PART 5. OFFICE OF CONSUMER CREDIT COMMISSIONER

CHAPTER 84. MOTOR VEHICLE INSTALLMENT SALES

SUBCHAPTER A. GENERAL PROVISIONS

7 TAC §84.105

The Finance Commission of Texas (commission) proposes new §84.105, concerning Indigency Affidavit for Appeal of Conditional Delivery Determination, with regard to motor vehicle sales finance licensees.

With the enactment of House Bill 2556 (HB 2556), the 81st Texas Legislature added §348.013 to the Texas Finance Code in order to outline the rights and duties of the parties to conditional delivery agreements of motor vehicles. Among other things, HB 2556 provides certain limitations on conditional delivery agreements in Texas, such as a maximum term of 15 days and inclusion in the agreement of the agreed value of any trade-in motor vehicle.

In addition, HB 2556 states that an amount paid or required to be paid under Texas Finance Code, §348.013(g) regarding trade-in value is subject to review by the Consumer Credit Commissioner (commissioner). The trade-in value becomes important if the prospective sale is not consummated and the dealer is unable to return the prospective retail buyer's vehicle. The commissioner's determination regarding trade-in value may be appealed, and those requesting an appeal are required by §348.013(m) to pay a deposit to secure payment of the costs of the hearing, unless they cannot afford it and file an affidavit to that effect. HB 2556 authorizes the commission to prescribe the form and content of this affidavit.

The purpose of the new rule is to implement HB 2556 by specifying the requirements for the affidavit (indigency affidavit) that may be filed by a prospective retail buyer who is unable to pay the deposit required for appeal of a conditional delivery determination made by the commissioner. The required information closely tracks the contents of an affidavit under Rule 145, Texas Rules of Civil Procedure. The agency has modeled the sample indigency affidavit after similar forms used commonly in the Texas and federal court systems.

Section 84.105 outlines the required information that a prospective retail buyer may file when that individual cannot afford to pay the deposit required under Texas Finance Code, §348.013(m) for appeal of a determination made by the commissioner under §348.013(g). The affiant must provide information under the following categories: monthly income, property, monthly expenses, and debts and other liabilities. Additionally, the rule states that the federal poverty guidelines will be used by the commissioner when evaluating an individual's affidavit for waiver of the required deposit.

The proposed new rule also provides a sample affidavit. Use of the model affidavit is not required, although any affidavit submitted must contain the required information as specified in the rule text.

Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the rule is in effect there will be no fiscal implications for state or local government as a result of administering the rule.

Commissioner Pettijohn has determined that for each year of the first five years the new rule is in effect the public benefit anticipated will be clarification of the requirements for indigency affidavits and the availability of a sample affidavit for interested parties. There is no anticipated cost to persons who are required to comply with the new rule as proposed. There will be no adverse economic effect on small or micro-businesses. There will be no effect on individuals required to comply with the new rule as proposed.

Comments on the proposed new rule may be submitted in writing to Laurie Hobbs, Assistant General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas 78705-4207 or by email to laurie.hobbs@occc.state.tx.us. To be considered, a written comment must be received on or before the 31st day after the date the proposed rule is published in the Texas Register. At the conclusion of the 31st day after the proposed rule is published in the Texas Register, no further written comments will be considered or accepted by the commission.

This new section is proposed under Texas Finance Code, §348.013(m) (Acts 2009, 81st Legislature), which authorizes the commission to adopt rules to prescribe the form and content of this affidavit. The new rule is also proposed under Texas Finance Code §11.304, which authorizes the commission to adopt rules to enforce Title 4 of the Texas Finance Code. Additionally, Texas Finance Code, §348.513 grants the commission the authority to adopt rules to enforce the motor vehicle installment sales chapter.

The statutory provisions affected by the proposed new section are contained in Texas Finance Code, Chapter 348.

§84.105.Indigency Affidavit for Appeal of Conditional Delivery Determination.

(a) Required information. An affidavit under Texas Finance Code, §348.103(m) filed with the hearings officer must contain the following information:

(1) the name of the prospective retail buyer;

(2) a statement by a notary public identifying the prospective retail buyer, and stating that the prospective retail buyer personally appeared before the notary and made the statements under oath;

(3) the following statement: "I am over 18 years of age and am capable of making this affidavit. The facts stated in this affidavit are within my personal knowledge and are true and correct. Due to my financial situation, I cannot afford to pay the deposit required under Texas Finance Code, §348.013(m). I wish to appeal the Consumer Credit Commissioner's determination under §348.013(g) regarding my conditional delivery agreement with (Insert Name and Address of Retail Seller and OCCC license number). The following information accurately states my income, assets, expenses, and liabilities.";

(4) nature and amount of monthly income from the following sources:

(A) employment;

(B) government entitlement;

(C) spouse, if spouse's income is available to the prospective retail buyer; and

(D) any other income;

(5) type and approximate value of property owned (other than homestead), including make, model, and year of any motor vehicles owned;

(6) checking or savings account information, including:

(A) name and location of financial entity;

(B) approximate amount of money held in account;

(7) approximate amount of any cash on hand;

(8) monthly expenses, including expenses from the following example sources:

(A) rent/mortgage;

(B) utilities;

(C) food;

(D) child care;

(E) child support;

(F) health care;

(G) car payment;

(H) transportation;

(I) insurance;

(J) clothes/laundry;

(K) finance charges; and

(L) any other monthly expenses;

(9) information regarding debts and other liabilities, including:

(A) name of creditor;

(B) total debt amount; and

(C) monthly payment;

(10) number of dependents;

(11) the following statement: "As the prospective retail buyer, I am unable to pay the deposit required by Texas Finance Code, §348.013(m) for the appeal of the Consumer Credit Commissioner's conditional delivery determination. I verify that the statements made in this affidavit are true and correct.";

(12) the date the affidavit was signed;

(13) the prospective retail buyer's signature and printed name;

(14) the prospective retail buyer's address; and

(15) the notary public's seal and signature.

