Part VI.
Credit Union Department
Chapter 91.
Chartering, Operations, Mergers, Liquidations
General Rules
7 TAC §91.103
The Texas Credit Union Commission proposes new §91.103,
concerning public notice of the department's activities. The proposed rule
is necessary to comply with new statutory requirements enacted in the 75th
Legislative Session. Senate Bill 358, effective September 1, 1997, 75th Legislature,
Chapter 338, 1997 Texas Session Law (to be codified at Texas Finance Code
Annotated, §15.4021), requires the commission to adopt rules relating
to providing the public with notice of department activities. The proposed
new rule requires the department to publish in the
Texas Register
and the department newsletter actions taken on certain
applications and requests submitted for approval that have become final.
Lynette Pool-Harris, Deputy Commissioner, has determined that for the first
five year period there will be no fiscal implication as a result of enforcing
or administering the proposed rule.
Ms. Pool-Harris, Deputy Commissioner, has determined that for each year
of the first five-year period the rule is in effect:
(a) The public benefits anticipated, as a result of the notice being given,
will be to ensure the public is informed of actions taken by the Department.
(b) There is no economic cost anticipated to the parties who are required
to comply with the rule.
(c) No impact on local employment is anticipated as a result of enforcing
the rule as proposed.
Written comments on the proposed rule must be submitted within 30 days
after publication of the proposed section in the
Texas Register
to Carol P. Shaner, Staff Services Officer, Credit
Union Department, 914 East Anderson Lane, Austin, Texas, 78752-1699.
The new section is proposed under the provisions of the Texas
Finance Code, §15.402, which authorizes the commission to adopt reasonable
rules, and Section 10 of Senate Bill 358, 75th Legislature, Chapter 338,
1997 Texas Session Law (to be codified at Texas Finance Code Annotated Section
15.4021), which requires the Commission to provide public notice of Department
activities.
The specific section affected by this proposed rule is §11.061 of
the Texas Credit Union Act (to be codified at Texas Finance Code Annotated,
§15.4021).
§91.103.Public Notice of Department Activities.
The commissioner shall cause notice of final actions taken by the
department on certain activities to be published in the
Texas Register
and the department newsletter. Notice shall be published
in both publications within 30 days of the action becoming final. The activities
covered by this requirement are:
(1)
an application for incorporation under the Texas Finance
Code, §122.001;
(2)
a request for an amendment to a credit union's articles
of incorporation under the Texas Finance Code, §122.011;
(3)
a request for an amendment to a credit union's bylaws
for the expansion of its field of membership under the Texas Finance Code,
§122.011;
(4)
an application for merger or consolidation under
the Texas Finance Code, §122.152;
(5)
a request by a foreign credit union to do business
in Texas under the Texas Finance Code, §122.013; and
(6)
an application for conversion of a credit union's
Charter under the Texas Finance Code, §§122.201, 122.202 or 122.203.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
January 28, 1998.
TRD-9801286
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: March 15, 1998
For further information, please call: (512) 837-9236
7 TAC §91.104
The Texas Credit Union Commission proposes new §91.104,
concerning public notice of certain requests for approval by the commissioner.
The proposed rule is necessary to comply with new statutory requirements
enacted in the 75th Legislative Session. Section 17 of Senate Bill 358, effective
September 1, 1997, 75th Legislature, Chapter 338, 1997 Texas Session Law
(to be codified at Texas Finance Code Annotated, §122.005), requires
the commissioner to submit to the secretary of state for publication in the
Lynette Pool-Harris, Deputy Commissioner, has determined that for the first
five year period there will be no fiscal implication as a result of enforcing
or administering the proposed rule.
Ms. Pool-Harris, Deputy Commissioner, has determined that for each year
of the first five-year period the rule is in effect:
(a) The public benefits anticipated, as a result of the notice being given,
will be to ensure the public is informed of applications and requests for
approval received by the Department.
(b) There is no economic cost anticipated to the parties who are required
to comply with the rule.
(c) No impact on local employment is anticipated as a result of enforcing
the rule as proposed.
