As Introduced

136th General Assembly

Regular Session H. B. No. 332

2025-2026

To amend sections 135.61, 135.62, 135.621, 135.623, 1733.04, and 1733.24 and to enact section 135.67 of the Revised Code to create the small defense business linked deposit program.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 135.61, 135.62, 135.621, 135.623, 1733.04, and 1733.24 be amended and section 135.67 of the Revised Code be enacted to read as follows:

Sec. 135.61. (A) For the purposes of this section:

(1) "Eligible borrower," "eligible credit union," and "eligible lending institution" have the same meanings as in section 135.62 of the Revised Code.

(2) "Eligible participant" and "eligible savings institution" have the same meanings as in section 135.70 of the Revised Code.

(B) The treasurer of state may invest in linked deposits under sections 135.61 to ~~135.66~~ 135.67 and 135.70 to 135.71 of the Revised Code, provided that at the time any such linked deposits are placed, purchased, or designated, the combined amount of investments of public money of the state in linked deposits of any kind is not more than twelve per cent of the state's total average investment portfolio, as determined by the treasurer of state. When deciding whether to invest in any linked deposits, the treasurer of state shall give priority to the investment, liquidity, and cash flow needs of the state.

(C) The treasurer of state may, in accordance with section 111.15 of the Revised Code, adopt rules necessary for the implementation and administration of linked deposits authorized by this section, including, but not limited to, the manner in which an eligible lending institution or eligible savings institution is designated, and the manner in which linked deposits are placed, purchased, designated, held, and collateralized.

(D) Notwithstanding any contrary provision of the Revised Code, the treasurer of state may require an eligible credit union that holds linked deposits authorized under this section to pay interest at a rate not lower than the product of the interest rate set in the deposit agreement, as required by sections 135.623 and 135.703 of the Revised Code, multiplied by the sum of one plus the treasurer of state's assessment rate. The treasurer of state may, in accordance with section 119.03 of the Revised Code, adopt rules necessary for the implementation of this division.

(E)(1) Records of the treasurer of state, an eligible lending institution, or an eligible savings institution are not public records within the meaning of section 149.43 of the Revised Code if any of the following apply:

(a) The record is provided by an eligible borrower to an eligible lending institution, or by an eligible participant to an eligible savings institution, to obtain a financial service or product from such institution.

(b) The record results from a transaction between the eligible borrower and the eligible lending institution, or the eligible participant and the eligible savings institution, involving a financial product or service.

(c) An eligible lending institution or eligible savings institution otherwise obtains the record about an eligible borrower or eligible participant in connection with providing a financial product or service.

(2) The records specified in division (E)(1) of this section may include names, addresses, telephone numbers, social security numbers, income, credit scores, information obtained through cookies and other internet collection devices, loan amounts, contributors to a linked deposit savings account, and amounts contributed to, earned by, or distributed from a linked deposit savings account.

Sec. 135.62. As used in sections 135.62 to ~~135.66~~ 135.67 of the Revised Code:

(A) "Discount interest rate" means an interest rate below the prevailing interest rate that the treasurer of state determines eligible lending institutions are willing to pay to hold linked deposits.

(B) "Eligible borrower" means a borrower that has met all the requirements necessary to participate in the adoption linked deposit program under section 135.63 of the Revised Code, agricultural linked deposit program under section 135.64 of the Revised Code, small business linked deposit program under section 135.65 of the Revised Code, or home improvement linked deposit program under section 135.66 of the Revised Code, or small defense business linked deposit program under section 135.67 of the Revised Code.

(C) "Eligible credit union" means, notwithstanding any contrary provision of sections 135.01 to 135.21 of the Revised Code, a federal credit union, a foreign credit union licensed pursuant to section 1733.39 of the Revised Code, or a credit union as defined in section 1733.01 of the Revised Code, located in this state.

(D) "Eligible lending institution" means a financial institution that is eligible to make loans, agrees to participate in the applicable linked deposit program, and is one of the following:

(1) A public depository of state funds, or an eligible credit union designated under division (A) of section 135.12 of the Revised Code;

(2) For the agricultural linked deposit program, notwithstanding any contrary provision of sections 135.01 to 135.21 of the Revised Code, an institution of the farm credit system organized under the federal "Farm Credit Act of 1971," 85 Stat. 583, 12 U.S.C. 2001, as amended.

(E) "Homestead" means a dwelling owned and occupied in this state as a single-family primary residence by an individual for the purpose of qualifying for the home improvement linked deposit program. "Homestead" includes a house, condo, a unit in a multiple-unit dwelling, manufactured home or mobile home taxed as real property pursuant to division (B) of section 4503.06 of the Revised Code, or any other building with a residential classification, as allowed by the treasurer of state. "Homestead" includes so much of the land surrounding the dwelling as is reasonably necessary for the use of the dwelling as a residence, as determined by the treasurer of state.

