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Powers - 17 Pa. Cons. Stat. § 501Legal Research Home > Pennsylvania Statutes
CHAPTER 5
CORPORATE POWERS, DUTIES AND SAFEGUARDS
Sec.
501. Powers.
502. Powers of central or corporate credit unions.
503. Regulation by department.
504. Fiscal year.
505. Capital and shares.
506. Joint accounts.
507. Minority and trust accounts.
508. Estate accounts.
509. Fees and charges.
510. Loan interest.
511. Power to borrow.
512. Loans.
513. Reserves.
514. Dividends.
515. Rights and liabilities of terminating members.
516. Adverse claims.
517. Taxation.
Enactment. Chapter 5 was added December 19, 1990, P.L.834,
No.198, effective in two months.
§ 501. Powers.
(a) General rule.--A credit union shall have the following
general powers:
(1) To continue as a corporation for the time specified
in its articles of incorporation subject to 15 Pa.C.S. § 501
(relating to reserved power of General Assembly).
(2) To maintain and defend judicial proceedings in its
corporate name.
(3) To adopt and use a corporate seal, and alter the
same at pleasure.
(4) To grant allowances or pensions to officers,
directors and employees for faithful and long-continued
services and, after the death of the officer, director or
employee either while in the service of the corporation or
after retirement, pensions or allowances may be granted or
continued to their dependents. The allowances to dependents
shall be reasonable in amount and paid only for a limited
time and, unless part of an employee benefit plan or
employment contract in effect at the time of retirement or
death of the officer, director or employee, shall not exceed
in total the amount of the compensation paid to the officer,
director or employee during the 12 months preceding
retirement or death.
(5) To have and exercise all of the powers and means
necessary to effect the purpose or purposes for which the
credit union is organized.
(b) Special powers.--A credit union shall have the following
special powers:
(1) To receive the savings of its members as payments,
representing equity on shares, share draft accounts and share
certificates.
(2) To make loans to members and to participate in loans
to credit union members, including members of any Federal
credit union or credit union chartered under the laws of any
state, jointly with such other credit unions, credit union
organizations or State or Federally chartered and regulated
depository institutions, if the institution which originates
such a loan shall be legally required to retain an interest
of at least 10% of the outstanding balance of the loan. No
loan may be made to any member if, upon the making of that
loan, the member would be indebted to the credit union upon
loans made to him in an aggregate amount which would exceed
10% of the credit union's unimpaired capital.
(3) To make loans to any cooperative society or
societies, or other organization or organizations, which have
membership in the credit union.
(4) To make purchase money mortgage loans to members
secured by mortgages which are first liens on improved real
property situated within the United States, the improvement
being an established dwelling house for not more than four
families which is owned by the member of the credit union
making the mortgage and occupied or to be occupied, in whole
or in part, by such member. Purchase money mortgages shall
not exceed 90% of the fair market value of the property,
except as provided in paragraph (4.1).
(4.1) The department may grant prior approval of a
purchase money mortgage loan policy submitted to the
department by the credit union which complies with paragraph
(4) and additionally provides for private mortgage insurance
for each purchase money mortgage and directs that purchase
money mortgages shall be written according to secondary
market standards, in which case purchase money mortgage loans
shall not exceed 100% of the fair market value of the
property.
(4.2) Shares of the credit union owned by the mortgagor
may be assigned or pledged as additional collateral security
for the mortgage loan and, in such event, the mortgage loan
granted upon such property may be increased by the withdrawal
value of the additional pledged shares to an amount not to
exceed a maximum total mortgage loan of 100% of the fair
market value of such real property, and the credit union may
release this additional collateral whenever the mortgage loan
meets all of the requirements of this title and could be made
legally at the time of release without the requirement of
additional collateral. Purchase money mortgage loans shall be
amortized by approximately equal payments sufficient in
amount to pay all interest and effect full repayment of
principal within a period not in excess of 30 years. Except
as otherwise provided in this section, purchase money
mortgage loans on any one property shall not exceed 90% of
the fair market value of the property or 5% of the unimpaired
capital of the credit union, whichever is lesser. The
aggregate total of mortgage loans shall not exceed 50% of the
unimpaired capital of the credit union. Without regard to the
limitations as to the amount and term of a purchase money
mortgage loan or the aggregate amount of all mortgage loans
set forth in this paragraph, a credit union may grant any
mortgage loan which is insured or guaranteed, in whole or in
part, by the United States or any instrumentality thereof, or
if there is a commitment to so insure or guarantee.
