(a) At least once a year, the governing board of each Connecticut credit union shall adopt a written investment policy governing investments made pursuant to this section and securities trading, if any. No Connecticut credit union shall make any investment pursuant to this section unless the purchase and holding of such investment is consistent with such policy. The policy shall establish standards for the making of prudent investments which shall include (1) the rating of individual investments by nationally recognized rating services, if any, and (2) standards for diversification of the credit union’s investment portfolio among industry categories. The policy shall provide for the frequent and periodic review by the credit union of investments made pursuant to the policy and shall provide for the reasonable and expeditious divestiture of investments which the governing board, upon its review, no longer deems prudent or consistent with the credit union’s investment policy. The investment policy and any investment made pursuant to the policy shall be subject to the supervision of the commissioner concerning safe and sound credit union practices.

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Terms Used In Connecticut General Statutes 36a-459a

  • another: may extend and be applied to communities, companies, corporations, public or private, limited liability companies, societies and associations. See Connecticut General Statutes 1-1
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Bank: means a Connecticut bank or a federal bank. See Connecticut General Statutes 36a-2
  • Commissioner: means the Banking Commissioner and, with respect to any function of the commissioner, includes any person authorized or designated by the commissioner to carry out that function. See Connecticut General Statutes 36a-2
  • Company: means any corporation, joint stock company, trust, association, partnership, limited partnership, unincorporated organization, limited liability company or similar organization, but does not include (A) any corporation the majority of the shares of which are owned by the United States or by any state, or (B) any trust which by its terms shall terminate within twenty-five years or not later than twenty-one years and ten months after the death of beneficiaries living on the effective date of the trust. See Connecticut General Statutes 36a-2
  • Connecticut bank: means a bank and trust company, savings bank or savings and loan association chartered or organized under the laws of this state. See Connecticut General Statutes 36a-2
  • Connecticut credit union: means a cooperative, nonprofit financial institution that (A) is organized under chapter 667 and the membership of which is limited as provided in section 36a-438a, (B) operates for the benefit and general welfare of its members with the earnings, benefits or services offered being distributed to or retained for its members, and (C) is governed by a volunteer board of directors elected by and from its membership. See Connecticut General Statutes 36a-2
  • Control: has the meaning given to that term in 12 USC Section 1841(a), as amended from time to time. See Connecticut General Statutes 36a-2
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Credit union service organization: means an entity organized under state or federal law to provide credit union service organization services primarily to its members, to Connecticut credit unions, federal credit unions and out-of-state credit unions other than its members, and to members of any such other credit unions. See Connecticut General Statutes 36a-2
  • Deposit: means funds deposited with a depository. See Connecticut General Statutes 36a-2
  • Director: means a member of the governing board of a financial institution. See Connecticut General Statutes 36a-2
  • Federal bank: means a national banking association, federal savings bank or federal savings and loan association having its principal office in this state. See Connecticut General Statutes 36a-2
  • Federal credit union: means any institution chartered or organized as a federal credit union pursuant to the laws of the United States having its principal office in this state. See Connecticut General Statutes 36a-2
  • Governing board: means the group of persons vested with the management of the affairs of a financial institution irrespective of the name by which such group is designated. See Connecticut General Statutes 36a-2
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • Loan: includes any line of credit or other extension of credit. See Connecticut General Statutes 36a-2
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mutual: when used in conjunction with any institution that is a bank or out-of-state bank means any such institution without capital stock. See Connecticut General Statutes 36a-2
  • National Credit Union Administration: The federal regulatory agency that charters and supervises federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of federal credit unions.) Source: OCC
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Out-of-state: includes any state other than Connecticut and any foreign country. See Connecticut General Statutes 36a-2
  • Out-of-state bank: means any institution that engages in the business of banking, but does not include a bank, Connecticut credit union, federal credit union or out-of-state credit union. See Connecticut General Statutes 36a-2
  • Out-of-state credit union: means any credit union other than a Connecticut credit union or a federal credit union. See Connecticut General Statutes 36a-2
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Person: means an individual, company, including a company described in subparagraphs (A) and (B) of subdivision (12) of this section, or any other legal entity, including a federal, state or municipal government or agency or any political subdivision thereof. See Connecticut General Statutes 36a-2
  • State: means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands. See Connecticut General Statutes 36a-2
  • Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.

(b) The investment officer or investment committee, if any, shall act for the governing board between meetings of the governing board in all matters involving investment of funds pursuant to this section. Such investment officer or committee shall report to the governing board at each of its regular meetings, during which the governing board shall review all investments made pursuant to this section, as well as details of any securities trading engaged in by such credit union. The minutes of the governing board meetings shall recite the results of each such review. The governing board shall cause the credit union to use reasonable efforts to divest as expeditiously as possible any investment which the governing board, upon its review, no longer deems prudent or consistent with the Connecticut credit union’s investment policy.