(b) Filing. The affiant should file the affidavit with the hearings officer through the commissioner.

(c) Commissioner's evaluation. The commissioner will use the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. §9902(2) when evaluating an individual's affidavit for waiver of the deposit required by Texas Finance Code, §348.013(m). The commissioner will consider the particular financial situation of the affiant in the process of determining whether the affiant's request for wavier of the deposit should be granted.

(d) Sample affidavit. A sample affidavit under Texas Finance Code, §348.013(m) is presented in the following example.

Figure: 7 TAC §84.105(d) (.pdf)

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 June 19, 2009.

TRD-200902486

Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 936-7660

SUBCHAPTER G. TRANSFER OF TAX LIEN

7 TAC §89.701, §89.702

The Finance Commission of Texas (commission) proposes new §89.701, concerning Sworn Document Authorizing Transfer of Tax Lien and §89.702, concerning Certified Statement of Transfer and Amount Paid by Transferee, with regard to property tax lenders. The new rules proposed in §89.701 and §89.702 outline new Subchapter G, concerning Transfer of Tax Lien.

In Texas, a property owner who owes property taxes to a taxing unit may allow another person, often called a transferee or property tax lender, to pay the property tax on the owner's behalf. The tax lien then passes from the taxing unit to the transferee. While the Texas Tax Code outlines certain items that must be included in the documents to transfer a tax lien, model forms do not presently exist to execute the transfer and certify that the transfer occurred and the amounts paid.

In Senate Bill 1620 (SB 1620), the 81st Texas Legislature amended Texas Tax Code, §32.06(a-4), directing the commission to promulgate rules prescribing "the form and content of the sworn document under Subsection (a-1) and the certified statement under Subsection (b)." These two forms are used to transfer tax liens from the taxing unit to the transferee or property tax lender.

The purpose of the new rules is to implement SB 1620 by specifying the requirements for the sworn document as provided in Texas Tax Code, §32.06(a-1) and the certified statement as provided in §32.06(b). The agency reviewed forms that are currently in use by several property tax lenders in conjunction with the relevant statutory provisions. The proposed rules track the forms already used by the industry.

Section 89.701 outlines the required information that the property owner must provide to the taxing unit to authorize the transfer of the tax lien to the transferee. The sworn statement verifies that the property tax lender is paying the outstanding taxes, penalties, interest, and collection costs on the owner's behalf.

Section 89.702 describes the required information that the taxing unit must provide to the transferee in order to certify that the transferee paid the taxes owed the taxing unit on a given piece of property, and that the tax lien was transferred to the transferee.

Both proposed new rules also provide sample model forms. Use of the model forms is not required, although any other forms utilized must contain the required information as specified in the rule text. Additionally, both rules contain optional provisions that may be added to the forms.

Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the rules are in effect there will be no fiscal implications for state or local government as a result of administering the rules.

Commissioner Pettijohn has determined that for each year of the first five years the new rules are in effect the public benefit anticipated will be clarification of the requirements for documents used to transfer tax liens and the availability of sample model forms for interested parties. It is the agency's belief that the clarity of the proposed rules and model forms will benefit both the property tax lender industry and the taxing units.

There is no anticipated cost to persons who are required to comply with the new rules as proposed. Persons required to comply with the new rules are already required by statute to provide the majority of the information described by the rules. The rules provide model forms that comply with the statutes. In fact, the proposed rules may result in a potential cost reduction for persons who are required to comply that utilize the model forms. The rules are anticipated to reduce costs and increase the efficiency of business for property tax lenders by not requiring the investment of resources in the development of forms. There will be no adverse economic effect on small or micro-businesses, as the uniformity of the model forms will either provide a neutral or positive effect on small businesses. Aside from the potential cost savings resulting from use of the model forms, there will be no effect on individuals required to comply with the new rules as proposed.

Comments on the proposed new rules may be submitted in writing to Laurie Hobbs, Assistant General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas 78705-4207 or by email to laurie.hobbs@occc.state.tx.us. To be considered, a written comment must be received on or before the 31st day after the date the proposed rules are published in the Texas Register. At the conclusion of the 31st day after the proposed rules are published in the Texas Register, no further written comments will be considered or accepted by the commission.

These new sections are proposed under Texas Finance Code, §351.007 (Acts 2007, 80th Legislature, Chapter 1220), which authorizes the commission to adopt rules to ensure compliance with the "Property Tax Lender License Act," and Texas Tax Code, §32.06(a-4)(3) (Acts 2009, 81st Legislature), which authorizes the commission to adopt rules to prescribe the form and content of the sworn document and certified statement under §32.06.

The statutory provisions affected by the proposed new sections are contained in Texas Tax Code, §32.06, and Texas Finance Code, Chapter 351, Property Tax Lenders, known as the "Property Tax Lender License Act" (Acts 2007, 80th Legislature, Chapter 1220, effective September 1, 2007).

§89.701.Sworn Document Authorizing Transfer of Tax Lien.

