69U-110.002: Definitions
69U-110.005: Application and Filing Fee
69U-110.0061: Bylaws
69U-110.008: Relocation and Place of Doing Business
69U-110.021: Filling of Appointments
69U-110.0211: Surety Bonds
69U-110.0212: Policies
69U-110.026: Supervisory/Audit Committee; Audit
69U-110.031: Powers
69U-110.038: Applications for Credit
69U-110.0381: Minimum Requirements for Certain Types of Loans
69U-110.0382: Credit Cards
69U-110.042: Investments
69U-110.043: Allowance for Loan Losses
69U-110.0431: Depletion of Regular Reserves
69U-110.0432: Equity Plan Requirements
69U-110.044: Accounting Practices
69U-110.045: Reports to OFR
69U-110.050: Currency Reporting Compliance Requirements
69U-110.062: Capitalization Criteria for Conservatorship or Involuntary Liquidation Actions
69U-110.063: Credit Unions Liquidation Certificate and Maintenance of Records
69U-110.065: Merger
69U-110.068: Central Credit Unions
PURPOSE AND EFFECT: Chapter 2005-181, Laws of Florida, revises provisions contained in Chapters 655 and 657, Florida Statutes, relating to state-chartered financial institutions in general and the regulation of state-chartered credit unions in particular. In summary, the law incorporates changes to provide consistency with the National Credit Union Administration guidelines and federal regulations; authorizes the Financial Services Commission to adopt rules to establish criteria under which the Office of Financial Regulation may place a credit union in involuntary liquidation; updates accounting requirements to conform with generally accepted accounting principles of the United States; revises procedures governing a merger of credit unions; removes specific powers of a credit union in favor of broader business powers; broadens the authority of the Office of Financial Regulation to issue an emergency order to require merger, conversion, or other appropriate action for a failing bank or trust company to apply to other financial institutions, including credit unions; and removes obsolete language relating to the Florida Credit Union Guaranty Corporation, which no longer exists. In light of this law, the Office of Financial Regulation is proposing the adoption of new rules, and amendments to, or the repeal of, certain existing administrative rules governing the regulation of state-chartered credit unions.
SUBJECT AREA TO BE ADDRESSED: State-Chartered Credit Unions.
SPECIFIC AUTHORITY: 120.54, 655.012(2), 657.005, 657.062, 657.063 FS.
LAW IMPLEMENTED: 655.044, 655.045, 655.057, 655.60, 655.061, 657.005, 657.008, 657.021, 657.026, 657.028, 657.031, 657.038, 657.042, 657.043, 657.0061, 657.062, 657.063, 657.065 FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE NOTICED IN THE NEXT AVAILABLE FLORIDA ADMINISTRATIVE WEEKLY.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Sharon Whiddon, Chief, Bureau of Credit Union Regulation, Office of Financial Regulation, Fletcher Building, 101 East Gaines Street, Tallahassee, Florida 32399, telephone: (850)410-9536
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
69U-110.002 Definitions.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.002, 657.008(2), 657.038(12) FS. HistoryNew 7-25-66, Renumbered from 3-5.02 to 3D-10.01 on 7-18-75, Amended 10-13-81, Formerly 3C-30.01, 3C-30.001, Amended 10-8-95, Formerly 3C-110.002, Repealed_________.
69U-110.005 Application and Filing Fee.
Application for authority to organize and operate a credit union shall be made to OFR per Rules 69U-105.001, 69U-105 Part I, F.A.C., and as follows:
(1) The organizers of the proposed credit union shall complete and file Form OFR-U-60, Application for Authority to Organize and Operate a Credit Union (revised 3/2003), which is hereby incorporated by reference, in triplicate and proposed bylaws on Form OFR-U-61, Model Credit Union Bylaws By-laws (revised 6/2006 3/2003), which is hereby incorporated by reference, in triplicate. The original shall be submitted to OFR with a nonrefundable filing fee of $250. A copy shall be submitted to the National Credit Union Administration and a copy shall be retained by the organizers.
(2) Each proposed director, member of the supervisory committee, and member of the credit committee, and executive officer shall complete the biographical report section only of Form OFR-U-10, Biographical Report (revised 3/2003) and Form OFR-U-10-A (revised 6/2006), which are hereby incorporated by reference, in triplicate. The original shall be submitted to OFR, a copy shall be submitted to the National Credit Union Administration, and a copy shall be retained by the organizers.
(3) Filing; Pre-filing meeting. OFR encourages that the applicant, including a member of the proposed board of directors, meet with staff of OFR to discuss the procedures and requirements for opening a new state financial institution prior to filing an application.
Specific Authority 120.543(1)(b), 655.012(2)(3), 657.005 FS. Law Implemented 657.005 FS. HistoryNew 10-21-75, Amended 3-21-77, 10-13-81, Formerly 3C-30.02, 3C-30.002, Amended 10-8-95, Formerly 3C-110.005, Amended_________.
69U-110.0061 Bylaws.
(1) New Credit Unions. Newly organized credit unions shall adopt bylaws in such form as provided by OFR, Form OFR-U-61, Model Credit Union Form Bylaws (revised 6/2006), which is hereby incorporated by reference, as their initial set of bylaws. The Model Credit Union Bylaws may be obtained from the OFR website or upon request.
(2) Amendments. All proposed bylaw amendments shall be submitted to OFR by filing Bylaw Amendment Form OFR-U-61-A (revised 6/2006), which is hereby incorporated by reference. OFR shall approve or disapprove proposed bylaw amendments within 60 days after receipt of a complete application. after receipt of same, except that amendments to the bylaws affecting the following subjects shall not require prior approval before they become operative:
(a) Receipting for moneys received.
(b) Dividends and interest refunds.
(c) Executive officers.
Bylaw Amendment Form OFR-U-61-A (revised 3/2003), which is hereby incorporated by reference, shall be used for submitting all bylaw amendments to OFR.
