Part 6.
CREDIT UNION DEPARTMENT
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter B. ORGANIZATION PROCEDURES
7 TAC §91.210
The Texas Credit Union Commission adopts amendments to §91.210,
relating to certificate of authority to do business in the State of Texas,
with no changes to the text as published in the November 3, 2000, issue of
the
Texas Register
(25 TexReg 10854).
Two new subsections are added to the rule. The first allows a foreign credit
union to add new occupational or associational groups to their fields of membership
provided that reciprocity exists between Texas and the credit unions' home
state or country and the proposed group can be conveniently served from the
foreign credit union's office. The second subsection adds an enforcement and
penalty provision that can be invoked by the Commissioner should a foreign
credit union fail to comply with any applicable statute or administrative
rule.
No comments were received on the proposal.
The amendments are adopted under the provisions of §122.013
of the Texas Finance Code that is interpreted as authorizing the Credit Union
Commission to adopt rules that govern foreign credit union operations in this
state.
The specific section affected by this rule is Texas Finance Code, §122.013.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on January 19, 2001.
TRD-200100369
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: February 8, 2001
Proposal publication date: November 3, 2000
For further information, please call: (512) 837-9236
7 TAC §91.301
The Texas Credit Union Commission adopts amendments to rule §91.301
relating to field of membership, with changes to the text as published in
the November 3, 2000 issue of the
Texas Register
(25 Tex Reg 10855).
The first amendment conforms the terminology used in the rule to that contained
in the enabling statute, specifically the term "common bond" has been changed
to "community of interests. Another change describes what constitutes a recognizable
community with regards to a geographic community of interest. The third amendment
inserts language addressing the treatment of overlaps resulting from a proposed
field of membership change. Lastly, there is an amendment that allows credit
unions the ability to add underserved communities regardless of location to
their fields of membership provided certain criteria are met.
The amended rule is adopted as a result of the general rule review mandated
by the Government Code and General Appropriations Act. Notice of Intention
to Review Chapter 91 rules was published in the
Texas Register
on February 4, 2000 (25 TexReg 823) for the purpose
of accepting public comment.
One comment from Brownsville Teachers' Credit Union was received regarding
the language allowing a credit union to apply to add an underserved area to
its FOM regardless of location of the underserved area in relation to the
credit union's offices. The commenter believes this provision will present
a safety and soundness issue for small and mid-sized credit unions because:
(1) it will allow large credit unions to skip across the state in an unrestricted
manner; and (2) the wording does not require a credit union to actually serve
in an underserved area. The Commission disagrees with the commenter's characterization
of this provision. All citizens of the state of Texas should not only have
access to financial services, but to their choice of institutions to meet
their specific needs. In an underserved community this opportunity does not
exist. Therefore, credit unions that are willing to provide the needed services
should be encouraged to expand into these areas. To ensure that a credit union
complies with the intent of the rule, certain requirements are specified in
the rule. To begin, the credit union must establish and maintain an office
or facility in the underserved community at which business can be transacted.
The credit union must also submit a business plan that describes how it will
serve the community. The commissioner may require periodic status reports
to ensure that the needs of the underserved community are being met. In summary,
the Commission believes adequate safeguards have been put into place to ensure
that credit unions expanding into underserved communities are doing so to
actually serve those communities.
The amendment is adopted under the provisions of §15.402
of the Texas Finance Code, which is interpreted as authorizing the Credit
Union Commission to reasonable rules necessary for administering Chapter 15
and Subtitle D, Title 3, of the Texas Finance Code.
The specific sections affected by the amended rule are §§122.001
and 122.051 of the Texas Finance Code.
§91.301.Field of Membership.
State credit unions will be allowed to have, as a minimum, at least
as much flexibility as federal credit unions in the regulation of fields of
membership. The following guidelines and standards shall be considered by
the commissioner in evaluating field of membership requests.
(1)
Occupational community of interest.
