SB375 - Revises provisions relating to credit unions. (BDR 55-605)

- 83rd Session (2025) Senate Bill No. 375–Senator Pazina CHAPTER.......... AN ACT relating to credit unions; authorizing a credit union which is a low-income credit union to issue shares to nonmembers under certain circumstances; authorizing the Commissioner of Financial Institutions to temporarily suspend certain regulations under certain circumstances; requiring the Commissioner to approve or deny an application to open an additional office within 60 days after receipt of the application; revising requirements for the par value of shares of a credit union; revising provisions relating to certain operations of a credit union; revising requirements for the board of directors of a credit union; revising provisions relating to membership in a credit union; revising provisions relating to certain reserves, loans and investments of a credit union; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides for the regulation and oversight of certain credit unions by the Commissioner of Financial Institutions. (Chapter 672 of NRS) Section 2 of this bill authorizes the Commissioner to issue an order which temporarily suspends a regulation of the Commissioner relating to credit unions for not more than 90 days: (1) during a state of emergency or declaration of disaster; or (2) if the Commissioner determines the order is in the public interest. Section 2 requires: (1) such an order to contain certain information and meet certain requirements; and (2) the Commissioner to provide written notice and a copy of any such order to any credit union subject to the authority of the Commissioner. Section 15 of this bill exempts any order issued by the Commissioner pursuant to section 2 from the requirements of the Nevada Administrative Procedure Act. Existing law requires an application which is submitted to the Secretary of State to organize a credit union to establish the par value of the shares, which must be $5 or some multiple thereof. (NRS 672.310) Section 3 of this bill reduces the required par value to $1 or some multiple thereof. Section 9 of this bill authorizes the bylaws of the credit union to: (1) specify a dollar amount for the par value of a share; or (2) require the par value of a share to be determined from time to time by resolution of the board of directors. Section 1 of this bill authorizes a credit union that qualifies and is approved for designation as a low-income credit union to issue shares to nonmembers under certain circumstances. Existing law authorizes a credit union to maintain an office at a location other than the main office, with the approval of the Commissioner, if the office is reasonably necessary to furnish service to its members. (NRS 672.330) Section 4 of this bill: (1) removes the requirement to determine whether an office is reasonably necessary to furnish such service; and (2) requires the Commissioner to approve or deny any application to open an additional office within 60 days after receiving the application. Existing law requires vacancies in the board of directors of a credit union to be filled by vote of the members of the credit union at the annual meeting or at a special meeting called for that purpose. Existing law also authorizes the board to temporarily fill such a vacancy until the next annual meeting or special meeting. – 2 – - 83rd Session (2025) (NRS 672.350) Section 5 of this bill authorizes the board to fill such a vacancy for the remainder of the unexpired term, after which the seat is required to be filled by vote of the members of the credit union according to the established procedures of the credit union for nomination and election. Existing law requires the board of directors of a credit union to meet not less than once a month. (NRS 672.360) Section 6 of this bill requires the board to meet not less than six times during each calendar year, including not less than one time during each calendar quarter. Section 6 also authorizes the Commissioner to require the board to meet more frequently if the Commissioner determines it is necessary to address matters relating to an examination. Finally, section 6 authorizes the board to conduct a meeting through certain electronic means under certain circumstances. Section 10 of this bill similarly authorizes members of a credit union to participate in a meeting through certain electronic means under certain circumstances. Existing law authorizes the board of directors to appoint membership officers from the members of the credit union to act upon membership applications. (NRS 672.380) Section 7 of this bill authorizes the board to appoint officers, directors or employees of the credit union to act as membership officers. Existing law requires the membership of a particular credit union to be limited to certain persons, including those who have: (1) paid the entrance fee provided in the bylaws; and (2) subscribed for one or more shares and have paid the initial installment thereon. (NRS 672.510) Section 8 of this bill authorizes a credit union to pay such an entrance fee, cost of shares or initial installment for a prospective member under certain circumstances if such a promotion is equally available to any prospective member. Existing law sets forth requirements relating to the regular reserves of a credit union. (NRS 672.670) Section 11 of this bill removes those specific requirements and instead requires a credit union to comply with certain provisions of federal regulations. Existing law authorizes a credit union to make loans to members under certain circumstances. (NRS 672.710) Section 12 of this bill revises certain requirements for the making of loans and authorizes a nonmember to participate in an obligation or extension of credit to a member, under certain circumstances, as a joint applicant, joint obligor, co-borrower, surety or guarantor. Existing law authorizes a credit union to make certain investments with money not used in loans to members. (NRS 672.760) Section 13 of this bill adds, under certain circumstances, municipal bonds which are issued by a public entity outside of this State to the list of permissible investments a credit union may make. Section 14 of this bill: (1) removes certain limitations on a credit union regarding investing in fixed assets; and (2) authorizes a credit union to purchase, hold and dispose of property necessary or incidental to the operations of the credit union in compliance with certain federal regulations. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 672 of NRS is hereby amended by adding thereto a new section to read as follows: A credit union that qualifies and is approved for designation as a low-income credit union pursuant to 12 C.F.R. § 701.34, as – 3 – - 83rd Session (2025) amended, may issue shares to nonmembers. The total number of shares issued by the credit union to nonmembers must not exceed 20 percent of the unimpaired capital and surplus of the credit union unless the credit union obtains written authorization from the Commissioner. Sec. 2. NRS 672.250 is hereby amended to read as follows: 672.250 [The] 1. Except as otherwise provided in this section, the Commissioner shall administer the provisions of this chapter, subject to administrative supervision by the Director. 