(3) To ensure compliance with Section 657.0061(1), F.S., a credit union that is proposing to expand its field of membership through a bylaw amendment must:
(a) Be operating in a safe and sound manner per paragraph 69U-100.948(2)(a), F.A.C., unless evidence is provided to show that a field of membership expansion will improve the financial condition of the credit union, and; OFR shall require any credit union filing a bylaw amendment which expands its field of membership to complete Form
(b) Complete Form OFR-U-70, Field of Membership Expansion Questionnaire (effective 10/95, revised 6/2006 3/2003), which is hereby incorporated by reference, when the expansion is geographic or increases the credit unions potential field of membership by more than five percent (5%).; or
(c) Provide to the OFR written notice of the number of potential new members if the field of membership expansion is non-geographic, and the resulting increase is five percent or less than the potential membership.
(4) Relocation. A credit union may change its principal place of doing business upon approval of OFR and filing an amendment on Form OFR-U-61-A to its bylaws. The filing shall include appropriate and sufficient financial information as OFR may require to document the investment in fixed assets.
(5)(4) Adoption of OFR Model Credit Union Form Bylaws. Any existing credit union may which desires to adopt the OFR form Model Credit Union Bbylaws as their bylaws may do so, in whole or in part, without prior application or notice to the OFR, however, no credit union shall change its name, the address of its principal place of business, or its field of membership through this process. The credit union shall file its amended bylaws with OFR within 10 business days of such adoption by the appropriate bylaw amendment process, and file with OFR after adoption by the credit union. Prior approval of the OFR shall not be required for such adoption provided that no credit union shall change its name, the address of its principal place of business, its field of membership, or the par value of each share without first obtaining the written approval of OFR.
(6)(5) Restatement of Bylaws. Any existing credit union may administratively which desires to restate its bylaws for clarity, correction of typographical errors, and to incorporate, incorporateing all previously approved bylaw amendments without prior application or notice to the OFR, may do so. No However, a credit union may not make additional changes to its bylaws are authorized through the bylaw restatement procedure. The credit union shall file its restated bylaws with OFR within 10 business days of such restatement.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.005(3)(e), 657.0061(1), 657.008 FS. HistoryNew 7-25-66, Renumbered from 3-5.10 to 3D-10.05 on 7-18-75, Amended 10-21-75, Formerly 3D-10.06, Amended 10-13-81, Formerly 3C-30.06, 3C-30.006, Amended 10-8-95, Formerly 3C-110.0061, Amended________.
69U-110.008 Branches Relocation and Place of Doing Business.
(1) Branch office means any permanent location or mobile unit other than the principal place of business where membership services are provided by credit union staff. Relocation. A credit union may change its principal place of doing business in the state upon approval of OFR.
(a) OFR shall approve such request when the credit union has shown that:
1. The relocation of the principal place of business is reasonably necessary to furnish service to its members; and
2. The new location will not unduly injure any state or federal credit union whose field of membership overlaps that of the applicant credit union.
(b) A credit union may change the location of its office without approval of OFR provided the street address as filed with OFR is not changed.
(2) Branches. A credit union operating in a safe and sound manner in paragraph 69U-100.948(2)(a), F.A.C., may open a branch office or relocate branch offices previously established by providing separate from its principal place of business with 30 days after prior written notification to OFR not less than thirty (30) days before the opening of the branch. The notification must specify the name and location of the branch office and effective date of the change. The branch office location and operations must comport with the credit unions bylaws and authorized field of membership. Notification shall be made on Form OFR-U-65, Notice of Establishment of a Credit Union Branch Office (revised 3/2003), which is hereby incorporated by reference.
(3) Any additional investment in fixed assets related to be made in conjunction with a change in location or opening of a branch office may not exceed the statutory limits of investments in real estate and equipment without prior written approval of OFR unless the credit union meets the criteria of subparagraph 69U-110.031(2)(a)2., F.A.C.
(4) OFR shall be notified in writing within ten business days of the closing of an established branch office.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.008(1), (2), (5), 657.042(5) FS. HistoryNew 6-16-78, Amended 10-13-81,___________.
69U-110.021 Filling of Appointments.
(1) Within thirty (30) days after election or appointment, including any change of position, each executive officer, director, member of the supervisory or audit committee, and member of the credit committee, or credit manager, and chief executive officer shall complete and file with the OFR the biographical report section only of Form OFR-U-10, Biographical Report (revised 3/2003) and Form OFR-U-10-A (revised 6/2006). The foregoing forms are hereby incorporated by reference file Form OFR-U-62, Statement of Directors, Committee Members and Certain Officers (revised 3/2003) which are hereby incorporated by reference, with OFR.
(2) No change.
(3) Within 30 days after election or appointment, a record of the names and addresses of the members of the board, members of committees, and all officers of the credit union shall be filed with the office. This filing may be satisfied by providing the office with a copy of reports filed with the National Credit Union Administration per 12 C.F.R. § 741.6 (2006), which is incorporated by reference.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.021(3), 657.028(4), (6) FS. HistoryNew 7-24-66. Renumbered from 3-5.07 to 3D-10.08 on 7-18-75, Amended 10-21-75, Formerly 3D-10.08, Amended 10-13-81, Formerly 3C-30.08, 3C-30.008, Amended 10-8-95, Formerly 3C-110.02, Amended___________.
69U-110.0211 Liability and Bond Insurance Surety Bonds.
The credit union shall maintain officer and director liability insurance and blanket bond insurance in such amounts and terms as required to maintain insurance of accounts by the National Credit Union Share Insurance Fund, as provided in National Credit Union Administration Rules 741.3(c) and 741.201(a) (codified at 12 C.F.R. §§ 741.3(c) and 741.201(a), respectively (2006)), which are hereby incorporated by reference. The liability and bond insurance shall provide, at a minimum, coverage for errors, omissions, negligence, fraud, and dishonesty by all employees, directors, officers, supervisory or audit committee members, and credit committee members. The credit union shall also maintain applicable insurance coverage with respect to all operations and activities. All officers, directors, committee members and employees of a credit union handling or having access to money, bank accounts, or securities owned by or pledged to the credit union shall be covered by a blanket surety bond protecting the credit union against loss due to fraud or dishonesty in an amount not less than that shown in the following schedule based on the assets of the credit union at the end of the preceding calendar year:
(a) The minimum required amounts of blanket bond coverage, based on the credit unions total assets, are:
Assets Minimum Bond
$0 to $10,000 Coverage equal to the credit unions assets.