(a) Required information. A sworn document under Texas Tax Code, §32.06(a-1) filed with the tax assessor-collector must contain the following information:

(1) the name of the county where the property is located;

(2) a statement that after the document is recorded, it is to be returned to the transferee;

(3) a statement by a notary public identifying the affiant, either property owner or authorized representative, and stating that the affiant personally appeared before the notary and made the statements under oath;

(4) a statement by the property owner or authorized representative that the affiant is over 18 years of age and is capable of making the affidavit, and that the facts stated in the affidavit are within the affiant's personal knowledge and are true and correct;

(5) a statement by the affiant that either the affiant or the entity represented by the affiant owns the real property described in the document;

(6) a description of the property that includes:

(A) the account number or property identification number used by the taxing unit(s);

(B) the legal description of the property; and

(C) the street address of the property, if applicable;

(7) the amount paid to the taxing unit(s), itemized as follows:

(A) taxes;

(B) interest;

(C) penalties;

(D) collection costs;

(8) the tax years for the amount paid;

(9) the transferee's name;

(10) the transferee's license status, evidenced by:

(A) if licensed, the transferee's OCCC property tax lender license number; or

(B) if exempt from licensing under Texas Finance Code, §351.051(c)(1):

(i) an affidavit stating the entity's type of organization that qualifies it for the exemption;

(ii) any charter number assigned by the governmental authority that issued the entity's charter; and

(iii) the address of the entity's main office; or

(C) if exempt from licensing under Texas Finance Code, §351.051(c)(2), the certificate issued by the OCCC indicating the entity's exemption;

(11) the transferee's street address;

(12) the following statement: "Pursuant to Texas Tax Code §32.06, I hereby authorize the above-named transferee or transferee's agent (the "Transferee"), to pay all taxes, penalties, interest, and collection costs imposed by any and all local taxing units or their agents on the real property, described above, for the tax years listed above. I further authorize and direct the tax assessor-collector(s) for said taxing units to issue a tax receipt with the collector's seal of office or notarized signature to the Transferee and to certify that 1) the taxes and any penalties and interest on the subject property and collection costs have been paid by the Transferee on behalf of the owner; and 2) the tax lien on the owner's property has been transferred to the Transferee.";

(13) the following statement: "I have been given notice that individual owners who are age 65 or older or disabled may be eligible for a tax deferral under Texas Tax Code §33.06 on their homestead property.";

(14) the date the document was signed;

(15) the signature and printed name of the property owner or authorized representative;

(16) the representative capacity or title of the authorized representative, if applicable; and

(17) the notary public's seal and signature.

(b) Optional information. The following information may be added to the sworn document:

(1) a notice of confidentiality rights disclosure substantially similar to the required notice or disclosure under Texas Property Code, §11.008;

(2) a statement of reliance stating that the affiant represents that the information is true and correct and that the transferee is relying on that representation in making the transfer;

(3) a statement that the property either is or is not the property owner's homestead;

(4) a statement that there are no federal liens against the property.

(c) Sample sworn document. A sample sworn document under Texas Tax Code, §32.06(a-1) is presented in the following example.

Figure: 7 TAC §89.701(c) (.pdf)

§89.702.Certified Statement of Transfer and Amount Paid by Transferee.

(a) Required information. A certified statement under Texas Tax Code, §32.06(b) issued by a tax assessor-collector must contain the following information:

(1) the name of the county where the property is located;

(2) the date the certification is executed;

(3) a description of the property that includes:

(A) the account number or property identification number used by the taxing unit(s);

(B) the legal description of the property; and

(C) the street address of the property, if applicable;

(4) the taxing unit(s) transferring a lien or liens to the transferee;

(5) the amount paid to the taxing unit(s), itemized as follows:

(A) taxes;

(B) interest;

(C) penalties;

(D) collection costs;

(6) the tax years for the amount paid;

(7) the property owner's name;

(8) the transferee's name;

(9) the transferee's street address;

(10) the following statement: "I, (Insert Name of Collector), tax assessor-collector for (Insert Name of Taxing Unit) and for all taxing units for which (Insert Name of Taxing Unit) collects ad valorem taxes, certify that the above-named transferee or transferee's agent ("Transferee") has paid the amount paid listed above due to the above-named taxing units on the property described above, and that the tax liens held by taxing units on the property for the tax years listed above are hereby transferred to Transferee in accordance with Texas Tax Code §32.06. I have issued a receipt to Transferee in conjunction with this certification reflecting the amount of taxes, penalties, interest, and collection costs paid.";

(11) the name of the tax collector-assessor;

(12) the name of the taxing unit(s);

(13) the signature of the tax assessor-collector, or that of the tax assessor-collector's deputy;

(14) one of the following:

(A) the tax assessor-collector's seal of office; or

(B) a notary public's seal of office and a statement that the certified statement was subscribed and sworn to before a notary public by the tax assessor-collector or the tax assessor-collector's deputy; and

(15) a statement that after the document is recorded, it is to be returned to the transferee.

(b) Optional information. The following information may be added to the certified statement:

(1) a compliance statement for a tax lien transfer under Texas Tax Code, §32.06(a-2)(1) or (a-2)(2)(A) or (a-2)(2)(B);

(2) a statement that the tax assessor-collector does not review the information provided by other parties for accuracy;

(3) a statement that the tax assessor-collector's certification of the amounts paid and that the transfer occurred does not constitute the rendering of legal advice;

(4) a statement regarding the obligation of the taxing units under Texas Tax Code, §32.06(b) to deliver the tax receipt and the statement attesting to the transfer of the tax lien to the transferee within 30 days.

(c) Sample certified statement. A sample certified statement under Texas Tax Code, §32.06(b) is presented in the following example.

Figure: 7 TAC §89.702(c) (.pdf)

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 June 19, 2009.

TRD-200902487

Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 936-7660

CHAPTER 91. CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS

SUBCHAPTER A. GENERAL RULES

7 TAC §91.101

The Credit Union Commission (Commission) proposes amendments to §91.101, concerning Definitions and Interpretations. The proposed amendments add six new definitions, modify three definitions, and delete two definitions. Appraisal, Finance Code, market value, pecuniary interest, real estate, and TAC are now defined in this section, while the definitions of core capital and corporate credit union have been deleted as no longer necessary. The definition of application has been expanded to include any request for approval to engage in any type of activity or operation. The catastrophic act definition was amended to include man-made disasters. Finally, the definition of a construction or development loan was modified to include loans for renovation or development of property already owned by the borrower if the renovation or construction changed the use of the property.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amendments to the rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code.

