Sec. 36a-441a. Loan and lease losses account. Net worth requirement.
Sec. 36a-454b. Conflict of interest policy. Prohibitions re insiders and family members of insiders.
Sec. 36a-456a. Shares; secondary capital accounts; share insurance.
Sec. 36a-456b. Tax and loan and note accounts.
Sec. 36a-458a. Loans. Definitions.
Sec. 36a-435b. Definitions. As used in sections 36a-435a to 36a-472a, inclusive, unless the context otherwise requires:
(1) “Appointed director” means a director emeritus or an advisory director of a Connecticut credit union who is not a member of the governing board of such credit union;
(2) “Branch” means any office established by a Connecticut credit union, an out-of-state, state-chartered credit union, a federal credit union or an out-of-state, federally-chartered credit union, as the case may be, at a fixed location, at which shares or deposits are received, share drafts or checks are paid or money is lent, including an office operated as a shared service center and not including the main office of the credit union;
(3) “Capital” means undivided earnings, special purpose reserves, donated equity and accumulated, unrealized gains or losses on securities in accordance with generally accepted accounting principles;
(4) “Certificate of incorporation” means the certificate of incorporation of a Connecticut credit union and includes in the case of Connecticut credit unions in existence on July 1, 1975, articles of association, articles of incorporation and certificates of organization;
(5) “Corporate”, when used in conjunction with any institution that is a Connecticut credit union, federal credit union or out-of-state credit union, means a corporate credit union, as defined in 12 CFR 704.2, as from time to time amended;
(6) “Credit manager” means a natural person approved by the governing board of a Connecticut credit union and employed by such credit union to supervise its lending activities;
(7) “Credit union service organization services” means those services that are authorized for credit union service organizations under state or federal law, and that are closely related to credit union business, are convenient and useful to credit union business, are reasonably related to the operations of a credit union or are financial in nature;
(8) “Director” means a member of the governing board of a Connecticut credit union;
(9) “Federal Credit Union Act” means 12 USC Section 1751 et seq., as from time to time amended;
(10) “Financial institution” means any Connecticut credit union, bank, federal credit union, out-of-state bank or out-of-state credit union;
(11) “Immediate family member” means a (A) spouse, (B) natural or adoptive parent, child or sibling, (C) stepparent, stepchild or stepsibling, (D) father-in-law, mother-in-law, daughter-in-law, son-in-law, brother-in-law or sister-in-law, (E) grandparent or grandchild, or (F) spouse of a grandparent or grandchild;
(12) “Insider” means a director, appointed director, member of a board-appointed committee, member of senior management or loan officer of a Connecticut credit union;
(13) “Loan officer” means a natural person who for compensation or gain, or with the expectation of compensation or gain, accepts loan applications or offers or negotiates the terms of personal, business or other loan products. “Loan officer” does not include a natural person engaged solely as a loan processor or underwriter;
(14) “Member” means any person who has been admitted to membership in the Connecticut credit union in accordance with this chapter;
(15) “Member in good standing” means a member who (A) owns at least one membership share in a credit union, (B) is current on all credit obligations to the credit union, and (C) has not caused the credit union a credit or share loss that remains outstanding;
(16) “Membership share” means a share equal to the stated par value of the Connecticut credit union which may not be withdrawn or transferred except upon termination of membership and which confers membership and voting rights on the member;
(17) “Mobile branch” means any office of a Connecticut credit union at which credit union business is conducted, which is in fact moved or transported to one or more predetermined locations in accordance with a predetermined schedule;
(18) “Multiple common bond membership” means a field of membership consisting of more than one group of individuals, each of which has, within the group, a common bond of occupation or association;
(19) “Officer” means the chairperson, vice chairperson, secretary and treasurer of the governing board of a Connecticut credit union;
(20) “Senior management” means the president or chief executive officer, vice president or vice chief executive officer, chief financial officer, credit manager, and any person occupying a similar status or performing a similar function;
(21) “Share” means the basic unit of moneys held by a member of a Connecticut credit union in share accounts at a Connecticut credit union on which a dividend may be paid;
(22) “Shared service center” means a branch that is (A) established by any combination of two or more (i) Connecticut credit unions, (ii) out-of-state, state-chartered credit unions, (iii) federal credit unions, or (iv) out-of-state, federally-chartered credit unions, and (B) operated in such a manner as to provide a credit union member the same credit union services that the credit union member could lawfully obtain at the main office of the member's credit union; and
(23) “Single common bond membership” means a field of membership consisting of one group that has a common bond of occupation or association.
(P.A. 02-73, S. 35; P.A. 03-16, S. 1; 03-35, S. 1; 03-196, S. 11; P.A. 25-37, S. 1.)
History: P.A. 03-16 redefined “branch” by substituting “established by” for “of” and by including an office established by an out-of-state or federal credit union and an office operated as a shared service center, and defined “shared service center”; P.A. 03-35 defined “appointed director”, redefined “director” by deleting “a director emeritus or an advisory director”, and made technical changes; P.A. 03-196 defined “mobile branch” and made technical changes, effective July 1, 2003; P.A. 25-37 redefined “capital” in Subdiv. (3) and “immediate family member” in Subdiv. (11), added new Subdiv. (12) defining “insider” and new Subdiv. (13) defining “loan officer”, redesignated existing Subdivs. (12) to (21) as Subdivs. (14) to (23), amended redesignated Subdiv. (22) by designating existing provisions as Subparas. (A) and (B) and making conforming changes and made technical changes throughout, effective July 1, 2025.
