) the Connecticut credit union has met such additional requirements as the commissioner may prescribe by regulation adopted in accordance with chapter 54.

(2) The commissioner may withhold or condition an approval of an amendment sought by a community credit union, as defined in section 2 of this act, under this subsection pursuant to the provisions of section 6 of this act.

Sec. 10. Section 36a-470 of the general statutes is amended by adding subsection (f) as follows:

(NEW) (f) When considering a merger pursuant to this section involving a community credit union, as defined in section 2 of this act, the Commissioner of Banking may withhold or condition approval of such merger pursuant to the provisions of section 6 of this act.

Sec. 11. This act shall take effect July 1, 2001.

Approved May 4, 2001