$10,001 to $1,000,000 $10,000 for each $100,000 or fraction thereof in assets.
$1,000,001 to $50,000,000 $100,000 plus $50,000 for each million or fraction thereof over $1,000,000 in
assets.
$50,000,001 to $295,000,000 $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000
in assets.
Over $295,000,000 $5,000,000
The board of directors is required to provide adequate protection to meet the credit unions unique circumstances by obtaining, when necessary, bond and insurance coverage in excess of the required minimum. The board of directors must also conduct an annual review of all bond and insurance policies to ascertain that such coverage adequately covers the risks of operating the credit union. and also meets the minimum requirements. The board shall ensure that the credit union complies with all National Credit Union Administration rules relating to surety bonds.
(2) The maximum amounts of permissible deductibles, based on the credit unions assets, are:
Assets Deductible allowed:
Assets of $1 to $100,000 No deductible allowed
Assets of $100,001 to $250,000 $1,000 deductible
Assets of $250,001 to $1,000,000 $2,000 deductible
Assets over $1,000,001 $2,000 plus 1/1,000 of total assets up to a maximum deductible of $200,000
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.021(7)(a) FS. HistoryNew 10-13-81, Formerly 3C-30.33, 3C-30.033, Amended 10-8-95,____________.
69U-110.0212 Policies.
The board of directors shall establish appropriate written policies and operating strategies to conduct prudent credit union operations based on the complexity of the credit union. Policies shall be reviewed and approved/reaffirmed per a schedule adopted by the Board, but no less than once every two years from the previous adoption or reaffirmation of each policy. The board is encouraged to consider published industry guidance provided by regulatory agencies in the development of policies, if available. The policies shall ensure that the credit union complies with all applicable state and federal requirements with respect to all operations and activities.
Specific Authority 120.54, 655.012 FS. Law Implemented 657.021 FS. HistoryNew________.
69U-110.026 Supervisory/Audit Committee; Audit.
(1) The supervisory committee of each state chartered credit union shall perform, or cause to be performed, an audit of the credit union to include every general ledger control account and related internal control procedures within each calendar year and within 15 months of the previous audit. Such audit shall be in compliance with the Comprehensive Annual Audit Minimum Audit - Procedures Report and shall be filed on Form OFR-U-63 (revised 3/2003), which is hereby incorporated by reference. No audit performed to satisfy this requirement shall be made within six (6) months of the previous audit, unless prior written consent has been obtained from OFR.
(1) Audit Committee.
(2) In lieu of establishing a supervisory committee, a credit union may elect or appoint an audit committee in compliance with the following conditions:
(a) The credit unions bylaws must be amended to provide for an audit committee, to set forth the membership of the audit committee, and to establish whether the members of the audit committee are appointed or elected to such position;
(b) Directors Any director which participates on the audit committee shall not perform or participate in any audits an audit for the audit committee; and
(c) No change.
(2) The supervisory or audit committee of each state chartered credit union shall perform, or cause to be performed, an annual audit of the credit union in each calendar year and within 15 months of the previous audit. The complete audit, including all summaries, reports, drafts, work papers, and similar documents, shall be made available upon request to the OFR for examination, copying, and review at the credit unions principal place of business. The annual audit shall be performed in such a manner as to ensure the maintenance of account insurance as required by Section 657.033, F.S., as provided in National Credit Union Administration Rule 741.202 (codified at 12 C.F.R. § 741.202 (2006)), which is hereby incorporated by reference.
(3) Persons Qualified to Perform Audits. Any person which performs audits for a credit union must qualify pursuant to one of the following classes:
(a) The supervisory committee which has been duly elected by the membership or appointed by the board of directors. The supervisory committee must complete all the requirements contained in the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, including preparing supporting work papers;
(b) Any person with a minimum of two (2) years of experience in auditing or examining financial institutions and which person has been duly appointed by the supervisory committee to perform such audit. Such person shall complete all the requirements of the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, including all supporting work papers.
(c) Certified public accountants which are licensed to practice in the State of
(3)(4) Content, Submission and Review of Audit Reports.
(a) Within 90 days after the completion of the audit, and within 45 days of acceptance by the board of directors, the board of directors shall submit with the report or shall be included in the report the following to the OFR: The audit report submitted to OFR shall include the following:
1. The date or dates on which the audit was conducted and the completion date;
2. A statement indicating that all of the procedures in the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, were performed, or specific reasons why required procedures were not included in the audit. Additionally, a completed copy of Form OFR-U-63 shall also be included. If an opinion audit prepared by a certified public accountant is submitted, the opinion audit must include a statement that certifies that the minimum audit procedures required by the AICPAs Audit and Accounting Guide Audits of Credit Unions (dated May 1, 1994), which is hereby incorporated by reference, have been performed;
2.3. A statement of condition as of the audit date;
3.4. A statement of income and expense for the calendar period year-to-date;
5. A schedule of verifications;
6. A summary schedule of delinquent accounts;
4.7. A statement describing the audit findings and recommendations; and
5.8. The A statement of the credit unions response to the audit findings and recommendations.
(4) OFR shall review each audit and, if it finds that the audit does not comprehensively address all relevant areas of concern or accurately reflect the condition of the credit union, OFR shall require an audit pursuant to paragraph 655.045(3)(a), F.S.
(b) The completed audit report shall be submitted to the board of directors within thirty (30) days of the completion date of the audit report. Within forty-five (45) days of the acceptance date of the audit report by the board of directors, the completed audit report, including all the requirements of paragraph (4)(a), and a notice of acceptance and consideration by the board of directors shall be submitted to OFR.