(A)
This community of interest is based on an employment relationship
with a specified employer. Persons sharing this community of interest may
be geographically dispersed. Employees of a parent corporation and its subsidiaries
and persons under contract to work regularly for an enterprise may be considered
under a single occupational community of interest. Each category to be served
(e.g., subsidiaries, contractors) should be separately listed in section 3.01
of the credit union's bylaws, if practical. Persons employed by different
entities, even if closely related geographically, persons working at a single
shopping center, industrial park, or office building, for example, are not
treated as having an occupational community of interest.
(B)
All occupational communities of interest should include
a geographic definition: e.g., "employees, officials, and persons who work
under contract regularly for ABC Corporation or any of its subsidiaries, who
work in Houston, Texas." Other acceptable geographic definitions are "employees
... who are paid from .... "or "employees ... who are supervised from ...."
(C)
The employer may also be included in this community of
interest -- e.g., "ABC Corporation and its subsidiaries."
(D)
Some examples of occupational group definitions are:
(i)
"employees of the Scott Manufacturing Company who work
in El Paso, Texas ...;"
(ii)
"employees and elected and appointed officials of municipal
government in Tyler, Texas ...;"
(iii)
"employees of Sharp Drillbit Company and its subsidiary,
Drillbit Salvage Company, who work in Midland or Houston, Texas ...;"
(iv)
"personnel of fleet units of the United States Navy home
port at Ingleside, Texas ...;"
(v)
"civilian and military personnel of the United States Government
who work or are stationed at, or are attached or assigned to Fort Hood, Texas,
or those who are retired from, or their dependents or dependent survivors
who are eligible by law or regulations to receive and are receiving benefits
or services from that military installation ...;"
(vi)
"employees of these contractors who work regularly at
United States Naval Shipyard in Ingleside, Texas ...;"
(vii)
"employees, doctor, medical staff, technicians, medical
and nursing students who work at Galveston Medical Center at the locations
stated: ...;"
(viii)
"employees, and teachers who work for the Fort Worth
Independent School District in Fort Worth, Texas...."
(E)
Some examples of insufficiently defined occupational groups
are:
(i)
"employees of engineering firms in Houston, Texas;" (No
common employer; names of firms must be stated; however, may be the basis
for a multiple group.)
(ii)
"persons employed or working in Dallas, Texas;" (No common
employer; names of firms must be stated.)
(iii)
"persons working in the entertainment industry in Texas."
(No common employer; names of firms should be stated.)
(2)
Associational community of interest.
(A)
This community of interest is generally based on groups
consisting primarily of natural persons who participate in activities developing
common loyalties, mutual benefits, and mutual interest. Qualifying associational
groups must hold meetings open to all natural person members at least once
a year, must sponsor other activities providing for contact among natural
persons members, and must have an authoritative definition of who is eligible
for membership -- usually, this will be in the associations's constitution
and bylaws. The clarity of the associational group's definition and compactness
of its membership will be important criteria in reviewing the application.
The department policy is to organize associational charters at the lowest
organizational level which is economically feasible.
(B)
Students constitute an associational community of interest
and may qualify for a credit union charter.
(C)
Associations formed primarily to obtain a credit union
charter do not have a sufficient associational community of interest; nor
do associations based on a client or customer relationship (e.g., an insurance
company's customers or a buyer's club).
(D)
The department normally charters associational credit unions
consisting of natural person members. The department will allow nonnatural
persons (e.g., corporate sponsor or organizations of members) to be eligible
for membership.
(E)
Moreover, the community of interest usually would extend
to the association's members and their employees. However, situations may
exist where the employees of a member of an association do not have a sufficiently
close tie to the association to be included.
(F)
Homeowner associations, tenant groups, electric co-ops,
consumer groups, and other groups of persons having an interest in a particular
cause and certain consumer cooperatives may be eligible to receive a charter,
however, they must make a strong showing of common activities and economic
viability. Newly-organized associations must make similar showing; experience
has shown that a new group's efforts are best focused on solidifying member
interest before attempting to offer credit union service.
