2023 Indiana Code › Title 28. Financial Institutions › Article 7. Specialized Financial Institutions › Chapter 1. Credit Unions › 28-7-1-19.2. Classification as Undercapitalized or Lower; Mandatory Supervisory Requirements and Restrictions; Discretionary Supervisory Actions

Sec. 19.2. (a) A credit union that is classified as undercapitalized or lower must do the following:
(1) Increase the credit union's net worth in accordance with section 19.1 of this chapter.
(2) Submit a net worth restoration plan to the director at the time and in the manner specified by the director. If the credit union:
(A) has a net worth ratio of less than five percent (5%); and
(B) either:
(i) fails to submit a net worth restoration plan required by this subdivision; or
(ii) materially fails to implement a net worth restoration plan submitted under this subdivision and approved by the director;
the credit union shall be reclassified as significantly undercapitalized as described in 12 CFR 702.102(a)(4)(ii).
(3) Beginning on the effective date of the credit union's classification as undercapitalized or lower, not permit the credit union's assets to increase beyond the credit union's assets as of the end of the preceding quarter unless one (1) of the following applies:
(A) The director and the credit union's share insurer have approved a net worth restoration plan that provides for an increase in total assets and:
(i) the assets of the credit union are increasing consistent with the approved plan; and
(ii) the credit union is implementing steps to increase the credit union's net worth ratio consistent with the approved plan.
(B) The director and the credit union's share insurer have not approved a net worth restoration plan, but the credit union's total assets are increasing because of increases in the balances (as of the end of the preceding quarter) of one (1) or more of the following:
(i) The credit union's total accounts receivable and accrued income on loans and investments.
(ii) Total cash and cash equivalents.
(iii) Total loans outstanding, as long as the amount of the credit union's total loans outstanding does not exceed the sum of the credit union's total assets plus the balance, as of the end of the preceding quarter, of the credit union's unused commitments to lend and unused lines of credit.
A credit union with one (1) or more increased balances under this clause may not offer rates on shares that exceed the prevailing rates on shares in the credit union's relevant market area, and may not establish or acquire any additional branch office.
(4) Beginning on the effective date of the credit union's classification as undercapitalized or lower, not increase the total dollar amount of member business loans (including loans outstanding and unused commitments to lend) above the total dollar amount of member business loans (including loans outstanding and unused commitments to lend) as of the end of the preceding quarter, unless the credit union is permitted to do so by the director and the credit union's share insurer.
(b) Subject to the applicable procedures for issuing, reviewing, and enforcing directives under this chapter, the director may, by directive, take one (1) or more of the following actions with respect to an undercapitalized credit union having a net worth ratio of less than five percent (5%) (or with respect to a director, officer, or employee of such a credit union) if the director determines that the action is necessary to carry out the purposes of section 19(b) of this chapter:
(1) Prohibit the credit union from, directly or indirectly:
(A) acquiring any interest in any business entity or financial institution;
(B) establishing or acquiring any additional branch office; or
(C) engaging in any new line of business;
unless the director has approved the credit union's net worth restoration plan, the credit union is implementing the plan, and the director determines that the proposed action is consistent with and will further the objectives of the plan.
(2) Restrict the credit union's transactions with a credit union service organization, or require the credit union to reduce or divest the credit union's ownership interest in a credit union service organization.
(3) Restrict the dividend rates that the credit union pays on shares to the prevailing rates paid on comparable accounts and maturities in the relevant market area, as determined by the director. However, the director may not retroactively restrict a dividend rate already declared with respect to shares acquired before a restriction is imposed under this subdivision.
(4) Prohibit any growth in the credit union's assets, or in a category of assets, or require the credit union to reduce the credit union's assets or a category of the credit union's assets.
(5) Require the credit union or the credit union's credit union service organization to alter, reduce, or terminate any activity that poses excessive risk to the credit union, as determined by the director.
(6) Prohibit the credit union from accepting all or certain nonmember deposits, as specified by the director.
(7) Require the credit union to dismiss from office one (1) or more directors or senior executive officers. A dismissal under this subdivision shall not be construed to be a formal administrative action for removal.
(8) Require the credit union to employ qualified senior executive officers, who, if the director and the credit union's share insurer so specify, shall be subject to the approval of the director and the credit union's share insurer.
(9) Restrict or require any other action by the credit union, to the extent the director and the credit union's share insurer determine that the restriction or requirement will carry out the purposes of section 19(b) of this chapter better than any of the restrictions or requirements set forth in subdivisions (1) through (8).
(c) An undercapitalized credit union that:
(1) has a net worth ratio of at least five percent (5%); or
(2) is classified as undercapitalized in accordance with 12 CFR 702.102(a)(3)(ii) for having a risk based capital ratio of less than eight percent (8%), as calculated under 12 CFR 702.104;
is subject to the discretionary supervisory actions set forth in subsection (b) if the credit union fails to comply with one (1) or more mandatory supervisory requirements or restrictions set forth in subsection (a), or if the credit union fails to timely implement a net worth restoration plan, as described in 12 CFR 702.111 and approved by the director, including a failure to meet the prescribed steps to increase the credit union's net worth ratio.
As added by P.L.197-2023, SEC.16.