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HOUSE DOCKET, NO. 2980 FILED ON: 1/16/2025
HOUSE . . . . . . . . . . . . . . . No. 1079
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
Shirley B. Arriaga
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act to strengthen the state credit union charter.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :DATE ADDED:Shirley B. Arriaga8th Hampden1/16/2025 1 of 18
HOUSE DOCKET, NO. 2980 FILED ON: 1/16/2025
HOUSE . . . . . . . . . . . . . . . No. 1079
By Representative Arriaga of Chicopee, a petition (accompanied by bill, House, No. 1079) of
Shirley B. Arriaga relative to the state credit union charter. Financial Services.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Fourth General Court
(2025-2026)
_______________
An Act to strengthen the state credit union charter.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. The first paragraph of section 4 of chapter 167I of the General Laws, as
2 appearing in the 2020 Official Edition, is hereby amended by inserting after the first
3sentence the
4 following sentence:
5 Any 1 or more mutual banks or subsidiary banking institutions and any 1 or more credit
6 unions may merge or consolidate into a single credit union upon terms approved by a
7vote of at
8 least 2/3 of the board of each mutual bank and the board of directors of each credit
9union, and
10 shall have been approved in writing by the commissioner.
11 SECTION 2. Said chapter 167I is hereby further amended by inserting after section 12 2 of 18
12 the following section:
13 Section 121/2. By any votes required and the filing of such documents as the
14 commissioner shall prescribe and under such terms and conditions as the commissioner
15may impose, a mutual bank, upon approval by the commissioner, shall be converted into a credit
16 union chartered pursuant to chapter 171, and shall not, in connection with or upon such
17 conversion, be subject to the requirements of the General Laws with respect to the
18organization
19 and commencement of business of such a credit union. The depositors of any mutual
20bank shall
21 become members of the credit union within 2 years after such transaction is approved or
22for such
23 longer period as may be approved by the commissioner. A mutual bank so converted into
24a credit
25 union shall have 2 years after such transaction is approved or for such longer period as
26may be
27 approved by the commissioner to dispose of any asset or investment that is not
28permissible for a
29 credit union.
30 If permissible under federal law, a mutual federal savings bank or a mutual federal 3 of 18
31 savings and loan association may also convert into a credit union under this section.
32 SECTION 3. Section 57 of chapter 171 of the General Laws, as so appearing, is hereby
33 amended by striking out the fourth paragraph.
34 SECTION 4. Section 67 of said chapter 171, as so appearing, is hereby amended by
35 adding after clause (v) the following 4 clauses:
36 (w) in asset-backed securities in an aggregate amount not to exceed 10% of the assets of a
37 credit union;
38 (x) in the shares, stocks, or obligations of any organization organized and operated for the
39 purpose of providing services which are closely related to banking as determined by the
40 commissioner in an aggregate amount not to exceed 10% of the assets of a credit union
41provided,
42 however, that such authority does not include the power to acquire control directly or
43indirectly,
44 another financial institution, nor invest in shares, stocks or obligations of an insurance
45company,
46 trade association, liquidity facility or any other similar organization, corporation, or
47association
48 not otherwise permitted by chapter 171 of the general laws; 4 of 18
49 (y) to participate in the activities of the Massachusetts Capital Growth Corporation
50 created under chapter 40W by making capital available to the corporation by making an
51 investment or deposit in or grant to said corporation, an affiliate or subsidiary of said
52corporation
53 or any fund managed by said corporation in an aggregate amount not to exceed 10% of
54the assets
55 of a credit union; and
56 (z) a credit union may or in participation with a federal credit union or foreign credit
57 union, as defined in section 1 of chapter 171, invest in, establish, operate or subscribe for
58 services from another federal credit union, out-of-state credit union or any other business
59entity
60 for the purpose of obtaining for or furnishing to the credit union technology, trust
61services,
62 financial planning, compliance, internal audits, human resource or other operation
63functions,
64 management staff or other banking services.