The specific section affected by the proposed amended rule is Texas Finance Code, §15.402.

§91.101.Definitions and Interpretations.

(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) - (3) (No change.)

(4) Application--a written request filed by an applicant with the department seeking approval to engage in various credit union activities, transactions, and operations [ incorporate, amend articles of incorporation or bylaws, deviate from standard bylaws, obtain a certificate of authority to do business in the state of Texas] 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. The market value should not include a going concern value or a special value to a specific property user. An appraisal may contain separate opinions of value for such items so long as they are clearly identified and disclosed.

(6) [(5)] 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) [(6)] Catastrophic act--any natural or man-made disaster such as a flood, tornado, earthquake, [etc. or] major fire or other disaster resulting in [some] physical destruction or damage.

(8) [(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.

(9) [(8)] Construction or development loan--a financing arrangement for acquiring property or rights to property, including land or structures, with the intent of converting the property into income-producing property such as residential housing for rental or sale; commercial use; industrial use; or similar use. Construction or development loan includes a financing arrangement for the major renovation or development of property already owned by the borrower that will convert the property to income-producing property or convert the use of income-producing property to a different or expanded use from its former use. Construction or development loan does not include loans to finance maintenance, repairs, or improvements to an existing income-producing property that do not change its use.

[(9) Core capital--has the same meaning as "tier one capital" as set forth in the capital regulations adopted by the appropriate federal banking regulatory agency.]

[(10) Corporate credit union--a credit union whose field of membership consists primarily of other credit unions.]

(10) [(11)] 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.

(11) [(12)] Department newsletter--the monthly publication that serves as an official notice of all applications, and by which procedures to protest applications are described.

(12) [(13)] 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.

(13) 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.

(14) - (19) (No change.)

(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) [(20)]Metropolitan Statistical Area (MSA)--a geographic area as defined by the director of the U.S. Office of Management and Budget.

(22) [(21)] 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) [(22)] 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 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) [(23)] 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) [(24)] Person--an individual, partnership, corporation, association, government, governmental subdivision or agency, business trust, estate, trust, or any other public or private entity.

(27) [(25)] Principal office--the home office of a credit union.

(28) [(26)] 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) [(27)] 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) [(28)] Reserves--allocations of retained earnings including regular and special reserves, except for any allowances for loan, lease or investment losses.

(32) [(29)] Resident of this state--a person physically located in, living in or employed in the state of Texas.

(33) [(30)] Respondent--a credit union or other person against whom a disciplinary proceeding is directed by the department.

(34) [(31)] 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.

(35) [(32)] 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.

(36) TAC--an acronym for the Texas Administrative Code, a compilation of all state agency rules in Texas.

(37) [(33)] Title or 7 TAC--Title 7, Part 6 [VI ] of the Texas Administrative Code, Banking and Securities, which contains all of the department's rules.

(38) [(34)] 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 effected economic development within the specified area.

(39) [(35)] 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 [section 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) [(36)] 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.

(b) (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 June 22, 2009.

TRD-200902530

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.103

The Credit Union Commission (Commission) proposes amendments to §91.103, concerning Public Notice of Department Activities. The proposed amendments rename the rule to Public Notice of Department Decisions, and further add applications for conversion of a credit union's certificate of incorporation and conversion to a mutual savings institution to the types of applications covered by the rule.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §15.4021, which directs the Commission to adopt rules providing for public notice of department activities, and §122.005, which directs the Commission to adopt rules for providing public notice of applications.

The specific sections affected by the proposed amended rule are Texas Finance Code, §15.4021 and §122.005.

§91.103.Public Notice of Department Decisions [ 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) - (5) (No change.)

(6) an application for conversion of a credit union's certificate of incorporation [Charter ] under Texas Finance Code §§122.201, 122.202 , [or] 122.203 , or §91.1007 of this chapter (relating to Conversion to a Mutual Savings Institution).

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 June 22, 2009.

TRD-200902531

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.104

The Credit Union Commission (Commission) proposes amendments to §91.104, concerning Notice of Applications. The proposed amendments rename the rule to Public Notice and Comment on Certain Applications, and add an application for conversion to a mutual savings institution to the types of applications covered by the rule.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §15.4021, which directs the Commission to adopt rules providing for public notice of department activities, and §122.005, which directs the Commission to adopt rules for providing public notice of applications.

The specific sections affected by the proposed amended rule are Texas Finance Code, §15.4021 and §122.005.

§91.104. Public Notice and Comment on Certain [ 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) - (3) (No change.)

(4) an application for merger or consolidation under Texas Finance Code §122.152; [and]

(5) an application for conversion of a credit union's certificate of incorporation under §91.1007 of this chapter (relating to Conversion to a Mutual Savings Institution); and

(6) [(5)] a request by a foreign credit union to do business in Texas under Texas Finance Code §122.013.

(b) (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 June 22, 2009.

TRD-200902532

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.105

The Credit Union Commission (Commission) proposes amendments to §91.105, concerning Application for Authorization from the Commissioner. The proposed amendments rename the rule Acceptance of Other Application Forms and revise the language of the rule for clarity.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §§122.001, 122.011, and 122.156, which govern applications submitted to the Commissioner for approval.

The specific sections affected by the proposed amended rule are Texas Finance Code, §§122.001, 122.011, and 122.156.

§91.105.Acceptance of Other Application Forms [ Applications for Authorization from the Commissioner ].

Notwithstanding other requirements of this chapter, if another state or federal regulator's application and forms provide all the information required by Texas law, the [The] commissioner may accept those [ applications and other] forms [ prescribed by federal or state regulators in lieu of the commissioner's forms]. This does [ The foregoing, however, shall ] not limit the commissioner's power to require additional information necessary to complete an [ concerning any] application or other form.

