| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Equipment includes all movable furniture, fixtures,
and equipment of the credit union, its branch offices, and consolidated
credit union service organizations, including automobiles and other
vehicles, and any lien on the above.
(2) Immediate family member--a spouse or other family
member living in the same household.
(3) Premises include the cost less accumulated depreciation,
of land and buildings actually owned and occupied (or to be occupied)
by the credit union, its branch offices, and consolidated credit union
service organizations. This includes vaults, fixed machinery, parking
facilities, and real estate acquired and intended, in good faith,
for future expansion. It also includes capitalized leases, leasehold
improvements, and remodeling costs to existing premises.
(4) Senior Management Employee--the chief executive
officer, any assistant chief executive officers (e.g. vice presidents
and above) and the chief financial officer.
(b) Investment Limitations on Premises. Without the
prior written consent of the Department, a credit union may not directly
or indirectly invest an amount in excess of its net worth in premises.
(c) Restrictions on Ownership of Property. A credit
union shall not acquire premises for the principal purpose of engaging
in real estate rentals or speculation.
(d) Transactions with insiders. Without the prior approval
of a disinterested majority of the board of directors recorded in
the minutes or, if a disinterested majority cannot be obtained, the
prior written approval of the commissioner, a credit union may not
directly or indirectly:
(1) sell or lease an asset of the credit union to a
director, committee member, or senior management employee, or immediate
family members of such individual; or
(2) purchase or lease an asset in which a director,
committee member, senior management employee, or immediate family
members of such individual has an interest.
(e) Use requirement for premises. If real property
or leasehold interest is acquired and intended, in good faith, for
use in future expansion, the credit union must partially satisfy the
"primarily for its own use in conducting business" requirement within
five years after the credit union makes the investment.
(f) Consent to Exceed Limitation. Generally, a credit
union need not obtain the Department's approval to invest in premises.
However, prior approval is required if the total aggregate investment
in premises will exceed the credit union's net worth. A credit union
shall submit such statements and reports as the Department may require
in support of the higher investment limit.
(1) When analyzing an application for an additional
investment in credit union premises, the Department will consider:
(A) Consistency with safe and sound credit union practices;
(B) The reasonableness of the amount of credit union
premises and the annual expenditures required to carry them relative
to the credit union's net worth and the nature and volume of operations;
and
(C) The effect of the investment on future earnings.
(2) The Department will consider denying a request
for an additional investment in credit union premises when:
(A) The additional investment would have a material
negative effect on the credit union's earnings, capital, or liquidity;
or
(B) The credit union has not demonstrated a reasonable
need for the additional investment.
(3) The Department may impose appropriate special conditions
for an approval of an additional credit union premises investment,
if it determines that they are necessary or appropriate to protect
the safety and soundness of the credit union or to further other supervisory
or policy considerations.
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| Source Note: The provisions of this §91.401 adopted to be effective March 14, 2004, 29 TexReg 2306; amended to be effective March 14, 2010, 35 TexReg 1978; amended to be effective March 16, 2014, 39 TexReg 1703; amended to be effective November 8, 2015, 40 TexReg 7662 |