Written comments on the proposed rule must be submitted within 30 days
after publication of the proposed section in the
Texas Register
to Carol P. Shaner, Staff Services Officer, Credit
Union Department, 914 East Anderson Lane, Austin, Texas, 78752-1699.
The new section is proposed under the provisions of Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules,
and Section 17 of Senate Bill 358, 75th Legislature, Chapter 338, 1997 Texas
Session Law (to be codified at Texas Finance Code Annotated, §122.005),
which requires the Commission to provide public notice of Department activities.
The specific section affected by this proposed rule is Texas Finance Code,
§122.005.
§91.104.Notice of Applications.
(a)
Upon receipt of a complete application for authorization
to be granted by the department, the commissioner shall cause notice of such
application to be published in the
Texas Register
and the department newsletter. Notice shall be published in both publications
at least 30 days prior to taking action on the request. The activities covered
by this requirement are:
(1)
an application for incorporation under the Texas Finance
Code, §122.001;
(2)
a request for an amendment to a credit union's articles
of incorporation under the Texas Finance Code, §122.011;
(3)
a request for an amendment to a credit union's bylaws
for an expansion of its field of membership under the Texas Finance Code,
§122.011; and
(4)
an application for merger or consolidation under
the Texas Finance Code, §122.152.
(b)
The commissioner may waive or delay notice of applications
under subsection (a) of this section when a waiver or delay is in the public
interest. The commissioner shall consider the welfare and stability of the
affected credit union(s) in determining the public interest. If the commissioner
determines that delaying public notice is in the public interest, the notice
of application shall be published in each publication at the earliest feasible
time.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
January 28, 1998.
TRD-9801287
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: March 15, 1998
For further information, please call: (512) 837-9236
7 TAC §91.701
The Texas Credit Union Commission proposes an amendment to
§91.701, concerning loans and extensions of credit that a credit union
may make. The amendments are being proposed to provide specific authorization
for a credit union to engage in home equity lending and reverse mortgage
lending, as allowed by Section 50, Article XVI, Texas Constitution. The amendments
are necessary to further clarify the Commission's determination that state
chartered credit unions have the authority to offer home equity loans and
reverse mortgages to their members. An amendment is also proposed to ensure
compliance with provisions of Section 50, Article XVI, Texas Constitution,
pertaining to home improvement loans. Next, an amendment is proposed to establish
a minimum dollar threshold under which title insurance is not required on
a real estate loan secured by a first lien. The proposed $25,000 threshold
would be the same as the threshold now required for a real estate loan secured
by other than a first lien. Currently, a title policy is required on all
real estate loans secured by a first lien. Lastly, an amendment is proposed
to raise the appraisal requirement threshold from $50,000 to $100,000, the
level established for federal credit unions, so that state-chartered credit
unions are not disadvantaged.
Lynette Pool-Harris, Deputy Commissioner, has determined that for the first
five year period there will be no fiscal implications as a result of enforcing
or administering the proposed amended rule.
Ms. Pool-Harris, Deputy Commissioner, has determined that for each year
of the first five years the amended rule proposed is in effect:
(a) The public benefits anticipated as a result of enforcing the rule as
proposed will be that state-chartered credit unions will be better able to
meet the credit needs of all of its members.
(b) There is no economic cost anticipated to the parties who are required
to comply with the rule.
(c) No impact on local employment is anticipated as a result of enforcing
the rule as proposed.
Written comments on the proposed amendments must be submitted within 30
days after their publication in the
Texas Register
to Carol P. Shaner, Staff Services Officer, Credit Union Department,
914 East Anderson Lane, Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §124.001, which provides the Credit Union Commission with the
authority to adopt rules governing loans made to credit union members; and
under the Texas Finance Code, §15.402, which authorizes the commission
to adopt reasonable rules.
The specific section affected by the proposed amendments is Texas Finance
Code, §124.001.
§91.701.Loans.
(a)-(b)
(No change.)