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 June 22, 2009.

TRD-200902533

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.201

The Credit Union Commission (Commission) proposes amendments to §91.201, concerning Incorporation Procedures. The amendments add a requirement that the applicants discuss their strategy for securing share and deposit insurance for its members' accounts, and specify that the applicants provide the pro forma financial information in a quarterly format. The amendments also make a grammatical change and correct a typographical error.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.001, which permits the Commission to prescribe the form for an application for incorporation and under §122.004 which permits the commissioner to investigate and obtain information concerning applications for incorporation.

The specific sections affected by the proposed amended rule are Texas Finance Code, §122.001 and §122.004.

§91.201.Incorporation Procedures.

(a) (No change.)

(b) Business Plan. The application must include a business plan that covers three years and provides detailed explanations of actions that are proposed to accomplish the primary functions of the credit union. The description should provide enough detail to demonstrate that the institution has a reasonable chance for success, will operate in a safe and sound manner, and will maintain adequate capital to support its operations. Specifically the plan must:

(1) (No change.)

(2) Provide quarterly pro forma financial information for the three years of operation, including annual totals for the Income Statement;

(3) - (4) (No change.)

(5) Discuss the overall marketing/advertising strategy to reach potential members; [and]

(6) Discuss the credit union's strategy for obtaining required share and deposit insurance protection for its members' accounts; and

(7) [(6)] Describe the economic forecast for the three years of the plan.

(c) - (d) (No change.)

(e) Proposed credit unions must investigate the possibility of an overlap with existing state or federal credit unions doing business in this state prior to submitting an application. When an overlap situation does arise, officials of the involved entities must attempt to resolve the overlap issue. Typically, an overlap will not be considered adverse to the overlapped credit union if:

(1) the group has fewer [less] than 3000 primary potential members or the overlap is otherwise incidental in nature;

(2) - (4) (No change.)

(f) (No change.)

(g) The commissioner may approve the application conditioned upon specific requirements being met, but the certificate of incorporation shall not be issued unless such conditions have been met [meet ] within the time specified in the approval order or any extension as set forth in Finance Code §122.006.

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 June 22, 2009.

TRD-200902534

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.202

The Credit Union Commission proposes amendments to §91.202, concerning Form of Bylaws; Amendments to Articles of Incorporation and Bylaws. The amendments change the name of the rule to Bylaw and Articles of Incorporation Amendments, delete duplicative language, and make conforming amendments to titles of other proposed rules being amended concurrently.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.011, which sets out the procedure for amending articles of incorporation or bylaws.

The specific section affected by the proposed amended rule is Texas Finance Code, §122.011.

§91.202. Bylaw and Articles of Incorporation Amendments [ Form of Bylaws; Amendments to Articles of Incorporation and Bylaws ].

(a) The Standard Bylaws for State Chartered Credit Unions ("Standard Bylaws"), approved [adopted] by the commission on February 20, 2004, [in 2002] or as subsequently revised or amended, constitute the bylaws which shall be used by credit union incorporators.

(b) The commissioner is expressly authorized to approve deviations from and amendments to the standard bylaws, [. The commissioner may approve a deviation or amendment] unless the deviation or amendment violates applicable law [ the Act or rules of the commission].

[(c) A credit union may request a deviation from the standard bylaws by submitting a written application to the commissioner. A request for a deviation shall be considered in the same manner as an application to amend bylaws under this section.]

(c) [(d)] Credit unions desiring to amend articles of incorporation or bylaws must submit a written application, in such form as the commissioner may prescribe. The application shall include the text of the amendment, the date that the board of directors adopted the amendment, a brief statement explaining the purpose of the amendment, information regarding the financial impact on the credit union if the amendment is approved, and any other information the commissioner may require to make a decision on the amendment.

(d) [(e)] The commissioner shall determine whether or not an application is complete within thirty day of its receipt and provide written notice of the determination. If the application is deemed incomplete, the notice shall provide with reasonable specificity the deficiencies in the application.

(e) [(f)] The commissioner does not need to provide notice as prescribed in §91.103 (relating to Public Notice of Department Decisions [Activities]) and §91.104 (relating to Public Notice and Comment on Certain Applications [Notice of Applications]) for applications that apply for standard optional field of membership provisions (1), (2), (3), and (4) as contained in the Standard Bylaws [for State Chartered Credit Unions] "Appendix A".

(f) [(g)] A credit union's board of directors may amend its bylaws to adopt any standard bylaw without approval by the commissioner provided:

(1) the wording of the amendment is identical to the Standard Bylaws; and

(2) the credit union submits a completed, fully executed Certification of Resolution of Amendment to Credit Union Bylaws ("Certification") to the commissioner. The commissioner will promptly acknowledge receipt of the Certification. The amendment will be effective as of the date the commissioner acknowledges receipt of the Certification.

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 June 22, 2009.

TRD-200902535

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.203

The Credit Union Commission (Commission) proposes new §91.203, concerning Share and Deposit Insurance Requirements. The proposed new rule moves §91.1110 from Subchapter J to Subchapter B with virtually identical text.

The new rule is proposed as a result of the Credit Union Department's general rule review which determined that the rule should be relocated.

Betsy Loar, General Counsel, has determined that for the first five-year period the new rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.

Ms. Loar has also determined that for each year of the first five years the proposed new rule is in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There is no anticipated effect on small or micro businesses as a result of adopting the new rule. There is no economic cost anticipated to credit unions or individuals for complying with the new rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The new rule is proposed under the provision of the Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §15.410, which requires the Commission to adopt, and the commissioner to enforce, rules requiring credit unions to provide share and deposit insurance for members and depositors.

The specific section affected by the proposed rule is Texas Finance Code, §15.410.