(c) A Connecticut credit union may invest its funds, which are not committed to loans to members in: (1) Securities, obligations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by the United States or any of its agencies or instrumentalities, or in any trusts established for investing directly or collectively in such instruments; (2) general obligations and revenue obligations of any state or territory of the United States, or any political subdivision thereof, provided such obligations are rated in the three highest rating categories by a rating service of such obligations recognized by the commissioner and no more than ten per cent of total assets may be invested in any one issuer; (3) obligations or other instruments or securities of the Student Loan Marketing Association; (4) federal funds, shares, share certificates or other share deposits of any other Connecticut credit union, federal credit union or out-of-state credit union whose share accounts or deposits are insured by the National Credit Union Administration, or its successor agency; (5) loans not exceeding twenty per cent of the lending credit union’s total assets to any other Connecticut credit union, federal credit union or out-of-state credit union; (6) federal funds of or deposit accounts with a Connecticut bank, federal bank or out-of-state bank the accounts of which are insured by the Federal Deposit Insurance Corporation or its successor agency; (7) shares of, deposits with or loans to any federal reserve bank or any central liquidity facility established under state or federal law; (8) shares of, deposits with or loans to any corporate Connecticut credit union, corporate federal credit union or corporate out-of-state credit union; (9) shares of stock or obligations of or loans to a national or state credit union association or credit union corporation of which the credit union is a member, provided such investment does not constitute a controlling interest in such association or corporation or does not in the aggregate exceed one per cent of the total assets of the credit union; (10) real estate and improvements thereon, furniture, fixtures and equipment for the present or future use of the Connecticut credit union, provided such investment may not in the aggregate exceed twenty per cent of the total assets of the Connecticut credit union without the written approval of the commissioner; (11) debt mutual funds and equity mutual funds, provided the portfolios of such mutual funds consist solely of investments described in subdivisions (1) to (3), inclusive, of this subsection; (12) fixed or variable rate asset-backed securities, collateralized mortgage obligations and real estate mortgage investment conduits, except stripped mortgage-backed securities, residual interests, mortgage servicing rights, commercial mortgage related securities or small business-related securities; (13) money market funds rated in the three highest rating categories by a rating service of such funds recognized by the commissioner; (14) repurchase agreements and reverse repurchase agreements provided (A) the underlying securities are legal investments for Connecticut credit unions, (B) the Connecticut credit union receives a daily assessment of the market value of the underlying securities, including accrued interest, and maintains an adequate margin that reflects a risk assessment of the underlying securities and the term of the agreement, and (C) the Connecticut credit union has entered into signed contracts with all approved counterparties; and (15) Yankee dollar deposits, Eurodollar deposits, banker’s acceptances, deposit notes and bank notes with original weighted average maturities of less than five years and issued by a Connecticut bank, federal bank or out-of-state bank.

(d) A Connecticut credit union may, subject to the provisions of subsections (e), (f) and (g) of section 36a-461a, invest its funds in or make loans to credit union service organizations provided (1) the total of any such investment in or loan to any one credit union service organization does not exceed two per cent of the total assets of the credit union without regard to the amount derived from the profitability of such credit union service organization, and (2) the credit union shall file with the commissioner prior written notice of its intention to make such investment or loan. The Connecticut credit union may make such investment or loan unless the commissioner disapproves such investment or loan not later than thirty business days after the notice is filed. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the notice raises issues that require additional information or additional time for analysis.

(e) In addition to other investments authorized by this section, a Connecticut credit union may, with the prior written approval of the commissioner, invest its funds in: (1) Debt securities, equity securities, debt mutual funds and equity mutual funds without regard to any other liability to the Connecticut credit union of the maker, obligor, guarantor or issuer of such securities and mutual funds provided: (A) The securities and mutual funds are rated in the three highest rating categories by a rating service of such securities and mutual funds recognized by the commissioner or, if not so rated, are determined by the credit union’s governing board to be a prudent investment, (B) the total amount of such securities and mutual funds of any one maker, obligor or issuer invested in by a Connecticut credit union may not exceed at any time twenty-five per cent of its capital, (C) the total amount of such debt securities and debt mutual funds may not exceed at any time twenty-five per cent of its total assets, (D) the total amount of such equity securities and equity mutual funds may not exceed at any time twenty-five per cent of its total assets, and (E) a Connecticut credit union may not engage in securities trading, including when-issued trading and pair-off transactions without additional prior written approval of the commissioner; and (2) subject to any limitations imposed by the commissioner, in any other investment the commissioner deems appropriate in light of such factors as the financial condition and strategic goals of the Connecticut credit union and the degree of risk inherent in the investment, provided the credit union demonstrates that sufficient resources, knowledge, systems and procedures are in place to monitor and control the risks involved.

(f) All securities in which a Connecticut credit union invests shall be registered in the name of the credit union. Records of securities owned by such credit union shall be maintained at the main office of such credit union. The records held by such credit union concerning its account with any of the depositories or financial institutions holding its securities, and the securities registered in its name and held by it, shall be subject to inspection at any time during business hours by any director, member of senior management or member of the supervisory committee of the Connecticut credit union.

(g) As used in this section:

(1) “Debt mutual funds” means partnership interests in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, provided the portfolios of such investment companies consist solely of investments described in subdivision (3) of this subsection.

(2) “Equity mutual funds” means partnership interests in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company which is registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, but excludes debt mutual funds, as defined in subdivision (1) of this subsection.

(3) “Debt securities” means (A) any marketable obligation evidencing indebtedness of any person in the form of direct, assumed or guaranteed bonds, notes or debentures or any security that has attributes similar to such marketable obligations; (B) any obligation identified by certificates of participation in investments described in subparagraph (A) of this subdivision in which a Connecticut credit union could invest directly; or (C) repurchase agreements.

(4) “Equity securities” means any stock or similar security, certificate of interest or participation in any profit-sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture or certificate of interest in a business trust; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle or other option or privilege of buying such a security from or selling such a security to another without being bound to do so, but excludes debt mutual funds, as defined in subdivision (1) of this subsection, and equity mutual funds, as defined in subdivision (2) of this subsection.

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