(c)
Loans secured by real estate. For loans secured, in whole
or in part, by a lien on real estate, the requirements described in this
subsection shall apply unless waived in writing by the commissioner:
(1)
Loans secured by a first lien on real estate. A loan,
or any refinancing thereof, secured by a first lien on real estate shall
be subject to the requirements described in this paragraph as applicable.
(A)-(B)
(No change.)
(C)
Title opinion; Title insurance. A loan may not be made
by the credit union unless it is furnished with either a written title opinion
of an attorney or a satisfactory policy of title insurance in the principal
amount of the loan, which policy shall be issued by a title company authorized
to insure titles in this state, insuring that the lien is a first and prior
lien.
The validity of title for loans of less than $25,000 may be determined
as prescribed by board policy.
(D)-(F)
(No change.)
(G)
Valuation. Every loan must have included in its documentation
evidence of the market value of the real estate determined in accordance with
written board policy or, if the amount of the loan exceeds
$100,000
[
(2)
Other real estate loans; Maximum maturity; Loan
to value ratio. A loan, or any refinancing thereof, secured by a lien on real
estate other than a first lien:
(A)-(E)
(No change.)
(F)
Valuation. Every loan must have included in its documentation
evidence of the market value of the real estate determined in accordance with
written board policy or, if the amount of the loan exceeds
$100,000
[
(3)
Home improvement loans. Loans
in which the proceeds are used to construct new improvements or renovate existing
improvements on a homestead property must also comply with the requirements
of Section 50(a)(5), Article XVI, Texas Constitution.
(4)
Loans originated under Section 50(a)(6),
Article XVI, Texas Constitution. For a loan secured by an encumbrance against
the equity in a homestead property, the terms and conditions set forth in
Section 50, Article XVI, Texas Constitution, will take precedence over any
specific requirement contained in this section if there is an irreconcilable
conflict between a constitutional provision and the provision of this section.
(5)
Reverse mortgages. A credit union
may offer reverse mortgages to its members under the terms and conditions
set forth in Section 50, Article XVI, Texas Constitution. In the event of
an irreconcilable conflict between any specific requirement contained in
this section and a constitutional provision, the constitutional requirement
shall prevail.
(d)-(f)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
January 28, 1998.
TRD-9801288
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: March 15, 1998
For further information, please call: (512) 837-9236
7 TAC §91.1003
The Texas Credit Union Commission proposes new §91.1003,
concerning mergers/consolidations of credit unions. The new rule is being
proposed in order to comply with Section 3 of Senate Bill 358 (75th Legislature)
which requires the commission, by rule, to establish appropriate criteria
that the commissioner must consider in determining whether to approve or
disapprove a merger/consolidation request. The proposed rule would formalize
documentation requirements and merger procedures currently utilized by the
Credit Union Department, as well as identify grounds for the commissioner's
disapproval of a merger/consolidation request.
Lynette Pool-Harris, Deputy Commissioner, has determined that for the first
five year period there will be no fiscal implications as a result of enforcing
or administering the proposed rule.
Ms. Pool-Harris, Deputy Commissioner, has determined that for each year
of the first five years the rule proposed is in effect:
(a) The public benefits anticipated as a result of enforcing the rule as
proposed will be that state-chartered credit unions will have a clearly defined
set of procedures to follow when contemplating a merger/consolidation, which
will ultimately benefit their members.
(b) There is no additional economic cost anticipated to the parties who
are required to comply with the rule.
(c) No impact on local employment is anticipated as a result of enforcing
the rule as proposed.
Comments on the proposal must be submitted within 30 days after its publication
in the
Texas Register
to Carol P. Shaner,
Staff Services Officer, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The new section is proposed under the provisions of the Texas
Finance Code, §15.402, which authorizes the commission to adopt reasonable
rules, and Section 3 of Senate Bill 358, 75th Legislature, Chapter 338, 1997
Texas Session Law (codified at Texas Finance Code Annotated, §122.153).
The specific sections affected by this proposed rule are §§122.151,
122.152, 122.153 122.154, and 122.155 of the Texas Finance Code pertaining
to merger or consolidation.
