Bill H.1079

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

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In the One Hundred and Ninety-Fourth General Court
(2025-2026)

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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:

SECTION 1. The first paragraph of section 4 of chapter 167I of the General Laws, as

appearing in the 2020 Official Edition, is hereby amended by inserting after the first sentence the

following sentence:

Any 1 or more mutual banks or subsidiary banking institutions and any 1 or more credit

unions may merge or consolidate into a single credit union upon terms approved by a vote of at

least 2/3 of the board of each mutual bank and the board of directors of each credit union, and

shall have been approved in writing by the commissioner.

SECTION 2. Said chapter 167I is hereby further amended by inserting after section 12

the following section:

Section 121/2. By any votes required and the filing of such documents as the

commissioner shall prescribe and under such terms and conditions as the commissioner may impose, a mutual bank, upon approval by the commissioner, shall be converted into a credit

union chartered pursuant to chapter 171, and shall not, in connection with or upon such

conversion, be subject to the requirements of the General Laws with respect to the organization

and commencement of business of such a credit union. The depositors of any mutual bank shall

become members of the credit union within 2 years after such transaction is approved or for such

longer period as may be approved by the commissioner. A mutual bank so converted into a credit

union shall have 2 years after such transaction is approved or for such longer period as may be

approved by the commissioner to dispose of any asset or investment that is not permissible for a

credit union.

If permissible under federal law, a mutual federal savings bank or a mutual federal

savings and loan association may also convert into a credit union under this section.

SECTION 3. Section 57 of chapter 171 of the General Laws, as so appearing, is hereby

amended by striking out the fourth paragraph.

SECTION 4. Section 67 of said chapter 171, as so appearing, is hereby amended by

adding after clause (v) the following 4 clauses:

(w) in asset-backed securities in an aggregate amount not to exceed 10% of the assets of a

credit union;

(x) in the shares, stocks, or obligations of any organization organized and operated for the

purpose of providing services which are closely related to banking as determined by the

commissioner in an aggregate amount not to exceed 10% of the assets of a credit union provided,

however, that such authority does not include the power to acquire control directly or indirectly,

another financial institution, nor invest in shares, stocks or obligations of an insurance company,

trade association, liquidity facility or any other similar organization, corporation, or association

not otherwise permitted by chapter 171 of the general laws;

(y) to participate in the activities of the Massachusetts Capital Growth Corporation

created under chapter 40W by making capital available to the corporation by making an

investment or deposit in or grant to said corporation, an affiliate or subsidiary of said corporation

or any fund managed by said corporation in an aggregate amount not to exceed 10% of the assets

of a credit union; and

(z) a credit union may or in participation with a federal credit union or foreign credit

union, as defined in section 1 of chapter 171, invest in, establish, operate or subscribe for

services from another federal credit union, out-of-state credit union or any other business entity

for the purpose of obtaining for or furnishing to the credit union technology, trust services,

financial planning, compliance, internal audits, human resource or other operation functions,

management staff or other banking services.

SECTION 5. Said chapter 171 is hereby further amended by striking out section 78A, as

so appearing, and inserting in place thereof the following section:

Section 78A. Any 1 or more credit unions, as defined in section 1 of chapter 171, may

merge or consolidate with 1 or more savings banks, as defined in section 1 of chapter 168, or 1

or more co-operative banks, as defined in section 1 of chapter 170, or 1 or more subsidiary

banking institutions, as defined in section 1 of chapter 167H and section 4 of chapter 167I, with

either as the surviving corporation.

SECTION 6. Said chapter 171 is hereby further amended by striking out section 80A and

inserting in place thereof the following section:

Section 80A. (a) A credit union subject to this section may convert into a mutual savings bank governed by chapter 168, a mutual co-operative bank governed by chapter 170, a mutual

federal savings bank or a mutual federal savings and loan association which exist under authority

of the United States. A mutual savings bank governed by chapter 168 or a mutual co-operative

bank governed by chapter 170 may convert into a credit union. If permissible under federal law,

a mutual federal savings bank or a mutual federal savings and loan association may also convert

into a credit union. The conversion shall comply with all applicable federal laws and regulations.

A credit union insured by the Massachusetts Credit Union Share Insurance Corporation shall file

notification of its intent to convert with said corporation at least 90 days before the date of the

proposed special meeting of the members of the credit union. A mutual savings or co-operative

bank insured by the Depositors Insurance Fund shall file notification of its intent to convert with

said fund at least 90 days before the date of the proposed special meeting of the corporators or

shareholders of the mutual savings or cooperative bank. No credit union, mutual savings bank, or

co-operative bank may convert pursuant to this section so long as any financial assistance

provided by the Depositors Insurance Fund or the Massachusetts Credit Union Share Insurance

Corporation to such credit union, mutual savings bank, or co-operative bank remains unpaid or

has not been compromised or settled. Any such repayment, compromise or settlement shall be

approved by the commissioner.