(F) "Linked deposit" means a certificate of deposit, a share certificate, other financial institution instrument, or portion of an existing deposit of interim funds made in accordance with section 135.09 of the Revised Code placed, purchased, or designated by the treasurer of state with an eligible lending institution; provided the institution agrees to lend up to the value of such certificate of deposit, share certificate, or other financial institution instrument, or designated portion of an existing deposit to eligible borrowers for applicable linked deposit programs at the rate established in division (A) of section 135.624 of the Revised Code, and in accordance with the deposit agreement provided in section 135.623 of the Revised Code.

(G) "Linked deposit program" means a program authorized under sections 135.61 to ~~135.66~~ 135.67 of the Revised Code and established by the treasurer of state pursuant to such sections.

(H) "Loan" means a contractual agreement under which an eligible lending institution agrees to lend money to an eligible borrower in the form of an upfront lump sum, a line of credit, or any other reasonable arrangement approved by the treasurer of state.

(I) "Manufactured home" has the same meaning as in section 3781.06 of the Revised Code.

(J) "Mobile home" has the same meaning as in section 4501.01 of the Revised Code.

(K) "Other financial institution instrument" means:

(1) For the agricultural linked deposit program under section 135.64 of the Revised Code, an investment by the treasurer of state in bonds, notes, debentures, or other obligations or securities issued by the federal farm credit bank with regard to an eligible lending institution;

(2) For all linked deposit programs other than the agricultural linked deposit program, a product that otherwise would pay the prevailing interest rate approved by the treasurer of state, for the purpose of providing eligible borrowers with the benefits of the applicable linked deposit program, and in accordance with the deposit agreement provided in section 135.623 of the Revised Code.

(L) "Owner" includes a holder of one of the several estates in fee, a vendee in possession under a purchase agreement or a land contract, a mortgagor, a life tenant, one or more tenants with a right of survivorship, tenants in common, a settlor of a revocable or irrevocable inter vivos trust holding the title to a homestead occupied by the settlor as of right under the trust, or any other determination as made by the treasurer of state.

(M) "Prevailing interest rate" means a current market interest rate selected by the treasurer of state that eligible lending institutions are willing to pay to hold deposits of the treasurer of state.

(N) "Qualifying adoption expense" means any expense incurred to legally adopt a child as described in division (C) of section 3107.055 of the Revised Code, including any costs incurred by the eligible borrower proximately relating to the completion and approval of the home study under section 3107.031 of the Revised Code, and any other expense as determined by the treasurer of state.

(O) "Treasurer of state's assessment rate" means a rate not exceeding ten per cent that is calculated in a manner determined by the treasurer of state and that seeks to account for the effect that varying tax treatment among different types of financial institutions has on the ability of financial institutions to pay competitive interest rates to hold deposits.

Sec. 135.621. (A) An eligible lending institution that desires to receive a linked deposit shall accept and review applications for loans from eligible borrowers for linked deposit programs in which the eligible lending institution participates. The eligible lending institution shall apply all usual lending standards to determine the credit worthiness of each eligible borrower. No loan shall exceed the amount determined by the treasurer of state.

(B) An eligible borrower shall certify on its loan application that the reduced rate loan will be used exclusively for the purposes of the applicable linked deposit program, as described in section 135.63, 135.64, 135.65, or 135.66, or 135.67 of the Revised Code. Whoever knowingly makes a false statement concerning such application is guilty of the offense of falsification under section 2921.13 of the Revised Code.

(C) The eligible lending institution shall forward to the treasurer of state a linked deposit loan package, in the form and manner prescribed by the treasurer of state. The package shall include such information as required by the treasurer of state, including the amount of each loan requested by each eligible borrower and all other information as described in section 135.63, 135.64, 135.65, or 135.66, or 135.67 of the Revised Code for the applicable linked deposit program. The institution shall certify both of the following:

(1) That each applicant is an eligible borrower and, for each such eligible borrower, the present borrowing rate;

(2) That the eligible lending institution applied all of its usual lending standards to determine the credit worthiness of each eligible borrower.

(D) No fee shall be charged to any party for the preparation, processing, or reporting of any application to an eligible lending institution or the treasurer of state for participation in a linked deposit program.

Sec. 135.623. (A) An eligible lending institution shall enter into a deposit agreement with the treasurer of state, which shall include requirements necessary to carry out the purposes of sections 135.62 to ~~135.66~~ 135.67 of the Revised Code.

(B) The deposit agreement shall specify the maturity period of the linked deposit considered appropriate by the treasurer of state, which shall not exceed five years, as well as any other information, terms, or conditions the treasurer of state may require. Interest shall be paid by the eligible lending institution at times determined by the treasurer of state.

