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Rules & Regulations
6.1
Non-Federal Share Insurance
Qualification Requirements for
Credit Unions
Under the provisions of Section
5-17-19(d) of the Code of
Alabama, 1975, as amended,
the administrator of the Alabama
Credit Union Administration is
vested with the authority to
permit insurance coverage of
member accounts other than the
National Credit Union Share
Insurance Fund, the federal
insurance program. The
authority to permit alternative
insurance rests solely with the
administrator and will be
granted only when certain
minimum standards of financial
safety and soundness are
maintained by the credit union.
These minimum standards for each
area of the CAMEL evaluation are
as follows:
Capital Adequacy
Total
Capital/Assets
6.25%
Net
Capital/Assets
6.00%
Asset Quality (1)
Delinquent
Loans/Total
Loan
1.75%
Net loan
losses/Average
Assets
0.75%
Management
Adequate written policies must
be in effect covering loans,
investments, Bank Secrecy Act,
collections, and ALM.
Earnings (2)
Net Income/Average
Assets
1.00%
Liquidity or Asset Liability
Management (3)
Cash + short term
investments/Total member
savings 10.00%
ALM - refer to management
section
(1) Variances may be allowed up
to 0.2% for each 1.0% capital
exceeds minimum standards.
(2) Variances may be allowed up
to 0.1% for each 1.0% capital
exceeds minimum standards.
(3) Variances may be allowed
when an adequate cash management
policy which addresses actions
to be followed in periods of
very low liquidity and an
approved line of credit
sufficient to ensure continued
operations are on hand.
Nothing in this regulation or
the Code of Alabama
should be construed as limiting
the discretionary authority of
the administrator in permitting
or not permitting any credit
union to elect alternative
insurance.
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