CHAPTER 84
HOUSE BILL No. 2252
An Act relating to credit unions; concerning the regulation
thereof; amending K.S.A.
17-2217 and K.S.A. 2000 Supp. 17-2223a and repealing the
existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 17-2217 is hereby
amended to read as follows: 17-
2217. All entrance fees, transfer fees and charges shall, after the
payment
of the organization expenses, be known as reserve income, and shall
be
added to the reserve fund of the credit union. At the close of the
fiscal
year or each dividend paying period there shall be set apart to the
reserve
fund, such sums as are provided for in this section.
(a) For any credit union covered
by share insurance authorized under
the provisions of this act and in operation less than four
years or having
assets of less than $500,000, the gross earnings of the
credit union shall
be determined. From this amount, there shall be set aside,
as a regular
reserve against losses on loans and against such other
losses, sums in
accordance with the following schedule: Ten percent of the
gross income
until the regular reserve shall equal 71/2% of the total of
outstanding loans
and risk assets, then 5% of gross income until the regular
reserve shall
equal 10% of the total of outstanding loans and risk
assets.
Whenever the regular reserve falls
below 10% or 71/2% of the total of
outstanding loans and risk assets, as the case may be, it
shall be replen-
ished by regular contribution in such amounts as may be
needed to main-
tain the reserve goals of 71/2% or 10%. In addition to such
regular reserve,
special reserves to protect the interests of members shall
be established
when found by the administrator, in any special case, to be
necessary for
that purpose.
(b) A credit union covered by
share insurance authorized under the
provisions of this act and in operation for more than four
years and having
assets of $500,000 or more shall set aside 10% of the gross
income until
the regular reserve shall equal 4% of the total of
outstanding loans and
risk assets, then 5% of gross income until the regular
reserve shall equal
6% of the total of outstanding loans and risk
assets.
Whenever the regular reserve falls
below the stated per centum of the
total outstanding loans and risk assets, it shall be
replenished by regular
contributions in such amounts as may be required to
maintain the reserve
goals. In addition to such regular reserve, special
reserves to protect the
interests of the members shall be established when found by
the admin-
istrator, in any special case, to be necessary for that
purpose. The admin-
istrator may also decrease the reserve requirements set
forth in this sub-
section and subsection (a) when in the administrator's
opinion such a
decrease is necessary or desirable.
(c) A corporate credit union, in
lieu of other reserve requirements,
at a minimum, shall set aside an amount equal to the
average daily net
assets of the corporate credit union, as defined by the
administrator, mul-
tiplied by .0005 and then multiplied by the number of days
in the transfer
period divided by 365, until the total amount of the
corporate credit
union's reserves, undivided earnings and membership shares
equal 4% of
the net assets of the corporate credit union. The
administrator may de-
crease the amounts required to be set aside by this
subsection when in
the administrator's opinion such decrease is necessary or
desirable.
(a) A credit union shall comply with
the reserve requirements of the
national credit union administration rules and regulations, 12
C.F.R. 702
in effect on the effective date of this act, or any later
version as adopted
by the administrator in rules and regulations.
(b) A corporate credit union, in lieu
of other reserve requirements, at
a minimum, shall set aside an amount equal to the average daily
net assets
of the corporate credit union, as defined by the administrator,
multiplied
by .0005 and then multiplied by the number of days in the
transfer period
divided by 365, until the total amount of the corporate credit
union's
reserves, undivided earnings and membership shares equal 4% of
the net
assets of the corporate credit union. The administrator may
decrease the
amounts required to be set aside by this subsection when in the
admin-
istrator's opinion such decrease is necessary or
desirable.
(d) (c) The
reserve fund shall belong to the credit union and shall be
held to meet losses on loans. Other losses may be charged to the
reserve
fund with prior approval of the credit union administrator. The
reserve
fund shall not be distributed to the members except upon
dissolution of
the credit union.
Sec. 2. K.S.A. 2000 Supp. 17-2223a
is hereby amended to read as
follows: 17-2223a. (a) Subject to the rules and regulations of
the admin-
istrator, no credit union, except credit unions organized
under the laws
of the state of Kansas or the ``federal credit union act,'' 12
U.S.C. 1751
et seq., and amendments thereto, shall do business in this
state until it
has received the approval of the credit union administrator.
(b) The administrator may require any
such credit union to submit
at least every 18 months an examination report made by or under
the
authority of the national credit union administration or its
successor or
successors, by any such other appropriate federal or state agency
or by
an independent auditor or certified public accountant. Such report
shall
meet the standards which the administrator has established.
(c) If after a hearing or an opportunity
for a hearing has been given
such credit union in accordance with the provisions of the Kansas
admin-
istrative procedure act, the administrator determines that such
credit un-
ion has violated any provision of this act, the administrator may
revoke
such credit union's authority to do business in this state.
Sec. 3. K.S.A. 17-2217 and K.S.A. 2000 Supp.
17-2223a are hereby
repealed.
Sec. 4. This act shall take effect and be in force
from and after its
publication in the Kansas register.
Approved April 3, 2001.
Published in the Kansas Register April 12, 2001.
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