§91.1003.Mergers/Consolidations.
(a)
Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Surviving credit union - The credit union that will continue
in operation after the merger/consolidation.
(2)
Merging credit union - The credit union that will
cease to exist as an operating credit union at the time of the merger/consolidation.
(b)
Two or more credit unions authorized to conduct business
in this state may merge/consolidate, in whole or in part, with each other
subject to commission rules.
(c)
A credit union authorized to conduct business under the
laws of this state may merge/consolidate with a credit union authorized to
conduct business under the laws of another state or U. S. territory, to the
extent permitted by the laws of the state or territory in question and subject
to commission rules. A credit union authorized to conduct business under
the laws of this state may also merge/consolidate with a credit union authorized
to conduct business under the laws of the United States to the extent permitted
by the laws of the United States and subject to commission rules. Each such
application/plan shall comply with the applicable requirements of this section,
and shall include a certified copy of an order from the appropriate supervisory
authority approving the merger/consolidation, or other evidence satisfactory
to the commissioner that all regulatory requirements of the out of state
or federal supervisory authority have been satisfied.
(d)
Approval to Merge/Consolidate. The following are required
for the completion of a merger/consolidation of credit unions:
(1)
approval of the merger/consolidation plan by resolution
of the board of directors of each credit union;
(2)
approval of the merger/consolidation plan by vote
of the members of each credit union as set forth in Section 122.151 of the
Act, unless waived by the commissioner; and
(3)
approval by the commissioner of the merger/consolidation
plan, the certificate of merger/consolidation, and the requisite amendment
to the surviving credit union's articles of incorporation or bylaws.
(e)
Notice of Intent to Merge/Consolidate. The credit unions
shall notify the commissioner of their intent to merge/consolidate by filing
a copy of the resolution adopted by each credit union's board of directors
that evidences their intent to merge/consolidate.
(f)
Plan for Merger/Consolidation. Upon the commissioner's
acknowledgment of receipt of the notice of intent to merge/consolidate, a
plan for the proposed merger/consolidation shall be prepared. The plan shall
include:
(1)
the current financial reports of each credit union;
(2)
the combined financial reports of the two credit
unions;
(3)
an explanation of any proposed adjustments to the
members shares, deposits, reserves, or undivided profits;
(4)
a summary of the products and services proposed to
be available to the members of the surviving credit union, with an explanation
of any changes from the current products and services provided to the members;
(5)
a summary of the advantages and disadvantages of
the merger/ consolidation;
(6)
the projected location of the main office and any
branch location(s) after the merger/consolidation; and
(7)
any other items deemed critical to the merger/consolidation
agreement by the boards of directors.
(g)
Submission of an Application to Merge/Consolidate to Department.
(1)
An application for approval of the merger/consolidation
will be complete when the following information is submitted to the commissioner:
(A)
the merger/consolidation plan, as described in this rule;
(B)
a copy of the resolution of each board of directors approving
the merger/consolidation plan;
(C)
the proposed Notice of Special Meeting of the members
and a copy of the ballot form to be used, unless approval by the members
is waived by the commissioner;
(D)
the current delinquent loan summaries for each credit
union;
(E)
evidence that relevant supervisory authorities and the
share insurer are in agreement with the merger/consolidation proposal; and
(F)
a request for a waiver of the requirement that the plan
be approved by the members of any of the affected credit unions, in the event
the board(s) seek such a waiver, together with a statement of the reason(s)
for the waiver(s).
(2)
If the surviving credit union is organized under
the laws of another state or of the United States, the commissioner may accept
an application to merge or consolidate that is prescribed by the state or
federal supervisory authority of the surviving credit union, provided that
the commissioner may require additional information to determine whether
to deny or approve the merger/consolidation. The application will be deemed
complete upon receipt of all information requested by the commissioner.
(h)
Upon receipt of a completed application, notice of the
proposed merger/ consolidation will be published in the Texas Register and
Department Newsletter.
