REPRESENTATIVES Salerno, Husted, Wolpert, R. Miller, Allen, Setzer, G. Smith, Peterson, Webster, Reidelbach, Britton, Sykes, Blasdel, Schmidt, Evans, Hoops, Ogg, Sulzer, Beatty, Kilbane

To amend sections 1761.01, 1761.02, 1761.03, 1761.05

1

to 1761.10, and 1761.13 of the Revised Code to

2

modify the Credit Union Guaranty Corporations Law

3

regarding insurable credit union share accounts,

4

composition of a board of directors, eligibility

5

requirements for licensure, powers of a

6

corporation, reporting requirements, funds to be

7

included in a guarantee fund, and eligible

8

investments by a corporation.

9

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1761.01, 1761.02, 1761.03, 1761.05,	10
1761.06, 1761.07, 1761.08, 1761.09, 1761.10, and 1761.13 of the	11
Revised Code be amended to read as follows:	12

Sec. 1761.01.  As used in this chapter:

13

(A) "Account" means the total of all amounts credited to a	14
participating credit union for paid-in capital contribution, and	15
other credits, net of any charges to that participating credit	16
union. "Account" is an "advancement" as that term is used in	17
section 3901.72 of the Revised Code, and is subject to the	18
requirements of suchthat section.	19

(B) "Capital contribution" means the amount each	20
participating credit union is required to maintain as a capital	21
deposit in the credit union share guaranty corporation. "Capital	22
contribution" is an "advancement" as that term is used in section	23
3901.72 of the Revised Code, and is subject to the requirements of	24
suchthat section. "Capital contribution" constitutes assets of	25
the corporation up to the amount of the normal operating level	26
otherwise described in this chapter.	27

(C) "Credit union," "state," and "member," unless otherwise	28
specified or described in this chapter, have the meanings given	29
such terms in Chapter 1733. of the Revised Code.	30

(D) "Credit union share accounts" means funds deposited in	31
any shares, accounts, deposits, or certificates of a participating	32
credit union.	33

(E) "Credit union share guaranty corporation" means a	34
corporation described in section 1761.02 of the Revised Code and	35
licensed by the superintendent of insurance under section 1761.04	36
of the Revised Code to guarantee payment of a credit union share	37
account of an individual member or, as described in division	38
(B)(2) of section 1761.02 of the Revised Code, a nonmember of a	39
credit union or otherwise issue or effect credit union share	40
guaranty insurance.	41

(F) "Credit union share guaranty insurance" means that	42
insurance for the protection of share accounts of member credit	43
unions described in and required by section 1733.041 of the	44
Revised Code.	45

(G) "Credit union supervisory authority" means that official	46
who regulates credit unions in another state.	47

(H) "Deficiency" means the difference between the guaranteed	48
amount of an individual member's or, as described in division	49
(B)(2) of section 1761.02 of the Revised Code, a nonmember's	50
credit union share account and the proceeds of any liquidation of	51
a participating credit union distributed or to be distributed to	52
the individual member or nonmember.	53

(I) "National credit union administration" means the federal	54
regulatory agency as established and defined by the "Federal	55
Credit Union Act," 84 Stat. 994 (1970), 12 U.S.C. 1751, as	56
amended, or any successor to the national credit union	57
administration.	58

(J) "Participating credit union" means a credit union that	59
has applied for and been admitted to participation in a credit	60
union share guaranty corporation and whose participation has not	61
been terminated.	62

(K) "Share capital" means the aggregate of all moneys in	63
credit union share accounts, irrespective of how denominated,	64
which show a balance due on the records of the participating	65
credit union and are guaranteed by the guaranty corporation.	66

(L) "Superintendent of insurance" is the chief executive	67
officer and director of the department of insurance as provided n	68
in Chapter 3901. of the Revised Code.	69

(M) "Superintendent of credit unions" means the	70
superintendent of the division of financial institutions of this	71
state.	72

Sec. 1761.02.  (A) A credit union share guaranty corporation	73
may be established, licensed, and operated in compliance with this	74
chapter.	75

(B)(1) A credit union share guaranty corporation may be	76
organized as a corporation under this chapter. Chapter 1701. or	77
1702. of the Revised Code, to the extent either is applicable and	78
not in conflict with this chapter and those chapters of Title	79
XXXIX of the Revised Code specified in division (A) of section	80
1761.04 of the Revised Code, applies to such corporation. A	81
credit union share guaranty corporation shall only be authorized	82
to engagedo any of the following:	83

(a) Engage in the business of guaranteeing payment of a	84
credit union share account of an individual member of a credit	85
union or otherwise;	86

(b) In accordance with division (B)(2) of this section,	87
engage in the business of guaranteeing payment of a credit union	88
share account of a nonmember of a credit union;	89

