PART 6. CREDIT UNION DEPARTMENT
CHAPTER 97. COMMISSION POLICIES AND ADMINISTRATIVE RULES
SUBCHAPTER B. FEES
The Credit Union Commission (the Commission) proposes amendments to 7 TAC, Chapter 97, Section 97.113 concerning fees and charges, waiver of fees and semi-annual assessments.
Specifically, the rule changes will:
- fund necessary additional security and operating costs,
- allow the commissioner to reduce, not simply waive, operating fees for individual credit unions,
- align the annual operating fee matrix and methodology with other financial institutions' operating fees methodology, and
- realign the asset size brackets to reflect current asset growth of regulated credit unions.
Texas Finance Code, Section 15.402 (c), authorizes the Commission to establish reasonable and necessary fees for the administration of the Credit Union Department.
Proposed amendments to paragraph (b) include changes to the fee schedule as follows:
1. Changes the base operating fee for the first $200,000 in assets to the first $3 million in assets.
2. Changes the base assessment amount from $200 to $1,450.
3. Deletes the category of $200 thousand to $1 million.
4. Changes the category of $1 million to less than $10 million to $3 million to less than $10 million.
5. Decreases the rate from a base of $1,500 to $1,450 and decreases the percentage assessed from .00034 to .00025 of assets on assets between $3 million and $10 million.
6. Deletes two specific categories from $10 million to $25 million and $25 million to $50 million.
7. Changes the category of $50 million to $100 million to $10 million to $100 million.
8. Decreases the base amount of the $10 million to $100 million category from $4,560 to $3,200.
9. Fixes the percentage assessment on assets between $10 and $100 million from a range of .00014 to .00019 to a new rate of .000165.
10. Decreases the base assessment for assets between $100 million and $500 million from $20,410 to $18,050.
11. Increases the percentage assessed on assets between $100 million and $500 million from .00008 to .00010.
12. Increases the base assessment for assets between $500 million and $1 billion from $52,410 to $58,050.
13. Increases the percentage assessed on assets between $500 million and $1 billion from .000072 to .000082.
14. Increases the base assessment for assets between $1 billion and $2 billion from $88,410 to $99,050.
15. Increases the percentage assessed on assets between $1 billion and $2 billion from .000069 to .000078.
16. Changes the category of $2 billion and over to $2 billion but less than $6.8 billion.
17. Increases the base amount on the $2 billion and over category from $157,410 to $177,050 (an increase of $19,640).
18. Adds a category of $6.8 billion and over of assets.
19. Sets a base amount for over $6.8 billion in assets of $474,650.
20. Reduces the percentage assessed on assets over $6.8 billion from .000062 to .000040.
Proposed amendments to (c), adds the ability of the Commissioner to reduce the operating fee of an individual credit union, in addition to being able to waive the fee.
STATE AND LOCAL GOVERNMENTS
Michael S. Riepen, Commissioner, has determined that for the first five-year period that the rule changes are in effect there will be no fiscal implications for state and local government as a result of enforcing or administering the rule changes.
STATEMENT OF PUBLIC COST AND BENEFITS
Mr. Riepen has also determined that for each year of the first five years the rules are in effect, the public will benefit from the adoption of the proposed amendments because it will provide for investment by the Department in technology, training, data security, addressing financial risks and addressing operational risks.
SMALL AND MICRO BUSINESSES AND RURAL COMMUNITIES
Mr. Riepen has also determined that for each year of the first five years the rule changes are in effect, there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. This will increase regulatory costs to credit unions with assets larger than $238 million and two credit unions under $1 million in assets. Allowing the commissioner to reduce fees in addition to waiving them provides flexibility in mitigating any impact to an institution. The maximum $19,640 proposed fee increase for the larger credit unions is of an amount that is considered immaterial to the profitable operations of these institutions.
GOVERNMENT GROWTH IMPACT STATEMENT
- Except as may be described below to the contrary, for each year of the first five years that the rules will be in effect, the rules will not:
- Create or eliminate a government program;
- Require the creation of new employee positions or the elimination of existing employee positions;
- Require an increase or decrease in future legislative appropriations to the agency;
- Create new regulations;
- Expand, limit, or repeal an existing regulation;
- Increase or decrease the number of individuals subject to the rule's applicability; or
- Positively or adversely affect this state's economy.
NEED FOR DEPARTMENT OPERATING FLEXIBILITY
Adjustments to the operating fee will provide for nominal, but much needed, funds for operations flexibility. This is needed for strategic expenditures related to:
- Investment in cybersecurity related to the systems utilized by the Credit Union Department.
- Investment in technology upgrades.
- Creation of a position for a full-time training examiner and a Subject Matter Expert related to more complex, and/or problematic CU operations.
- Investment in an internal audit and internal controls.
- Implementation of a succession plan related to future retirements in key positions.
- Additional flexibility to fund unexpected operating costs.
PARITY WITH REGARD TO OTHER DEPOSITORY INSTITUTIONS
Changes to the operating fee schedule will provide for greater parity with other depository institutions who currently charge higher incremental rates at most asset levels. The Texas Finance Code, Section 15.402(b)(3) provides for in adopting rules "the commission shall consider the need to (3) preserve and protect the competitive parity of credit unions with regard to other depository institutions consistent with the safety and soundness (c) requires that "The commission by rule shall establish reasonable and necessary fees for the administration of this chapter and Subtitle D, Title 3." (The Texas Credit Union Act).
COMMENTS
Written comments on the proposed amendments may be submitted to Michael S. Riepen, Commissioner, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699 or by email to CUDMail@cud.texas.gov. To allow the Commission sufficient time to fully address all the comments it receives, all comments must be received on or before 5:00 p.m. on the 31st day after the date the proposal is published in the Texas Register.
