04 NCAC 06C .0311. SURETY BOND AND INSURANCE COVERAGE

(a)  It shall be the duty of the Board of Directors to purchase a blanket fidelity bond including such other bond coverage as required by the statutes or as may be required by the Administrator as set forth in G.S. 54-109.44(2).

(b)  Every state chartered credit union shall maintain the minimum bond and insurance coverage as required by statute. No form of surety bond shall be used except as is approved by the Administrator.  The approved bond forms are Credit Union Blanket Bond 500 Bond Series, plus faithful performance rider, NCUA Optional Form 581 or its equivalent. These bond forms shall be considered the minimum coverages required for the purpose of this section. The approved bond forms in this Paragraph provide faithful performance coverage for all employees and officials. Fidelity bonds must provide coverage for the fraud and dishonesty of all employees, directors, officials, and supervisory and credit committee members.  Other forms, or changes in the amount of bond coverage, must be approved by the Administrator.

(c)  Maximum deductible limits may be applied to the required coverage contained in 500 Bond Series, as specified in this Paragraph:

Assets                                                       Maximum Deductible

     0 to $100,000                                                                       -0-

$100,001 to $250,000                                                        $    500

$250,001 to $500,000                                                               50

$500,001 to $750,000                                                           1,000

$750,001 to $1,000,000                                                       1,500

$1,000,001 to $2,000,000                                                    2,000

$2,000,001 to $3,000,000                                                   3,000

$3,000,001 to $5,000,000                                                    4,000

$5,000,001 to $50,000,000                                                  5,000

$50,000,001 to $100,000,000                                             7,500

Over $100,000,001                                                             10,000

Deductibles in excess of those shown must be approved by the Administrator.  In no event shall any deductible be applied to the fidelity coverage or the faithful performance provision of the bond unless approved by the Administrator.

(d)  In considering a request to deviate from the bond coverage and deductible amounts set forth in this Rule, the Administrator shall consider the credit union's:

(1)           financial strength;

(2)           net worth;

(3)           return on assets;

(4)           quality of assets; and

(5)           Capital, Assets, Management, Earnings, and Liquidity (CAMEL) rating, used by the Division and NCUA to evaluate the soundness of credit unions on a uniform basis.

 

History Note:        Authority G.S. 54-109.11 (5); 54-109.12; 54-109.44 (2);

Eff. April 1, 1981;

Amended Eff. July 1, 2013; February 1, 1992; April 1, 1985.