(c) Each audit report and supporting work papers shall be subject to review by OFR. Upon completion of OFRs review, an acknowledgment will be furnished to the credit union noting acceptance of the audit report or indicating specific areas of inadequate compliance with the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63.
(5) Minimum Audit Requirements.
(a) To be acceptable, every audit of a credit union must be made in accordance with the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, and supported by work papers. An opinion audit by an independent certified public accountant together with the management letter comments and the credit unions response thereto, can be accepted as satisfaction of the minimum audit requirements.
(b) OFR shall determine whether an audit is acceptable. OFR shall reject any audit which does not materially conform with the minimum prescribed requirements. OFR shall reject any audit if OFR finds that any person who has performed such audit has not followed recognized rules of ethics or conduct, or has not met the minimum standards of this section. Any material misstatement of facts or circumstances or any misrepresentation of any kind knowingly made shall also cause the audit to be rejected. If the audit is rejected, OFR shall have the option of requiring an acceptable audit to be made at the expense of the credit union.
(c) The scope of the audit, the extent to which accounts must be tested and the audit comments required, will vary according to the adequacy of the internal control procedures. Credit unions having sound established internal control procedures may find these minimum requirements sufficient. However, the minimum procedures should not be construed as restrictive. Circumstances may make it necessary or desirable to expand certain procedures, apply alternative procedures, or extend the audit procedures to additional areas. The audit shall include a general review of the credit unions operating procedures and system of internal controls and the audit report shall include comments and recommendations resulting from this review. Unless otherwise stated, all test check procedures are to be performed from the previous audit date.
(d) Verification of accounts.
1. The verification of accounts required by section 115 of the Federal Credit Union Act (12 U.S.C. §1761d) and section 741.2 of the National Credit Union Administration Rules and Regulations (12 C.F.R. §741.2), which are hereby incorporated by reference, as such provisions existed on 10/95 could be substituted for the verification required in conjunction with the minimum audit requirements if performed using the same as of date as the audit.
2. Loans.
a. Commercial or Business Loans 20 percent of the total dollar volume provided that at least 5 percent of the total number of loans outstanding are represented, exclusive of past due loans, by positive verification.
b. Installment Loans 10 percent of the total number of outstanding loans (unless warranted, such confirmations need not exceed 250 accounts), exclusive of past due loans, by positive or negative verification.
c. Credit Card Accounts 5% of the total number of loans outstanding, exclusive of past due credit card accounts, by positive or negative verification.
d. Past Due Loans and Credit Card Accounts 100 percent, by positive or negative verification.
3. Shares, Share Drafts and Deposits.
a. Shares 10 percent of the total number of accounts provided that 10 percent of the total dollar volume is represented, by positive or negative verification.
b. Term Share and Deposits 100 percent of all accounts with a balance of $100,000 or more and 10 percent of the total number of remaining accounts, by positive or negative verification.
4. Information required: The number of accounts, dollar amounts, customer response and reconcilement information will be included in the audit report in tabular form showing percentages in each case. Other sampling methods, used in an opinion audit, will be permitted if such methods meet the minimum requirements of minimum auditing standards which are generally recognized industry wide. In such a case, however, a schedule of confirmations showing the percentage of each type of account performed shall be included in the audit report in tabular form.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.045(3), 657.026 FS. HistoryNew 7-25-66, Renumbered from 3-5.08 to 3D-10.10 on 7-18-75, Amended 10-21-75, Formerly 3D-10.10, Amended 10-13-81, Formerly 3C-30.10, 3C-30.010, Amended 10-8-95, Formerly 3C-110.026, Amended_________.
69U-110.031 Powers.
(1) Definitions. As used in Chapter 69U-110, F.A.C., and the Financial Institutions Codes, Title 38, Florida Statutes, as applicable to credit unions, and unless the context otherwise indicates a different meaning was intended, the term:
(a) General Powers means the same powers as an individual to do all things necessary, convenient, or useful to carry out its business and affairs as a financial institution, consistent with the Financial Institutions Codes, in providing financial services and benefits to its members.
(b) Incidental Powers means those powers necessary to conduct business activities that may only indirectly or coincidentally benefit or serve the credit unions members, mission, or business, or are the functional equivalent or logical outgrowth of activities that are part of the mission or business of credit unions and involves risks similar in nature to those already assumed as part of the business of credit unions.
(2) General Powers Activities. Credit unions are authorized to engage in those general powers activities to provide financial services and benefits to their members without prior approval of the OFR, unless such approval is otherwise specifically required by law or is necessary to achieve competitive equality per Section 655.061, F.S. The following general powers activities are so authorized for competitive equality:
(a) Credit unions exempted from significant events reporting per Section 655.948(4)(a), F.S., and meeting the net worth and Capital, Asset, Management, Earnings and Liquidity (CAMEL) rating eligibility criteria for the National Credit Union Administrations Regulatory Flexibility Program, as specified in 12 C.F.R Part 742 (2006), which is hereby incorporated by reference, may:
1. Establish and maintain Federal public unit and nonmember accounts in accordance with National Credit Union Administration (NCUA) Rule 701.32 (codified at 12 C.F.R. § 701.32 (2006)), which is hereby incorporated by reference, and the exemption of NCUA Rule 742.4(a) (codified at 12 C.F.R. § 742.4(a)(2006)), which is hereby incorporated by reference, consistent with the limitations of Chapter 280, F.S.;
2. Invest in real estate and equipment for the credit union as provided in Section 657.042(5), F.S., that may exceed five percent of the capital of the credit union, without prior notice or approval of the OFR; and
3. Invest in commercial mortgage related securities as may be permitted by NCUA Rule 703.16 (codified at 12 C.F.R. § 703.16 (2006)), which is hereby incorporated by reference, and the exemption, limitations and restrictions of NCUA Rule 742.4(b) (codified at 12 C.F.R. § 742.4(b) (2006)), which is hereby incorporated by reference.