(b) A mutual savings bank, co-operative bank or credit union shall file with the

75 commissioner, at the same time, notices, disclosures and communications required by or sent to the National Credit Union Administration or the Federal Deposit Insurance Corporation. The

commissioner may require changes and additions to said notices, disclosures or communications,

78 except as required by federal law or regulation.

capitalized and has received at least a satisfactory rating in its most recent examination for

compliance with the Community Reinvestment Act may submit a plan of conversion approved

by a 2/3 vote of the entire board of directors or trustees to the commissioner. Unless waived by

the commissioner, the plan shall include but not be limited to:

(1) a 3 year business plan for the appropriate chartered mutual savings bank, co-operative

bank or credit union which shall include pro forma financial statements;

(2) a commitment by the converting credit union that it will not convert to a stock form before the expiration of 1 year of the effective date of the conversion to a mutual savings bank or

co-operative bank charter;

(3) an estimated budget for conversion expenses;

(4) financial statements for the most recently completed quarter;

(5) if applicable, the procedures and timing for termination of excess deposit insurance from the

Massachusetts Credit Union Share Insurance Corporation or the Depositors Insurance

Fund; and

(6) other relevant information that the commissioner may reasonably require.

(d) Included with the plan shall be an information statement to be sent to corporators, shareholders or members which shall fully and fairly disclose all significant terms and steps to be

taken for the conversion and shall include but not be limited to:

(1) a statement as to why the board is considering the conversion;

(2) a statement of the major positive and negative business effects of the proposed

conversion;

(3) the impact on the member’s financial and other interests in the credit union;

(4) in the case of a credit union converting to a mutual savings bank or co-operative bank,

(a) a disclosure that the conversion from a credit union to a mutual savings bank or co-operative

bank could lead to a member losing ownership interest in the credit union if the mutual savings

bank or co-operative bank subsequently converts to a stock institution and the member does not

become a stockholder; and (b) a disclosure of any conversion related economic benefit a director

or senior management official may receive including receipt of or an increase in compensation

and an explanation of any foreseeable stock related benefits associated with a subsequent

conversion to a stock institution. The explanation of stock related benefits shall include a

comparison of the opportunities to acquire stock that are available to officials and employees,

with those opportunities available to the general membership.

(e) A converting credit union shall file with the commissioner a plan of conversion and an information statement at least 120 days before the date of the proposed special meeting of the

members. The commissioner may require reasonable changes to the plan of conversion and

information statement. The commissioner may also require any equitable disclosure he

determines applicable to the proposed conversion. The commissioner may specify the form, type

and other material aspects of the plan of conversion and information statement to be sent to

members except to the extent that it does not conflict with federal law or regulation.

(f) The commissioner shall review the contents of the plan before the board of directors

of the credit union presents the conversion plan to the members for a vote. The commissioner

shall authorize the distribution of the conversion plan and information statement only if the

commissioner is satisfied of all of the following:

(1) the plan discloses to the members information concerning the advantages and

disadvantages of the proposed conversion;

(2) the information statement discloses the impact on the member’s financial and other

interests in the credit union; and

(3) the conversion would not be made to circumvent a pending supervisory action that is

initiated by the commissioner or other regulatory agency because of a concern over the safety

and soundness of the credit union.

(g) The commissioner shall render a decision within 30 days from the date of the filing of

the plan or any amendment thereof. Upon authorization by the commissioner of the distribution

of the contents of the conversion plan and information statement, the converting credit union

shall call a special meeting of the members to vote on the conversion plan. At least 30 days

before the special meeting, the converting credit union shall mail to each member a notice of the

special meeting, the conversion plan and information statement.

(h) The plan of conversion of a credit union shall be approved by a majority vote of those

members voting. A member may vote on the proposal to convert in person or by electronic

means at the special meeting held on the date set for the vote or by written ballot filed by the

qualified voter. The vote on the conversion proposal shall be by secret ballot and conducted by

an independent entity. The independent entity shall be a company with experience in conducting

corporate elections. A director or officer of the converting credit union, or an immediate family

member of a director or officer, shall not have an ownership interest in, or be employed by, the

entity.

(i) A converting credit union or an officer or director thereof shall not directly or

indirectly give or offer or provide a chance to win a lottery or anything of substantial value, as

determined by the commissioner, to the membership or a member of the credit union, for an

action related to the conversion to a mutual bank or as an inducement to vote on the plan of

conversion.