(5) To make loans to credit unions organized under the
laws of this Commonwealth or under the laws of any state or
under the laws of the United States. In the case of central
or corporate credit unions, the aggregate amount outstanding
on all such loans shall not exceed 25% of the unimpaired
capital of the lending credit union.
(6) To deposit its funds in insured state banks, bank
and trust companies, savings banks, national banking
associations, savings associations, Federal saving and loan
associations, insured credit unions and insured Federal
credit unions and central-type credit union organizations.
(7) To invest its funds in the following investments:
(i) Securities, obligations or other instruments of
or fully guaranteed as to principal and interest by the
United States or any agency thereof or in any trust
established for investing directly or collectively in the
same.
(ii) Bonds or other interest-bearing obligations of
the Commonwealth or any political subdivision thereof or
an authority which has been created as a body corporate
and politic under any law of this Commonwealth.
(iii) Shares of any savings and loan association or
credit union, organized under the laws of this
Commonwealth, or of any Federal savings and loan
association or Federal credit union, to the extent to
which the withdrawal or repurchase value of such shares
is insured by any agency of the United States or any
other insurer approved by the department.
(iv) Bonds and notes of the Pennsylvania Housing
Agency created by the act of December 3, 1959 (P.L.1688,
No.621), known as the Housing Finance Agency Law.
(v) Capital stock, obligations or other securities
of any service corporation organized under the laws of
this Commonwealth or under the laws of any other state
and duly qualified to do business in this Commonwealth,
if the entire capital stock of such corporation is
available for purchase only by credit unions, organized
and existing under the laws of this Commonwealth and by
Federal credit unions or association of credit unions. A
complete description of the service corporation and its
activities must be furnished to the department and its
approval obtained by the credit union before investing in
such corporation. No credit union may make an investment
in a service corporation if its then aggregate
outstanding investments under this subparagraph would
exceed 1% of its assets.
(vi) Obligations issued by banks for cooperatives,
Federal land banks, Federal intermediate credit banks or
any corporation designated in 31 U.S.C. § 9101(2) and (3)
(relating to definitions) as a "government corporation."
(vii) Obligations, participations or other
instruments of or issued by, or fully guaranteed as to
principal and interest by, the Federal National Mortgage
Association or the Government National Mortgage
Association.
(viii) Mortgages, obligations or other securities
which are or ever have been sold by the Federal Home Loan
Mortgage Corporation pursuant to 12 U.S.C. § 1454
(relating to purchase and sale of mortgages; residential
mortgages; conventional mortgages; terms and conditions
of sale or other disposition; authority to enter into,
perform, and carry out transactions) or 1455 (relating to
obligations and securities of the corporation).
(ix) Obligations or other instruments or securities
of the Student Loan Marketing Association.
(x) Participation certificates evidencing beneficial
interests in obligations, or in the right to receive
interest and principal collections therefrom, which
obligations have been subjected by one or more government
agencies to a trust or trusts for which any executive
department, agency or instrumentality of the United
States (or the head thereof) has been named to act as
trustee.
(xi) Bankers' acceptances issued by State banks,
bank and trust companies and savings banks, and national
banking associations the accounts of which are Federally
insured.
Before making the investments described in subparagraphs (vi)
through (xi), a credit union shall be in compliance with
investment standards established by the department.
(8) To borrow money subject to the limitations set forth
in this title.
(9) To make, amend, alter and repeal bylaws, not
inconsistent with law, for the regulation of its affairs and
the conduct and management of the credit union. Immediately
upon the adoption of the bylaws, or any additions thereto, or
any alteration, amendment or repeal thereof, notice of such
fact and a copy of such bylaws or such alteration, amendment
or repeal shall forthwith be sent to the department. The
department shall, within 60 days after receipt thereof, have
the power to disapprove, for any reasonable cause stated in
writing, any such bylaw or any such alteration, amendment or
repeal thereof, but the bylaw, alteration, amendment or
repeal shall be effective until the department disapproves it
and gives notice thereof to the credit union.
(10) To hold, purchase, mortgage, alter, improve and
sell fixed assets, meaning such real property, and furniture
and fixtures to be used therein, as the purposes of the
credit union require and which the credit union occupies or
intends to occupy for the transaction of its business or
partly so occupies and partly leases to others, except that,
without the prior written approval of the department, the
cost, at the time of acquisition, of such real property and
furniture and fixtures therein shall not exceed 5% of shares
and retained earnings.
(11) To purchase group insurance at reasonable rates on
the lives of its members in an amount not to exceed the
respective shares balances of such members.
(12) To act as an issuing agent of the United States
Treasury for the sale, issuance and redemption of United
States Savings Bonds to its members.