(i)
Commissioner Action on the Application.
(1)
The commissioner shall approve the application for merger/consolidation
upon the finding from information submitted in the application that the proposed
merger/consolidation will promote the welfare and stability of the merging
and surviving credit unions.
(2)
The commissioner shall deny an application for merger/consolidation
if the commissioner finds any of the following:
(A)
the financial condition of the surviving credit union
before the merger/consolidation is such that it will likely jeopardize the
financial stability of the merging credit union or prejudice the financial
interests of the members, beneficiaries or creditors of either credit union;
(B)
the plan includes a change in the products or services
available to members of the merging credit union that substantially harms
the financial interests of the members, beneficiaries or creditors of the
merging credit union;
(C)
the merger/consolidation would probably substantially
lessen the ability of the surviving credit union to meet the reasonable needs
and convenience of members to be served;
(D)
the credit unions do not furnish to the commissioner all
information requested by the commissioner which is material to the application;
(E)
the credit unions fail to obtain any approval required
from a federal or state supervisory authority; or
(F)
the merger/consolidation would be contrary to law.
(3)
For applications to merge/consolidate in which
the products and services of the surviving credit union after merger/consolidation
are proposed to be substantially the same as those of the merging and surviving
credit unions, the commissioner will presume that the merger/consolidation
will not significantly change or affect the availability and adequacy of
financial services in the local community.
(j)
Procedures for Approval of Merger/Consolidation Plan by
the Members of Each Credit Union.
(1)
The credit unions have the option of allowing their members
to vote on the plan in person at a meeting of the members, by mail ballot,
or by a combination of both.
(2)
Members shall be given advance notice of the meeting
in accordance with the credit union's bylaws. The notice of the meeting shall:
(A)
specify the purpose of the meeting;
(B)
state the reasons for the proposed merger/consolidation;
(C)
state that the merger/consolidation plan will be presented
to the members;
(D)
provide the name and location of the surviving credit
union;
(E)
specify whether the vote will be taken in person at the
meeting, by mail ballot to be received by the credit union no later than the
date and time of the meeting, or by combination of both methods; and
(F)
be accompanied by a mail ballot and a copy of the merger/consolidation
plan if voting by mail is permitted.
(k)
Completion of Merger/Consolidation.
(1)
Upon approval of the merger/consolidation plan by the membership,
if applicable, the Certificate of Merger/Consolidation shall be completed,
signed and submitted to the commissioner for final authority to combine the
records. Necessary amendments to the surviving credit union's articles of
incorporation or bylaws shall also be submitted at this time.
(2)
Upon receipt of the commissioner's written authorization,
the records of the credit unions shall be combined as of the effective date
of the merger/consolidation. The board of the directors of the surviving credit
union shall certify the completion of the merger/consolidation to the commissioner
within 30 days after the effective date of the merger/consolidation.
(3)
Upon receipt by the commissioner of the certification
of the merger/consolidation in which the surviving credit union will operate
under a Texas charter, any article of incorporation or bylaw amendments will
be approved at the same time the charter of the merging credit union is canceled.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
January 28, 1998.
TRD-9801290
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: March 15, 1998
For further information, please call: (512) 837-9236
7 TAC §91.3001, §91.3002
The Texas Credit Union Commission proposes new §91.3001
and §91.3002, concerning the opportunity for interested parties to be
heard on certain applications. The new rules are being proposed in accordance
with Section 17 of Senate Bill 358 (75th Legislature) which provides that
the commission may establish reasonable rules governing the circumstances
and conduct of informal meetings. The proposed rules would formalize requirements
and procedures to be utilized by the Credit Union Department.
Lynette Pool-Harris, Deputy Commissioner, has determined that for the first
five year period there will be no fiscal implications as a result of enforcing
or administering the proposed rules.
Ms. Pool-Harris, Deputy Commissioner, has determined that for each year
of the first five years the rules proposed are in effect:
(a) The public benefits anticipated as a result of enforcing the rules
as proposed will be that interested parties unions will have a clearly defined
set of procedures to follow when requesting an informal meeting with the
commissioner.