(c) Otherwise issue or effect credit union share guaranty	90
insurance.	91

(2) For purposes of division (B) of this section, both of	92
the following apply:	93

(a) Nonmember share accounts are subject to guaranty provided	94
by the credit union share guaranty corporation not exceeding	95
twenty per cent of the aggregate share accounts of the	96
participating credit union.	97

(b) Nonmember share accounts are share accounts that are	98
received by a participating credit union that has been designated	99
by its supervisory authority as serving predominantly low-income	100
members; share accounts of other credit unions; and, to the extent	101
determined by the participating credit union's supervisory	102
authority to be received by that credit union consistent with law,	103
share accounts of public units or political subdivisions.	104

(C) A credit union share guaranty corporation shall have the	105
word "insurance" in its name.	106

(D) Persons who receive from a credit union share guaranty	107
corporation any commission, salary, or other emolument for	108
services arising out of their association with the corporation	109
shall not comprise a majority of the membership of the board of	110
directors of the corporation. Persons who are officers, directors,	111
or employees of participating credit unions shall not comprise a	112
majority of the membership of the board of directors of a credit	113
union share guaranty corporationThis division does not apply to	114
persons who receive only an emolument consisting of fees or	115
expense reimbursements for serving as a member of the board of	116
directors of the corporation or of a committee of the board of	117
directors.	118

(E) A credit union share guaranty corporation organized as a	119
nonprofit corporation under this chapter is exempt from all taxes	120
and fees imposed by this state or any county, municipal	121
corporation, local authority, or other subdivision, except that	122
any real property owned by the nonprofit corporation is subject to	123
taxation to the same extent according to its value as other real	124
property is taxed.	125

(F) Notwithstanding the provisions of section 5725.18 of the	126
Revised Code, the capital deposits or contributions by	127
participating credit unions shall not be included in the value of	128
capital and surplus subject to the annual franchise tax payable by	129
a credit union share guaranty corporation organized under this	130
chapter nor shall any capital contributions, assessments, or fees	131
received from participating credit unions for primary coverage by	132
such credit union share guaranty corporation be included in the	133
gross amount subject to the annual franchise tax. Any payment	134
otherwise made under this division shall be in addition to any	135
taxes due as an insurer under Title LVII of the Revised Code.	136

Sec. 1761.03.  The general purposes of a credit union share	137
guaranty corporation are:	138

(A) To guarantee payment of all or a part of participating	139
credit union share accounts of an individual member or, as	140
described in division (B)(2) of section 1761.02 of the Revised	141
Code, a nonmember of a participating credit union, subject to any	142
express limitations as provided in this chapter;	143

(B) To aid and assist any participating credit union which	144
that is in liquidation or incurs financial difficulty in order	145
that the credit union share accounts are protected or guaranteed	146
against loss;	147

(C) To cooperate with participating credit unions, the	148
superintendent of credit unions, the appropriate credit union	149
supervisory authorities, and the national credit union	150
administration for the purpose of advancing the general welfare of	151
credit unions in this state and in such other states where	152
participating credit unions operate.	153

Sec. 1761.05.  (A) No person shall guarantee to a credit	154
union payment of a credit union share account of an individual	155
member or, as described in division (B)(2) of section 1761.02 of	156
the Revised Code, a nonmember of a credit union or otherwise issue	157
or effect credit union share guaranty insurance until the	158
superintendent of insurance has licensed it to do so as a credit	159
union share guaranty corporation under this chapter. Such license	160
shall not be issued or renewed unless an applicant for a license	161
or a credit union share guaranty corporation satisfies the	162
following conditions:	163

(1) The articles of incorporation of the applicant or	164
corporation, and any amendments thereto, are filed with and	165
approved by the secretary of state and the attorney general;	166

(2) The articles of incorporation and the bylaws of the	167
applicant or corporation, and any amendments thereto, are	168
consistent with the provisions of this chapter and those chapters	169
of Title XXXIX of the Revised Code specified in division (A) of	170
section 1761.04 of the Revised Code, and are approved by the	171
superintendent of insurance;	172

(3) The applicant holds bona fide applications for	173
participation in the corporation from at least fiftythirty credit	174
unions which shall become effective immediately upon issuance of	175
the license, or, in the case of a renewal of such license, the	176
corporation has at least fiftythirty participating credit unions;	177

(4) The applicant or corporation maintains a reserve for	178
guarantee losses in compliance with section 1761.15 of the Revised	179
Code;	180

(5) The applicant or corporation has capital deposits in a	181
principal sum no less than five million dollars and such capital	182
deposits are invested in compliance with section 1761.121761.13	183
of the Revised Code;	184

