Committee hears bill to restore cooperative (mutual) financial institution charter option

The Industry, Business and Labor Committee heard testimony on House Bill 1507, which would create a cooperative financial institution charter in state law — a mutual, member‑owned bank structure that previously existed in North Dakota until an outdated provision was repealed in the 2000s. The bill’s sponsors and the Department of Financial Institutions argued restoring the charter provides state‑level charter choice, preserves states’ rights in banking regulation and offers an additional option for institutions considering conversion from federal to state charters.

Deputy Commissioner Corey Krebs of the Department of Financial Institutions briefed the committee on technical elements of the bill. The bill largely reuses existing community‑bank provisions in chapter 6 of the North Dakota Century Code where appropriate and creates a single new section to address governance, capital and conversion rules specific to cooperative financial institutions. Krebs told the committee the department does not expect immediate conversions but that the law change would allow future conversions and inbound chartering where market actors choose a state cooperative form.

Industry reaction and fiscal note
The North Dakota Bankers Association told the committee it supports charter choice and said reintroducing the cooperative option is consistent with a long‑standing preference for in‑state charter options. The Dakota Credit Union Association testified neutral and noted important distinctions between credit unions (member‑owned, tax‑exempt financial cooperatives) and for‑profit cooperative financial institutions; its witness noted many credit unions would not recharter absent material federal tax changes.

The Secretary of State’s office submitted a neutral fiscal comment: its vendor estimated a one‑time cost of about $47,000 to add a new entity type to the statewide filings system and to align a planned 2026 upgrade with the change.

No vote occurred at the hearing; the department and sponsors asked the committee to allow a short drafting amendment period to resolve technical drafting errors and to incorporate additional suggestions that surfaced during the hearing.

Speakers cited in this article include Representative Dan Volmer (bill sponsor), Deputy Commissioner Corey Krebs, Rick Klayberg (North Dakota Bankers Association) and John Alexander (Dakota Credit Union Association).