(G)
All associational communities of interest will include
a definition of the group and a geographic or operational area limitation,
unless the constitution or bylaws of the associational group limit the geographical
area -- e.g., "Members of the Small Businessmen Association living or working
in Dallas, Texas who qualify for membership in accordance with its constitution
and bylaws in effect on January 21, 1989."
(H)
The association itself may also be included in the field
of membership; e.g., "ABC Association."
(I)
Some examples of associational group definitions are:
(i)
"regular members of Locals 10 and 13, IBEW Union, Houston,
Texas, who qualify for membership in accordance with their constitution and
bylaws in effect on May 20, 1989;"
(ii)
"members of the Texas Farm Bureau who live or work in
Williamson or adjacent counties, who qualify for membership in accordance
with its constitution and bylaws in effect on March 7, 1990;"
(iii)
"members of the Catholic Church who live or work in Del
Rio, Texas;"
(iv)
"members of the First Baptist Church in Georgetown, Texas;"
(v)
"regular members of the Corporate Executives Association,
located in Dallas, Texas, who live or work in Dallas, Texas, who qualify for
membership in accordance with its constitution and bylaws in effect on December
1, 1985;"
(vi)
"members of the Lower Colorado River Authority located
in Austin, Texas."
(J)
Some examples of insufficiently defined association group
definitions are:
(i)
"members of military service clubs in the State of Texas."
(No single associational tie; specific clubs and locations must be named;
may be considered as multiple group.)
(ii)
"veterans of United States military service."
(K)
Some examples of unacceptable associational communities
of interest are:
(i)
"ABC Buyers Club." (An interest in purchasing only does
not meet associational standards.)
(ii)
"customers of ABC Insurance Company." (Policyholders or
customer/client relationships do not meet associational standards.)
(3)
Geographic community of interest.
(A)
This community of interest is based upon employment, or
residence within a clearly defined and specified geographic area(s). Business
entities within the specified geographic area(s) may also qualify for membership.
Given the diversity of community characteristics throughout the state and
the department's goal of making credit union service available to all eligible
groups who wish to have it, the department has established the following guidelines:
(i)
The geographic area(s) must be clearly specified.
(ii)
The application must establish that the area(s) is recognized
as a distinct neighborhood, community, or geographic area(s). For the purposes
of this section a recognizable community is a geographical area which possesses
such characteristics that the residents of the area share a definable community
of interest or sense of identification with each other which may be based
upon mutual interests, goals, community pride or other similar elements.
(B)
A typical definition of a geographic community of interest
is: "Persons who live, work or are located in ABC, the area of XYZ City bounded
by Fern Street on the north, Long Street on the east, Fourth Street on the
south, and Elm Avenue on the west."
(C)
Additional criteria may be considered for an application
to convert to or expand an existing community and may include, but not be
limited to, providing for a protective exclusion for honoring existing credit
unions in the proposed area(s).
(D)
Some examples of geographic community of interest definitions
are:
(i)
"persons who live, work or are located in Brown County,
Texas;
(ii)
"persons who live or work in and business entities located
in Spring Branch Independent School District, Houston, Texas;"
(iii)
"persons who live or work are located within a ten-mile
radius of El Campo, Texas".
(E)
Some examples of insufficiently defined geographic community
of interest definitions are:
(i)
"persons who live or work in East Texas;"
(ii)
"persons who live or work in the ship channel section
of Houston, Texas."
(4)
Multiple-group charters.
(A)
The department may charter a credit union to serve a combination
of definable occupational, associational and/or geographical groups.
(B)
In addition to general chartering requirements, special
requirements pertaining to multiple-group applications may be required before
the department will grant such a charter.
(i)
Each group to be included in the proposed field of membership
of the credit union must have its own community of interest.
(ii)
Each group must individually request inclusion in the
proposed credit union's charter.
(5)
Overlap protection.
