By the Division of Banks

Aggregate Limit On Term Deposits Held By A Credit Union Organizational Member

Mass. Gen. laws chapter 171, section 30 establishes $500,000 as the aggregate limit of term deposits which can be held by an organizational member of a credit union. Section 32 of chapter 171 provides that any shares or deposits authorized by section 30 may be received as term shares or deposits, subject to the limitations set forth in section 30. Section 30 indicates that the limitations on shares and deposits are exclusive of accumulated interest or dividends.

Interest or dividends accumulated during the term of the deposit are excluded from the calculation of the deposit amount for the purposes of the aggregate limitation. It is the Division's position that, when a credit union contracts with a member for a new certificate upon the maturity of a prior certificate, if dividends or interest accumulated by the prior deposit are rolled-over into the amount of the new certificate, they become a part of the principal amount of the new certificate. The principal amount of the new certificate may not, in the aggregate, exceed the limit set by said section 30.