65 SECTION 5. Said chapter 171 is hereby further amended by striking out section 78A, as
66 so appearing, and inserting in place thereof the following section:
67 Section 78A. Any 1 or more credit unions, as defined in section 1 of chapter 171, may 5 of 18
68 merge or consolidate with 1 or more savings banks, as defined in section 1 of chapter
69168, or 1
70 or more co-operative banks, as defined in section 1 of chapter 170, or 1 or more
71subsidiary
72 banking institutions, as defined in section 1 of chapter 167H and section 4 of chapter
73167I, with
74 either as the surviving corporation.
75 SECTION 6. Said chapter 171 is hereby further amended by striking out section 80A and
76 inserting in place thereof the following section:
77 Section 80A. (a) A credit union subject to this section may convert into a mutual savings
78bank governed by chapter 168, a mutual co-operative bank governed by chapter 170, a mutual
79 federal savings bank or a mutual federal savings and loan association which exist under
80authority
81 of the United States. A mutual savings bank governed by chapter 168 or a mutual co-
82operative
83 bank governed by chapter 170 may convert into a credit union. If permissible under
84federal law,
85 a mutual federal savings bank or a mutual federal savings and loan association may also
86convert 6 of 18
87 into a credit union. The conversion shall comply with all applicable federal laws and
88regulations.
89 A credit union insured by the Massachusetts Credit Union Share Insurance Corporation
90shall file
91 notification of its intent to convert with said corporation at least 90 days before the date
92of the
93 proposed special meeting of the members of the credit union. A mutual savings or co-
94operative
95 bank insured by the Depositors Insurance Fund shall file notification of its intent to
96convert with
97 said fund at least 90 days before the date of the proposed special meeting of the
98corporators or
99 shareholders of the mutual savings or cooperative bank. No credit union, mutual savings
100bank, or
101 co-operative bank may convert pursuant to this section so long as any financial assistance
102 provided by the Depositors Insurance Fund or the Massachusetts Credit Union Share
103Insurance
104 Corporation to such credit union, mutual savings bank, or co-operative bank remains
105unpaid or 7 of 18
106 has not been compromised or settled. Any such repayment, compromise or settlement
107shall be
108 approved by the commissioner.
109 (b) A mutual savings bank, co-operative bank or credit union shall file with the
110 75 commissioner, at the same time, notices, disclosures and communications required by
111or sent to the National Credit Union Administration or the Federal Deposit Insurance
112Corporation. The
113 commissioner may require changes and additions to said notices, disclosures or
114communications,
115 78 except as required by federal law or regulation.
116 (c) A mutual savings bank, co-operative bank or credit union that is adequately
117 capitalized and has received at least a satisfactory rating in its most recent examination
118for
119 compliance with the Community Reinvestment Act may submit a plan of conversion
120approved
121 by a 2/3 vote of the entire board of directors or trustees to the commissioner. Unless
122waived by
123 the commissioner, the plan shall include but not be limited to: 8 of 18
124 (1)a 3 year business plan for the appropriate chartered mutual savings bank, co-
125operative
126 bank or credit union which shall include pro forma financial statements;
127 (2)a commitment by the converting credit union that it will not convert to a stock
128form before the expiration of 1 year of the effective date of the conversion to a mutual savings
129bank or
130 co-operative bank charter;
131 (3)an estimated budget for conversion expenses;
132 (4) financial statements for the most recently completed quarter;
133 (5) if applicable, the procedures and timing for termination of excess deposit insurance
134from the
135 Massachusetts Credit Union Share Insurance Corporation or the Depositors
136Insurance
137 Fund; and
138 (6) other relevant information that the commissioner may reasonably require.