(b) There is no economic cost anticipated to the parties who are required
to comply with the rules.
(c) No impact on local employment is anticipated as a result of enforcing
the rules as proposed.
Comments on the proposed rules must be submitted within 30 days after their
publication in the
Texas Register
to Carol
P. Shaner, Staff Services Officer, Credit Union Department, 914 East Anderson
Lane, Austin, Texas 78752-1699.
The new sections are proposed under the provisions of the Texas
Finance Code, §15.402, which authorizes the commission to adopt reasonable
rules, and Section 17 of Senate Bill 358, 75th Legislature, Chapter 338,
1997 Texas Session Law (to be codified at Texas Finance Code Annotated, §122.005),
which provides the Credit Union Commission with the authority to establish,
by rule, appropriate criteria governing the circumstances and conduct of
informal meetings.
The specific sections affected by these proposed rules are Texas Finance
Code, §§122.006, 122.011,122.151, and 122.152, pertaining to applications
for incorporation, request for approval of article of incorporation amendments,
and merger or consolidation.
§91.3001.Opportunity to Submit Comments on Certain Applications.
(a)
An interested party may submit comments to the commissioner
on the following matters:
(1)
an application for incorporation under the Texas Finance
Code, §122.001;
(2)
an amendment to a credit union's articles of incorporation
under the Texas Finance Code, §122.011, which includes an amendment to
expand the credit union's field of membership; or
(3)
an application to merge or consolidate under the
Texas Finance Code, §122.152.
(b)
An interested party is a person or entity that has an
interest in particular to the application other than as a member of the general
public.
(c)
Acceptance of comments under this section does not constitute
a determination of standing to protest or otherwise participate in a contested
case hearing on the application.
(d)
Comments may be made in writing or provided in a meeting
with the commissioner or deputy commissioner, as follows:
(1)
written comments shall be submitted within 30 days after
notice of the application is published in the
Texas
Register
or the department's newsletter, whichever is later;
(2)
a meeting to receive comments shall be held upon written
request by an interested party or upon the commissioner's direction.
§91.3002.Conduct of Meetings to Receive Comments.
(a)
Meetings to receive comments under §91.3001 of this
title (relating to opportunities to submit comments on certain applications)
will be conducted in the following manner:
(1)
a written request for a meeting to receive comments must
be received by the department within 30 days after publication of the notice
of the application and shall contain the following:
(A)
the identity of the requestor, including the name of a
natural person who represents a business entity or other association, mailing
address, daytime telephone number, and a facsimile number if any;
(B)
the name of the application and type of application;
(C)
a description of the requestor's interest in the application;
and
(D)
a list of at least three dates and times within 30 days
after the date of publication of notice of application, which are available
for the meeting.
(2)
the meeting will be scheduled and may be rescheduled,
if necessary, by the commissioner to occur after at least three business days'
notice by telephone, facsimile, or mail;
(3)
one meeting may be scheduled to receive comments
from more than one interested party, at the discretion of the commissioner;
(4)
a limit on the length and other conditions for the
conduct of the meeting may be imposed by the commissioner, and the conditions
will be stated in the notice of the meeting;
(5)
the meeting may be conducted by telephone with the
consent of the interested party; and
(6)
the department is not required to make a record of
the meeting.
(b)
An interested party who fails to attend a meeting scheduled
for the party's benefit may submit written comments within three days after
the date scheduled for the meeting, but the commissioner is not required to
schedule another meeting.
(c)
The purpose of the meeting is only to receive comments,
and no decision, preliminary or otherwise, will be made at the meeting.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
January 28, 1998.
TRD-9801291
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: March 15, 1998
For further information, please call: (512) 837-9236
Fees
Loans
$50,000
], a report of an appraisal prepared by a state certified appraiser.
$50,000
], a report of an appraisal prepared by a state certified appraiser.
Changes in Corporate Status
Submission of Comments by Interested Parties
Chapter 97.
Commission Policies and Administrative Rules