(6) The applicant or corporation submits an audited	185
financial statement verified by the oath of the president and	186
secretary of the corporation, which demonstrates the corporation's	187
compliance with generally accepted accounting principles, and the	188
applicant or corporation submits an annual statement in accordance	189
with sections 3929.30 and 3941.29 of the Revised Code that	190
demonstrates the applicant's or corporation's solvency according	191
to principles of statutory accounting;	192

(7) The superintendent of credit unions certifies in writing	193
to the superintendent of insurance that the applicant or	194
corporation is in compliance with this chapter;	195

(8) The applicant or corporation is in compliance with those	196
chapters of Title XXXIX of the Revised Code specified in division	197
(A) of section 1761.04 of the Revised Code as determined by the	198
superintendent of insurance.	199

(B) The superintendent shall issue, renew, refuse to renew,	200
or deny the license required by this section by written order	201
issued within thirty days after receipt of the application. The	202
superintendent shall issue or renew the license if the conditions	203
set forth in division (A) of this section are satisfied.	204

(C) In the event the superintendent determines to refuse to	205
renew or deny the license, hethe superintendent shall specify all	206
reasons for the refusal or denial in histhe superintendent's	207
written order and shall set the matter for hearing under Chapter	208
119. of the Revised Code within thirty days after issuance of his	209
that written order. At such hearing, the applicant or credit	210
union share guaranty corporation may present evidence to	211
demonstrate its ability to satisfy the conditions required for the	212
issuance or renewal of a license under division (A) of this	213
section. Within twenty days after the conclusion of the hearing,	214
the superintendent shall issue hisa final order either issuing,	215
renewing, refusing to renew, or denying the license. The final	216
order shall comply with the requirements of an adjudication order	217
under Chapter 119. of the Revised Code. The applicant or credit	218
union share guaranty corporation aggrieved by the final order may	219
appeal in accordance with Chapter 119. of the Revised Code.	220

(D) The license required by this section shall be renewable	221
annually on the anniversary date of the issuance of the original	222
license.	223

Sec. 1761.06.  (A) In carrying out its general purposes as	224
set forth in section 1761.03 of the Revised Code, a credit union	225
share guaranty corporation may do any of the following:	226

(1) Guarantee to participating credit unions the payment of	227
any deficiency in the individual member's or, as described in	228
division (B)(2) of section 1761.02 of the Revised Code, a	229
nonmember's credit union share accounts caused by insolvency or	230
any other reason;	231

(2) Issue credit union share guaranty insurance policies or	232
otherwise effect credit union share guaranty insurance;	233

(3) Advance funds in accordance with agreed lending terms	234
and conditions to aid participating credit unions to operate and	235
to meet liquidity requirements;	236

(4) Upon the written order of the superintendent of credit	237
unions, and at such compensation as shall be agreed upon, the	238
corporation may assume control of the property and business of any	239
participating credit union and operate it at the direction of the	240
superintendent until its financial stability has been	241
reestablished to the satisfaction of the superintendent, or the	242
credit union has been liquidated or merged into another credit	243
union;	244

(5) Assist in the merger, consolidation, or liquidation of	245
credit unions;	246

(6) Purchase or otherwise acquire, lease as lessee, invest	247
in, hold, use, lease as lessor, encumber, sell, exchange,	248
transfer, and dispose of property of any description or any	249
interest therein;	250

(7) Borrow money, and issue, sell, and pledge its notes,	251
bonds, and other evidences of indebtedness, and secure any of its	252
obligations by mortgage, pledge, or deed of trust of all or any of	253
its property, and guarantee or secure obligations of participating	254
credit unions, subject to section 3901.72 of the Revised Code;	255

(8) Enter into contracts of insurance or reinsurance,	256
insuring in whole or in part its contractual guarantees to	257
participating credit unions and any other insurance or bonding	258
company contracts necessary or advisable in the conduct of its	259
business, provided a credit union share guaranty corporation shall	260
not assume as reinsurer any risks from another insurer;	261

(9) Receive money or other property from its participating	262
credit unions, or any person;	263

(10) Invest its funds as provided in section 1761.13 of the	264
Revised Code;	265

(11) Receive by assignment, mortgage, or purchase any asset	266
or interest therein owned or held by a participating credit union;	267

(12) Sell, assign, mortgage, encumber, or transfer property	268
of any nature;	269

(13) Conduct investigations, examinations, and audits of any	270
applicant or participating credit union in order to determine the	271
financial condition and operations of the applicant or	272
participating credit union;	273

(14) Become a member or shareholder in any organization,	274
domestic or foreign, regional or national, organized and operated	275
for the purpose of assisting the corporation in carrying out its	276
purposes and, subject to the approval of the superintendent of	277
credit unions, delegate to such organization any one or more of	278
the functions for which it is responsible under this chapter;	279