139 (d) Included with the plan shall be an information statement to be sent to corporators,
140shareholders or members which shall fully and fairly disclose all significant terms and steps to be
141 taken for the conversion and shall include but not be limited to:
142 (1)a statement as to why the board is considering the conversion; 9 of 18
143 (2)a statement of the major positive and negative business effects of the proposed
144 conversion;
145 (3)the impact on the member’s financial and other interests in the credit union;
146 (4)in the case of a credit union converting to a mutual savings bank or co-operative
147bank,
148 (a) a disclosure that the conversion from a credit union to a mutual savings bank or co-
149operative
150 bank could lead to a member losing ownership interest in the credit union if the mutual
151savings
152 bank or co-operative bank subsequently converts to a stock institution and the member
153does not
154 become a stockholder; and (b) a disclosure of any conversion related economic benefit a
155director
156 or senior management official may receive including receipt of or an increase in
157compensation
158 and an explanation of any foreseeable stock related benefits associated with a subsequent
159 conversion to a stock institution. The explanation of stock related benefits shall include a
160 comparison of the opportunities to acquire stock that are available to officials and
161employees, 10 of 18
162 with those opportunities available to the general membership.
163
164 (e) A converting credit union shall file with the commissioner a plan of conversion and
165an information statement at least 120 days before the date of the proposed special meeting of the
166 members. The commissioner may require reasonable changes to the plan of conversion
167and
168 information statement. The commissioner may also require any equitable disclosure he
169 determines applicable to the proposed conversion. The commissioner may specify the
170form, type
171 and other material aspects of the plan of conversion and information statement to be sent
172to
173 members except to the extent that it does not conflict with federal law or regulation.
174 (f) The commissioner shall review the contents of the plan before the board of directors
175 of the credit union presents the conversion plan to the members for a vote. The
176commissioner
177 shall authorize the distribution of the conversion plan and information statement only if
178the
179 commissioner is satisfied of all of the following:
180 (1)the plan discloses to the members information concerning the advantages and 11 of 18
181 disadvantages of the proposed conversion;
182 (2)the information statement discloses the impact on the member’s financial and
183other
184 interests in the credit union; and
185 (3)the conversion would not be made to circumvent a pending supervisory action
186that is
187 initiated by the commissioner or other regulatory agency because of a concern over the
188safety
189 and soundness of the credit union.
190 (g) The commissioner shall render a decision within 30 days from the date of the filing of
191 the plan or any amendment thereof. Upon authorization by the commissioner of the
192distribution
193 of the contents of the conversion plan and information statement, the converting credit
194union
195 shall call a special meeting of the members to vote on the conversion plan. At least 30
196days
197 before the special meeting, the converting credit union shall mail to each member a
198notice of the
199 special meeting, the conversion plan and information statement. 12 of 18
200 (h) The plan of conversion of a credit union shall be approved by a majority vote of those
201 members voting. A member may vote on the proposal to convert in person or by
202electronic
203 means at the special meeting held on the date set for the vote or by written ballot filed by
204the
205 qualified voter. The vote on the conversion proposal shall be by secret ballot and
206conducted by
207 an independent entity. The independent entity shall be a company with experience in
208conducting
209 corporate elections. A director or officer of the converting credit union, or an immediate
210family
211 member of a director or officer, shall not have an ownership interest in, or be employed
212by, the
213 entity.
214 (i) A converting credit union or an officer or director thereof shall not directly or
215 indirectly give or offer or provide a chance to win a lottery or anything of substantial
216value, as
217 determined by the commissioner, to the membership or a member of the credit union, for
218an 13 of 18
219 action related to the conversion to a mutual bank or as an inducement to vote on the plan
220of
221 conversion.
222 (j) The provisions on notice to members and voting procedures in this section shall
223 govern the process for converting to a mutual bank notwithstanding other provisions of
224this
225 chapter or a by-law of the converting credit union to the contrary.
226 (k) Certified copies of the results of the board of the converting mutual savings bank, co
227 operative bank or credit union meetings and votes of the membership meetings of the
228credit
229 union shall be filed with the commissioner. The credit union shall also certify that the
230 information statement, plan, and other written materials provided to members were
231identical to
232 those materials considered satisfactory by the commissioner.
233 (l) If the commissioner disapproves of the methods by which the membership votes were
234 taken or the procedures applicable to the votes, the commissioner may direct that a new
235vote be
236 taken. If the commissioner does not disapprove of the methods by which the membership
237vote 14 of 18
238 was taken within 10 days after the notification is given, the vote shall be considered
239approved.
