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

   1. (1) Immediate family member--a spouse or other family member living in the same household.
   2. (2) Premises--any real property where the credit union transacts or will transact business.
   3. (3) Senior management employee--the chief executive officer, any assistant chief executive officers (e.g. vice presidents and above) and the chief financial officer.

2. (b) Restrictions on Ownership of Property. A credit union shall not acquire real property for any purpose other than majority use as premises.

   1. (1) A credit union investing in real property, including a leasehold interest therein, with a good faith intention to use it in future expansion must put the majority of each property into service for credit union business within six years after making the investment.
   2. (2) The Commissioner may extend the six-year period in paragraph (1) of this subsection. To seek an extension, a credit union must submit a written request and fully explain why it needs the extension. The Commissioner will approve or disapprove the request in writing based on safety and soundness considerations.

3. (c) Investment Limitations on Premises. Without the prior written consent of the Department, a credit union may not directly or indirectly invest an amount in excess of its net worth in premises. In support of an application for approval of an additional investment in premises, a credit union shall submit such statements and reports as the Department requires.

   1. (1) When analyzing an application for an additional investment in credit union premises, the Department will consider:

      1. (A) consistency with safe and sound credit union practices;
      2. (B) the reasonableness of the amount of credit union premises and the annual expenditures required to carry them relative to the credit union's net worth and the nature and volume of operations; and
      3. (C) the effect of the investment on future earnings.

   2. (2) The Department will consider denying a request for an additional investment in credit union premises when:

      1. (A) the additional investment would have a material negative effect on the credit union's earnings, capital, or liquidity; or
      2. (B) the credit union has not demonstrated a reasonable need for the additional investment.
   3. (3) The Department may impose appropriate special conditions for an approval of an additional credit union premises investment if it determines that they are necessary or appropriate to protect the safety and soundness of the credit union or to further other supervisory or policy considerations.

4. (d) Transactions with insiders.

   1. (1) Without the prior approval of a disinterested majority of the board of directors recorded in the minutes or, if a disinterested majority cannot be obtained, the prior written approval of the commissioner, a credit union may not directly or indirectly:

      1. (A) sell or lease an asset of the credit union to a director, committee member, or senior management employee, or immediate family member of such individual; or
      2. (B) purchase or lease an asset in which a director, committee member, senior management employee, or immediate family member of such individual has an interest.
   2. (2) All transactions with family members not defined as immediate family members in subsection (a)(1) of this section must be conducted at arm's length and in the interest of the credit union.

Source Note:The provisions of this §91.401 adopted to be effective March 14, 2004, 29 TexReg 2306; amended to be effective March 14, 2010, 35 TexReg 1978; amended to be effective March 16, 2014, 39 TexReg 1703; amended to be effective November 8, 2015, 40 TexReg 7662; amended to be effective April 16, 2026, 51 TexReg 2355.