(b) Credit unions may serve as a United States Treasury Department tax and loan depository, a depository of Federal taxes, and a financial agent of the United States Government, in accordance with NCUA Rules (codified at 12 C.F.R. Chapter VII (2006)), which is hereby incorporated by reference.
(3) Incidental Powers Activities. Credit unions are authorized to engage in such incidental powers activities as authorized by law or approved by the OFR. The following category of activities is pre-approved as incidental to carrying on credit union business:
Trustee or custodial services. Trustee or custodial services are services in which the credit union is authorized to act under any written trust instrument or custodial agreement created or organized in the United States and forming part of a tax-advantaged savings plan, as authorized under the Internal Revenue Code. These services may include acting as a trustee or custodian for member retirement, education and health savings accounts.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.061, 657.031, 657.042 FS. HistoryNew________.
69U-110.038 Applications for Credit.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.038(12) FS. HistoryNew 7-25-66, Renumbered from 3-5.01 to 3D-10.11 on 7-18-75, Amended 10-21-75, Formerly 3D-10.11, Amended 10-13-81, Formerly 3C-30.11, 3C-30.011, Amended 10-8-95, Formerly 3C-110.038, Repealed________.
69U-110.0381 Loans Secured by Real Estate Minimum Requirements for Certain Types.
The board of directors shall adopt and maintain written policies that establish appropriate limits and standards for loans that are secured by liens on or interests in real estate. Real estate lending policies must be: consistent with safe and sound industry practices; appropriate for the size of the credit union and scope of its operations; and reviewed and approved by the board of directors in accordance with Rule 69U-110.0212, F.A.C. The lending policies must establish: loan portfolio diversification standards; prudent underwriting standards; loan administration procedures for the credit union's real estate portfolio; and documentation, approval, and reporting requirements to monitor compliance with the credit union's real estate lending policies.
(1) Loans secured by real estate. The board of directors must establish a mortgage loan policy which specifies the types of mortgage loans that can be made, the dollar limit on such loans, and the maximum maturity and minimum documentation requirements. An asset/liability management policy must also be established which limits the total percentage amount of all mortgage loans and the type of individual mortgage loans offered. The maximum amount (or credit limit) of a mortgage plus the outstanding balances (or credit limits) of any outstanding prior liens may not exceed appraised or documented property value. The minimum documentation required for all loans primarily secured by real estate includes:
(a) Appraisal or determination of property value as required by Rule 69U-100.600, F.A.C., Appraisal Standards;
(b) Mortgagee title insurance or an attorneys opinion of title. However, in the case of a home equity loan, mortgagee title insurance or an attorneys opinion of title is not required.
(c) Hazard insurance, including fire and extended coverage, in an amount of at least the outstanding mortgage balance or value of any improvements used to determine value, whichever is less, with the credit union named as loss payee.
(d) Flood insurance, if the property is located in a special flood hazard area, in an amount of at least the value of the improvements or the maximum amount obtainable under standard flood insurance policies.
(e) Mortgage recorded in the public records of the county or counties wherein the property is located.
(f) Closing statement reflecting the allocation/disbursement of the mortgage loan proceeds.
(2) The minimum documentation requirements for loans based on the collateral consisting of motor vehicles, mobile homes, airplanes or boats include:
(a) Evidence of a properly recorded lien in favor of the credit union, including the original title certificate where available, retained in the files of the credit union.
(b) Security agreement.
(c) Evidence of hazard insurance insuring against fire, theft, comprehensive and collision coverage with a loss payee clause in favor of the credit union; provided, however, in lieu of hazard insurance purchased by the borrower, the credit union may purchase vendors single interest insurance; the credit committee, or credit manager, may waive comprehensive and collision coverage by executing a statement of justification thereof, which statement shall be kept in the loan file.
(3) The provisions of this rule are not all inclusive and all credit unions shall comply with all state and federal requirements with respect to all loans.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.60, 657.038(5)(6), (11)(12) FS. HistoryNew 7-25-66, Amended 10-26-67, 3-9-70, Renumbered from 3-5.01 to 3D-10.13 on 7-18-75, Amended 10-21-75, Formerly 3D-10.13, Amended 10-13-81, Formerly 3C-30.13, 3C-30.013, Amended 10-8-95, Formerly 3C-110.0381, Amended_________.
69U-110.0382 Credit Cards.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.954(1), 657.031(27), 657.038 FS. HistoryNew 2-1-78, Amended 10-13-81, Formerly 3C-30.28, 3C-30.028, Amended 10-8-95, Formerly 3C-110.0382, Repealed________.
69U-110.042 Investments.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.042(2), (6) FS. HistoryNew 10-13-81, Amended 12-16-85, Formerly 3C-30.34, 3C-30.034, Amended 10-8-95, Formerly 3C-110.042, Repealed________.
69U-110.043 Reserves Allowance for Loan Losses.
(1) Allowance for Loan Losses. The board of directors must establish procedures to verify that the allowance for loan losses account methodology is valid and conforms to generally accepted accounting principles and supervisory guidance. At a minimum, the board shall require an annual review through the annual audit or otherwise, by an independent party, as to the validity of, conformance to, and effectiveness of the established methodology and allowances. The allowance for loan loss account (allowance account) is a contra-asset account to the loan accounts on the financial statement of a credit union. Each state chartered credit union must establish an allowance account within the records of the credit union. A credit union must thereafter maintain a reasonable balance in the account through periodic charges to the operating expense account (provision for loan loss account) of the credit union.
(2) All loan and negative balance share or deposit balances charged-off shall be reported to the board of directors in accordance with a policy adopted by the board wherein parameters are set when to report individual amounts or aggregate amounts by classification, or both. The report shall be approved by the board. The amount of the allowance account must be adequate to cover specifically identified loans, as well as estimated losses inherent in the loan portfolio, such as loans and pools of loans for which losses are probable but not identifiable on a specific loan-by-loan basis. At a minimum, the following formula shall be used to determine the adequacy of the allowance account:
(a) 100% of classified loans; plus
(b) The outstanding principal balance of all loans, less those which are classified, times the five year average loan loss ratio.
