Each credit union incorporated under the laws of this State shall:
Participate in and have its member accounts insured under the National Credit Union Administration Share Insurance Program; or
Participate in and have its member accounts insured by a credit union share guaranty corporation that is approved by the Commissioner to at least the same extent and amount as provided by the National Credit Union Administration Share Insurance Program.
The Commissioner may examine any credit union share guaranty corporation that insures the member accounts of a credit union that is subject to this title.
The Commissioner may charge the reasonable cost of an examination conducted under paragraph (1) of this subsection to the credit union share guaranty corporation that is examined.
A credit union share guaranty corporation, its members, and persons who have share and deposit accounts in credit unions are not subject to the provisions of the Insurance Article as a result of any of the activities of the credit union share guaranty corporation under this title.
A credit union may not voluntarily terminate its insurance with the National Credit Union Administration Share Insurance Program or a credit union share guaranty corporation without prior approval of the Commissioner.
A credit union is subject to the provisions of 12 C.F.R., Part 702 (Prompt Corrective Action) and 12 U.S.C. § 1790d (Net Worth Provisions).
In this section, “risk assets” means a credit union’s total loans outstanding to its members.
Each credit union shall have a reserve fund to meet losses on loans and to meet other contingencies that the Commissioner specifies.
The reserve fund may be distributed to the members of the credit union only on dissolution of the credit union.
After paying organization expenses, each credit union shall credit to its reserve fund all entrance fees, transfer fees, and fines.
A credit union in operation for 4 years or more and having assets of $500,000 or more shall credit to the reserve fund, at the end of each accounting period:
10 percent of its gross income until the reserve fund equals 4 percent of its risk assets; and
Then, 5 percent of its gross income until the reserve fund equals 6 percent of its risk assets.
A credit union in operation for less than 4 years or having assets of less than $500,000 shall credit to the reserve fund, at the end of each accounting period:
10 percent of its gross income until the reserve fund equals 7.5 percent of its risk assets; and
Then, 5 percent of its gross income until the reserve fund equals 10 percent of its risk assets.
On recommendation of the board, the amount credited to the reserve fund may be increased.
If the reserve fund falls below the amounts required by subsection (c)(2) or (3) of this section, it shall be restored by regular contributions.
A credit union shall maintain an allowance for loan and lease loss account in accordance with generally accepted accounting principles.
The balance of the allowance for loan and lease loss account shall include coverage for:
Individually classified loans; and
The historical reserve needs of the credit union.
The assets of a credit union that are not committed for loans may be invested in:
General obligations of or obligations guaranteed by the United States;
Deposits, loans, shares, or stock of any federal reserve bank, federal home loan bank, or any central liquidity facility established under state or federal law;
Securities, obligations, or other instruments of or issued by or fully guaranteed as to principal and interest by the federal government or a unit of the federal government;
General obligations of a state or a federal territory or political subdivision, provided that the general obligation is rated in one of the three highest rating categories of a nationally recognized statistical rating organization as determined by the Commissioner;
Deposits or federal funds of any financial institution that has federal deposit insurance;
Shares or deposits of other credit unions;
Mutual funds that invest solely in investments permissible for direct investment by the credit union;
Repurchase transactions secured by investments permissible for direct investment by the credit union; or
Any other investment that the Commissioner approves.
Subject to the provisions of paragraph (2) of this subsection, in addition to the investments authorized under subsection (a) of this section, a credit union may request authority from the Commissioner to make other investments, including investments authorized under the federal Credit Union Act or regulations of the National Credit Union Administration, on an ongoing basis.
To obtain the Commissioner’s approval for additional investment authority under paragraph (1) of this subsection, a credit union shall submit to the Commissioner an investment policy.
The Commissioner may review the investment policies of the credit union and order changes.
With the prior approval of the Commissioner, as required under subsection (b) of this section, a credit union may organize a credit union service organization.
A credit union that proposes to organize a credit union service organization shall:
File with the Commissioner a notice of intention to organize a credit union service organization; and
Submit to the Commissioner any information the Commissioner requires in order to evaluate the proposed credit union service organization.
In deciding whether to approve the organization of a credit union service organization, the Commissioner shall consider whether:
The organization of the credit union service organization will promote the convenience of the members of the credit union;
The credit union has sufficient net worth to support the credit union service organization; and
The credit union generally is operating in compliance with the provisions of this title.
Unless the Commissioner notifies the credit union that a different time period is necessary, within 60 days of receipt of the notice specified in paragraph (2) of this subsection, the Commissioner shall notify the credit union of the determination on the approval of the organization of a credit union service organization.
Subject to the provisions of this subsection, a credit union may invest in and make loans to a credit union service organization.
If an investment or loan by a credit union to a credit union service organization causes the aggregate of the credit union’s investments or loans to exceed 2% of the credit union’s total assets, the credit union shall:
Notify the Commissioner as provided in paragraph (3) of this subsection; and
Receive the prior approval of the Commissioner for any investment in or loan to the credit union service organization that exceeds the limit imposed under this paragraph.
A credit union that proposes to make any investment in or loan to the credit union service organization that exceeds the limit under paragraph (2) of this subsection shall:
File with the Commissioner a notice of intention to exceed the limit; and
Submit to the Commissioner any information the Commissioner requires in order to evaluate the proposed intention to exceed the limit.
In deciding whether to approve the investment or loan, the Commissioner shall consider whether:
The investment or loan will promote the convenience of the members of the credit union;
The credit union has sufficient net worth to support the investment or loan; and
The credit union generally is operating in compliance with the provisions of this title.
Unless the Commissioner notifies the credit union that a different time period is necessary, within 60 days of receipt of the notice specified in paragraph (2) of this subsection, the Commissioner shall notify the credit union of the determination on the approval of the investment or loan.
