| (a) Words and terms used in this chapter that are defined
in Finance Code §121.002, have the same meanings as defined in
the Finance Code. The following words and terms, when used in this
chapter, shall have the following meanings, unless the context clearly
indicates otherwise.
(1) Act--the Texas Credit Union Act (Texas Finance
Code, Subtitle D).
(2) Allowance for loan and lease losses (ALLL)--a general
valuation allowance that has been established through charges against
earnings to absorb losses on loans and lease financing receivables.
An ALLL excludes the regular reserve and special reserves.
(3) Applicant--an individual or credit union that has
submitted an application to the commissioner.
(4) Application--a written request filed by an applicant
with the department seeking approval to engage in various credit union
activities, transactions, and operations or to obtain other relief
for which the commission is authorized by the act to issue a final
decision or order subject to judicial review.
(5) Appraisal--a written statement independently and
impartially prepared by a qualified appraiser setting forth an opinion
as to the market value of a specifically described asset as of a specific
date, supported by the presentation and analysis of relevant market
information.
(6) Automated teller machine (ATM)--an automated, unstaffed
credit union facility owned by or operated exclusively for the credit
union at which deposits are received, cash dispensed, or money lent.
(7) Community of interest--a unifying factor among
persons that by virtue of its existence, facilitates the successful
organization of a new credit union or promotes economic viability
of an existing credit union. The types of community of interest currently
recognized are:
(A) Occupational--based on an employment relationship
that may be established by:
(i) employment (or a long-term contractual relationship
equivalent to employment) by a single employer, affiliated employers
or employers under common ownership with at least a 10% ownership
interest;
(ii) employment or attendance at a school; or
(iii) employment in the same trade, industry or profession
(TIP) with a close nexus and narrow commonality of interest, which
is geographically limited.
(B) Associational--based on groups consisting primarily
of natural persons whose members participate in activities developing
common loyalties, mutual benefits, or mutual interests. In determining
whether a group has an associational community of interest, the commissioner
shall consider the totality of the circumstances, which include:
(i) whether the members pay dues;
(ii) whether the members participate in furtherance
of the goals of the association;
(iii) whether the members have voting rights;
(iv) whether there is a membership list;
(v) whether the association sponsors activities;
(vi) what the association's membership eligibility
requirements are; and
(vii) the frequency of meetings. Associations formed
primarily to qualify for credit union membership and associations
based on client or customer relationships, do not have a sufficient
associational community of interest.
(C) Geographic--based on a clearly defined and specific
geographic area where persons have common interests and/or interact.
More than one credit union may share the same geographic community
of interest. There are currently four types of affinity on which a
geographic community of interest can be based: persons, who:
(i) live in;
(ii) worship in;
(iii) attend school in; or
(iv) work in that community. The geographic community
of interest requirements are met if the area to be served is in a
recognized single political jurisdiction, e.g., a city or a county,
or a portion thereof.
(D) Other--The commissioner may authorize other types
of community of interest, if the commissioner determines that either
a credit union or foreign credit union has sufficiently demonstrated
that a proposed factor creates an identifiable affinity among the
persons within the proposed group. Such a factor shall be well-defined,
have a geographic definition, and may not circumvent any limitation
or restriction imposed on one of the other enumerated types.
(8) Credit union service organization (CUSO)--an organization
authorized by §91.801 of this title (relating to Investments
in Credit Union Service Organizations). A consolidated CUSO is one
where control or ownership by a credit union requires consolidation
of the credit union and CUSO financial statements to comply with Generally
Accepted Accounting Principles.
(9) Day--whenever periods of time are specified in
this title in days, calendar days are intended. When the day, or the
last day fixed by statute or under this title for taking any action
falls on Saturday, Sunday, or a state holiday, the action may be taken
on the next succeeding day which is not a Saturday, Sunday, or a state
holiday.
(10) Department newsletter--the monthly publication
that serves as an official notice of all applications, and by which
procedures to protest applications are described.
(11) Field of membership (FOM)--refers to the totality
of persons a credit union may accept as members. The FOM may consist
of one group, several groups with a related community of interest,
or several unrelated groups with each having its own community of
interest.
(12) Finance Code or Texas Finance Code--the codification
of the Texas statutes governing financial institutions, financial
businesses, and related financial services, including the regulations
and supervision of credit unions.
(13) Imminent danger of insolvency--a circumstance
or condition in which a credit union is unable or lacks the means
to meet its current obligations as they come due in the regular and
ordinary course of business, even if the value of its assets exceeds
its liabilities; or the credit union has a positive net worth ratio
equal to two percent or less of its assets.
(14) Improved residential property--residential real
estate containing on-site, offsite or other improvements sufficient
to make the property ready for primarily residential construction,
and real estate in the process of being improved by a building or
buildings to be constructed or in the process of construction for
primarily residential use.
(15) Interactive teller machine (ITM)--a video-based
interactive technology which allows members to conduct transactions
and credit union services driven by a centrally based teller, in a
real time video or audio interaction.
(16) Indirect financing--a program in which a credit
union makes the credit decision in a transaction where the credit
is extended by the vendor and assigned to the credit union or a loan
transaction that generally involves substantial participation in and
origination of the transaction by a vendor.
(17) Loan and extension of credit--a direct or indirect
advance of funds to or on behalf of a member based on an obligation
of the member to repay the funds or repayable from the application
of the specific property pledged by or on behalf of the member. The
terminology also includes the purchase of a member's loan or other
obligation, a lease financing transaction, a credit sale, a line of
credit or loan commitment under which the credit union is contractually
obligated to advance funds to or on behalf of a member, an advance
of funds to honor a check or share draft drawn on the credit union
by a member, or any other indebtedness not classified as an investment
security.
(18) Loan-to-value ratio--the aggregate amount of all
sums borrowed and secured by the collateral, including outstanding
balances plus any unfunded commitment or line of credit from another
lender that is senior to the credit union's lien divided by the current
value of the collateral.
(19) Manufactured home--a HUD-code manufactured home
as defined by the Texas Manufactured Housing Standards Act. The terminology
may also include a mobile home, house trailer, or similar recreational
vehicle if the unit will be used as the member's residence and the
loan is secured by a first lien on the unit, and the unit meets the
requirements for the home mortgage interest deduction under the Internal
Revenue Code (26 U.S.C. Section 163(a), (h)(2)(D)).
(20) Market Value--the most probable price which an
asset should bring in a competitive and open market under an arm's-length
sale, the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit
in this definition is the consummation of a sale as of a specified
date and the passing of ownership from seller to buyer where:
(A) buyer and seller are typically motivated;
(B) both parties are well informed or well advised,
and acting in their own best interests;
Cont'd... |