(c) Classified loans include all loans that are delinquent or nonperforming and which have been determined by the board of directors to be worthless or doubtful of collection. To determine the dollar value of classified loans, the credit union management shall regularly review and report to the board of directors all delinquent or nonperforming loans. Nonperforming loans shall include all loans which have been refinanced or extended without adequate payment history.
(d) The five year average loan loss ratio, as determined by the credit union, may be changed by OFR or the National Credit Union Administration if it is determined through an examination or visitation that the required amount is not representative of the losses inherent in the loan portfolio.
(e) Credit unions which maintain sufficient detail to compute a loan loss ratio for each loan category or loans acquired through merger may establish a loan loss ratio for each category of loan.
(f) The board of directors shall review the allowance account and direct any necessary adjustments to the account balance. If, at any time, the actual allowance account balance falls below the required balance, the board of directors shall increase the balance to the required amount before paying dividends.
(3) Each credit union shall establish a monthly accrual based on estimated losses. The monthly accrual shall be credited to the allowance account and debited to the expense account.
(4) The board of directors shall approve all charge-offs of loans prior to such charge-off. To record the charge-off of a loan, the allowance account will be debited for the net amount charged off and the loan account will be credited. Any note or other obligation, either secured or unsecured, which is past due for 12 months or longer, is deemed to be worthless, or upon which no interest has been paid for 12 months or longer shall be charged off against the allowance account, except that:
(a) Any such note or other obligation which is secured by a lien or other collateral may be carried as an asset of the credit union at the current fair market value of the collateral securing the note or obligation.
(b) Any note or other obligation upon which payments are being made in a manner which will retire the debt may be carried as an asset of the credit union to the extent of its reasonable or market value as determined by the board.
(c) Any such note or other obligation may be refinanced if a new note or obligation is executed and:
1. All past due interest is paid;
2. The loan is collateralized fully and such collateral amply secures the obligation; or
3. The member meets the underwriting criteria established in the loan and credit policy. The new note or obligation may then be carried as an asset of the credit union at full face value. Refinancing of a note or obligation, either secured or unsecured, which is past due for 12 months or longer or upon which no interest has been paid for 12 months or longer will be permitted only one time.
(5) To record a recovery the allowance account will be credited and the cash account debited. If interest is collected, the amount will be credited to income.
(6) When setting aside the required transfer to the regular reserve the amount previously credited to the allowance account for loan losses in the form of monthly or special transfers during the period will be deducted from the required transfer first, then the regular reserve account.
(7) For the purpose of determining the regular reserve to risk asset ratio, the total regular reserve will equal the sum of regular reserve plus allowance for loan losses.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.044, 657.043(2) FS. HistoryNew 10-13-81, Formerly 3C-30.32, 3C-30.032, Amended 10-8-95, Formerly 3C-110.043, Amended________.
69U-110.0431 Depletion of Regular Reserves.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.043(3) FS. HistoryNew 2-4-85, Formerly 3C-30.38, 3C-30.038, Amended 10-8-95, Formerly 3C-110.0431, Repealed_________.
69U-110.0432 Equity Plan Requirements.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.043(8) FS. HistoryNew 10-8-95, Formerly 3C-110.0432, Repealed_________.
69U-110.044 Accounting Practices.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.044(1) FS. HistoryNew 2-4-85, Formerly 3C-30.40, 3C-30.040, Amended 10-8-95, Formerly 3C-110.044, Repealed_________.
69U-110.045 Reports to OFR.
Each credit union shall prepare and submit an accurate and complete OFR shall require a quarterly report of financial condition to the OFR. The reports shall reflect the credit unions condition to be prepared as of the close of business on March 31, June 30, September 30, and December 31. Each credit union shall file its report electronically with the OFR and National Credit Union Administration (NCUA). The credit union shall provide the report required to maintain insurance of accounts by the National Credit Union Share Insurance Fund, as provided in NCUA Rule 741.6 (codified at 12. C.F.R. § 741.6 (2006)), which is hereby incorporated by reference. Form NCUA 5300 (revised 12/01), which is hereby incorporated by reference. Such reports shall be due no later than April 22, July 22, October 22, and January 22, respectively, of each year. If any due date falls on a weekend or holiday, a quarterly report is timely filed if it is postmarked or electronically transmitted no later than the next business day. An administrative late fee of $100.00 per day shall be levied against a credit union pursuant to Section 655.045(2)(b), F.S., for reports not timely filed unless the administrative fine is waived by OFR for good cause, such as incidental and isolated clerical errors or omissions.
Specific Authority 655.012(2) FS. Law Implemented 655.045(2) FS. HistoryNew 10-31-81, Formerly 3C-30.31, 3C-30.031, Amended 10-8-95, 3-20-02, Formerly 3C-110.045, Amended________.
69U-110.050 Currency Reporting Compliance Requirements.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.50, 657.021(7) FS. HistoryNew 2-24-88, Formerly 3C-30.041, Amended 10-8-95, Formerly 3C-110.050, Repealed__________.
69U-110.062 Capitalization Criteria for Conservatorship or Involuntary Liquidation Actions.
The office may take action to have a credit union placed into a conservatorship or involuntary liquidation upon finding that, among other reasons, the credit union is significantly undercapitalized or undercapitalized, and has no reasonable prospect of becoming adequately capitalized. The criteria for such determination of capitalization shall be as defined in the net worth categories contained in s. 216, the Federal Credit Union Act, codified at 12 U.S.C. 1790d(c), and the regulations promulgated thereunder in 12 C.F.R. Part 702 (2006), which are incorporated by reference.
Specific Authority 655.012, 657.062, 657.063 FS. Law Implemented 657.062, 657.063 FS. HistoryNew_________.