(15) Conduct its affairs in and outside of this state,	280
provided it shall maintain its offices, books, and records in the	281
location stated in its articles of incorporation as its principal	282
place of business.	283

(B) The corporation may obtain, and continuously maintain in	284
effect, reinsurance and a line of credit, each from one or more	285
insurance companies or financial institutions and in such amount	286
as determined by its board of directors. The superintendent of	287
credit unions or the superintendent of insurance may require the	288
corporation to obtain and maintain reinsurance or a line of credit	289
but only in the event the superintendent of credit unions or the	290
superintendent of insurance first finds that such reinsurance or	291
line of credit is actuarially or financially necessary. Such	292
determination shall be made on a year-to-year basis.	293

In the event of lapse of either reinsurance or the line of	294
credit of the corporation, the corporation shall immediately	295
notify the superintendent of credit unions, the superintendent of	296
insurance, the president of the senate, and the speaker of the	297
house of representatives, and shall confirm this communication in	298
writing.	299

(C) All written communication with regulatory significance	300
from a credit union supervisory authority of another state to the	301
corporation shall be copied and such copy shall be sent by the	302
corporation to the superintendent of credit unions and the	303
superintendent of insurance within three days of receipt.	304

(D) The corporation shall not publicly represent in any	305
manner that it is an agency of the state or federal government.	306
Any public representations of the corporation's status or legal	307
existence are further subject to rules adopted by the	308
superintendent of credit unions and the superintendent of	309
insurance.	310

(E) The corporation shall submit its standard contract of	311
share guaranty, and any amendments thereto, to the superintendent	312
of credit unions and the superintendent of insurance annually. The	313
contract of share guaranty shall reflect all terms governing the	314
guarantee of payment of a credit union share account and shall	315
constitute the policy of credit union share guaranty insurance.	316

Sec. 1761.07.  (A) Any credit union chartered by this state	317
or any credit union chartered by a state that, as described in	318
division (B) of this section, allows its credit unions to be	319
eligible for participation in a credit union share guaranty	320
corporation or any credit union chartered by the federal	321
government that, as described in division (C) of this section,	322
allows federally chartered credit unions to be eligible for	323
participation in a credit union share guaranty corporation is	324
eligible to participate in a credit union share guaranty	325
corporation under this chapter, subject to the following	326
conditions:	327

(1) The board of directors of the credit union and the board	328
of directors of the credit union share guaranty corporation	329
approve the participation;	330

(2) The credit union satisfies the risk eligibility	331
standards established by the credit union share guaranty	332
corporation and applicable to all applying and participating	333
credit unions;	334

(3) The credit union agrees to furnish financial statements,	335
delinquent loan reports, and such other information considered	336
necessary by the credit union share guaranty corporation to assess	337
the financial condition and performance of the credit union;	338

(4) The credit union agrees to be bound by the provisions of	339
this chapter and the articles of incorporation and bylaws of the	340
credit union share guaranty corporation;	341

(5) Participation by the credit union would not result in a	342
violation by the credit union share guaranty corporation of any	343
provision of this chapter or other applicable state or federal	344
law.	345

(B) Credit unions chartered by other states qualify for	346
participation in the corporation, provided the following	347
conditions are satisfied:	348

(1) Such participation is lawful under the laws of both this	349
state and the domicile state of the credit union applying for	350
participation in the corporation;	351

(2) The credit union share guaranty corporation by agreement	352
or law has sufficient authority to require the credit union	353
applying for participation in the corporation to comply with the	354
articles of incorporation and bylaws of the corporation, and with	355
this chapter;	356

(3) The credit union supervisory authority of such state	357
agrees to furnish to the credit union share guaranty corporation	358
copies of all financial and examination reports and other	359
information regarding participating credit unions as is necessary	360
to effect the corporation's purposes. If the credit union	361
supervisory authority is prohibited by law from disclosing such	362
this information, the participating credit unions shall provide	363
the information to the corporation.	364

(C) Credit unions chartered by the federal government may	365
participate in the corporation, provided the following conditions	366
are satisfied:	367

(1) The national credit union administration does not	368
restrict such participation;	369

(2) Such participation is lawful under the laws of both this	370
state, the domicile state of the credit union applying for	371
participation in the corporation, and the federal government;	372

(3) The credit union share guaranty corporation by agreement	373
or law has sufficient authority to require the credit union	374
applying for participation in the corporation to comply with the	375
articles of incorporation and bylaws of the corporation, and with	376
this chapter;	377

(4) ParticipatingTo the extent permitted by federal law or	378
regulation, participating credit unions insured by the national	379
credit union administration agree to furnish to the corporation	380
copies of all financial and examination reports and such other	381
information regarding the participating credit unions as is	382
necessary to effect the corporation's purposes.	383

