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) Fixed Assets--real property, premises, furniture, fixtures and equipment.
   2. (2) Furniture, fixtures, and equipment--all office furnishings, office machines, computer hardware and software, automated terminals, and heating and cooling equipment, including capitalized leases of such items.
   3. (3) Immediate family member--a spouse or other family member living in the same household.
   4. (4) Premises--any office, service center, parking lot, or other facility where the credit union transacts or intends to transact business. It also includes capitalized leases, leasehold improvements, and remodeling costs to existing premises.
   5. (5) Real property--land and anything growing on, attached to, or erected on it that is acquired and intended primarily for the credit union's own use in conducting business. It does not include any real property which may be conveyed to the credit union in satisfaction of debts previously contracted in the course of business, nor any real estate that the credit union purchases at sale on judgments, decrees, mortgage or deed of trust foreclosures under a security agreement held by the credit union.
   6. (6) 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) Fixed Asset Investment 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.

   1. (1) A credit union shall not purchase real estate (land or buildings) for the principal purpose of engaging in real estate rentals or speculation.
   2. (2) A credit union bidding at a foreclosure or similar sale shall not bid a larger amount than is necessary to satisfy the debts and costs owed the credit union.

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 management employee, or immediate family members of such individual; or
   2. (2) purchase or lease an asset in which a director, committee member, senior management employee, or immediate family members of such individual has an interest.
5. (e) Use requirement. If real property or leasehold interest is acquired and intended, in good faith, for use in 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 requesting a waiver or modification of the fixed asset investment limits, shall submit statements and reports required by the commissioner, including but not limited to:

   1. (1) a description of the proposal's cost, usage, location, and method of financing;
   2. (2) a statement of the business reasons for making the investment and the economic advantages 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; amended to be effective March 14, 2010, 35 TexReg 1978.