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Sec. 36a-441a. Loan and lease losses account. Net worth requirement. (a) A Connecticut credit union shall establish and maintain an allowance for loan and lease losses account in an amount that represents the estimated losses on loans and leases. The allowance for loan and lease losses account requirement shall be computed and adjusted, through the provision for loan and lease losses account, prior to the declaration or payment of dividends.
(b) A Connecticut credit union shall contribute from its earnings, as net worth, the greater of (1) such amounts as may be required by 12 CFR Part 702, as from time to time amended, or (2) amounts in accordance with the following schedule: (A) In the case of a Connecticut credit union in existence for more than four years and having assets of two million dollars or more, ten per cent of its gross income until its net worth equals four per cent of total assets, then five per cent of gross income until its net worth equals six per cent of total assets; and (B) in the case of a Connecticut credit union in existence for four years or less or a Connecticut credit union having assets of less than two million dollars, ten per cent of its gross income until its net worth equals seven and one-half per cent of total assets, then five per cent of its gross income until its net worth equals ten per cent of total assets.
(c) The commissioner may increase the net worth requirement of any Connecticut credit union set forth in subsection (b) of this section when the commissioner deems it necessary to protect the safety and soundness of such Connecticut credit union.
(d) Whenever the net worth falls below the applicable percentages of total assets specified in subsection (b) of this section, the Connecticut credit union shall make regular contributions in such amounts as specified in subsection (b) of this section as may be needed to maintain such net worth. Such contributions shall be made prior to the declaration or payment of dividends.
(e) As used in this section, the term “net worth” means the retained earnings balance of the Connecticut credit union at the end of each dividend period, excluding the allowance for loan and lease losses account and, in the case of a Connecticut credit union designated by the National Credit Union Administration as a low-income credit union under 12 CFR 701.34, as from time to time amended, net worth includes any secondary capital account that is uninsured and subordinate to all other claims, including claims of creditors, shareholders and the National Credit Union Share Insurance Fund. Retained earnings shall consist of undivided earnings, as determined under generally accepted accounting principles, and other appropriations designated by the commissioner or the National Credit Union Administration, or its successor agency, or by the governing board of the Connecticut credit union with the approval of the commissioner.
(P.A. 02-73, S. 43; P.A. 03-84, S. 50; P.A. 25-37, S. 8.)
History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (c) and (e), effective June 3, 2003; P.A. 25-37 amended Subsec. (e) to delete “regular reserves”, effective July 1, 2025.
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Sec. 36a-454b. Conflict of interest policy. Prohibitions re insiders and family members of insiders. (a) The governing board of a Connecticut credit union shall adopt a written conflict of interest policy that includes provisions addressing transactions with insiders and their immediate family members and other persons having a common ownership, investment or other pecuniary interest in a business enterprise with such insiders and immediate family members of such persons.
(b) An extension of credit made by a Connecticut credit union to an insider shall require the approval of the governing board if (1) such insider is the debtor, guarantor, endorser or cosigner of the extension of credit; and (2) the extension of credit by itself or when added to the aggregate of all outstanding extensions of credit for which such insider is the debtor, guarantor, endorser or cosigner exceeds twenty-five thousand dollars plus pledged shares.
(c) No insider of a Connecticut credit union or professional retained by a Connecticut credit union shall in any manner, directly or indirectly, participate in any determination affecting such insider's or professional's pecuniary interest or the pecuniary interest of any immediate family member of such insider or professional or any corporation, partnership or association, other than the Connecticut credit union, in which such insider or professional is directly or indirectly interested.
(d) (1) Except as provided in subdivision (2) of this subsection, an insider, immediate family member of such insider or other person having a common ownership, investment or other pecuniary interest in a business enterprise with an insider or immediate family member of such insider shall not obtain an extension of credit from the Connecticut credit union with preferential rates, terms or conditions, or act as guarantor or endorser thereon, and shall not be involved in the appraisal or valuation of assets which are to be used as collateral for an extension of credit.
(2) An insider, an employee of a Connecticut credit union or a member of the governing board may obtain an extension of credit from the Connecticut credit union with preferential rates, terms or conditions, or act as guarantor or endorser thereon, provided such extension of credit is obtained pursuant to a written policy established by the governing board. Any such written policy shall require that (A) uniform preferential rates, terms or conditions are offered to insiders, employees and members of the governing board, and (B) no extension of credit shall be offered pursuant to such written policy if, at the time the credit is extended, the Connecticut credit union reasonably expects such extension of credit to result in a financial loss.
(e) An insider and the immediate family member of such insider shall not receive, directly or indirectly, any commission, fee or other compensation, except those of a nominal value, in connection with any extension of credit by the Connecticut credit union, provided this subsection shall not prohibit: (1) Payment by a Connecticut credit union of: (A) Salaries to employees, (B) incentives or bonuses to employees based on the Connecticut credit union's overall financial performance, (C) incentives or bonuses to employees, other than a member of senior management, in connection with an extension of credit, provided the governing board establishes written policies and internal controls in connection with such incentives or bonuses and monitors compliance with such policies and controls at least annually, (D) fees to an insider or immediate family member of such insider for the performance of title searches, loan closings and collections, provided the Connecticut credit union has complied with subsection (k) of this section prior to engaging such insider or immediate family member of such insider; and (2) receipt of compensation from a person outside a Connecticut credit union by a director, appointed director, member of a board-appointed committee or employee who is not a member of senior management or an immediate family member of such director, appointed director, committee member or employee, for a service or activity performed by the director, appointed director, committee member or employee outside the Connecticut credit union, provided no referral has been made by the credit union or the director, appointed director, committee member, employee or immediate family member of such director, appointed director, committee member or employee.