(13) To invest its funds in shares and become members of
any insured central-type credit union organized under the
laws of the United States or under the laws of this
Commonwealth in which such investments are specifically
authorized by the board of directors of the State credit
union making the investment.
(14) To receive payments on shares and deposits from
other credit unions and Federal credit unions. As used in
this paragraph, the term "deposit" means a type of time or
demand account in which the credit union incurs a debt to the
depositor.
(15) To receive payments on shares which may be issued
at varying dividend rates, share certificates which may be
issued at varying dividend rates and maturities and share
draft accounts from members or nonmember units of Federal,
state or local governments, including any officer, employee
or agent of the United States, any state or any political
subdivision thereof, or any territory or possession of the
United States having official custody of public funds and
lawfully investing such funds in a credit union.
(16) To sell Federal funds to a bank or institution
whose accounts are federally insured, provided that the
interest or other consideration received from the financial
institution is at the market rate for Federal funds
transaction and that the transaction has a maturity of one or
more business days or the credit union is able to require
repayment at any time.
(17) With the prior written approval of the department,
to sell all or a part of its assets and to assign its
liabilities and capital to another credit union, Federal
credit union or out-of-State credit union. Further, a credit
union with prior written approval of the department shall
have the power to purchase all or part of the assets and to
assume the liabilities and capital of a credit union, Federal
credit union or out-of-State credit union.
(c) Southern Africa investments.--(Deleted by amendment).
(d) Special powers of community development credit unions.--
A community development credit union may do all of the
following:
(1) Accept payments on shares from any agency,
instrumentality, public corporation or other entity of the
United States or any state and nonmembers pursuant to the
Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751 et
seq.) and other applicable Federal law and requirements of
the National Credit Union Administration.
(2) Participate in the Community Development Revolving
Loan Program under the administration of the National Credit
Union Administration.
(3) Engage in any other programs or activities permitted
by Federal or State law applicable to a community development
credit union with the prior written approval of the
department upon filing of an application and submittal of a
fee.
(e) Federal parity.--Notwithstanding any other provisions of
this title or any other law, in addition to any other powers as
authorized by this title or other law, a credit union shall have
the power:
(1) To engage in any activity permissible for a Federal
credit union as authorized by the Federal Credit Union Act
(48 Stat. 1216, 12 U.S.C. § 1751 et seq.) and the rules and
regulations of the National Credit Union Administration,
subject to reasonable conditions, limitations and
restrictions as may be imposed by the department, including,
but not limited to, conditions, limitations and restrictions
based upon safety and soundness.
(2) To engage in the activity of creating, amending or
expanding its field of membership as authorized by section
109 of the Federal Credit Union Act (48 Stat. 1216, 12 U.S.C.
§ 1759), subject to reasonable conditions, limitations and
restrictions as may be imposed by the department, including,
but not limited to, conditions, limitations and restrictions
based upon safety and soundness.
(3) To control, hold an interest in or participate in a
credit union service organization that engages in any
activity permissible for a Federal credit union to conduct
through a credit union service organization, provided that
any activity permissible for a credit union service
organization shall be subject to reasonable conditions,
limitations and restrictions as may be imposed by the
department, including, but not limited to, conditions,
limitations and restrictions based upon safety and soundness.
(f) Notice to department.--Unless prior approval is granted
by the department, a credit union shall provide at least 30
days' prior written notice to the department before it engages
in an activity or acquires an interest permissible under
subsection (e). During the review period provided by this
subsection, the department may:
(1) request further information concerning any proposed
activity or interest;
(2) impose any conditions, limitations or restrictions
upon such interests or activities to the extent authorized by
subsection (e); or
(3) prohibit the credit union from engaging in any
activity or acquiring any interest if to do so would have a
significant adverse impact upon the safety and soundness of
the credit union.
(g) Approval to be presumed.--Except as otherwise agreed to
by a credit union, the department shall be deemed to have
granted approval for a credit union to engage in an activity or
acquire an interest if within 30 days of receipt of written
notice from a credit union the department does not act.
(Dec. 12, 1994, P.L.1067, No.146, eff. 60 days; Dec. 9, 2002,
P.L.1572, No.207, eff. 60 days)
2002 Amendment. Act 207 amended subsec. (b) intro. par.,
(4), (7)(iii) and (10), deleted subsec. (c) and added subsecs.
(b)(4.1) and (4.2), (d), (e), (f) and (g).
1994 Amendment. Act 146 amended subsec. (b)(7) and (10).
Cross References. Section 501 is referred to in section 511
of this title.
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