Sec. 135.67. (A) As used in this section:

(1) "Armed forces" has the same meaning as in section 5903.01 of the Revised Code.

(2) "Gross receipts" has the same meaning as in section 5751.01 of the Revised Code.

(B) The general assembly finds that the defense industry makes significant contributions to the economic well-being of this state. However, various economic challenges, such as tightened capital availability, inflationary pressures, and rising interest rates, can discourage fledgling businesses, particularly small businesses, from taking root in this state and engaging with the defense industry. Accordingly, it is declared to be the public policy of the state to make reduced rate loans available to defense-oriented businesses through the small defense business linked deposit program.

(C) An eligible borrower for the small defense business linked deposit program is any person that has all the following characteristics:

(1) Is currently headquartered or domiciled in this state, and has been headquartered or domiciled in this state for at least five years preceding the person's application for participation in the linked deposit program;

(2) Maintains offices or operating facilities in this state that comprise not less than fifty-one per cent of the total of all offices and operating facilities maintained by the person;

(3) Is a party to, or has been a party to, a contract with the armed forces or an agency or instrumentality of the United States government for the provision of goods or services to the armed forces;

(4) Has less than twenty-five million dollars in gross receipts for the twelve months preceding application to the linked deposit program;

(5) Is organized for profit.

(D) An eligible lending institution for the small defense business linked deposit program must be able to make commercial loans.

(E) An eligible borrower shall certify on the loan application that the reduced rate loan will be used exclusively in this state to create new jobs, preserve existing jobs and employment opportunities, or materially contribute to the preservation or growth of the eligible borrower's business.

Sec. 1733.04. (A) In addition to the authority conferred by section 1701.13 of the Revised Code, but subject to any limitations contained in sections 1733.01 to 1733.45 of the Revised Code, and its articles and regulations, a credit union may do any of the following:

(1) Make loans as provided in section 1733.25 of the Revised Code;

(2) Invest its money as provided in section 1733.30 of the Revised Code;

(3) If authorized by the code of regulations, rebate to the borrowing members a portion of the member's interest paid to the credit union;

(4) If authorized by the regulations, charge a membership or entrance fee;

(5) Purchase group savings life insurance and group credit life insurance;

(6) Make reasonable contributions to any nonprofit civic, charitable, or service organizations;

(7) Act as trustee or custodian, for which reasonable compensation may be received, under any written trust instrument or custodial agreement created or organized in the United States and forming part of a tax-advantaged savings plan that qualifies for specific tax treatment under sections 223, 401(d), 408, 408A, and 530 of the Internal Revenue Code, 26 U.S.C. 223, 401(d), 408, 408A, and 530, as amended, for its members or groups of its members, provided that the funds of such plans are invested in share accounts or share certificate accounts of the credit union. These services include, but are not limited to, acting as a trustee or custodian for member retirement, education, or health savings accounts.

(8) Participate in and pledge assets in connection with the linked deposit programs under sections 135.61 to ~~135.66~~ 135.67 of the Revised Code and sections 135.70 to 135.71 of the Revised Code.

(B) The authority of a credit union shall be subject to the following:

(1) A credit union may not borrow money in excess of twenty-five per cent of its shares and undivided earnings, without prior specific authorization by the superintendent of credit unions.

(2) A credit union may not pay a commission or other compensation to any person for securing members or for the sale of its shares, except that reasonable incentives may be made available directly to members or potential members to promote thrift.

(C)(1) A credit union may have service facilities other than its home office.

(2) Real estate may be acquired by lease, purchase, or otherwise as necessary and to the extent required for use of the credit union presently and in the future operation of its office or headquarters, and in case of a purchase of real estate, the superintendent must first be notified in writing prior to the purchase of the real estate. Nothing herein contained shall be deemed to prohibit a credit union from taking title to real estate in connection with a default in the payment of a loan, provided that title to such real estate shall not be held by the credit union for more than two years without the prior written approval of the superintendent. A credit union also may lease space in any real estate it acquires in accordance with rules adopted by the superintendent.

(D)(1) As used in division (D) of this section:

(a) "School" means an elementary or secondary school.

(b) "Student" means a child enrolled in a school.

(c) "Student branch" means the designation provided to the credit union for the in-school services and financial education offered to students.

(2) A credit union, upon agreement with a school board, in the case of a public school, or the governing authority, in the case of a nonpublic school, and with the permission of the superintendent, may open and maintain a student branch.

(3) Notwithstanding any other provision of this section, any student enrolled in the school maintaining a student branch who is not otherwise qualified for membership in the credit union maintaining the student branch is qualified to be a member of that student branch.

(4) The student's membership in the student branch expires upon the student's graduation from secondary school.

(5) The student branch is for the express use of students and may not be used by faculty, staff, or lineal ancestors or descendants of students.