(f) An insider and the immediate family members of such insider or an employee of a Connecticut credit union shall not receive anything of value in connection with the making of an investment or deposit by the Connecticut credit union of funds of the credit union, unless the governing board determines that the involvement of the insider, the immediate family member of such insider or the employee does not present a conflict of interest, and includes such determination in its minutes. The prohibition contained in this subsection shall not prohibit the credit union from paying salaries, incentives and bonuses to employees in connection with the making of such investments or deposits. An insider shall conduct all transactions that are not prohibited under this subsection at arm's length and in the best interests of the Connecticut credit union.
(g) An insider and the immediate family members of such insider shall not receive any direct or indirect compensation or benefit in connection with the credit union's insurance or group purchasing activities for members and employees. The prohibition contained in this subsection shall also apply to any employee not otherwise covered if the employee is directly involved in insurance or group purchasing activities unless the governing board determines that the employee's involvement does not present a conflict of interest and includes such determinations in its minutes. An insider and the immediate family member of such insider shall conduct all transactions that are not prohibited under this subsection at arm's length and in the best interests of the credit union.
(h) A Connecticut credit union shall not buy, lease or otherwise acquire premises from any of the following without the prior approval of the governing board, such approval to be included in the governing board's minutes: (1) An insider or immediate family member of such insider; (2) a corporation in which an insider or immediate family member of such insider is an officer or director or has an ownership interest of ten per cent or more; (3) a partnership in which any insider or immediate family member of such insider is a general partner or a limited partner with an interest of ten per cent or more. The prohibition contained in this subsection shall also apply to any employee not otherwise covered if the employee is directly involved in investments in fixed assets unless the governing board determines that the employee's involvement does not present a conflict of interest and includes such determinations in its minutes.
(i) No insider or employee of a Connecticut credit union or the immediate family member of any such person shall purchase, directly or indirectly, any of the assets of the credit union for an amount less than the current market value thereof, without the prior approval of the governing board which approval shall include a determination that the transaction is in the best interests of the credit union. Such approval and determination shall be included in the governing board's minutes.
(j) With the approval of the commissioner, a Connecticut credit union may have as an employee, director or appointed director a person who serves as an officer, employee, director or appointed director of any other financial institution.
(k) When a Connecticut credit union retains an insider or an immediate family member of such insider to render services to the credit union, the governing board shall document in its minutes that such hiring was at arm's length and in the best interests of the credit union and was in accordance with the competitive bidding and appropriate due diligence process as provided in the credit union's conflict of interest policy.
(l) The directors, appointed directors, members of board-appointed committees, members of senior management and the immediate family members of such persons that have outstanding loans or investments in a credit union service organization shall not receive any salary, commission, investment income or other income or compensation from such credit union service organization, either directly or indirectly, or from any person being served through the credit union service organization. This provision shall not prohibit (1) such Connecticut credit union insiders or the immediate family members of such persons from assisting in the operation of such credit union service organization, provided such persons are not compensated by the credit union service organization, and (2) reimbursement to the Connecticut credit union for the services provided by such directors, appointed directors, committee members or senior management members if the accounts receivable of the Connecticut credit union due from the credit union service organization are paid in full at least quarterly.
(m) A Connecticut credit union shall not grant a member business loan if any additional income received by the credit union or senior management of the credit union is tied to the profit or sale of the business or commercial endeavor for which the loan is made.
(P.A. 02-73, S. 51; P.A. 03-35, S. 6; 03-84, S. 55; P.A. 04-8, S. 7; P.A. 25-37, S. 7.)
History: P.A. 03-35 amended Subsec. (a) by designating definition of “insider” as Subdiv. (1), adding “appointed director” in said Subdiv. (1) and defining “immediate family member” in new Subdiv. (2), and amended Subsecs. (e), (j) and (l) by inserting “appointed director” and “appointed directors”; P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (j), effective June 3, 2003; P.A. 04-8 made a technical change in Subsec. (l)(2), effective April 16, 2004; P.A. 25-37 amended Subsec. (a) to delete reference to Sec. 36a-435b and provisions defining “insider” and “immediate family member”, amended Subsec. (c) to make technical changes, amended Subsec. (d) to designate existing provisions as Subdiv. (1) and therein add provision re exception in Subdiv. (2) and make conforming changes, and add Subdiv. (2) re an insider, employee or member of governing board obtaining an extension of credit with preferential rates, terms or conditions, or acting as guarantor or endorser thereon, effective July 1, 2025.
