An Act To Update the Statutes under Which Maine's Credit Unions Are Chartered
Maine Legislature, Session 128, LD 1055
Committee: Insurance and Financial Services
Sponsors: FREDETTE, CUSHING, ESPLING, HERBIG, MARTIN, TIMBERLAKE, WALLACE
Amends: 9-B MRSA §332, 9-B MRSA §335, 9-B MRSA §816, 9-B MRSA §831, 9-B MRSA §832, 9-B MRSA §833, 9-B MRSA §847, 9-B MRSA §863, 9-B MRSA §864

Legislative Document
No. 1055
H.P. 738
House of Representatives, March 16, 2017
An Act To Update the Statutes under Which Maine's Credit Unions 
Are Chartered
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed.
ROBERT B. HUNT
Clerk
Presented by Representative FREDETTE of Newport.
Cosponsored by Senator CUSHING of Penobscot and
Representatives: ESPLING of New Gloucester, HERBIG of Belfast, MARTIN of Eagle Lake, 
TIMBERLAKE of Turner, WALLACE of Dexter.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  9-B MRSA §332, sub-§2-A, ¶A, as enacted by PL 1999, c. 218, §12, is 
amended to read: 
A.  For a branch being established in the State by a financial institution, approval 
must be obtained pursuant to section 336, except that a financial institution that meets 
the minimum standards set forth in section 412-A or 832 831 and any rules adopted 
pursuant to these sections and is not under an enforcement action that requires the 
superintendent's prior approval of a branch establishment may establish a branch in 
this State without the prior approval of the superintendent.  If the superintendent's 
approval is not required, the financial institution shall inform the superintendent at 
least 10 days prior to the proposed action.  This notice must be accompanied by a 
recording fee not to exceed $100. 
Sec. 2.  9-B MRSA §335, sub-§1, as amended by PL 1997, c. 398, Pt. E, §4, is 
further amended to read: 
1.  Relocation.  A main office, branch or agency office of a financial institution may 
not be moved to a new location without the prior written approval of the superintendent, 
pursuant to section 336, except that a financial institution that meets the minimum 
standards set forth in section 412-A or 832 831 and any rules adopted pursuant to these 
sections and is not under an enforcement action that requires the superintendent's prior 
approval of a branch relocation, may relocate a main office or branch in this State without 
the prior approval of the superintendent.  If the superintendent's approval is not required, 
then the financial institution must inform the superintendent at least 10 days prior to the 
proposed action.  This announcement must be accompanied by a recording fee not to 
exceed $100. 
Sec. 3.  9-B MRSA §816, sub-§1, ¶F, as enacted by PL 1983, c. 373, §1, is 
amended to read: 
F.  Needs Has a field of membership that would meet the requirements of section 814 
if the credit union were organized under this chapter and needs to conduct business in 
this State to adequately serve its members in this State. 
Sec. 4.  9-B MRSA §831, sub-§3, as enacted by PL 1975, c. 500, §1, is amended 
to read: 
3.  Surplus.  "Surplus" or "total surplus" or "net worth" of a credit union means the 
sum of its guaranty fund, undivided profits and other surplus and reserve accounts 
balance of its retained earnings, which consists of undivided earnings, regular reserves, a 
guaranty fund and any other account approved by the superintendent. 
Sec. 5.  9-B MRSA §831, sub-§§4 to 7 are enacted to read: 
4.  Requirement.  A credit union shall establish and maintain adequate levels of net 
worth under rules adopted by the superintendent.  Rules under this subsection must 
address, at a minimum, composition of net worth, net worth levels that must be 
maintained and procedures that must be followed to restore net worth if the net worth 
becomes impaired or falls below the minimum standards.  Minimum net worth 
requirements established by the superintendent may be no less stringent than those 
applicable to a federally chartered institution with a similar charter. 
5.  Exception.  The superintendent may approve in writing net worth levels below the 
required minimum as the superintendent considers necessary or appropriate under the 
particular circumstances of a credit union. 
6.  Approval.  A proposed issuance of securities considered to be net worth under 
subsection 4 or under rules adopted under subsection 4 must be submitted to the 
superintendent for the superintendent's approval at least 10 days prior to issuance and 
include any documentation the superintendent considers necessary. 
7.  Rulemaking.  The superintendent shall adopt rules to implement this section or to 
determine the amount of net worth required under this section.  Rules adopted pursuant to 
this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 
2-A.  In the absence of rulemaking, a credit union shall follow the capital adequacy 
standards established by the National Credit Union Administration or a successor 
institution.  In the event standards established by the National Credit Union 
Administration or a successor institution require the credit union to accumulate or 
maintain accounts in an amount in excess of the standard established by the 
superintendent, the credit union shall accumulate and maintain such accounts in a manner 
sufficient to satisfy the requirements of the National Credit Union Administration or a 
successor institution. 
Sec. 6.  9-B MRSA §832, as amended by PL 2003, c. 322, §§20 and 21, is 
repealed. 