2. The Commissioner shall make the decisions and determinations and adopt regulations which are necessary or reasonably appropriate to accomplish the purposes of this chapter. 3. The Commissioner may issue an order to temporarily suspend a regulation of the Commissioner adopted pursuant to this chapter, in accordance with the requirements of this section, if: (a) The Governor or the Legislature proclaims the existence of a state of emergency or issues a declaration of disaster pursuant to NRS 414.070; or (b) The Commissioner determines that the order is in the public interest. 4. An order issued pursuant to subsection 3: (a) Is effective for not more than 90 days unless the Commissioner extends the order for one additional period of not more than 90 days. The Commissioner shall not extend an order issued pursuant to paragraph (b) of subsection 3 more than once. (b) Must include: (1) The regulation that the order suspends; (2) The specific reason for the order, including, without limitation, the public interest which is served by the order, if applicable; and (3) The date on which the order becomes effective and the date on which the order terminates. 5. If the Commissioner issues an order to temporarily suspend a regulation pursuant to subsection 3, the Commissioner shall promptly provide written notice and a copy of the order to any credit union subject to the provisions of this chapter. Sec. 3. NRS 672.310 is hereby amended to read as follows: 672.310 1. The Secretary of State shall not issue any certificate of incorporation to any credit union authorizing it to do business in this state until the articles of incorporation are approved by the Commissioner. – 4 – - 83rd Session (2025) 2. An amendment to the articles of incorporation may not be filed by the Secretary of State without the written approval of the Commissioner. 3. Not less than seven persons who are residents of Nevada, have a common bond and are of legal age who desire to organize a credit union under this chapter shall first execute in triplicate an application, upon forms to be issued by the Commissioner, for permission to organize an association. The applicants shall submit with or include in their application: (a) A copy of the articles of incorporation which must comply with the provisions of NRS 81.440 except where those provisions conflict with the provisions of this chapter. (b) The par value of the shares, which must be [$5] $1 or some multiple thereof. (c) The names and addresses of the applicants and an itemized account of the financial condition of the applicants and the proposed credit union. (d) The name, which must include the words “credit union,” and the principal place of business. (e) Any additional information which the Commissioner may require to determine the character and responsibility of the applicants and the need for a credit union in the community to be served.  The incorporators shall submit a set of proposed bylaws to the Commissioner with their application and the bylaws when approved by the Commissioner are effective upon filing the articles of incorporation. The Commissioner shall approve or disapprove the application within 30 days following its receipt. 4. Every application for permission to organize, as provided for in this section, must be accompanied by an application fee and a fee payment to cover expenses attendant upon the investigation required for approval. The amount of the fees must be established by regulation adopted by the Commissioner. 5. The subscribers for a credit union charter shall not transact any business until formal approval of the charter has been received. Sec. 4. NRS 672.330 is hereby amended to read as follows: 672.330 1. A credit union may maintain, with the approval of the Commissioner, offices at locations other than its main office . [if the maintenance of] The Commissioner shall approve or deny any application to open an additional office within 60 days after the [offices is reasonably necessary to furnish service to its members.] date on which the Commissioner receives the application. – 5 – - 83rd Session (2025) 2. A credit union may change its principal place of business within this state upon providing written notice to the Division of Financial Institutions. 3. A credit union may share office space with one or more credit unions and contract with a corporation to provide facilities or personnel. Sec. 5. NRS 672.350 is hereby amended to read as follows: 672.350 1. The business affairs of a credit union shall be directed by an odd-numbered board of not fewer than five directors to be elected at the annual meetings by and from the members, and an audit and credit committee if appointed by the board. The persons designated in the articles of incorporation shall be the first directors. 2. All members of the board and such committees shall hold office for such terms as the bylaws may provide. 3. Vacancies in the board of directors shall be filled by vote of the [members at the annual meeting or at a special meeting called for that purpose. The] board [may fill any vacancies occurring in] of directors for the remainder of the [board until successors elected at] unexpired term, after which the [annual meeting or special meeting have qualified.] seat shall be filled by vote of the members according to the established procedures of the credit union for nomination and election. 4. The board shall also fill vacancies in the credit and audit committees. Sec. 6. NRS 672.360 is hereby amended to read as follows: 672.360 1. [The] Except as otherwise provided in subsection 2, the board of directors is responsible for the general direction of the affairs, funds and records of the credit union and shall meet as often as necessary to accomplish their duties, but not less than [once a month.] six times during each calendar year, including not less than one time during each calendar quarter. 2. The Commissioner may require the board to meet more frequently than six times during any calendar year if the Commissioner determines it is necessary to address matters relating to an examination conducted pursuant to this chapter. 3. The board may appoint an executive committee of not less than three directors who may be authorized, by a majority vote of the whole board, to act for the board subject to any conditions or limitations the board may prescribe. 4. Except as otherwise provided in the articles of incorporation or the bylaws, the board of directors may conduct a meeting through electronic communications, videoconferencing, – 6 – - 83rd Session (2025) teleconferencing or other available technology which allows the directors to communicate simultaneously or sequentially. Participating in a meeting pursuant to this subsection constitutes presence in person at the meeting. Sec. 7. NRS 672.380 is hereby amended to read as follows: 672.380 The directors may: 1. Act upon applications for membership or appoint one or more membership officers from the members of the credit union or from the officers, directors or employ [Text truncated for display. Full text available on LegiScan.]