Oregon Administrative Rules
Chapter 441 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, FINANCE AND SECURITIES REGULATION
Division 720 - CREDIT UNIONS
Section 441-720-0310 - Board of Directors and Management Responsibilities
Universal Citation: OR Admin Rules 441-720-0310
Current through Register Vol. 63, No. 9, September 1, 2024
Prior to engaging in commercial lending, a credit union must address the following board responsibilities and operational requirements:
(1) Board of directors. A credit union's board of directors, at a minimum, must:
(a) Approve a commercial loan policy that
complies with OAR 441-720-0315. The board must
review its policy on an annual basis, prior to any material change in the
credit union's commercial lending program or related organizational structure,
and in response to any material change in portfolio performance or economic
conditions, and update it when warranted.
(b) Ensure the credit union appropriately
staffs its commercial lending program in compliance with paragraph (2)(b) of
this section.
(c) Understand and
remain informed, through periodic briefings from responsible staff and other
methods, about the nature and level of risk in the credit union's commercial
loan portfolio, including its potential impact on the credit union's earnings
and net worth.
(2) Required expertise and experience. A credit union making, purchasing, or holding any commercial loan must internally possess the following experience and competencies:
(a) Senior executive
officers. A credit union's senior executive officers overseeing the commercial
lending function must understand the credit union's commercial lending
activities. At a minimum, senior executive officers must have a comprehensive
understanding of the role of commercial lending in the credit union's overall
business model and establish risk management processes and controls necessary
to safely conduct commercial lending.
(b) Qualified lending personnel. A credit
union must employ qualified staff with experience in the following areas:
(A) Underwriting and processing for the
type(s) of commercial lending in which the credit union is engaged;
(B) Overseeing and evaluating the performance
of a commercial loan portfolio, including rating and quantifying risk through a
credit risk rating system; and
(C)
Conducting collection and loss mitigation activities for the type(s) of
commercial lending in which the credit union is engaged.
(c) Options to meet the required experience.
A credit union may meet the experience requirements in paragraphs (2)(a) and
(b) of this section by conducting internal training and development, hiring
qualified individuals, or using a third-party, such as an independent
contractor or a credit union service organization; however, with respect to the
qualified lending personnel requirements in paragraph (2)(b) of this section,
use of a third-party is permissible only if the following conditions are met:
(A) The third-party has no affiliation or
contractual relationship with the borrower or any associated borrowers;
(B) The actual decision to grant a
loan must reside with the credit union;
(C) Qualified credit union staff exercises
ongoing oversight over the third-party by regularly evaluating the quality of
any work the third party performs for the credit union; and
(D) The third-party arrangement must
otherwise comply with OAR
441-720-0370.
Statutory/Other Authority: ORS 723.102
Statutes/Other Implemented: ORS 723.152, 723.156 & 723.512
Disclaimer: These regulations may not be the most recent version. Oregon may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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