1. (a) Definitions. For the purposes of this rule, the term "fixed assets" means real property, premises, and furniture, fixtures and equipment as defined herein. Premises include real property with any improvements or leasehold interest where the credit union transacts or intends to transact business. Furniture, fixtures and equipment includes all office furnishings (e.g. tables, chairs, desks, file cabinets, curtains, drapes, rugs, etc.), office machines, word processing equipment, computer hardware and software, automated terminals, and heating and cooling equipment. The term does not extend to any real property which may be conveyed to the credit union in satisfaction of debts previously contracted in the course of business, nor to such real estate as the credit union shall purchase at sale on judgments, decrees, mortgage or deed of trust foreclosures under a security agreement held by the credit union, but a credit union shall not bid at such sale a larger amount than is necessary to satisfy the debts and costs owed the credit union.
2. (b) Limitations. A credit union may purchase fixed assets or enter into a contract for the purchase or lease of fixed assets primarily for its own use in conducting business if the aggregate of all such investments does not exceed the lesser of 70% of the credit union's retained earnings or six percent of total assets.
3. (c) Restrictions. A credit union shall not purchase real estate (land or buildings) for the principal purpose of engaging in real estate rentals or speculation.

4. (d) Transactions with insiders. 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. (1) sell or lease an asset of the credit union to a director, committee member, or senior executive staff; or
   2. (2) purchase or lease an asset in which a director, committee member, or senior management staff has an interest.
5. (e) Use requirement. If real property or leasehold interest is acquired for future expansion, the credit union must partially satisfy the "primarily for its own use in conducting business" requirement within five years after the credit union makes the investment.
6. (f) Waiver. The commissioner may, upon written application, waive or modify any of the limitations or restrictions placed on the investment of fixed assets.

7. (g) Written application. A credit union shall submit such statements and reports as the commissioner may, in his discretion, require in support of a waiver or modification of the limits imposed upon the investment of fixed assets. Such reports and statements shall include but not be limited to:

   1. (1) a description of the proposal in terms of cost, usage, location and method of financing;
   2. (2) a statement of the economic advantage and disadvantages relating to the proposed investment;
   3. (3) evidence that the increase in operating expenses caused by the project can be supported after accounting for the current level of expenses and dividend commitments; and
   4. (4) the credit union's latest balance sheet, income statement and loan delinquency report.

Source Note:The provisions of this §91.401 adopted to be effective March 14, 2004, 29 TexReg 2306.