§91.203.Share and Deposit Insurance Requirements.

(a) All credit unions in the State of Texas shall obtain share insurance protection as provided in Chapter 95 of this title (relating to Share and Depositor Insurance Protection).

(b) With the approval of the commissioner, and if recognized by its insuring organization, a credit union may, from time to time as determined by its board of directors, issue uninsured membership shares which are subordinate to all other claims, including creditors, shareholders, and the insuring organization. The commissioner may approve the issuance of such accounts conditioned upon specific requirements being met.

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 June 22, 2009.

TRD-200902540

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.205

The Credit Union Commission (Commission) proposes amendments to §91.205, concerning Use of Credit Union Name. The amendments change the name of the rule to Credit Union Name and make grammatical and technical changes to the rule.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.003, which requires credit unions to use only names approved by the commissioner.

The specific section affected by the proposed amended rule is Texas Finance Code, §122.003.

§91.205. [ Use of ] Credit Union Name.

(a) Unless a name change has been approved by the commissioner in accordance with the Act and these rules, a [A ] credit union shall do business under the name in which its certificate of incorporation was issued[, unless a name change has been approved by the commissioner in accordance with the Act and these rules].

(b) - (c) (No change.)

(d) The commissioner shall not issue a certificate of authority to use an assumed business name if the designation might confuse or mislead the public, or if it is not readily distinguishable from, or is deceptively similar to, a name of another credit union lawfully doing business with [ and that has established] an office in this state.

(e) Credit [It is the responsibility of the credit] union officials are responsible for complying [to comply ] with state and federal law applicable to corporate and assumed names.

(f) Before using an assumed name, a [A] credit union [that intends to use an assumed name] shall take reasonable steps to ensure that use of the name will not cause a reasonable person to believe the credit union's [result in confusion to the extent that its] different facilities are [may be mistaken as] different credit unions or to believe that [the] shares or [ and] deposits in one facility [ deposited at or through the different facilities ] are separately insured from those of another facility [ the other facilities].

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 June 22, 2009.

TRD-200902536

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.206

The Credit Union Commission (Commission) proposes amendments to §91.206, concerning Underserved Area Credit Unions--Secondary Capital Accounts. The proposed amendments make non-substantive grammatical and technical changes.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.014, which permits the Commission to adopt rules for the organization and operation of underserved-area credit unions.

The specific section affected by the proposed amended rule is Texas Finance Code, §122.014.

§91.206.Underserved Area Credit Unions--Secondary Capital Accounts.

A credit union that has [having] been approved for a designation as a Underserved Area Credit Union pursuant to § [Section] 122.014, Finance Code may issue secondary capital accounts to members or nonmembers of the credit union on the following conditions:

(1) Prior to offering secondary capital accounts, the credit union shall file an application for approval with the commissioner . The application shall be [,] supported by a written plan for use of the funds in the secondary capital accounts and subsequent liquidity needs to meet repayment requirements upon maturity of the accounts, along with such other information and data as the commissioner may require.

(2) (No change.)

(3) The [maturity of the] secondary capital account must mature no earlier than [ be for a minimum of] five years.

(4) - (5) (No change.)

(6) Funds deposited into the secondary capital account, including interest accrued and paid into the capital account, must be available to cover the credit union's realized operating losses [realized by the credit union] that exceed its net available reserves and undivided earnings (i.e., reserves and undivided earnings exclusive of allowance accounts for loan losses), and to the extent funds are so used, the credit union shall not restore or replenish the account. The credit union may, in lieu of paying interest into the secondary capital account, pay interest accrued on the secondary capital account directly to the secondary capital account holder or into a separate account from which the secondary capital account holder may make withdrawals. Losses realized shall be distributed pro-rata among all secondary capital accounts held by the credit union at the time the losses are realized.

(7) - (8) (No change.)

(9) A secondary capital account contract agreement must be executed by an authorized representative of the account holder and the credit union. The agreement must set [which sets] forth all of the terms and conditions of this section and contain [contains] a disclosure and acknowledgement by the account holder that the secondary capital account is not redeemable, will not be insured, may be used to cover operating losses of the credit union and not be replaced or replenished, and is subordinate to all other claims on the assets of the credit union, including claims of member shareholders, creditors and the credit union's insuring organization. All such contract agreements must be retained by the credit union for the term of the agreement.

(10) - (11) (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 June 22, 2009.

TRD-200902537

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.310

The Credit Union Commission (Commission) proposes new §91.310, concerning Annual Report to Membership. The proposed new rule sets out the contents of the annual report that must be made available to members. The new rule provides that the report must be posted on the credit union's website, if the credit union maintains a website, and must contain information such as the names and terms of office of the directors, and names of advisory directors, a description of changes in senior management, bylaws and articles of incorporation, financial condition and operating results, field of membership, and services, as well as a summary of the most recent audit. Credit unions that do not have a website must notify members that copies of the report are available on request.

The new rule is proposed as a result of legislation adopted as part of the review of the Credit Union Department by the Sunset Commission (HB 2735).

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed new rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.

Ms. Loar has also determined that for each year of the first five years the proposed new rule is in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There is no anticipated effect on small or micro businesses as a result of adopting the new rule. There is no economic cost anticipated to credit unions or individuals for complying with the new rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The new rule is proposed under the provision of the Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §15.4105, which directs the Commission to adopt rules requiring a credit union to provide an annual report to members.

The specific section affected by the proposed rule is Texas Finance Code, §15.4105.

§91.310.Annual Report to Membership.

(a) Every credit union shall provide to its membership an annual written report, as prescribed in subsection (b) of this section. The report must be updated before the credit union's annual meeting and shall be available on the credit union's website throughout the year. Any credit union that does not maintain a website shall distribute the report at its annual meeting and must give notice to the membership that copies of the annual report are available upon request.

