Florida Statutes 657.042 – Investment powers and limitations
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A credit union may invest its funds subject to the following definitions, restrictions, and limitations:
(1) INVESTMENTS NOT SUBJECT TO LIMITATIONS.–There is no limitation with respect to the capital of the investing credit union on the following investments:
(a) Direct obligations of the United States Government.
Terms Used In Florida Statutes 657.042
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Capital: means shares, deposits, and equity. See Florida Statutes 657.002
- Corporate credit union: means any credit union organized pursuant to any state or federal act for the purpose of serving other credit unions. See Florida Statutes 657.002
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Credit union: means any cooperative society organized pursuant to this chapter. See Florida Statutes 657.002
- Equity: means undivided earnings, regular reserves, and other reserves. See Florida Statutes 657.002
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Shares: means the money placed into the credit union by members on which dividends may be paid. See Florida Statutes 657.002
(b) Obligations of agencies created by the United States Congress and authorized thereby to issue securities or evidences of indebtedness, regardless of guarantee of repayment by the United States Government.
(c) Public housing authority obligations.
(d) General obligations of the states of the United States and of the political subdivisions and municipalities thereof.
(e) Obligations issued by the State Board of Education under authority of the Constitution or applicable statutes.
(f) Tax anticipation certificates or warrants of counties or municipalities having maturities not exceeding 1 year.
(g) The assets of liquidating credit unions in this state, provided such assets are otherwise eligible for investment by the acquiring credit union.
(h) The shares and deposit accounts of corporate credit unions and any other fund established by this state or by the Federal Government for the purpose of maintaining liquidity in credit unions; however, such investments shall not exceed the amount required for the purpose of meeting the daily needs of the investing credit union for operating liquidity.
(i) Stock of the Federal National Mortgage Association, Federal Home Loan Bank, or any other similar entity designated by the office, designed to promote investment in residential mortgages, which may be purchased and retained as required in connection with mortgage transactions with the association or entity.
(2) INVESTMENTS SUBJECT TO LIMITATION OF 25 PERCENT OF CAPITAL OF THE CREDIT UNION.–Up to 25 percent of the capital of the credit union may be invested in:
(a) The shares or deposit accounts in any one corporate credit union or other insured financial depository institution. The credit union may exceed the 25-percent investment limitation in the corporate credit union, subject to the prior written approval of the office.
(b) Federal funds, daily; however, a credit union may not sell at any one time federal funds to any individual institution in an amount exceeding 100 percent of the equity of the selling credit union.
(c) Bankers’ acceptances that are eligible for purchase by Federal Reserve Banks.
(3) INVESTMENT SUBJECT TO LIMITATION OF TWO PERCENT OF CAPITAL OF THE CREDIT UNION.–
(a) Up to 2 percent of the capital of the credit union may be invested in the capital shares, obligations, or preferred stock issues of any agency or association, or membership association, provided the membership or stockholdings, as the case may be, of such agency or association are primarily confined or restricted to credit unions or organizations of credit unions and provided the purposes for which such agency or association is organized are designed primarily to service or otherwise assist credit union operations.
(b) Commercial paper and bonds of any corporation within the United States which have a fixed maturity, as provided in subsection (7), except that the total investment in all such paper and bonds may not exceed 10 percent of the capital of the credit union.
(4) INVESTMENT SUBJECT TO LIMITATION OF ONE PERCENT OF CAPITAL OF THE CREDIT UNION.–Up to 1 percent of the capital of the credit union may be invested in any of the following:
(a) Corporate obligations of any one corporation which is an affiliate or subsidiary of the credit union or a service corporation, except that the total investment in all such corporate obligations shall not exceed 10 percent of the capital of the credit union.
(b) Any capital participation instrument or evidence of indebtedness issued by the Department of Commerce pursuant to the Florida Small and Minority Business Assistance Act.
(5) INVESTMENTS IN REAL ESTATE AND EQUIPMENT FOR THE CREDIT UNION.–
(a) Up to 5 percent of the capital of the credit union may be invested in real estate and improvements thereon, furniture, fixtures, and equipment utilized or to be utilized by the credit union for the transaction of business.
(b) The limitations provided by this subsection may be exceeded with the prior written approval of the office. The office shall grant such approval if it is satisfied that:
1. The proposed investment is necessary.
2. The amount thereof is commensurate with the size and needs of the credit union.
3. The investment will be beneficial to the members.
4. A reasonable plan is developed to reduce the investment to statutory limits.
(6) INVESTMENTS SUBJECT TO APPROVAL.–A credit union may invest its funds in such other investments, including the capital stock of other financial institutions, as the commission or office approves by rule or order.
(7) SPECIAL PROVISIONS.–
(a) A credit union may not invest its funds in bonds or other obligations described in this section unless the bonds or other obligations are current as to all payments of principal and interest.
(b) A credit union shall establish written policies and procedures for evaluating the systemic and specific risks and benefits associated with investments authorized under this section before making such investments and must conduct appropriate risk management and monitoring for the duration of the investment. An investment decision may not be based solely on the rating of the bond or other obligation by an investment rating service. The office may require a credit union to divest itself of an investment that the office determines creates excessive risk or the associated risk exceeds the ability of the credit union to properly evaluate and manage.
(c) With prior office approval, any investment permitted in this section may also be made indirectly by investment in a trust or mutual fund, the investments of which are limited as set forth in this section. The credit union must maintain a current file on each investment which contains sufficient information to determine whether the investment complies with the requirements of this section. If the investment fails to comply, the credit union must divest itself of its investment, unless otherwise approved by the office.