69U-110.063 Credit Unions Liquidation Certificate and Maintenance of Records.
(1) No change.
(2) OFR itself shall be authorized to receive and maintain the books and records of a credit union upon dissolution or it shall be authorized to appoint as custodian the National Credit Union Administration to keep and maintain the books and records of such dissolved credit union.
(3) No change.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655-057, 657.062, 657.063, 657.064 FS. HistoryNew 11-7-84, Formerly 3C-30.39, Amended 1-25-87, Formerly 3C-30.039, Amended 10-8-95, Formerly 3C-110.063, Amended _________.
69U-110.065 Merger.
In conjunction with the requirements of Section 657.065, F.S., if the proposed surviving credit union is state chartered, it shall submit a nonrefundable application fee of $500 to OFR, along with an Application for Approval of Merger on Form OFR-U-64, (revised 3/2003), which is hereby incorporated by reference. If the proposed surviving credit union is federally chartered, the credit union shall submit a copy of the federal merger application to OFR. The Credit union shall notify OFR, NCUA and other regulatory agencies, as applicable, upon consummation of the merger.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.065 FS. HistoryNew 7-25-66, Renumbered from 3-5.12 to 3D-10.23 on 7-18-75, Amended 10-21-75, Formerly 3D-10.23, Amended 10-13-81, Formerly 3C-30.23, 3C-30.023, Amended 10-8-95, Formerly 3C-110.065, Amended_________.
69U-110.068 Central Credit Unions.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.068(2)(d), (e) FS. HistoryNew 10-13-81, Formerly 3C-30.36, 3C-30.036, Amended 10-8-95, Formerly 3C-110.068, Repealed __________.
69U-110.002 Definitions.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.002, 657.008(2), 657.038(12) FS. HistoryNew 7-25-66, Renumbered from 3-5.02 to 3D-10.01 on 7-18-75, Amended 10-13-81, Formerly 3C-30.01, 3C-30.001, Amended 10-8-95, Formerly 3C-110.002, Repealed_________.
69U-110.005 Application and Filing Fee.
Application for authority to organize and operate a credit union shall be made to OFR per Rules 69U-105.001, 69U-105 Part I, F.A.C., and as follows:
(1) The organizers of the proposed credit union shall complete and file Form OFR-U-60, Application for Authority to Organize and Operate a Credit Union (revised 3/2003), which is hereby incorporated by reference, in triplicate and proposed bylaws on Form OFR-U-61, Model Credit Union Bylaws By-laws (revised 6/2006 3/2003), which is hereby incorporated by reference, in triplicate. The original shall be submitted to OFR with a nonrefundable filing fee of $250. A copy shall be submitted to the National Credit Union Administration and a copy shall be retained by the organizers.
(2) Each proposed director, member of the supervisory committee, and member of the credit committee, and executive officer shall complete the biographical report section only of Form OFR-U-10, Biographical Report (revised 3/2003) and Form OFR-U-10-A (revised 6/2006), which are hereby incorporated by reference, in triplicate. The original shall be submitted to OFR, a copy shall be submitted to the National Credit Union Administration, and a copy shall be retained by the organizers.
(3) Filing; Pre-filing meeting. OFR encourages that the applicant, including a member of the proposed board of directors, meet with staff of OFR to discuss the procedures and requirements for opening a new state financial institution prior to filing an application.
Specific Authority 120.543(1)(b), 655.012(2)(3), 657.005 FS. Law Implemented 657.005 FS. HistoryNew 10-21-75, Amended 3-21-77, 10-13-81, Formerly 3C-30.02, 3C-30.002, Amended 10-8-95, Formerly 3C-110.005, Amended_________.
69U-110.0061 Bylaws.
(1) New Credit Unions. Newly organized credit unions shall adopt bylaws in such form as provided by OFR, Form OFR-U-61, Model Credit Union Form Bylaws (revised 6/2006), which is hereby incorporated by reference, as their initial set of bylaws. The Model Credit Union Bylaws may be obtained from the OFR website or upon request.
(2) Amendments. All proposed bylaw amendments shall be submitted to OFR by filing Bylaw Amendment Form OFR-U-61-A (revised 6/2006), which is hereby incorporated by reference. OFR shall approve or disapprove proposed bylaw amendments within 60 days after receipt of a complete application. after receipt of same, except that amendments to the bylaws affecting the following subjects shall not require prior approval before they become operative:
(a) Receipting for moneys received.
(b) Dividends and interest refunds.
(c) Executive officers.
Bylaw Amendment Form OFR-U-61-A (revised 3/2003), which is hereby incorporated by reference, shall be used for submitting all bylaw amendments to OFR.
(3) To ensure compliance with Section 657.0061(1), F.S., a credit union that is proposing to expand its field of membership through a bylaw amendment must:
(a) Be operating in a safe and sound manner per paragraph 69U-100.948(2)(a), F.A.C., unless evidence is provided to show that a field of membership expansion will improve the financial condition of the credit union, and; OFR shall require any credit union filing a bylaw amendment which expands its field of membership to complete Form
(b) Complete Form OFR-U-70, Field of Membership Expansion Questionnaire (effective 10/95, revised 6/2006 3/2003), which is hereby incorporated by reference, when the expansion is geographic or increases the credit unions potential field of membership by more than five percent (5%).; or
(c) Provide to the OFR written notice of the number of potential new members if the field of membership expansion is non-geographic, and the resulting increase is five percent or less than the potential membership.
(4) Relocation. A credit union may change its principal place of doing business upon approval of OFR and filing an amendment on Form OFR-U-61-A to its bylaws. The filing shall include appropriate and sufficient financial information as OFR may require to document the investment in fixed assets.