(j) The provisions on notice to members and voting procedures in this section shall

govern the process for converting to a mutual bank notwithstanding other provisions of this

chapter or a by-law of the converting credit union to the contrary.

(k) Certified copies of the results of the board of the converting mutual savings bank, co

operative bank or credit union meetings and votes of the membership meetings of the credit

union shall be filed with the commissioner. The credit union shall also certify that the

information statement, plan, and other written materials provided to members were identical to

those materials considered satisfactory by the commissioner.

(l) If the commissioner disapproves of the methods by which the membership votes were

taken or the procedures applicable to the votes, the commissioner may direct that a new vote be

taken. If the commissioner does not disapprove of the methods by which the membership vote

was taken within 10 days after the notification is given, the vote shall be considered approved.

(m) If the conversion to a mutual savings bank or co-operative bank is approved by the

credit union members or if the conversion to a credit union is approved by the boards of a mutual

savings or co-operative bank and the commissioner receives notification from the converting

mutual savings bank, co-operative bank or credit union that approvals required under state and

federal law and regulations, including approvals needed for deposit insurance by the Federal

Deposit Insurance Corporation or the National Credit Union Administration have been obtained,

and that any waiting period prescribed by federal law has expired, and in the case of conversion

to a mutual savings or co-operative bank, it will become a member of the Depositors Insurance

Fund and of the deposit insurance fund thereof, and further, in the case of conversion to a credit

union, it will become a member of the Massachusetts Credit Union Share Insurance Corporation

and of the share insurance fund thereof and has made all applicable payments thereto as

determined by the commissioner, a certificate to transact business shall be issued by the

commissioner as applicable. A conversion to a mutual savings, co-operative bank or a credit

union under this section shall not be consummated until arrangements satisfactory to the

Depositors Insurance Fund or to Massachusetts Credit Union Share Insurance Corporation, as

applicable, have been made and notice thereof has been received by the commissioner. After

receipt of the certificate to transact business, the converting mutual savings bank, co-operative

bank or credit union shall promptly file the certificate and its articles of organization with the

secretary of state. Upon the filing, the charter of the converting mutual savings bank, co

operative bank or credit union shall automatically cease and the converting mutual savings bank,

co-operative bank or credit union shall become a mutual savings bank, co-operative bank or

credit union. Upon the conversion, the converted mutual savings bank, co-operative bank or

credit union shall possess all of the rights, privileges and powers granted to it by its articles of

organization and by the laws applicable to the type of mutual savings bank, co-operative bank or

credit union charter into which it converted, and all of the assets and business of the converting

mutual savings bank, co-operative bank or credit union shall be transferred to and vested in it

without any deed or instrument of conveyance; but the converting mutual savings bank, co

operative bank or credit union may execute a deed or instrument of conveyance as is convenient

to confirm the transfer. The converted mutual savings bank, co-operative bank or credit union

shall be subject to all of the duties, relations, obligations and liabilities of the converting mutual

savings bank, co-operative bank or credit union, whether as debtor, depository or otherwise, and

shall be liable to pay and discharge the debts and liabilities, to perform all the duties in the same

manner and to the same extent as if the converted mutual savings bank, co-operative bank or

credit union had itself incurred the obligation or liability or assumed the duty or relation. Rights

of creditors of the converting mutual savings bank, co-operative bank or credit union and liens

upon the property of such mutual savings, co-operative bank or credit union shall be preserved

unimpaired and the converted mutual savings bank, co-operative bank or credit union shall be

entitled to receive, accept, collect, hold and enjoy all gifts, bequests, devises, conveyances and

appointments in favor of or in the name of the converting mutual savings bank, co-operative

bank or credit union and whether made or created to take effect before or after the conversion.

(n) If the conversion to a mutual federal savings bank or a mutual federal savings and

loan association is approved by the members the converting credit union shall provide

notification to the commissioner that all approvals under state and federal law and regulations

including approvals needed for deposit insurance by the Federal Deposit Insurance Corporation

have been obtained and that any waiting period prescribed by federal law has expired and shall

provide a certified copy of the approval of the federal mutual charter by the Office of Thrift

Supervision or any successor agency thereto. Upon acceptance of the federal charter, the

converting credit union's charter from the commonwealth shall cease to exist.

(o) A person who willfully violates the disclosure provisions of this section knowing the

disclosure made to be false or misleading in a material respect shall upon conviction be fined not

more than $5,000 or imprisoned not more than 3 years, or both.

Name:	District/Address:	Date Added:
Shirley B. Arriaga	8th Hampden	1/16/2025