(D) Any credit union that has becomebeen admitted to	384
participation in the credit union share guaranty corporation in	385
accordance with the qualifications of this section shall have	386
referenced in their contract with the corporation all of the	387
appropriate conditions for participation and the manner in which	388
theythese conditions were satisfied.	389

(E) Any credit union that has becomebeen admitted to	390
participation in the corporation in accordance with the	391
qualifications of division (B) or (C) of this section shall have	392
the same privileges, benefits, and obligations of participation as	393
those participating credit unions chartered under the laws of this	394
state.	395

(F) No credit union shall be admitted to participation in	396
the corporation unless it has paid in full its capital	397
contribution or any applicable premiums, fees, and assessments.	398

(G) Notwithstanding any other provision of law to the	399
contrary, each participating credit union, which is otherwise	400
entitled to vote on any matters or action of the corporation under	401
this chapter, Chapter 1701. or 1702. of the Revised Code, or the	402
articles or bylaws of the corporation, shall be entitled to cast	403
no more than one vote.	404

(H) The right to participate issued by the corporation shall	405
be nontransferrable and shall be exempt from the securities laws	406
of this state.	407

Sec. 1761.08.  (A)(1) In order to permit the credit union	408
share guaranty corporation to assess the financial condition and	409
performance of a credit union, upon the written request of the	410
corporation, the superintendent of credit unions or other credit	411
union supervisory authority or the national credit union	412
administration may furnish to the corporation a copy of unaudited	413
financial statements filed by a participating credit union or a	414
credit union making application to participate in the corporation	415
pursuant to divisions (B) and (C) of section 1733.32 of the	416
Revised Code or a comparable state or federal statute or of any	417
examination reports of the superintendent or other credit union	418
supervisory authority which were prepared pursuant to division (A)	419
of section 1733.32 of the Revised Code or a comparable state or	420
federal statute. There	421

(2) There shall be no liability on the part of, and no cause	422
of action of any nature shall arise against this state or any	423
state, the superintendent of credit unions or other credit union	424
supervisory authority, or the national credit union administration	425
for the release of any information furnished to the corporation	426
pursuant to this division. Such financial	427

(3) Financial statements and analyses furnished to the	428
corporation pursuant to this division (A) of this section are not	429
public documents, and the information contained therein is	430
privileged and confidential to the corporation for its sole use in	431
carrying out its statutory functions.	432

(B)(1) Each participating credit union shall submit monthly	433
to the credit union share guaranty corporation quarterly, or more	434
frequently as considered necessary by the corporation, a copy of	435
its financial statements, delinquent loan report, and any other	436
such information as considered necessary by the credit union share	437
guaranty corporation in order to assess the financial performance	438
of the participating credit union. The corporation may require	439
that participating credit unions submit financial information in	440
the format required by the corporation.	441

(2) Financial statements submitted to the corporation by	442
participating credit unions pursuant to division (B)(1) of this	443
section are public documents.	444

(C) Each participating credit union shall submit to the	445
credit union share guaranty corporation upon written request of	446
the corporation any other information as is necessary to effect	447
the corporation's purposes.	448

(D)(1) In addition to other powers conferred in this chapter	449
a credit union share guaranty corporation may do the following:	450

(1)(a) Appoint an independent certified public accountant or	451
public accountant to prepare an audit report containing audited	452
financial statements together with such other information as the	453
corporation, in good faith, requires regarding the financial	454
condition of any participating credit union;	455

(2)(b) Upon notification to its participating credit union	456
and after notice to the superintendent of credit unions, or other	457
credit union supervisory authority, or the national credit union	458
administration, send a specialized employee to investigate the	459
operations of a participating credit union.	460

(3)(2) Costs and expenses for an audit report or special	461
investigation report under division (D)(1)(a) of this section	462
shall be paid by the corporation.	463

(E)(1) Upon determination by the superintendent of credit	464
unions or the credit union share guaranty corporation that a	465
participating credit union is operating in an unsafe or unsound	466
manner, or that financial statements, delinquent loan reports, and	467
other data received or examined by the corporation is unreliable	468
or the participating credit union investment in the corporation is	469
in excess of five per cent of the corporation's fund, the	470
corporation shall require that an audit of the books and records	471
of the participating credit union be conducted. The audit shall	472
be completed in accordance with generally accepted auditing	473
standards, and include such testing of the records necessary to	474
render an opinion of an independent certified public accountant.	475
If such	476

(2) If the report, certificate, or opinion of the	477
independent accountant, as described in division (E)(1) of this	478
section, is in any way qualified, the corporation shall require	479
the credit union to take such action as the corporation considers	480
necessary to permit an independent accountant to remove such	481
qualification from the report, certificate, or opinion. If such	482
qualification is not remedied within the time period designated,	483
the corporation shall report such qualification in writing to the	484
superintendent within three days thereof. In	485