(6) Faculty, staff, or lineal ancestors or descendants of students are not eligible for membership in the credit union maintaining the student branch unless otherwise qualified by this section to be members.

(7) The superintendent may adopt rules appropriate to the formation and operation of student branches.

(E) A credit union may guarantee the signature of a member in connection with a transaction involving tangible or intangible property in which a member has or seeks to acquire an interest.

Sec. 1733.24. (A) A credit union is authorized to receive funds for deposit in share accounts, share draft accounts, and share certificates from its members, from other credit unions, and from an officer, employee, or agent of the federal, state, or local governments, or political subdivisions of the state, in accordance with such terms, rates, and conditions as may be established by its board of directors, and for purposes of the linked deposit programs created under sections 135.61 to ~~135.66~~ 135.67 of the Revised Code and sections 135.70 to 135.71 of the Revised Code.

(B) The shares and share accounts of the credit union may be of one or more classes, as designated by the board of directors, subject to approval of the superintendent of credit unions based on rules that shall assure equitable distribution of dividends among classes, considering costs and advantages of each class to the members of the credit union, including without limitation special services rendered, length of ownership, minimum investment, conditions of repurchase, and other appropriate standards or combinations thereof. In the event the articles of incorporation of the credit union indicate the authorized number of shares to be unlimited, the designation of classification of shares and share accounts of the credit union may be effected by the board of directors, subject to the approval of the superintendent, and does not require amendment of the articles of incorporation. All shares of the credit union shall have a par value per share as set by the board of directors. Redemptions and liquidating dividends shall be prorated to each member on the basis of the price paid the credit union for such share, irrespective of the class of such shares.

(C)(1) Each credit union shall have one class of shares designated as "membership share." The membership shares, or if a credit union has but one class of shares, then all of the shares of the credit union, shall have a par value as set by the board of directors.

(2) Two or more persons that are eligible for membership that have jointly subscribed for one or more shares under a joint account each may be admitted to membership.

(D) A credit union need not issue certificates for any or all of its classes of shares but irrespective of whether certificates are issued, a registry of shares must be kept, including all of the transactions of the credit union pertaining to such shares.

(E) A credit union is authorized to maintain share draft accounts in accordance with rules prescribed by the superintendent. The credit union may pay dividends on share draft accounts, may pay dividends at different rates on different types of share draft accounts, and may permit the owners of such share draft accounts to make withdrawals by negotiable or transferable instruments or other orders for the purpose of making transfers to third parties.

(F) Unless otherwise provided by written agreement of the parties, the rights, responsibilities, and liabilities attaching to a share draft withdrawn from, transferred to, or otherwise handled by a credit union are defined in and governed by Chapters 1303. and 1304. of the Revised Code, as if the credit union were a bank.

(G) Unless otherwise provided in the articles or regulations, a member may designate any person or persons to own or hold shares, or share accounts with the member in joint tenancy with right of survivorship and not as tenants in common.

(H) Shares or share accounts may be issued in the name of a custodian under the Ohio transfers to minors act, a member in trust for a beneficiary, a fiduciary or custodian in trust for a member beneficiary, or a fiduciary or custodian in trust upon the death of a member. Redemption of such shares or payment of such share accounts to a member, to the extent of the payment, discharges the liability of the credit union to the member and the beneficiary, and the credit union shall be under no obligation to see to the application of the payment. Unless prior to the death of a member, the member has notified the credit union in writing in a form approved by the credit union of a different beneficiary to receive the proceeds of such shares or share accounts, then the proceeds shall be paid to the beneficiary or to the beneficiary's parent or legal representative. Any payment made pursuant to written instructions of the member or pursuant to the provisions herein contained shall be a valid and sufficient release and discharge of the credit union in connection with any such share or share accounts.

(I)(1) Except as otherwise provided in the articles or regulations, and subject to the provisions thereof, a minor may purchase shares, share accounts, or other depository instruments, and except for qualification as a voting member, the credit union may deal with the minor with respect to shares, share accounts, or other depository instruments owned by the minor as if the minor were a person of legal age.

(2) If shares, share accounts, or other depository instruments are issued in the name of a minor, redemption of any part or all of the shares or withdrawal of funds by payment to the minor of the shares or funds and any declared dividends or interest releases the credit union from all obligation to the minor as to the shares reduced or funds withdrawn.

(J) The regulations may require advance written notice of a member's intention to withdraw the member's shares. Such advance notice shall not exceed sixty days.

(K) Notwithstanding any provision of law to the contrary, funds deposited in a share account, share certificate, or in any other manner pursuant to a program offered by a credit union to promote consumer savings do not constitute valuable consideration for purposes of a scheme of chance under Chapter 2915. of the Revised Code.

Section 2. That existing sections 135.61, 135.62, 135.621, 135.623, 1733.04, and 1733.24 of the Revised Code are hereby repealed.