(A)
The commissioner will consider the financial effect of
an overlap proposed by an application to expand a credit union's field of
membership or when a charter application proposes an overlap. Generally, the
department will not charter or otherwise authorize two or more credit unions
to serve the same single occupational or associational group. An overlap is
permitted when the expansion's beneficial effect in meeting the convenience
and needs of the members of the group proposed to be included in the field
of membership outweighs any adverse effect on the overlapped credit union(s).
(B)
The commissioner will weigh the information in support
of the application and any information provided by a protesting or affected
credit union. If the applicant has the financial capacity to serve the financial
needs of the proposed members, demonstrates economic feasibility, complies
with the requirements of this rule, and no protestant reasonably establishes
a basis for denying the request, it shall be approved.
(C)
If a finding is made that overlap protection is warranted,
the commissioner shall reject the application or require the applicant to
limit or eliminate the overlap by adding exclusionary language to the text
of the amendment, e.g., "excluding persons eligible for primary membership
in any occupation or association based credit union that has an office within
a specified proximity of the applicant credit union at the time membership
is sought." Generally, overlap protection will not be considered warranted
unless the financial effect on the overlapped credit union will present a
safety and soundness concern. Exclusionary clauses are rarely appropriate
for inclusion in a geographic community of interest credit union.
(D)
Generally, if the overlapped credit union does not submit
a notice of protest form, and the department determines that there is no safety
and soundness problem, an overlap will be permitted. If, however, a notice
of protest is filed, the commissioner will consider the following in performing
an overlap analysis:
(i)
whether the overlap is incidental in nature, ie., the group(s)
in question is so small as to have no material effect on the overlapped credit
union;
(ii)
whether there is limited participation by members of the
group(s) in the overlapped credit union after the expiration of a reasonable
period of time;
(iii)
whether the overlapped credit union provides requested
service;
(iv)
the financial effect on the overlapped credit union;
(v)
the desires of the group(s); and
(vi)
the best interests of the affected group(s) and the credit
union members involved.
(E)
Where a sponsor organization expands its operations internally,
by acquisition or otherwise, the credit union may serve these new entrants
to its field of membership if they are part of the community of interest described
in the credit union's bylaws. Where acquisitions are made which add a new
subsidiary or affiliate, the group cannot be served until the entity is included
in the field of membership through the application process.
(F)
Credit unions affected by the organizational restructuring
or merger of a group within its field of membership must apply for a modification
of their fields of membership to reflect the group to be served.
(6)
Underserved communities.
(A)
All credit unions may include in their fields of membership,
without regard to location, communities satisfying the definition for underserved
areas. More than one credit union can serve the same underserved area.
(B)
Once an underserved area has been added to a credit union's
field of membership, the credit union must establish and maintain an office
or facility in the community. For the purposes of this subsection service
facility is defined as a place where shares are accepted for members' accounts,
loan applications are accepted and loan proceeds are disbursed. This definition
includes a credit union owned branch, a shared branch, a mobile branch, and
an office operated on a regularly scheduled weekly basis, or a credit union
owned electronic facility that meets, at a minimum, these requirements. This
definition does not include an atm.
(C)
A credit union desiring to add an underserved area must
document that the community meets the definition. In addition, the credit
union must develop a business plan specifying how it will serve the community.
The business plan, at a minimum, must identify the credit and depository needs
of the community and detail how the credit union plans to serve those needs.
The credit union will be expected to regularly review the business plan to
determine if the community is being adequately served. The commissioner may
require periodic service status reports from a credit union pertaining to
the underserved area to ensure that the needs of the area are being met, as
well as requiring such reports before allowing a credit union to add an additional
unserved area.
This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.
Filed with the Office of
the Secretary of State on January 22, 2001.
TRD-200100391
Harold E. Feeney
Commissioner
Credit Union Department
Effective date: February 11, 2001
Proposal publication date: November 3, 2000
For further information, please call: (512) 837-9236
Subchapter C. MEMBERS
Subchapter H. INVESTMENTS