(3) In addition to other action described in this division,	486
the corporation may do the following:	487

(1)(a) Recommend appropriate corrective measures to the	488
operational policies and procedures of the participating credit	489
unions;	490

(2)(b) Make appropriate recommendations to the	491
superintendent or appropriate credit union supervisory authority	492
or the national credit union administration including the	493
recommendation that the participating credit union be liquidated	494
or consolidated;	495

(3)(c) Submit reports and make recommendations to the	496
superintendent of credit unions, other credit union supervisory	497
authority, or the national credit union administration regarding	498
the financial condition of any participating credit union. Such	499
reports and recommendations are not public documents. There	500

(4) There shall be no liability on the part of, and no cause	501
of action of any nature shall arise against, the corporation or	502
its participating credit unions, directors, officers, employees,	503
or agents, or the superintendent or other credit union supervisory	504
authority or the national credit union administration, for any	505
statements made by them in any reports or recommendations made in	506
accordance with this division (E) of this section.	507

(F) When an examination or investigation of any	508
participating credit union is considered necessary for good cause	509
shown by the superintendent of credit unions under this chapter,	510
the corporation shall pay to the superintendent of credit unions	511
the cost thereof, including the salary or other compensation paid	512
to the persons making the examination or rendering special	513
services and overhead cost incurred in connection with the	514
examination or investigation as fixed by the superintendent. In	515
determining the costs of services or examinations, the	516
superintendent may use the estimated hourly cost for all persons	517
performing services for, or examinations of, the corporation for	518
the fiscal year. Travel expenses shall be paid by the division of	519
financial institutions.	520

(G) Neither the corporation nor any participating credit	521
union, as an agent of the corporation or of its participating	522
credit unions, or any other person shall use information obtained	523
under division (A), (B), (C), (D), or (E) of this section for any	524
purpose not authorized by this section. The conviction for	525
violation of this division by any person located outside this	526
state shall be reported to the appropriate credit union	527
supervisory authority or the national credit union administration	528
for prosecution under the laws of that jurisdiction.	529

Sec. 1761.09.  (A) Each credit union share account of an	530
individual member or, as described in division (B)(2) of section	531
1761.02 of the Revised Code, a nonmember of a participating credit	532
union shall be guaranteed in amounts established from time to time	533
by the credit union share guaranty corporation. Such primary	534
guaranteed amount shall not be less than the amount of the credit	535
union share account but, in no event, shall exceed two hundred	536
fifty thousand dollars.	537

(B) In addition to the primary guaranteed amount, the	538
corporation may establish an excess coverage guarantee for the	539
benefit of those participating credit unions that voluntarily	540
elect to obtain such additional guarantee.	541

(C) The guarantees provided pursuant to this chapter do not	542
apply to credit union share accounts until suchthe credit union	543
has applied for and been admitted as a participating credit union,	544
and cease to apply to the share accounts of any credit union upon	545
the later of any of the following:	546

(1) The termination of the credit union's participation in	547
the corporation pursuant to section 1761.12 of the Revised Code;	548

(2) The completion of the liquidation of the credit union;

549

(3) The withdrawal of the credit union from participation in	550
the corporation.	551

Sec. 1761.10.  (A)(1) A credit union share guaranty	552
corporation shall establish and maintain a guarantee fund. The	553
fund shall be maintained at a normal operating level as defined by	554
the board of directors of the corporation and approved by the	555
superintendent of insurance, except that the normal operating	556
level shall at all times be no less than one per cent of the	557
aggregate share capital of participating credit unions,	558
irrespective of how denominated. The fund of the corporation	559
shall be comprised of the following:	560

(a) The account for each participating credit union;

561

(b) Retained and undivided earnings;

562

(c) Any reserves required by statute or order of the	563
superintendent of credit unions;	564

(d) Borrowings made in accordance with section 3901.72 of	565
the Revised Code.	566

(2)(a) Each participating credit union shall contribute to	567
and maintain with the corporation a capital contribution to be	568
credited to its account, in an amount equal to at least one per	569
cent of its aggregate share capital as is established as the	570
normal operating level of the fund by the board of directors	571
pursuant to division (A)(1) of this section and approved by the	572
superintendent of insurance. Each participating credit union's	573
account shall be adjusted annually to reflect changes in the	574
participating credit union's aggregate share capital in accordance	575
with procedures adopted by the board of directors and may be	576
adjusted more frequently if an increase in the aggregate share	577
capital or a change in the financial condition of the	578
participating credit union warrants such adjustment. Those credit	579
unions participating in excess coverage shall pay a premium as	580
prescribed by the board of directors of the corporation and as	581
filed and approved under Chapter 3937. of the Revised Code.	582

