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Understanding CU Compliance: Ownership of Fixed Assets and Property Investments

This article explores the regulations surrounding credit unions' ownership of fixed assets, emphasizing their investment in properties intended for conducting credit union business. It highlights the legal framework that allows Federal Credit Unions (FCUs) to invest in properties that support internal operations or directly benefit their members. Ensuring compliance with these guidelines is crucial for effective asset management and optimizing financial outcomes for members.

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Understanding CU Compliance: Ownership of Fixed Assets and Property Investments

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  1. CU Compliance Connection Ownership of Fixed Assets
  2. Investing in Property FCU may only invest in property – It intends to use to transact credit union business; or In property that supports the credit unions’ internal operations or serves its members.
  3. Fixed Assets Fixed assets include: Premises Furniture Fixtures and equipment Branch office or suboffice Service center Parking lot Facility Real estate Office furnishings Office machines Computer hardware and software Automated terminals Heating and cooling equipment
  4. Fixed Asset Rule The fixed assets rule: Limits a federal credit union’s investments in fixed assets; Establishes occupancy, planning, and disposal requirements for acquired and abandoned premises; and Prohibits certain transactions.
  5. Definitions The significant amendments to the rule are clarifications to the meaning of ‘‘unimproved land or unimproved real property’’ and further defines ‘‘partially occupy’’ additionally the process for obtaining waivers is clarified.
  6. Unimproved Property Unimproved land or unimproved real property means: Raw land or land without development; Land that has never had improvements; Land that was improved at one time but has functionally reverted to its unimproved state; or Land that has been improved, but the improvements serve no purpose for the federal credit union’s planned use of the property.
  7. Partially Occupied Property The credit union must occupy the property on a full-time basis, or a portion of the premises that is: Consistent with the federal credit union’s usage plan for the premises; Significant enough that the federal credit union is deriving practical utility from the occupied portion, relative to the scope of the usage plan; and Sufficient to show that the federal credit union will fully occupy the premises within a reasonable time.
  8. NCUA Waiver Process To seek a waiver: The federal credit union must submit a written request to its Regional Office. The Regional Director will inform the federal credit union, in writing, that the request was received. Within 45 days of the request the Regional Director will provide the federal credit union a written response. The Regional Director’s decision will be based on safety and soundness considerations.
  9. Thank you for joining me for this review of the NCUA Fixed Assets Rule Stay Tuned… Shawn Wolbert, CIA, CUCE Director CU System Relations 101 S. Washington Square, Suite 900 Lansing, MI 48933-1703 (800) 262-6285 Ext. 486 (734) 658-5427 Mobile Follow me on Twitter – Shawn Wolbert @ Go2CUGuru
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