(b) The annual report shall cover the credit union's operations during the preceding calendar year and shall contain, at a minimum, the following information:

(1) the names and dates of expiration of the terms of office for each director on the credit union's board;

(2) the names of any honorary or advisory directors appointed by the board;

(3) a brief description of any changes, since the preceding report required by this section was made available or otherwise provided, to the credit union's:

(A) senior management staff;

(B) bylaws or articles of incorporation;

(C) financial condition and operating results; and

(D) field of membership and any new services offered.

(4) the credit union's current balance sheet and income/expense; and

(5) a summary of the most recent audit completed in accordance with §91.516 of this chapter (relating to Audits and Verifications).

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 June 22, 2009.

TRD-200902555

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.315

The Credit Union Commission (Commission) proposes a new §91.315, concerning Members' Access to Credit Union Documents. The proposed new rule requires credit unions to provide members with notice that certain documents related to the credit union's finances and management are available. The proposed new rule specifies the frequency and methods that a credit union must use to provide the notice to its members, and itemizes the information that must be included in the notice.

The new rule is proposed as a result of legislation adopted as part of the review of the Credit Union Department by the Sunset Commission (HB 2735).

Betsy Loar, General Counsel, has determined that for the first five-year period the new rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed new rule.

Ms. Loar has also determined that for each year of the first five years the proposed new rule is in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There is no anticipated effect on small or micro businesses as a result of adopting the new rule. There is no economic cost anticipated to credit unions or individuals for complying with the new rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The new rule is proposed under the provisions of the Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §122.107, which directs the Commission to adopt rules for credit unions to provide notice to members of the availability of certain documents.

The specific section affected by the proposed rule is Texas Finance Code, §122.107.

§91.315.Members' Access to Credit Union Documents.

(a) Required Notice. Every credit union shall provide notice to its membership of the availability of certain documents related to the credit union's finances and management.

(b) Delivery of Required Notice. A credit union shall post a copy of the required notice on its website throughout the year. The notice required by this section shall be published in the credit union's newsletter twice a year. If a credit union does not maintain a website or distribute a newsletter at least semiannually, the credit union shall provide the notice with each member's account statement.

(c) Documents Available to Members. Upon request, a member is entitled to review or receive a copy of the most recent version of the following credit union documents:

(1) annual report to the membership;

(2) balance sheet and income statement (the non-confidential pages of the latest call report (NCUA Form 5300) may be given to meet this requirement);

(3) a summary of the most recent annual audit completed in accordance with §91.516 of this chapter (relating to Audits and Verifications);

(4) written board policy regarding access to the articles of incorporation, bylaws, rules, guidelines, board policies, and copies thereof; and

(5) Internal Revenue Service Form 990.

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 June 22, 2009.

TRD-200902556

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.901

The Credit Union Commission (Commission) proposes amendments to §91.901, concerning Reserve Requirements. The proposed amendments add a provision allowing a credit union to reduce the amount transferred to reserves if the Commissioner approves. The amendments also make grammatical and technical changes to conform with other rules and for clarity.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.104, which directs the commission to establish rules requiring a credit union to contribute to and maintain net worth reserves necessary to protect the interests of its members.

The specific section affected by the proposed amended rule is Texas Finance Code, §122.104.

§91.901.Reserve Requirements.

(a) Definitions. The [following] words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (3) (No change.)

(b) In accordance with the requirements of §122.104 of the Act, state-chartered credit unions shall set aside a portion of their current gross income, prior to the declaration or payment of dividends, as follows:

(1) A credit union with a net worth ratio below 7.0% shall increase the dollar amount of its net worth reserves by [ transfer in accordance with GAAP] the following amounts at the indicated intervals [to its regular reserve account] until its net worth ratio equals 7.0% [7%] of total assets:

(A) - (B) (No change.)

(2) For a credit union in operation less than ten years and having assets of less than $10 million, a business plan must be developed that reflects, among other items, net worth projections consistent with the following:

(A) 2.0% [2%] net worth ratio by the end of the third year of operation;

(B) 3.5% net worth ratio by the end of the fifth year of operation;

(C) 6.0% [6%] net worth ratio by the end of the seventh year of operation; and

(D) 7.0% [7%] net worth ratio by the time it reaches $10 million in total assets or by the end of the tenth year of operation, which ever is shorter.

(3) Whenever the net worth ratio falls below 7.0% [ 7%], the credit union shall transfer a portion of its current period net income [gross income] to its regular reserve in such amounts as described in paragraph (1) of this subsection.

(4) (No change.)

(5) Insuring organization's capital requirements. As applicable, a credit union shall also comply with any and all net worth or capital requirements imposed by an insuring organization as a condition to maintaining insurance on share and deposit accounts . For federally-insured credit unions this includes[, including ] all prompt corrective action requirements contained within Part 702 of the NCUA Rules and Regulations.

(6) Decrease in Required Reserve Transfer. The commissioner, on a case-by-case basis, and after receipt of a written application, may permit a credit union to transfer an amount that is less than the amount required under paragraph (1) of this subsection. A credit union shall submit such statements and reports as the commissioner may, in his discretion, require in support of a decreased transfer request. The application must be received no later than 10 days before the quarter end and shall include but not be limited to:

(A) An explanation of the need for the reduced transfer amount;

(B) Financial statement reflecting the fiscal impact of the required transfer; and

(C) Documentation supporting the credit union's ability to resume the required transfer at a future date certain.

(c) Revised business plan for new credit unions. A credit union that has been in operation for less than ten years and has assets of less than $10 million shall file a written revised business plan within 30 calendar days of the date the credit union's net worth ratio has failed to increase consistent with its current [then-present ] business plan. Failure to submit a revised business plan, or submission of a plan not [deemed] adequate to either increase net worth or increase net worth within a reasonable time; or failure of the credit union to implement its revised business plan, may trigger the regulatory actions described in subsection (b)(4) of this section.

