[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR713.6]



[Page 531-532]

 

                       TITLE 12--BANKS AND BANKING

 

            CHAPTER VII--NATIONAL CREDIT UNION ADMINISTRATION

 

PART 713_FIDELITY BOND AND INSURANCE COVERAGE FOR FEDERAL CREDIT UNIONS

--Table of Contents

 

Sec. 713.6  What is the permissible deductible?



    (a)(1) The maximum amount of allowable deductible is computed based 

on a federal credit union's asset size and capital level, as follows:



------------------------------------------------------------------------

                 Assets                         Maximum deductible

------------------------------------------------------------------------

$0 to $100,000.........................  No deductible allowed.

$100,001 to $250,000...................  $1,000.

$250,000 to $1,000,000.................  $2,000.

Over $1,000,000........................  $2,000 plus 1/1000 of total

                                          assets up to a maximum of

                                          $200,000; for credit unions

                                          over $1 million in assets that

                                          qualify for NCUA's Regulatory

                                          Flexibility Program in Part

                                          742, the maximum deductible is

                                          $1,000,000.

------------------------------------------------------------------------



    (2) The deductibles may apply to one or more insurance clauses in a 

policy. Any deductibles in excess of the above amounts must receive the 

prior written permission of the NCUA Board.

    (b) A deductible may not exceed 10 percent of a credit union's 

Regular Reserve unless a separate Contingency Reserve is set up for the 

excess. In computing the maximum deductible, valuation accounts such as 

the allowance for loan losses cannot be considered.

    (c) A credit union's eligibility to qualify for a deductible in 

excess of $200,000 is determined based on it having assets in excess of 

$1 million as reflected in its most recent year-end 5300 call report 

and, as of that same year-end, qualifying for NCUA's Regulatory 

Flexibility Program under part 742 of this title as determined by its 

most recent examination report. A credit union that previously qualified 

for a deductible in excess of $200,000, but that subsequently fails to 

qualify based



[[Page 532]]



on its most recent year-end 5300 call report because either its assets 

have decreased or it no longer meets the net worth requirements of part 

742 of this title or fails to meet the CAMEL rating requirements of part 

742 of this title as determined by its most recent examination report, 

must obtain the coverage otherwise required by paragraph (b) of this 

section within 30 days of filing its year-end call report and must 

notify the appropriate NCUA regional office in writing of its changed 

status and confirm that it has obtained the required coverage.



[64 FR 28720, May 27, 1999, as amended at 70 FR 61716, Oct. 26, 2005]