As deemed necessary by the Commissioner, the Commissioner shall have complete:
Access to the books and records of a credit union service organization; and
Authority to review the internal controls of a credit union service organization.
A credit union service organization may serve on a contractual basis more than one credit union and its members.
In addition to any other investment authorized under this subtitle, a credit union may purchase, construct, or acquire and hold, either individually or jointly with another credit union, fixed assets for the purpose of providing adequate facilities for the transaction of present and future business.
A credit union may use fixed assets acquired under this section for:
The principal office functions;
Branches; and
Any other activities in which the credit union engages.
A credit union may rent excess space in a fixed asset acquired under this section as a source of income.
A credit union’s investment in fixed assets acquired under this section:
May exceed 4% of the total assets of the credit union only with the prior approval of the Commissioner; and
May not exceed 6% of the total assets of the credit union.
A credit union may purchase, lease, or acquire and hold tangible personal property, either individually or jointly with another credit union, as may be necessary or incidental to the operations of the credit union.
Subject to the provisions of paragraph (2) of this subsection, a credit union may borrow money for the purchase of fixed assets.
The term of the loan may not exceed:
15 years for borrowings secured by real or leasehold property; and
5 years for borrowings secured by other fixed assets.
A credit union may borrow money for a purpose other than the purchase of fixed assets as long as the total borrowing does not exceed the greater of:
Two times the net worth of the borrowing credit union; or
10% of the total assets of the borrowing credit union.
A credit union may change its place of business on written notice to the Commissioner.
The fiscal year of each credit union ends at the close of business on December 31.
A credit union shall post its hours of operation prominently in its office.
Each credit union shall be open for business during its posted hours, except that a credit union may close:
On any State holiday; and
At any other time if:
Notice of the closing is posted prominently in its office 3 business days in advance;
Specifically authorized to close by the Commissioner; or
An emergency exists that affects the credit union and it is not practical to obtain authorization from the Commissioner before closing the affected credit union.
If a credit union closes under the provisions of subsection (b)(2)(iii) of this section, the chairman of the board or the president of the affected credit union shall notify the Commissioner of the reason for the closing of the credit union as soon as possible but no later than 24 hours after the closing of the credit union.
In this section the following words have the meanings indicated.
“Branch” means a deposit–taking office of a credit union in the State that is open to the public as of December 31 of the calendar year preceding the request for an assessment offset credit.
“De novo branch” means a deposit–taking office of a credit union in the State that was opened to the public for the first time during the calendar year immediately preceding a request for an assessment offset credit that:
Was originally established by the credit union as a branch; but
Did not become a branch of the credit union as a result of:
The acquisition by the credit union of an insured depository institution or a branch of an insured depository institution; or
The conversion, merger, or consolidation of an insured depository institution or a branch of an insured depository institution.
“Deposits” means deposits originated and housed at a credit union branch located in a low– to moderate–income tract as reported by a credit union to the Commissioner each year as of December 31.
“Low– to moderate–income tract” has the meaning stated in § 5–203 of this article.
“Maryland Opportunity Account” means a transaction account offered by a credit union to its members that meets standards annually determined by the Commissioner that promote fair and equal access to financial services.
This section applies only to a credit union with assets of $300,000 or greater.
The Commissioner shall impose an annual assessment on each credit union as provided in this subsection to cover the expense of regulating credit unions.
The Commissioner shall assess each credit union the sum of:
$1,000; and
8 cents for each $1,000 of the assets of the credit union over $1,000,000.
The assessment shall be based on assets stated in the credit union’s most recent financial report.
A well–capitalized credit union with a composite CAMELS rating of 1 or 2 may file with the Commissioner a request for an assessment offset credit of:
12 cents for each $1,000 of deposits in a de novo branch located in a low– to moderate–income tract for the first 5 years after the date the de novo branch opened; or
6 cents for each $1,000 of deposits in a branch located in a low– to moderate–income tract not to exceed the cap set by the Commissioner by December 31 of the calendar year preceding the request for an assessment offset credit.
In addition to an assessment offset credit under paragraph (4) of this subsection, a well–capitalized credit union with a composite CAMELS rating of 1, 2, or 3 may file with the Commissioner a request for an assessment credit of:
$5,000 on receiving the Commissioner’s initial approval that the credit union offers at least one Maryland Opportunity Account; and
$3,000 for each year thereafter that the credit union offers at least one Maryland Opportunity Account that, as determined by the Commissioner, remains in active use by the credit union’s members.
A credit union shall pay the assessment imposed under this section to the Commissioner on or before the April 15 after the assessment is imposed.
If a credit union files an application with the Maryland Insurance Commissioner to purchase or make available, as an agent or otherwise, insurance for its members either on an individual or group basis, the credit union shall notify the Commissioner, within 10 days after filing the application, that the credit union has filed the application.
As approved by the Commissioner, a credit union may enter into marketing arrangements with a person to facilitate the credit union’s members’ voluntary purchase of goods or other services from third parties, consistent with the purposes of the credit union.
A credit union may be compensated for the services provided under subsection (a) of this section.
A credit union shall keep the books and records that the Commissioner requires to determine compliance with this title.
Unless a longer period is expressly required by State or federal law, a credit union shall retain the books and records required under subsection (a) of this section for a period of at least 5 years.
A credit union may retain the books and records required under subsection (a) of this section at any location, provided that the credit union:
Notifies the Commissioner in writing of the location of the books and records; and
Makes the books and records available at the credit union’s principal place of business, as agreed by the Commissioner and the credit union, within 7 days of a written request for examination by the Commissioner.
A credit union shall retain the books and records required under subsection (a) of this section in one of the following ways:
Original form;
An electronic equivalent approved by the Commissioner; or
A microphotographic copy approved by the Commissioner.