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Sec. 36a-455a. Powers. A Connecticut credit union may:
(1) Transact a general credit union business and exercise by its governing board or duly authorized members of senior management, subject to applicable law, all such incidental powers as are consistent with its purposes. The express powers authorized for a Connecticut credit union under this section do not preclude the existence of additional powers deemed to be incidental to the transaction of a general credit union business pursuant to this subdivision;
(2) (A) Issue shares to its members and receive payments on shares from its members and from nonmembers in accordance with the provisions of subsection (e) of section 36a-456a, subject to the provisions of sections 36a-290 to 36a-297, inclusive, 36a-330 to 36a-338, inclusive, and 36a-456a, (B) receive deposits of members and nonmembers subject to provisions of sections 36a-456a and 36a-456b, (C) reduce the amount of its member and nonmember shares and deposits, (D) expel members and cancel shares in accordance with section 36a-439a, and (E) provide check cashing and wire and electronic transfer services to nonmembers who are within such credit union's field of membership;
(3) Make and use its best efforts to make secured and unsecured loans and other extensions of credit to its members in accordance with section 36a-265 and sections 36a-457a, 36a-457b and 36a-458a;
(4) Invest its funds in accordance with section 36a-459a;
(5) Declare and pay dividends in accordance with sections 36a-441a and 36a-456c, and pay interest refunds to borrowers;
(6) Act as a finder or agent for the sale of insurance and fixed and variable rate annuities directly, sell insurance and such annuities indirectly through a Connecticut credit union service organization, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut credit union or to members of the Connecticut credit union, provided: (A) Such insurance and annuities are issued or purchased by or from an insurance company licensed in accordance with section 38a-41; and (B) the Connecticut credit union, Connecticut credit union service organization or third-party marketing organization, and any officer and employee thereof, shall be licensed as required by section 38a-769 before engaging in any of the activities authorized by this subdivision. As used in this subdivision, “annuities” and “insurance” have the same meanings as set forth in section 38a-41, except that “insurance” does not include title insurance. The provisions of this subdivision do not authorize a Connecticut credit union or Connecticut credit union service organization to underwrite insurance or annuities;
(7) Borrow money to an amount not exceeding fifty per cent of the total assets of the Connecticut credit union provided the credit union shall give prior notice to the commissioner in writing of its intention to borrow amounts in excess of thirty-five per cent of its total assets;
(8) Act as fiscal agent for the federal government, this state or any agency or political subdivision thereof;
(9) Provide loan processing, loan servicing, member check and money order cashing services, disbursement of share withdrawals and loan proceeds, money orders, internal audits, automated teller machine services, ACH and wire transfer services, prepaid debit cards, payroll cards, digital wallet services, coin and currency services, remote deposit capture services, electronic banking and other similar services to other Connecticut credit unions, federal credit unions, federally insured financial institutions and out-of-state credit unions;
(10) Provide finder services to its members, including the offering of third party products and services through the sale of advertising space on its web site, account statements and receipts, and the sale of statistical or consumer financial information to outside vendors in accordance with sections 36a-40 to 36a-45, inclusive, in order to facilitate the sale of such products to the members of such Connecticut credit union;
(11) With the prior approval of the commissioner, exercise fiduciary powers;
(12) Maintain and rent safe deposit boxes within suitably constructed vaults, provided the Connecticut credit union has adequate insurance coverage for losses related to such rental;
(13) Provide certification services, including notary services, signature guaranties, certification of electronic signatures and share draft certifications;
(14) Act as agent (A) in the collection of taxes for any qualified treasurer of any taxing district or qualified collector of taxes, or (B) for any electric distribution, gas, water or telephone company operating within this state in receiving moneys due such company for utility services furnished by it;
(15) Issue and sell securities which (A) are guaranteed by the Federal National Mortgage Association or any other agency or instrumentality authorized by state or federal law to create a secondary market with respect to extensions of credit of the type originated by the Connecticut credit union, or (B) subject to the approval of the commissioner, relate to extensions of credit originated by the Connecticut credit union and are guaranteed or insured by a financial guaranty insurance company or comparable private entity;
(16) Establish a charitable fund, either in the form of a charitable trust or a nonprofit corporation to assist in making charitable contributions, provided (A) the trust or nonprofit corporation is exempt from federal income taxation and may accept charitable contributions under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations are disclosed fully to the commissioner upon request, and (C) the trust department of the credit union or one or more directors or members of senior management of the credit union act as trustees or directors of the fund;
(17) (A) In the discretion of the Connecticut credit union's senior management, make charitable contributions or gifts, provided (i) the aggregate amount of such charitable contributions or gifts made during a fiscal year shall not exceed one ten-thousandth of the net assets of the Connecticut credit union as of the close of the prior fiscal year, (ii) no such charitable contributions or gifts are made to a recipient if an insider or immediate family member of an insider is a director or member of senior management of such recipient, and (iii) the Connecticut credit union establishes and maintains a record of any charitable contribution or gift made pursuant to this subparagraph; and
(B) (i) If approved by a majority of the Connecticut credit union's governing board and documented in such governing board's minutes, make charitable contributions or gifts (I) during a fiscal year that, in the aggregate, exceed one ten-thousandth of the net assets of the Connecticut credit union as of the close of the prior fiscal year, or (II) to a recipient even if an insider or immediate family member of an insider is a director or member of senior management of such recipient, and (ii) provided the Connecticut credit union establishes and maintains a record of any charitable contribution or gift made pursuant to this subparagraph;