(b) The approval of the superintendent of insurance	583
concerning the normal operating level of the guarantee fund	584
expires upon written determination by the superintendent of	585
insurance that there is cause for additions to the guarantee fund.	586
SuchThis determination is not subject to any hearing requirement	587
under Chapter 119. of the Revised Code, provided a credit union	588
guaranty corporation may request a supervisory conference under	589
section 1761.19 of the Revised Code.	590

(3) If, at the close of a fiscal year, the guarantee fund	591
exceeds the normal operating level determined by the board of	592
directors of a credit union share guaranty corporation, the board	593
of directors may make a distribution of the excess to	594
participating credit unions. Any distribution shall be made to	595
each participating credit union in the proportion that each	596
participating credit union's account bears to the total aggregate	597
participating credit union accounts of the corporation. No	598
determination by the board of directors is effective until	599
approved by the superintendent of insurance. No distribution	600
shall be made, nor shall it confer any rights, until approved by	601
the superintendent of insurance.	602

(4) The amount of the account of each participating credit	603
union shall be carried on the books of the individual participant	604
as a deposit with the corporation.	605

(5) Notwithstanding any other provision of this chapter, the	606
corporation shall require the participating credit unions to make	607
capital contributions to maintain the normal operating level set	608
by division (A)(1) of this section during any calendar year in	609
which the fund has been reduced below the minimum operating level	610
as a result of payment of any deficiencies in credit union share	611
accounts.	612

(B)(1) The corporation may annually or more frequently levy	613
and collect additions to the capital contribution as the board of	614
directors of the corporation considers appropriate. The	615
corporation shall notify the superintendent of credit unions and	616
the superintendent of insurance of such additions. Whenever the	617
superintendent of credit unions or the superintendent of insurance	618
considers it necessary for the maintenance of the normal operating	619
level of the fund, hethe superintendent shall order the	620
corporation to levy and collect additions to the capital	621
contributions. Such order shall specify the amount of the	622
addition and the reasons upon which the order is based.	623

(2) The corporation shall send a written notice of capital	624
contributions required pursuant to division (B)(1) of this section	625
to each participating credit union within ten days after the levy	626
of any capital contributions. Capital contributions shall be paid	627
to the corporation by each participating credit union not later	628
than thirty days following mailing of written notice of any	629
required capital contribution.	630

(C)(1) In the event of potential impairment of the fund, a	631
special assessment of the fund may be levied by the corporation	632
with the approval of the superintendent of credit unions or the	633
superintendent of insurance. Impairment for this purpose is	634
deemed to exist when the corporation's liabilities and share	635
capital exceed its assets. Whenever the superintendent of credit	636
unions or the superintendent of insurance considers it necessary	637
to avoid an impairment of the fund, hethe superintendent shall	638
order the corporation to levy a special assessment. Such order	639
shall specify the amount of the assessment and the reasons upon	640
which the order is based.	641

(2) The corporation shall send a written notice of the	642
special assessment required pursuant to division (C)(1) of this	643
section to each participating credit union within ten days after	644
the levy thereof. Special assessments shall be paid to the	645
corporation by each participating credit union not later than	646
thirty days following mailing of written notice of any special	647
assessment unless for good cause shown the time period is	648
extended.	649

(D) A report of each capital contribution that may be	650
required pursuant to division (B) of this section shall be made to	651
the superintendent of credit unions and the superintendent of	652
insurance within ninety days of the special assessment levy. A	653
report of each special assessment that may beis required pursuant	654
to division (C) of this section shall be made to the	655
superintendent of credit unions and the superintendent of	656
insurance within ten days after mailing the written notice thereof	657
to participating credit unions.	658

(E)(1) In the event any participating credit union fails to	659
pay an annual capital contribution when due, the corporation shall	660
report such default in writing to the superintendent of credit	661
unions and the superintendent of insurance and the appropriate	662
credit union supervisory authority or the national credit union	663
administration within twenty-four hours of such default, and shall	664
revoke after thirty days' notice the participating credit union's	665
participation in the corporation, unless good cause is shown for	666
the delay.	667

(2) In the event any participating credit union fails to pay	668
any additional capital contribution, premium, fee, or assessment	669
when due, the corporation shall report such default in writing to	670
the superintendent of credit unions and the superintendent of	671
insurance and the appropriate credit union supervisory authority	672
or the national credit union administration within twenty-four	673
hours of such default, and shall revoke after thirty days' notice	674
the participating credit union's participation in the corporation,	675
unless good cause is shown for the delay.	676

(3) The thirty-day notice of revocation required under	677
divisions (E)(1) and (2) of this section does not apply to the	678
revocation of excess coverage.	679

