(a) To the extent specified herein, a credit union may invest its own assets in:

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Terms Used In Hawaii Revised Statutes 412:10-502

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Capital: means :

    (1) The aggregate par value or other amount received and allocated to the issued and outstanding capital stock of a financial institution; or

    (2) The total amount of a credit union's outstanding and unimpaired membership shares or share accounts. See Hawaii Revised Statutes 412:1-109

  • Commissioner: means the commissioner of financial institutions of this State. See Hawaii Revised Statutes 412:1-109
  • Company: means any corporation, partnership, trust (business or otherwise), association, joint venture, pool syndicate, unincorporated organization, or any form of business entity not specifically listed herein and, unless specifically excluded, a financial institution; provided that "company" does not mean any trust existing on July 1, 1993, which under its terms must terminate within twenty-five years, or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust. See Hawaii Revised Statutes 412:1-109
  • 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.
  • county: includes the city and county of Honolulu. See Hawaii Revised Statutes 1-22
  • Federal: means belonging to, part of, or related to the government of the United States of America. See Hawaii Revised Statutes 412:1-109
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgagee: The person to whom property is mortgaged and who has loaned the money.
  • Personal property: All property that is not real property.
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
  • surplus: includes retained earnings, whether or not transferred or allocated to surplus. See Hawaii Revised Statutes 412:1-109
  • this State: means the State of Hawaii, its political subdivisions, agencies, and departments. See Hawaii Revised Statutes 412:1-109
(1) Securities and obligations of the United States government and any agency of the United States government whose debt obligations are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the United States, including without limitation Federal Reserve Banks, the Government National Mortgage Association, the Department of Veterans Affairs, the Federal Housing Administration, the United States Department of Agriculture, the Export-Import Bank, the Overseas Private Investment Corporation, the Commodity Credit Corporation, and the Small Business Administration;
(2) Bonds, notes, mortgage backed securities, and other debt obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Federal Home Loan Banks;
(3) Securities and obligations of United States government-sponsored agencies which are originally established or chartered by the United States government to serve public purposes specified by the Congress but whose debt obligations are not explicitly guaranteed by the full faith and credit of the United States, including without limitation Banks for Cooperatives, Federal Agricultural Mortgage Corporation, Federal Farm Credit Banks, Federal Intermediate Credit Banks, Federal Land Banks, Resolution Funding Corporation, Student Loan Marketing Association, Tennessee Valley Authority, the United States Postal Service, and securities and obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Federal Home Loan Banks that are not bonds, notes, mortgage backed securities, or other debt obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Federal Home Loan Banks; provided that the total amount invested in obligations of any one issuer shall not exceed ten per cent of the credit union’s capital; and
(4) Securities and obligations of quasi-United States governmental institutions, including without limitation the International Bank for Reconstruction and Development (World Bank), the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the European Investment Bank, and other multilateral lending institutions or regional development institutions in which the United States government is a shareholder or contributing member; provided that the total amount invested in any one issuer shall not exceed ten per cent of the credit union’s capital.
(b) A credit union may invest its own assets in bonds, securities, or similar obligations issued by this State or any county of this State, through an appropriate agency or instrumentality.
(c) To the extent specified herein, a credit union may invest its own assets in bonds or similar obligations issued by any state of the United States other than this State, the District of Columbia, or any territory or possession of the United States, by municipal governments of such states, territories or possessions, or by any foreign country or political subdivision of such country; provided, that:

(1) The bond, note, or warrant has been issued in compliance with the constitution and laws of any such government;
(2) There has been no default in payment of either principal or interest on any of the general obligations of such government for a period of five years immediately preceding the date of the investment; and
(3) The total amount invested in such obligations of any one issuer by a credit union shall not exceed ten per cent of the credit union’s capital.
(d) To the extent specified, a credit union may invest its own assets in credit union service organizations pursuant to § 412:10-202.
(e) To the extent specified herein, a credit union may invest its own assets in securities that are rated within the four highest grades by a nationally-recognized rating service and which represent ownership of one or more promissory notes, certificates of interest, or participation in such notes, or which are secured by one or more promissory notes, certificates of interest, or participation in such notes, which notes:

(1) Are directly secured by a first lien on residential real estate or a residential manufactured home as defined under title 42 of the United States Code, whether or not such manufactured home is considered real or personal property under state law; and
(2) Were originated by a credit union, insurance company, or similar institution which is supervised and examined by a federal or state authority, or by a mortgagee approved by the Secretary of Housing and Urban Development. Notes secured by a lien on a manufactured home may also originate from a credit union approved for insurance by the Secretary of Housing and Urban Development. The total amount invested in such securities by a credit union shall not exceed twenty per cent of its capital and surplus.

The term “securities” in this subsection shall have the same meaning as given in chapter 485A.

(f) To the extent specified herein, a credit union may invest its own assets in mortgage related securities that:

(1) Are offered and sold pursuant to section 4(5) of the Securities Act of 1933 (15 U.S.C. § 77D(5)); or
(2) Are mortgage related securities (as that term is defined in section 3(a)(41) of the Securities Exchange Act of 1934 (15 U.S.C. § 78C(a)(41)), subject to such rules as the commissioner may adopt, including rules prescribing minimum size of issue (at the time of initial distribution) or minimum aggregate sales prices, or both.
(g) To the extent specified herein, a credit union may purchase, hold, convey, sell or lease real or personal property as follows:

(1) The real property in or on which the business of the credit union is carried on, other space in the same property to rent as a source of income, other real property necessary to the accommodation of the credit union’s business, including but not limited to parking facilities, data processing centers, and real property held for future use where the credit union in good faith expects to utilize the property as credit union premises; provided, if the credit union ceases to use any real property and improvements thereon for one of the foregoing purposes, it shall, within five years thereafter, sell the real property or cease to carry it or them as an asset; provided further, such property shall not, without the approval of the commissioner, exceed five per cent of the credit union’s capital;
(2) Personal property used in or necessary to the accommodation of the credit union’s business, including but not limited to furniture, fixtures, equipment, vaults and safety deposit boxes. The credit union’s investment in furniture and fixtures shall not, without the approval of the commissioner, exceed five per cent of the credit union’s capital;
(3) Such real property or tangible personal property as may come into the credit union’s possession as security for loans or in the collection of debts; or as may be purchased by or conveyed to the credit union in satisfaction of or on account of debts previously contracted in the course of the credit union’s business, when such property was held as security by the credit union; and
(4) The seller’s interest under an agreement of sale, as that term is defined in sections 501-101.5 and 502-85, including without limitation the reversionary interest in the real property and the right to income under the agreement of sale, with or without recourse to the seller.

Except as otherwise authorized in this section any tangible personal property coming into the possession of any credit union pursuant to paragraph (3) shall be disposed of as soon as practicable and shall not, without the written consent of the commissioner, be considered a part of the assets of the credit union after the expiration of two years from the date of acquisition.

Except as otherwise authorized in this section any real property acquired by a credit union pursuant to paragraph (3) shall be sold or exchanged for other real property by the credit union within five years after title thereto has vested in it by purchase or otherwise, or within such further time as may be granted by the commissioner.

Any credit union acquiring any real property in any manner other than provided by this section shall immediately, upon receiving notice from the commissioner, charge the same to profit and loss, or otherwise remove the same from assets, and when any loss impairs the capital of the credit union the impairment shall be made good in the manner provided in this chapter.

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