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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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