Current through Reg. 49, No. 38; September 20, 2024
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Equipment includes all movable furniture, fixtures, and equipment of the credit
union, its branch offices, and consolidated credit union service organizations,
including automobiles and other vehicles, and any lien on the above.
(2) Immediate family member--a spouse or
other family member living in the same household.
(3) Premises include the cost less
accumulated depreciation, of land and buildings actually owned and occupied (or
to be occupied) by the credit union, its branch offices, and consolidated
credit union service organizations. This includes vaults, fixed machinery,
parking facilities, and real estate acquired and intended, in good faith, for
future expansion. It also includes capitalized leases, leasehold improvements,
and remodeling costs to existing premises.
(4) Senior Management Employee--the chief
executive officer, any assistant chief executive officers (e.g. vice presidents
and above) and the chief financial officer.
(b) 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.
(c) Restrictions on
Ownership of Property. A credit union shall not acquire premises for the
principal purpose of engaging in real estate rentals or speculation.
(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) 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) purchase or lease an asset in which a
director, committee member, senior management employee, or immediate family
members of such individual has an interest.
(e) Use requirement for premises. 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.
(f) Consent to Exceed Limitation. Generally,
a credit union need not obtain the Department's approval to invest in premises.
However, prior approval is required if the total aggregate investment in
premises will exceed the credit union's net worth. A credit union shall submit
such statements and reports as the Department may require in support of the
higher investment limit.
(1) When analyzing
an application for an additional investment in credit union premises, the
Department will consider:
(A) Consistency
with safe and sound credit union practices;
(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
(C) The effect of
the investment on future earnings.
(2) The Department will consider denying a
request for an additional investment in credit union premises when:
(A) The additional investment would have a
material negative effect on the credit union's earnings, capital, or liquidity;
or
(B) The credit union has not
demonstrated a reasonable need for the additional investment.
(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.