Sec. 7.  9-B MRSA §833, sub-§1-A, as enacted by PL 2003, c. 322, §23, is 
amended to read: 
1-A.  Time for payment of dividends; method.  At such intervals as the board of 
directors may authorize and after provision for the guaranty fund established the credit 
union establishes and maintains adequate levels of net worth pursuant to section 832 831, 
the board of directors may declare a dividend to be paid at different rates on different 
types of shares, at different rates and maturity dates in the case of share certificates and at 
different rates on different types of share draft accounts.  Dividends credited may be 
accrued on various types of shares, share certificates and share draft accounts as 
authorized by the board of directors. 
Sec. 8.  9-B MRSA §847, sub-§1, as enacted by PL 1975, c. 500, §1, is amended 
to read: 
1.  Grounds for expulsion.  The board of directors A manager or chief executive 
officer of a credit union may expel from the credit union any member who has not carried 
out his the member's engagement with it the credit union, or who has been convicted of a 
criminal offense, or who neglects or refuses to comply with the provisions of this Part or 
the bylaws or the official policies of the credit union, or who has deceived the credit 
union or a committee thereof of the credit union with regard to the use of borrowed 
money; but no member shall be expelled until he has been informed in writing of the 
charges against him and until an opportunity has been given him, after reasonable notice, 
to be heard thereon.  The expelled member must be informed of the grounds for the 
expulsion and may appeal the expulsion to an expulsion committee established by the 
credit union.  The board of directors of the credit union shall establish an expulsion 
committee to review expulsion appeals by members, and all decisions of the expulsion 
committee are final. 
Sec. 9.  9-B MRSA §863, sub-§2, as enacted by PL 1975, c. 500, §1, is amended 
to read: 
2.  Limitation. The cost to the credit union of such lands, buildings, fixtures and 
equipment shall described in subsection 1 may not exceed 50% 60% of such the credit 
union's total surplus at the time such the investment is made; provided except that the 
superintendent may, for good cause shown, upon application by the credit union in 
writing, approve an amount in excess of said 50% 60% of total surplus, subject to such 
conditions as the superintendent may deem considers necessary. 
Sec. 10.  9-B MRSA §864, sub-§2, ¶B, as amended by PL 1993, c. 655, §1, is 
further amended to read: 
B.  The service corporation primarily serves credit unions and the membership of 
affiliated credit unions.  A service corporation formed after July 31, 1994 primarily 
serves credit unions and the membership of affiliated credit unions within the 
meaning of this paragraph if at least 75% of the services provided within this State 
are to credit unions and members of credit unions; except that for a service 
corporation formed after October 1, 2017, when determining whether a service 
corporation primarily serves credit unions and the membership of affiliated credit 
unions within the meaning of this paragraph, the superintendent shall consider the 
relevant federal laws and regulations in effect at the time of formation of the service 
corporation. 
Sec. 11.  9-B MRSA §864, sub-§3, as amended by PL 1993, c. 99, §3, is repealed. 
Sec. 12.  9-B MRSA §864, sub-§§4 and 5 are enacted to read: 
4.  Records.  The books and accounts of a service corporation involving any credit 
union must be kept in such manner and form as the superintendent may prescribe, and 
any agreement between a credit union and a service corporation must provide that the 
books and accounts of the service corporation may be examined by the superintendent or 
the superintendent's designee. 
5.  Application; notice required.  A credit union or credit unions seeking to 
organize as or invest in a service corporation shall notify the superintendent in writing at 
least 10 days prior to organizing as or investing in the service corporation. 
SUMMARY 
This bill updates the charter provisions for state-chartered credit unions in the 
following ways: 
1.  Putting state-chartered credit unions in line with their federally chartered 
counterparts by repealing the guaranty fund requirements and allowing dividend 
payments when the credit union establishes and maintains adequate levels of net worth.  
Currently, state-chartered credit unions must have a percentage of gross income set aside 
before there may be a dividend payment to a member.  The bill directs the Superintendent 
of Financial Institutions to adopt rules regarding the composition of net worth, the levels 
that must be maintained and procedures that must be followed to restore net worth if it 
falls below the minimum standard to continue to safeguard credit union members; 
2.  To ensure safe and smooth day-to-day operations of state-chartered credit unions 
and consistent with the trend followed by credit unions in other states, allowing the 
manager or chief executive officer of a credit union, rather than the board of directors, to 
expel a member for certain types of conduct.  The expelled member must be informed of 
the grounds for the expulsion and may appeal the expulsion; 
3.  Increasing the percentage of total surplus that state-chartered credit unions may 
invest in real estate and fixed assets from 50% to 60%; and 
4.  To bring Maine's state charter in line with its federal counterpart, directing the 
superintendent to consider federal laws and regulations when determining whether a new 
credit union service corporation primarily serves a credit union or credit union members 
and removing a general reference to a statutory provision that in itself is not specific to 
credit unions and instead incorporating language from that provision that requires credit 
unions to notify the superintendent in writing 10 days prior to organizing as or investing 
in a credit union service corporation and vesting the superintendent with the power to 
prescribe the manner and form of the credit union service corporation's books and 
accounts.