Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 6 - CREDIT UNION DEPARTMENT › Chapter 91 - CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS › Subchapter A - GENERAL RULES › Section 91.101 - Definitions and Interpretations

Current through Reg. 49, No. 28; July 12, 2024
(a)
				  Words and terms used in this chapter that are defined in Finance Code §
										RSA 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 §
											RSA
				  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 (
				  RSA
				  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;
(C) a reasonable time is
				  allowed for exposure in the open market;
(D) payment is made in cash in U.S. dollars
				  or in terms of financial arrangements comparable thereto; and
(E) the price represents the normal
				  consideration for the property sold unaffected by special or creative financing
				  or sales concessions granted by anyone associated with the sale.
(21) Metropolitan Statistical Area
				  (MSA)--a geographic area as defined by the director of the U.S. Office of
				  Management and Budget.
(22) Mobile
				  office--a branch office that does not have a single, permanent site, including
				  a vehicle that travels to various public locations to enable members to conduct
				  their credit union business.
(23)
				  Office--includes any service facility or place of business established by a
				  credit union at which deposits are received, checks or share drafts paid, or
				  money lent. This definition includes a credit union owned branch, a mobile
				  branch, an office operated on a regularly scheduled weekly basis, a credit
				  union owned ATM, or a credit union owned ITM or other electronic facility that
				  meets, at a minimum, these requirements; however, it does not include the
				  credit union's Internet website. This definition also includes a shared branch
				  or a shared branch network if either:
(A) the
				  credit union has an ownership interest in the service facility either directly
				  or through a CUSO or similar organization; or
(B) the service facility is local to the
				  credit union and the credit union is an authorized participant in the service
				  center.
(24)
				  Overlap--the situation which exists when a group of persons is eligible for
				  membership in two or more state, foreign, or federal credit unions doing
				  business in this state. Notwithstanding this provision, no overlap exists if
				  eligibility for credit union membership results solely from a family
				  relationship.
(25) Pecuniary
				  interest--the opportunity, directly or indirectly, to make money on or share in
				  any profit or benefit derived from a transaction.
(26) Person--an individual, partnership,
				  corporation, association, government, governmental subdivision or agency,
				  business trust, estate, trust, or any other public or private entity.
(27) Principal office--the home office of a
				  credit union.
(28) Protestant--a
				  credit union that opposes or objects to the relief requested by an
				  applicant.
(29) Real estate or real
				  property--an identified parcel or tract of land. The term includes
				  improvements, easements, rights of way, undivided or future interest and
				  similar rights in a tract of land, but does not include mineral rights, timber
				  rights, growing crops, water rights and similar interests severable from the
				  land when the transaction does not involve the associated parcel or tract of
				  land.
(30) Remote service
				  facility--an automated, unstaffed credit union facility owned or operated by,
				  or operated for, the credit union, such as an automated teller machine, cash
				  dispensing machine, point-of-sale terminal, or other remote electronic
				  facility, at which deposits are received, cash dispensed, or money
				  lent.
(31) Reserves--allocations of
				  retained earnings including regular and special reserves, except for any
				  allowances for loan, lease or investment losses.
(32) Resident of this state--a person
				  physically located in, living in or employed in the state of Texas.
(33) Respondent--a credit union or other
				  person against whom a disciplinary proceeding is directed by the
				  department.
(34) Secured credit--a
				  loan made or extension of credit given upon an assignment of an interest in
				  collateral pursuant to applicable state laws so as to make the enforcement or
				  promise more certain than the mere personal obligation of the debtor or
				  promisor. Any assignment may include an interest in personal property or real
				  property or a combination thereof.
(35) Shared service center--a facility which
				  is connected electronically with two or more credit unions so as to permit the
				  facility, through personnel at the facility and the electronic connection, to
				  provide a credit union member at the facility the same credit union services
				  that the credit union member could lawfully obtain at the principal office of
				  the member's credit union.
(36)
				  TAC--an acronym for the Texas Administrative Code, a compilation of all state
				  agency rules in Texas.
(37) Title
				  or 7 TAC--Title 7, Part VI of the Texas Administrative Code Banking and
				  Securities, which contains all of the department's rules.
(38) Underserved area--a geographic area,
				  which could be described as one or more contiguous metropolitan statistical
				  areas (MSA) or one or more contiguous political subdivisions, including
				  counties, cities, and towns, that satisfy any one of the following criteria:
(A) a majority of the residents earn less
				  than 80 percent of the average for all wage earners as established by the U.S.
				  Bureau of Labor Statistics;
(B) the
				  annual household income for a majority of the residents falls at or below 80
				  percent of the median household income for the State of Texas, or the nation,
				  whichever is higher; or
(C) the
				  commission makes a determination that the lack of available or adequate
				  financial services has adversely affected economic development within the
				  specified area.
(39)
				  Uninsured membership share--funds paid into a credit union by a member that
				  constitute uninsured capital under conditions established by the credit union
				  and agreed to by the member including possible reduction under §122.105 of
				  the act, risk of loss through operations, or other forfeiture. Such funds shall
				  be considered an interest in the capital of the credit union upon liquidation,
				  merger, or conversion.
(40)
				  Unsecured credit--a loan or extension of credit based solely upon the general
				  credit financial standing of the borrower. The term shall include loans or
				  other extensions of credit supported by the signature of a co-maker, guarantor,
				  or endorser.