240 (m) If the conversion to a mutual savings bank or co-operative bank is approved by the
241 credit union members or if the conversion to a credit union is approved by the boards of a
242mutual
243 savings or co-operative bank and the commissioner receives notification from the
244converting
245 mutual savings bank, co-operative bank or credit union that approvals required under
246state and
247 federal law and regulations, including approvals needed for deposit insurance by the
248Federal
249 Deposit Insurance Corporation or the National Credit Union Administration have been
250obtained,
251 and that any waiting period prescribed by federal law has expired, and in the case of
252conversion
253 to a mutual savings or co-operative bank, it will become a member of the Depositors
254Insurance
255 Fund and of the deposit insurance fund thereof, and further, in the case of conversion to a
256credit 15 of 18
257 union, it will become a member of the Massachusetts Credit Union Share Insurance
258Corporation
259 and of the share insurance fund thereof and has made all applicable payments thereto as
260 determined by the commissioner, a certificate to transact business shall be issued by the
261 commissioner as applicable. A conversion to a mutual savings, co-operative bank or a
262credit
263 union under this section shall not be consummated until arrangements satisfactory to the
264 Depositors Insurance Fund or to Massachusetts Credit Union Share Insurance
265Corporation, as
266 applicable, have been made and notice thereof has been received by the commissioner.
267After
268 receipt of the certificate to transact business, the converting mutual savings bank, co-
269operative
270 bank or credit union shall promptly file the certificate and its articles of organization with
271the
272 secretary of state. Upon the filing, the charter of the converting mutual savings bank, co
273 operative bank or credit union shall automatically cease and the converting mutual
274savings bank, 16 of 18
275 co-operative bank or credit union shall become a mutual savings bank, co-operative bank
276or
277 credit union. Upon the conversion, the converted mutual savings bank, co-operative bank
278or
279 credit union shall possess all of the rights, privileges and powers granted to it by its
280articles of
281 organization and by the laws applicable to the type of mutual savings bank, co-operative
282bank or
283 credit union charter into which it converted, and all of the assets and business of the
284converting
285 mutual savings bank, co-operative bank or credit union shall be transferred to and vested
286in it
287 without any deed or instrument of conveyance; but the converting mutual savings bank,
288co
289 operative bank or credit union may execute a deed or instrument of conveyance as is
290convenient
291 to confirm the transfer. The converted mutual savings bank, co-operative bank or credit
292union
293 shall be subject to all of the duties, relations, obligations and liabilities of the converting
294mutual 17 of 18
295 savings bank, co-operative bank or credit union, whether as debtor, depository or
296otherwise, and
297 shall be liable to pay and discharge the debts and liabilities, to perform all the duties in
298the same
299 manner and to the same extent as if the converted mutual savings bank, co-operative bank
300or
301 credit union had itself incurred the obligation or liability or assumed the duty or relation.
302Rights
303 of creditors of the converting mutual savings bank, co-operative bank or credit union and
304liens
305 upon the property of such mutual savings, co-operative bank or credit union shall be
306preserved
307 unimpaired and the converted mutual savings bank, co-operative bank or credit union
308shall be
309 entitled to receive, accept, collect, hold and enjoy all gifts, bequests, devises,
310conveyances and
311 appointments in favor of or in the name of the converting mutual savings bank, co-
312operative
313 bank or credit union and whether made or created to take effect before or after the
314conversion. 18 of 18
315 (n) If the conversion to a mutual federal savings bank or a mutual federal savings and
316 loan association is approved by the members the converting credit union shall provide
317 notification to the commissioner that all approvals under state and federal law and
318regulations
319 including approvals needed for deposit insurance by the Federal Deposit Insurance
320Corporation
321 have been obtained and that any waiting period prescribed by federal law has expired and
322shall
323 provide a certified copy of the approval of the federal mutual charter by the Office of
324Thrift
325 Supervision or any successor agency thereto. Upon acceptance of the federal charter, the
326 converting credit union's charter from the commonwealth shall cease to exist.
327 (o) A person who willfully violates the disclosure provisions of this section knowing the
328 disclosure made to be false or misleading in a material respect shall upon conviction be
329fined not
330 more than $5,000 or imprisoned not more than 3 years, or both.