(18) Subject to the provisions of section 36a-455b, sell, pledge or assign any or all of its outstanding extensions of credit to any other lending institution, credit union service organization or quasi-governmental entity and any government-sponsored enterprise, and act as collecting, remitting and servicing agent in connection with any such extension of credit and charge for its acts as agent. Any such credit union may purchase the minimum amount of capital stock of such entity or enterprise if required by that entity or enterprise to be purchased in connection with the sale, pledge or assignment of extensions of credit to that entity or enterprise and may hold and dispose of such stock, provided that with respect to purchases of stock of a credit union service organization, the Connecticut credit union shall not exceed the limitations of section 36a-459a. A Connecticut credit union may purchase one or more outstanding extensions of credit from any other lending institution and any federally-recognized Native American tribe, provided there exists a formal written agreement with tribal government to permit the credit union to service and collect on such extensions of credit;
(19) Subject to the provisions of section 36a-455b, sell a participating interest in any or all of its outstanding extensions of credit to and purchase a participating interest in any or all of the outstanding extensions of credit of any financial institution or credit union service organization pursuant to an appropriate written participation and servicing agreement to be signed by all parties involved in such transaction;
(20) With the approval of the commissioner, join the Federal Home Loan Bank System and borrow funds as provided under federal law;
(21) Subject to the provisions of section 36a-455b, sell all or part of its assets, other than extensions of credit, to other lending institutions, purchase all or part of the assets, other than extensions of credit, of other lending institutions, and assume all or part of the shares and the liabilities of any other credit union or out-of-state credit union;
(22) With the prior written approval of the commissioner, engage in closely related activities, unless the commissioner determines that any such activity shall be conducted by a credit union service organization of the Connecticut credit union, utilizing such organizational, structural or other safeguards as the commissioner may require, in order to protect the Connecticut credit union from exposure to loss. As used in this subdivision, “closely related activities” means those activities that are closely related, convenient and necessary to the business of a Connecticut credit union, are reasonably related to the operation of a Connecticut credit union or are financial in nature including, but not limited to, business and professional services, data processing, courier and messenger services, credit-related activities, consumer services, services related to real estate, financial consulting, tax planning and preparation, community development activities, or any activities reasonably related to such activities;
(23) Engage in any activity that a federal credit union or out-of-state credit union may be authorized to engage in under state or federal law, provided the Connecticut credit union file with the commissioner prior written notice of its intention to engage in such activity. Such notice shall include a description of the activity, a description of the financial impact of the activity on the Connecticut credit union, citation of the legal authority to engage in the activity under state or federal law, a description of any limitations or restrictions imposed on such activity under state or federal law, and any other information that the commissioner may require. The Connecticut credit union may engage in any such activity unless the commissioner disapproves such activity not later than thirty days after the notice is filed. The commissioner may adopt regulations in accordance with chapter 54 to ensure that any such activity is conducted in a safe and sound manner with adequate consumer protections. The provisions of this subdivision do not authorize a Connecticut credit union or a Connecticut credit union service organization to sell title insurance.
(P.A. 02-73, S. 52; P.A. 03-84, S. 56; 03-196, S. 12; P.A. 05-28, S. 1; P.A. 11-50, S. 13; P.A. 14-134, S. 117; P.A. 18-117, S. 4; P.A. 25-37, S. 4, 6.)
History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-196 inserted “Subject to the provisions of section 36a-455b,” in Subdivs. (18), (19) and (21), effective July 1, 2003; P.A. 05-28 added Subdiv. (2)(E) re check cashing and wire and electronic transfer services provided to nonmembers within credit union's field of membership; P.A. 11-50 amended Subdiv. (3) to add “loans and other”, effective June 13, 2011; P.A. 14-134 amended Subdiv. (14) by deleting reference to electric company, effective June 6, 2014; P.A. 18-117 amended Subdiv. (9) by adding “, ACH and wire transfer services, prepaid debit cards, payroll cards, digital wallet services, coin and currency services, remote deposit capture services, electronic banking” and adding reference to federally insured financial institutions, substantially amended Subdiv. (23), including by deleting provision re approval of commissioner re engaging in activity that federal credit union or out-of-state credit union may be authorized to engage in, replacing provision re application for approval with provision re filing prior written notice of intention to engage in activity, replacing provision re commissioner's authority to impose limitations or conditions with provision re commissioner's authority to adopt regulations, and making technical and conforming changes; P.A. 25-37 amended Subdiv. (2)(A) by replacing “from those nonmembers specified in subsection (e)” with “from nonmembers in accordance with the provisions of subsection (e)”, amended Subdiv. (17) by designating existing provisions as Subpara. (A) and therein replacing “a majority of its governing board, make contributions” with “the Connecticut credit union's senior management, make charitable contributions”, deleting provision re making contributions or gifts to or for use of certain entities, adding provisos re making charitable contributions or gifts in discretion of senior management and making a technical change and adding Subpara. (B) re making contributions or gifts if approved by a majority of governing board and documented in board's minutes, effective July 1, 2025.
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Sec. 36a-456a. Shares; secondary capital accounts; share insurance. (a) The par value of shares of a Connecticut credit union shall be five dollars or any multiple thereof, provided such par value shall not exceed one hundred dollars.
(b) A Connecticut credit union may receive payments on shares and permit withdrawals of payments on shares with the exception of membership shares in accordance with such credit union's bylaws and the Deposit Account Contract Act, sections 36a-315 to 36a-323, inclusive, except that the governing board may require members to give sixty days' notice of intention to withdraw the whole or any part of their shares or payments on shares, including membership shares.