AUTHORITY
The rule changes are proposed under Texas Finance Code, Section 15.402, which authorizes the Commission to adopt reasonable rules for administering Texas Finance Code Title 2, Chapter 15 and Title 3, Subtitle D.
The statutory provision authorizing the proposed amendments is Texas Finance Code, Section 15.402 (c), regarding establishing reasonable and necessary fees for the administration of the Credit Union Department.
§97.113.Fees and Charges.
(a) Remittance of fees.
(1) Each credit union authorized to do business under the Act shall remit to the department an annual operating fee. The fee shall be paid in semi-annual installments, billed effective September 1 and March 1 of each year. The final installment may be adjusted as provided by subsection (d) of this section. Installments received after September 30 or March 30 of each year will be subject to a monthly 10% late fee unless waived by the commissioner for good cause.
(2) Credit unions that exit the Texas credit union system on or before August 31 or February 28 of a given year, will not be subject to the semi-annual assessment for the period beginning September 1 or March 1, respectively. Only those credit unions leaving the state credit union system prior to the close of business on those dates avoid paying the semi-annual assessment for the period beginning September 1 or March 1, as applicable.
(b) Calculation of operating fees. The schedule provided in this section shall serve as the basis for calculating operating fees. The base date shall be June 30 of the year in which operating fees are calculated. The asset base may be reduced by the amount of reverse-repurchase balances extant on the June 30 base date. The commissioner is authorized to increase the fee schedule once each year as needed to match revenue with appropriations. An increase greater than 5% shall require prior approval of the commission. The commissioner shall notify the commission of any such adjustment at the first meeting of the commission following the determination of the fee schedule.
Figure: 7 TAC §97.113(b) (.pdf)
[Figure: 7 TAC §97.113(b)]
(c) Waiver or reduction of operating fees. The commissioner is authorized to waive or reduce the operating fee for an individual credit union when good cause exists. The commissioner shall document the reason(s) for each waiver or reduction of operating fees and report such waiver or reduction to the commission at its next meeting.
(d) Adjustment of an installment. The commissioner in the exercise of discretion may, after review and consideration of actual revenues to date and projected revenues for the remainder of the fiscal year, lower the amount of the final installment due from credit unions.
(e) Supplemental examination fees.
(1) If the commissioner or deputy commissioner schedules a special examination in addition to the regular examination, the credit union is subject to a supplemental charge to cover the cost of time and expenses incurred in the examination.
(2) The credit union shall pay a supplemental fee of $50 for each hour of time expended on the examination. The commissioner may waive the supplemental fee or reduce the fee, individually or collectively, as he deems appropriate. Such waiver or reduction shall be in writing and signed by the commissioner. The department shall fully explain the time and charges for each special examination to the president or designated official in charge of operations of a credit union.
(f) Foreign credit union branches. Credit unions operating branch offices in Texas as authorized by §91.210 of this title (relating to Foreign Credit Unions) shall pay an annual operating fee of $500 per branch office.
(g) Credit union conversion fee. A credit union organized under the laws of the United States or of another State that converts to a credit union organized under the laws of this State shall remit to the department an annual operating fee within 30 days after the issuance of a charter by the commissioner. The schedule provided in subsection (b) of this section shall serve as the basis for calculating the operating fee. All provisions set forth in subsection (b) of this section shall apply to converting credit unions with the following exceptions:
(1) Should the effective date of the conversion fall on or after October 31, the base date shall be the calendar quarter end immediately preceding the issuance date of a charter by the commissioner.
(2) The amount of the operating fee calculated under this section will be prorated based upon the number of full months remaining until September 1. For example, should the effective date of the conversion be January 31, the converting credit union will remit seven-twelfths of the amount of the operating fee calculated using December 31 base date.
(3) Any fee received more than 30 days after the issuance of a charter will be subject to a monthly 10% late fee unless waived by the commissioner for good cause.
(h) Mergers/Consolidations. In the event a credit union in existence as of June 30 merges or consolidates with another credit union and the merger/consolidation is completed on or before August 31, the surviving credit union's asset base, for purposes of calculating the operating fee prescribed in subsection (b) of this section, will be increased by the amount of the merging credit union's total assets as of the June 30 base date.
(i) Special assessment. The commission may approve a special assessment to cover material expenditures, such as major facility repairs and improvements and other extraordinary expenses.
(j) Foreign credit union fee for field of membership expansion. A foreign credit union applying to expand its field of membership in Texas shall pay a fee of $200. This fee shall be paid at the time of filing to cover the cost of processing the application. In addition, the applicant shall pay any cost incurred by the department in connection with a hearing conducted at the request of the applicant.
(k) Foreign credit union examination fees.
(1) If the commissioner schedules an examination of a foreign credit union, the credit union is subject to supplemental charges to cover the cost of time and expenses incurred in the examination.
(2) The foreign credit union shall pay a fee of $50 for each hour of time expended by each examiner on the examination. The commissioner may waive the examination fee or reduce the fee as he deems appropriate.
(3) The foreign credit union shall also reimburse the department for actual travel expenses incurred in connection with the examination, including mileage, public transportation, food, and lodging in addition to the fee set forth in paragraph (2) of this subsection. The commissioner may waive this charge at his discretion.
(l) Contract Services. In addition, the commissioner may charge, or otherwise cause to be paid by, a credit union, a foreign credit union or related entities the actual cost incurred by the department for an examination or a review of all or part of the operations or activities of a credit union, a foreign credit union or related entity that is performed under a personal services contract entered into between the department and third parties.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on November 6, 2023.
TRD-202304078
Michael S. Riepen
Commissioner
Credit Union Department
Earliest possible date of adoption: December 17, 2023
For further information, please call: (512) 837-9236