(d) Unsafe practice. Any credit union which has less than a 6.0% net worth ratio may be deemed to be engaged in an unsafe practice pursuant to §122.255 of the Finance Code . The determination may be abated if, [unless ] the credit union has entered into and is in compliance with a written agreement or order with the department or is in compliance with a net worth restoration or revised business plan approved by the department to increase its net worth ratio. If a credit union has a net worth ratio below 6.0% or is otherwise engaged in an unsafe practice, the department may impose the following administrative sanctions in addition to, or in lieu of, any other authorized supervisory action:

(1) - (3) (No change.)

(e) Supervisory action. Notwithstanding any requirements in this section, the department may take enforcement action against a credit union with capital above the minimum requirement if the credit union's circumstances indicate such action would be appropriate.

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 June 22, 2009.

TRD-200902541

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.1003

The Credit Union Commission (Commission) proposes amendments to §91.1003, concerning Mergers/Consolidations. The proposed amendments replace the terms "surviving" and "merging" with "acquirer" and "acquiree" to conform with the terminology used by the Financial Accounting Standards Board. The amendments also update references to the Hart-Scott-Rodino Act.

The amendments are proposed as a result of the Credit Union Department's general rule review.

Betsy Loar, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Loar has also determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of enforcing the rule will be greater clarity and ease of use of the rule. There will be no effect on small or micro businesses as a result of adopting the amended rule. There is no economic cost anticipated to credit unions or individuals for complying with the amended rule if adopted.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The amendments are proposed under Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under Texas Finance Code §122.156, which sets out the requirements for rules adopted for mergers or consolidations.

The specific section affected by the proposed amended rule is Texas Finance Code, §122.156.

§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) Acquirer [Surviving] credit union--The credit union that will continue in operation after the merger/consolidation.

(2) Acquiree [Merging] credit union--The credit union that will cease to exist as an operating credit union at the time of the merger/consolidation.

(3) (No change.)

(b) - (c) (No change.)

(d) Plan for Merger/Consolidation. Upon approval of a proposition for merger/consolidation by the boards of directors, the credit unions must prepare a plan for the proposed merger/consolidation. The plan shall include:

(1) (No change.)

(2) the combined financial reports of [the] two or more credit unions;

(3) - (4) (No change.)

(5) a summary of the products and services proposed to be available to the members of the acquirer [surviving ] credit union, with an explanation of any changes from the current products and services provided to the members;

(6) - (8) (No change.)

(e) 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) - (E) (No change.)

(F) if the acquiree [merging] credit union has $65.2 [$50] million or more in assets on its latest call report, a statement as to [ about] whether the transaction is subject [ two credit unions intend] to the Hart-Scott-Rodino [ make a Hart-Scott Rodino] Act premerger notification filing requirements [with the Federal Trade Commission and, if not, an explanation why not]; and

(G) (No change.)

(2) If the acquirer [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 acquirer [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.

(3) (No change.)

(f) Commissioner Action on the Application.

(1) (No change.)

(2) The commissioner shall deny an application for merger/consolidation if the commissioner finds any of the following:

(A) the financial condition of the acquirer [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 acquiree [merging] credit union that substantially harms the financial interests of the members, beneficiaries or creditors of the acquiree [merging ] credit union;

(C) the merger/consolidation would probably substantially lessen the ability of the acquirer [surviving] credit union to meet the reasonable needs and convenience of members to be served;

(D) - (F) (No change.)

(3) For applications to merge/consolidate in which the products and services of the acquirer [surviving] credit union after merger/consolidation are proposed to be substantially the same as those of the acquiree [merging] and acquirer [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.

(g) Procedures for Approval of Merger/Consolidation Plan by the Members of Each Credit Union.

(1) (No change.)

(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) - (C) (No change.)

(D) provide the name and location of the acquirer [ surviving] credit union;

(E) - (F) (No change.)

(h) 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 acquirer [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 acquirer [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 completion of the merger/consolidation certification, any article of incorporation or bylaw amendments will be approved and the charter of the acquiree [merging] credit union will be 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 June 22, 2009.

TRD-200902538

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236

7 TAC §91.1110

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Credit Union Department or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.)

The Credit Union Commission (Commission) proposes the repeal of §91.1110, concerning Share and Deposit Insurance Requirements. The Commission proposes the repeal of §91.1110, because it is being proposed as new §91.203 under Subchapter B.

The repeal of the rule is proposed as a result of the Credit Union Department's proposal to move the rule to a new location.

Betsy Loar, General Counsel, has determined that for the first five-year period the rule is repealed there will be no fiscal implications for state or local government as a result of repealing the rule.

Ms. Loar has also determined that for each year of the first five years the rule is repealed, the public benefits anticipated as a result of repealing the rule will be ease of use by credit unions and the public with the new rule replacing the repealed rule. There is no anticipated effect on small or micro businesses as a result of repealing the rule. There is no economic cost anticipated to credit unions or individuals for repealing the rule.

Written comments on the proposal must be submitted within 30 days after its publication in the Texas Register to Betsy Loar, General Counsel, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.

The repeal is proposed under the provision of the Texas Finance Code, §15.402, which authorizes the Commission to adopt reasonable rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §15.410, which requires the Commission to adopt, and the commissioner to enforce, rules requiring credit unions to provide share and deposit insurance for members and depositors.

The specific section affected by the proposed repeal is Texas Finance Code, §15.410.

§91.1110.Share and Deposit Insurance Requirements.

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 June 22, 2009.

TRD-200902539

Harold E. Feeney

Commissioner

Credit Union Department

Earliest possible date of adoption: August 2, 2009

For further information, please call: (512) 837-9236