(c) A Connecticut credit union may, with the written approval of the commissioner and subject to applicable restrictions of state and federal law, receive from members payments on shares that qualify as part of a retirement plan for self-employed individuals or an individual retirement account in accordance with the applicable provisions of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. Such payments on shares shall be established in a separate account from the shares of the member, and shall not be subject to pledge to secure extensions of credit by the Connecticut credit union to the member or be available for set-off by the Connecticut credit union if the member defaults on an extension of credit. Such shares shall be treated as under separate ownership for purposes of applying any limit imposed by the governing board pursuant to its authority under subdivision (5) of subsection (a) of section 36a-448a, on the maximum amount of shares owned by a member. Otherwise, such shares are subject to all of the provisions of this chapter relating to shares.
(d) A Connecticut credit union may receive payments on shares which the member agrees in writing not to withdraw within the time period specified in the agreement.
(e) (1) A Connecticut credit union may receive payments from a nonmember who is (A) an individual, into a share account held jointly with a member of the Connecticut credit union, which share account is subject to the provisions of section 36a-290; (B) the United States, this state or any municipality or other political subdivision thereof; (C) a federally-recognized Native American tribal government located in this state; or (D) another Connecticut credit union, federal credit union or out-of-state credit union.
(2) Notwithstanding the provisions of subdivision (1) of this subsection, a Connecticut credit union that is designated by the United States Department of the Treasury as a community development financial institution under 12 CFR Part 1805, as amended from time to time, may receive payments from any nonmember, provided the aggregate amount of payments received from all nonmembers shall not at any time exceed: (A) For a Connecticut credit union with total assets of less than two hundred fifty million dollars, the greater of six million two hundred fifty thousand dollars or five per cent of the total value of all shares of such Connecticut credit union; (B) for a Connecticut credit union with total assets of two hundred fifty million dollars or more but less than five hundred million dollars, the greater of nine million five hundred thousand dollars or two and one-half per cent of the total value of all shares of such Connecticut credit union; (C) for a Connecticut credit union with total assets of five hundred million dollars or more but less than one billion dollars, the greater of fifteen million dollars or two per cent of the total value of all shares of such Connecticut credit union; and (D) for a Connecticut credit union with total assets of one billion dollars or more, the greater of twenty-five million dollars or one and one-half per cent of the total value of all shares of such Connecticut credit union. For purposes of this subdivision, the receipt by a Connecticut credit union of a public deposit under sections 36a-330 to 36a-338, inclusive, shall not be treated as the receipt by such Connecticut credit union of a payment from a nonmember.
(f) A Connecticut credit union that has received a low-income designation from the National Credit Union Administration, or its successor agency, under 12 CFR 701.34, as from time to time amended, may offer secondary capital accounts to any person other than an individual, subject to the requirements and conditions imposed on federally-chartered, low-income designated credit unions under 12 CFR 701.34, as from time to time amended.
(g) A Connecticut credit union shall maintain in full force and effect share insurance as required under the Federal Credit Union Act. Any Connecticut credit union that fails to maintain in full force and effect such share insurance shall terminate its corporate existence under such terms and conditions as the commissioner deems appropriate.
(h) A Connecticut credit union may obtain from an insurance company licensed and qualified to do business in this state share insurance coverage that exceeds the maximum allowable under the Federal Credit Union Act.
(i) Without being required to take any action to attach or perfect a lien, a Connecticut credit union shall have and may impress and enforce a lien on the shares of each member to secure the payment of all absolute and contingent liabilities of such member to the Connecticut credit union.
(P.A. 02-73, S. 54; P.A. 03-84, S. 57; P.A. 25-37, S. 3.)
History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (c) and (g), effective June 3, 2003; P.A. 25-37 amended Subdiv. (e) by redesignating existing provisions as Subdiv. (1) and adding Subdiv. (2) re Connecticut credit unions designated as community development financial institutions receiving payments from any nonmember, effective July 1, 2025.
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Sec. 36a-456b. Tax and loan and note accounts. (a) As used in this section:
(1) “Tax and loan account” means an account, the balance of which is subject to the right of immediate withdrawal, established for receipt of payments of federal taxes and certain United States obligations. Such accounts are not shares, as defined in section 36a-435b; and
(2) “Note account” means a note, subject to the right of immediate call, evidencing funds held by depositories electing the note option under applicable United States Treasury Department regulations. Note accounts are not shares, as defined in section 36a-435b.
(b) Subject to the regulations of the United States Treasury Department, Connecticut credit unions may serve as depositories for federal taxes or as United States Treasury tax and loan depositories, and satisfy any requirement in connection therewith, including maintaining tax and loan accounts and note accounts, and pledging collateral.
(c) Connecticut credit unions shall pay a return on note accounts at the rates required by the United States Treasury Department.
(d) In addition to the requirements contained in the regulations of the United States Treasury Department, Connecticut credit unions shall meet all requirements in order to obtain any available insurance of deposits contained in tax and loan accounts and note accounts by the National Credit Union Administration's Share Insurance Fund.
(P.A. 02-73, S. 55; P.A. 25-37, S. 2.)
History: P.A. 25-37 deleted “subdivision (17) of” in reference to Sec. 36a-435b in Subsec. (a), effective July 1, 2025.
