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. (1) Occupational community of interest.

   1. (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.
   2. (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 ...."
   3. (C) The employer may also be included in this community of interest -- e.g., "ABC Corporation and its subsidiaries."

   4. (D) Some examples of occupational group definitions are:

      1. (i) "employees of the Scott Manufacturing Company who work in El Paso, Texas ...;"
      2. (ii) "employees and elected and appointed officials of municipal government in Tyler, Texas ...;"
      3. (iii) "employees of Sharp Drillbit Company and its subsidiary, Drillbit Salvage Company, who work in Midland or Houston, Texas ...;"
      4. (iv) "personnel of fleet units of the United States Navy home port at Ingleside, Texas ...;"
      5. (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 ...;"
      6. (vi) "employees of these contractors who work regularly at United States Naval Shipyard in Ingleside, Texas ...;"
      7. (vii) "employees, doctor, medical staff, technicians, medical and nursing students who work at Galveston Medical Center at the locations stated: ...;"
      8. (viii) "employees, and teachers who work for the Fort Worth Independent School District in Fort Worth, Texas...."

   5. (E) Some examples of insufficiently defined occupational groups are:

      1. (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.)
      2. (ii) "persons employed or working in Dallas, Texas;" (No common employer; names of firms must be stated.)
      3. (iii) "persons working in the entertainment industry in Texas." (No common employer; names of firms should be stated.)

2. (2) Associational community of interest.

   1. (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.
   2. (B) Students constitute an associational community of interest and may qualify for a credit union charter.
   3. (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).
   4. (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.
   5. (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.
   6. (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.
   7. (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."
   8. (H) The association itself may also be included in the field of membership; e.g., "ABC Association."

   9. (I) Some examples of associational group definitions are:

      1. (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;"
      2. (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;"
      3. (iii) "members of the Catholic Church who live or work in Del Rio, Texas;"
      4. (iv) "members of the First Baptist Church in Georgetown, Texas;"
      5. (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;"
      6. (vi) "members of the Lower Colorado River Authority located in Austin, Texas."

   10. (J) Some examples of insufficiently defined association group definitions are:

       1. (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.)
       2. (ii) "veterans of United States military service."

   11. (K) Some examples of unacceptable associational communities of interest are:

       1. (i) "ABC Buyers Club." (An interest in purchasing only does not meet associational standards.)
       2. (ii) "customers of ABC Insurance Company." (Policyholders or customer/client relationships do not meet associational standards.)

3. (3) Geographic community of interest.

   1. (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:

      1. (i) The geographic area(s) must be clearly specified.
      2. (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.
   2. (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."
   3. (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).

   4. (D) Some examples of geographic community of interest definitions are:

      1. (i) "persons who live, work or are located in Brown County, Texas;
      2. (ii) "persons who live or work in and business entities located in Spring Branch Independent School District, Houston, Texas;"
      3. (iii) "persons who live or work are located within a ten-mile radius of El Campo, Texas".

   5. (E) Some examples of insufficiently defined geographic community of interest definitions are:

      1. (i) "persons who live or work in East Texas;"
      2. (ii) "persons who live or work in the ship channel section of Houston, Texas."

4. (4) Multiple-group charters.

   1. (A) The department may charter a credit union to serve a combination of definable occupational, associational and/or geographical groups.

   2. (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.

      1. (i) Each group to be included in the proposed field of membership of the credit union must have its own community of interest.
      2. (ii) Each group must individually request inclusion in the proposed credit union's charter.

5. (5) Overlap protection.

   1. (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).
   2. (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.
   3. (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.

   4. (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:

      1. (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;
      2. (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;
      3. (iii) whether the overlapped credit union provides requested service;
      4. (iv) the financial effect on the overlapped credit union;
      5. (v) the desires of the group(s); and
      6. (vi) the best interests of the affected group(s) and the credit union members involved.
   5. (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.
   6. (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. (6) Underserved communities.

   1. (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.
   2. (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.
   3. (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.

Source Note:The provisions of this §91.301 adopted to be effective July 8, 1994, 19 TexReg 4926; amended to be effective February 11, 2001, 26 TexReg 1132.