(F) Any participating credit union that is voluntarily	680
liquidated or, any participating credit union that withdraws from	681
participation in the corporation and obtains a different form of	682
share guaranty or insurance pursuant to section 1733.041 of the	683
Revised Code or similar state statute, or any participating credit	684
union that merges with another credit union that becomes the	685
surviving credit union whose shares are guaranteed or insured by a	686
different form of guaranty or insurance may be refunded in an	687
amount equal to the balance of its capital contribution account.	688
Such reimbursement of a participating credit union's capital	689
contribution account balance shall be paid only if and when the	690
guarantee fund exceeds its normal operating level as calculated	691
without the account of the withdrawing credit union.	692

(G) In the event of a merger of two or more participating	693
credit unions where the surviving credit union is to be insured by	694
the corporation, the funds in the capital contribution account of	695
each such credit union shall be transferred to the account of the	696
surviving credit union.	697

(H) If a credit union share guaranty corporation is	698
dissolved, the net assets after settling any recorded, contingent,	699
and contractual liabilities, and all costs of dissolution shall be	700
distributed to the participating credit unions in accordance with	701
their share balances, less any outstanding debts owed to the	702
corporation.	703

Sec. 1761.13.  (A) A credit union share guaranty corporation	704
shall invest or deposit its funds in the following manner:	705

(1) In banks incorporated under the laws of this or any	706
other state, or the United States;	707

(2) In negotiable certificates of deposit and bankers	708
acceptances;	709

(3) In share certificates deposited in or any form of	710
evidence of interest or indebtedness of any credit union organized	711
under Chapter 1733. of the Revised Code or comparable state law if	712
insured, or whose member accounts are insured as provided for by	713
Title II of the "Federal Credit Union Act," 84 Stat. 994, (1970),	714
12 U.S.C.A. 1781, as amended, or by comparable insurance. No	715
investment under division (A)(3) of this section shall be in a	716
participating credit union.	717

(4) In accounts with, investment certificates or	718
withdrawable shares of, any savings and loan association that is	719
an insured institution as defined by Title IV of the "National	720
Housing Act," 48 Stat. 1255 (1934), 12 U.S.C.A. 1724, as amended.	721

(5) In United SatesStates government securities or United	722
States government agency obligations;	723

(6) In bonds or other evidence of indebtedness rated in the	724
three highest ratings of Standard and Poor's or Moody's service,	725
not in default as to principal or interest, that are valid	726
obligations issued, assumed, or guaranteed by any state, county,	727
or municipal corporation of the United States;	728

(7) In bonds or other evidence of indebtedness rated in the	729
three highest ratings by Standard and Poor's or Moody's service,	730
not in default as to principal or interest, that are valid	731
obligations issued, assumed, or guaranteed by any corporation	732
incorporated under the laws of the United States or a state and	733
described in division (D)(1) of section 3925.08 of the Revised	734
Code. However, a credit union share guaranty corporation shall	735
not invest in any such corporate security containing any provision	736
of optionality, including, but not limited to, any derivative	737
security.	738

(8) In any other investments that are expressly approved by	739
the superintendent of credit unions and the superintendent of	740
insurance or are permitted by rules adopted by the superintendents	741
pursuant to division (C) of section 1761.04 of the Revised Code,	742
but such other investments shall not exceed twenty per cent of the	743
sum of the capital contributions, retained and undivided earnings,	744
and any borrowings made in accordance with section 3901.72 of the	745
Revised Code of the corporation. The superintendents shall not	746
permit the corporation to make any investment in any unrelated	747
corporation or unrelated subsidiary without the prior written	748
approval of the superintendent of credit unions and the	749
superintendent of insurance.	750

(B) The maximum investment in securities of any one	751
corporation shall not exceed ten per cent of the guarantee fund at	752
the time the investment is made.	753

(C) The corporation's directors, officers, committee	754
members, and employees, and immediate family members of such	755
individuals, are prohibited from receiving pecuniary or any other	756
type of consideration in connection with the making of an	757
investment or deposit by the corporation.	758

(D) Within thirty days of appointment, each officer, agent,	759
or employee having control or access to funds or securities owned	760
by or pledged with a credit union share guaranty corporation shall	761
be provided with fidelity bond coverage by the corporation in an	762
amount commensurate with the risk involved.	763

(E) The corporation shall not take a position in any	764
corporate stock without the express written approval of the board	765
of directors and the superintendent of credit unions and the	766
superintendent of insurance.	767

Section 2. That existing sections 1761.01, 1761.02, 1761.03,	768
1761.05, 1761.06, 1761.07, 1761.08, 1761.09, 1761.10, and 1761.13	769
of the Revised Code are hereby repealed.	770