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Sec. 36a-458a. Loans. Definitions. (a) As used in this section:
(1) “Associated member” means any member with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower.
(2) “Construction loan” means a loan for developing or acquiring and developing real estate, as defined in subsection (a) of section 36a-457b, where the borrower intends to convert such real estate to income-producing property or use such real estate for income-producing purposes, including residential housing for rental or sale, or commercial, industrial or similar purposes.
(3) “Member business loan” means any loan, line of credit or unfunded commitment thereof, letter of credit or any other extension of credit, where the borrower intends to use or uses the proceeds for any of the following purposes: (A) Commercial; (B) corporate; (C) investment property; (D) business venture; or (E) agricultural, but does not include the following loans:
(i) A loan intended for personal use;
(ii) A loan fully secured by a lien on a one-to-four family residence that is the primary residence of the member;
(iii) A loan fully secured by shares in the credit union making the loan or by shares or deposits in other financial institutions;
(iv) One or more loans to a member or an associated member where the proceeds are to be used or are used for the purposes specified in this subdivision to benefit a common endeavor and which, in the aggregate, are equal to less than fifty thousand dollars;
(v) A loan where any agency of the federal government, a state or any political subdivision of such state, fully insures or guarantees repayment, or provides an advance commitment to purchase the loan in full;
(vi) A loan granted by the corporate Connecticut credit union to a Connecticut credit union, federal credit union or out-of-state credit union; or
(vii) A commercial loan to a nonmember or a participation interest in a commercial loan to a nonmember that (I) is acquired by a federally insured credit union in compliance with all applicable laws and regulations, and (II) is not traded for a member business loan for the purpose of circumventing the limitations on member business loans established in subsections (f) to (i), inclusive, of this section.
(4) “Net worth” means retained earnings under generally accepted accounting principles.
(5) “Net outstanding member business loan balance” means the outstanding loan balance, including any unfunded commitment, exclusive of the portion of the member business loan secured by shares in the credit union, or by shares or deposits in other financial institutions, or fully or partially insured or guaranteed by any agency of the federal government, a state or any political subdivision of such state, or subject to an advance commitment to purchase by any agency of the federal government, a state or any political subdivision of such state.
(b) No Connecticut credit union shall make a member business loan unless it has adequate net worth as determined by the commissioner, develops a member business loan program and obtains the prior written approval of the commissioner for such program. The request for approval of such program shall include a member business loan policy that meets the requirements of subsection (c) of this section and shall demonstrate that sufficient resources, knowledge, systems and procedures are in place to monitor and control the risks involved. A Connecticut credit union that makes member business loans shall use the services of or employ an individual for the purpose of processing, making or servicing member business loans with at least two years direct experience with the types or categories of member business loans the credit union intends to make.
(c) The governing board of a Connecticut credit union shall adopt a specific member business loan policy that shall be a part of the credit union's loan policy. Such policy shall be reviewed at least annually or more often if deemed necessary by the governing board and shall address:
(1) The categories or types of member business loans that will be made;
(2) The trade area;
(3) The maximum amount of assets, in relation to net worth, that will be invested in member business lending subject to the limitations provided in subsection (h) of this section;
(4) The maximum amount of assets, in relation to net worth, that will be invested in a given category or type of member business loan subject to the limitations provided in subdivision (2) of subsection (f) of this section and subsection (i) of this section;
(5) The maximum amount of assets, in relation to net worth, that will be loaned to one member or associated members, subject to the limitations provided in subdivision (2) of subsection (f) of this section and subsection (g) of this section;
(6) The qualifications and experience of the individuals responsible for processing, approving or administering member business loans;
(7) The required analysis and documentation of the ability of the borrower to repay the member business loan by the individuals responsible for processing, approving or administering;
(8) The receipt and periodic updating of financial statements and other documentation, including tax returns;
(9) The documentation required in support of each loan application, which shall include the following: (A) Balance sheet, (B) cash flow analysis, (C) income statement, (D) tax data, (E) analysis of leveraging, and (F) comparison with industry average or similar analysis. If the member business loan is secured by a mortgage on income-producing real estate and if the Connecticut credit union relies upon such real estate or income production as primary security for the loan, the credit union shall also obtain and retain in its files such income projection statements, tenants' financial statements and other credit information as the credit union deems necessary. The governing board may amend the member business loan policy to eliminate the requirement for any documentation that the governing board determines is not generally available for a particular type of member business loan provided the reasons for such determination are stated in such amendment;
(10) The collateral requirements which shall include: (A) Loan-to-value ratios, (B) determination of value, (C) determination of ownership, (D) steps to secure various types of collateral, and (E) frequency of re-evaluation of value and marketability of collateral;
(11) The interest rates and maturities of member business loans;
(12) General member business loan procedures which shall include: (A) Loan monitoring, (B) servicing and administering, and (C) collection; and
(13) Guidelines for purchase and sale of member business loans and loan participation if the credit union intends to engage in such activity.
(d) A Connecticut credit union shall not grant a member business loan if any additional income received by such credit union or a member of the senior management is tied to the profit or sale of the business or commercial endeavor for which the loan is made.
(e) Member business loans made to an insider are subject to the provisions of section 36a-454b.
(f) A Connecticut credit union may make unsecured member business loans provided:
(1) The aggregate of unsecured net outstanding member business loan balances to any one member or associated members shall not exceed the lesser of one hundred thousand dollars or two and one-half per cent of the credit union's net worth;
(2) The aggregate of all unsecured net outstanding member business loan balances shall not exceed ten per cent of the credit union's net worth;
(3) The credit union has a net worth of at least seven per cent; and
(4) The credit union submits quarterly reports to the commissioner providing numbers and such other detail as may be required by the commissioner to demonstrate compliance with this section.
(g) The aggregate amount of secured and unsecured net outstanding member business loan balances to any one member or associated members shall not exceed the greater of one hundred thousand dollars or fifteen per cent of the credit union's net worth. The commissioner may waive this limit subject to the provisions of subsection (l) of this section.
(h) (1) The aggregate amount of secured and unsecured net outstanding member business loan balances shall be limited to the lesser of twelve and one-quarter per cent of the Connecticut credit union's total assets or one and three-quarters times the Connecticut credit union's net worth. The commissioner may grant an exception to the aggregate limit upon written request from a Connecticut credit union and submission of documentation evidencing that one of the following three criteria have been met:
(A) The credit union serves predominantly low-income members, as defined in subsection (f) of section 36a-456a;
(B) The credit union participates in the Community Development Financial Institutions Program, 12 CFR Part 1805, as from time to time amended; or
(C) The credit union is established for the purpose of making member business loans, as supported by its bylaws, business plan, field of membership, minutes of the governing board and loan portfolio.
(2) The commissioner shall notify the Connecticut credit union and the National Credit Union Administration of the commissioner's decision on the request for an exception not later than forty-five days from such request. An exception, if granted, shall be revoked by the commissioner if the Connecticut credit union ceases to qualify under subparagraph (A), (B) or (C) of subdivision (1) of this subsection, or for reasons of safety and soundness.
(i) Unless waived by the commissioner under subsection (l) of this section, a member business loan that is a construction loan is subject to the following additional requirements:
(1) The aggregate of all construction loans shall not exceed fifteen per cent of the net worth of the Connecticut credit union;
(2) The borrower shall have at least a thirty-five per cent equity interest in the real estate being developed or acquired and developed; and
(3) The loan proceeds shall be released only after on-site, written inspections by qualified personnel and in accordance with a pre-approved draw schedule and any other conditions as set forth in the loan documentation.
(j) Unless waived by the commissioner under subsection (l) of this section, the loan-to-value ratio for a member business loan secured by a first lien shall not exceed eighty per cent unless the value in excess of eighty per cent is covered through private mortgage or equivalent insurance, or is insured or guaranteed or subject to advance commitment to purchase by an agency of the federal government, or of a state or any of the political subdivisions of such state, but in no case shall the loan-to-value ratio exceed ninety-five per cent.
(k) The loan-to-value ratio for any member business loan secured by a second or lesser priority lien shall not exceed eighty per cent unless the credit union holds the first lien and the value in excess of eighty per cent is covered through private mortgage or equivalent insurance, or is insured or guaranteed or subject to advance commitment to purchase by an agency of the federal government, or of a state or any of the political subdivisions of such state, in which case the loan-to-value ratio of such member business loan shall not exceed ninety-five per cent.
(l) A Connecticut credit union may request a waiver of the limitations set forth in subsections (g), (i) and (j) of this section by submitting the following documentation to the commissioner: (1) A copy of the member business loan policy; (2) a statement of the higher limit sought, if applicable; (3) an explanation of the need to raise the limit or change the appraisal requirement, as applicable; (4) documentation to support the credit union's ability to manage the activity; (5) an analysis of the credit union's prior experience in making member business loans, including: (A) The history of loan losses and loan delinquency, (B) volume and cyclical or seasonal patterns, (C) diversification, (D) concentrations of credit to one member or associated members in excess of fifteen per cent of the credit union's net worth, (E) underwriting standards and practices, (F) types or categories of loans grouped by purpose and collateral, and (G) the qualifications of individuals responsible for processing, approving and administering member business loans. The commissioner will provide a copy of the waiver request to Region 1 of the National Credit Union Administration and will consult and seek to work cooperatively with Region 1 in making a decision on the request. The commissioner may grant or deny the waiver within sixty days of receipt of the request.
(m) Member business loans shall be subject to the appraisal requirements of 12 CFR Part 722.3, as from time to time amended, provided the credit union may request a waiver of such appraisal requirements in accordance with the applicable provisions of subsection (l) of this section. Such waiver request shall not become effective until written approval has been granted by both the commissioner and the National Credit Union Administration.
(n) The commissioner may lower any limit provided in this section, revoke any waiver granted under this section or revoke the credit union's approval to make member business loans if the credit union's policies or practices violate safe and sound lending principles.
(o) Member business loans shall be identified in the aggregate on a Connecticut credit union's financial statements provided each type or category of member business loan shall be separately identified in the credit union's records.
(P.A. 02-73, S. 59; P.A. 03-84, S. 61; P.A. 25-37, S. 5.)
History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 25-37 amended Subsec. (a)(3) to add new clause (i) re a loan intended for personal use, redesignate existing clauses (i) to (v) as clauses (ii) to (vi), add clause (vii) re a commercial loan to a nonmember or a participation interest in a commercial loan to a nonmember and make conforming changes, effective July 1, 2025.
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