(5)(4) Adoption of OFR Model Credit Union Form Bylaws. Any existing credit union may which desires to adopt the OFR form Model Credit Union Bbylaws as their bylaws may do so, in whole or in part, without prior application or notice to the OFR, however, no credit union shall change its name, the address of its principal place of business, or its field of membership through this process. The credit union shall file its amended bylaws with OFR within 10 business days of such adoption by the appropriate bylaw amendment process, and file with OFR after adoption by the credit union. Prior approval of the OFR shall not be required for such adoption provided that no credit union shall change its name, the address of its principal place of business, its field of membership, or the par value of each share without first obtaining the written approval of OFR.
(6)(5) Restatement of Bylaws. Any existing credit union may administratively which desires to restate its bylaws for clarity, correction of typographical errors, and to incorporate, incorporateing all previously approved bylaw amendments without prior application or notice to the OFR, may do so. No However, a credit union may not make additional changes to its bylaws are authorized through the bylaw restatement procedure. The credit union shall file its restated bylaws with OFR within 10 business days of such restatement.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.005(3)(e), 657.0061(1), 657.008 FS. HistoryNew 7-25-66, Renumbered from 3-5.10 to 3D-10.05 on 7-18-75, Amended 10-21-75, Formerly 3D-10.06, Amended 10-13-81, Formerly 3C-30.06, 3C-30.006, Amended 10-8-95, Formerly 3C-110.0061, Amended________.
69U-110.008 Branches Relocation and Place of Doing Business.
(1) Branch office means any permanent location or mobile unit other than the principal place of business where membership services are provided by credit union staff. Relocation. A credit union may change its principal place of doing business in the state upon approval of OFR.
(a) OFR shall approve such request when the credit union has shown that:
1. The relocation of the principal place of business is reasonably necessary to furnish service to its members; and
2. The new location will not unduly injure any state or federal credit union whose field of membership overlaps that of the applicant credit union.
(b) A credit union may change the location of its office without approval of OFR provided the street address as filed with OFR is not changed.
(2) Branches. A credit union operating in a safe and sound manner in paragraph 69U-100.948(2)(a), F.A.C., may open a branch office or relocate branch offices previously established by providing separate from its principal place of business with 30 days after prior written notification to OFR not less than thirty (30) days before the opening of the branch. The notification must specify the name and location of the branch office and effective date of the change. The branch office location and operations must comport with the credit unions bylaws and authorized field of membership. Notification shall be made on Form OFR-U-65, Notice of Establishment of a Credit Union Branch Office (revised 3/2003), which is hereby incorporated by reference.
(3) Any additional investment in fixed assets related to be made in conjunction with a change in location or opening of a branch office may not exceed the statutory limits of investments in real estate and equipment without prior written approval of OFR unless the credit union meets the criteria of subparagraph 69U-110.031(2)(a)2., F.A.C.
(4) OFR shall be notified in writing within ten business days of the closing of an established branch office.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.008(1), (2), (5), 657.042(5) FS. HistoryNew 6-16-78, Amended 10-13-81,___________.
69U-110.021 Filling of Appointments.
(1) Within thirty (30) days after election or appointment, including any change of position, each executive officer, director, member of the supervisory or audit committee, and member of the credit committee, or credit manager, and chief executive officer shall complete and file with the OFR the biographical report section only of Form OFR-U-10, Biographical Report (revised 3/2003) and Form OFR-U-10-A (revised 6/2006). The foregoing forms are hereby incorporated by reference file Form OFR-U-62, Statement of Directors, Committee Members and Certain Officers (revised 3/2003) which are hereby incorporated by reference, with OFR.
(2) No change.
(3) Within 30 days after election or appointment, a record of the names and addresses of the members of the board, members of committees, and all officers of the credit union shall be filed with the office. This filing may be satisfied by providing the office with a copy of reports filed with the National Credit Union Administration per 12 C.F.R. § 741.6 (2006), which is incorporated by reference.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.021(3), 657.028(4), (6) FS. HistoryNew 7-24-66. Renumbered from 3-5.07 to 3D-10.08 on 7-18-75, Amended 10-21-75, Formerly 3D-10.08, Amended 10-13-81, Formerly 3C-30.08, 3C-30.008, Amended 10-8-95, Formerly 3C-110.02, Amended___________.
69U-110.0211 Liability and Bond Insurance Surety Bonds.
The credit union shall maintain officer and director liability insurance and blanket bond insurance in such amounts and terms as required to maintain insurance of accounts by the National Credit Union Share Insurance Fund, as provided in National Credit Union Administration Rules 741.3(c) and 741.201(a) (codified at 12 C.F.R. §§ 741.3(c) and 741.201(a), respectively (2006)), which are hereby incorporated by reference. The liability and bond insurance shall provide, at a minimum, coverage for errors, omissions, negligence, fraud, and dishonesty by all employees, directors, officers, supervisory or audit committee members, and credit committee members. The credit union shall also maintain applicable insurance coverage with respect to all operations and activities. All officers, directors, committee members and employees of a credit union handling or having access to money, bank accounts, or securities owned by or pledged to the credit union shall be covered by a blanket surety bond protecting the credit union against loss due to fraud or dishonesty in an amount not less than that shown in the following schedule based on the assets of the credit union at the end of the preceding calendar year:
(a) The minimum required amounts of blanket bond coverage, based on the credit unions total assets, are:
Assets Minimum Bond
$0 to $10,000 Coverage equal to the credit unions assets.
$10,001 to $1,000,000 $10,000 for each $100,000 or fraction thereof in assets.
$1,000,001 to $50,000,000 $100,000 plus $50,000 for each million or fraction thereof over $1,000,000 in
assets.
$50,000,001 to $295,000,000 $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000
in assets.
Over $295,000,000 $5,000,000
The board of directors is required to provide adequate protection to meet the credit unions unique circumstances by obtaining, when necessary, bond and insurance coverage in excess of the required minimum. The board of directors must also conduct an annual review of all bond and insurance policies to ascertain that such coverage adequately covers the risks of operating the credit union. and also meets the minimum requirements. The board shall ensure that the credit union complies with all National Credit Union Administration rules relating to surety bonds.
(2) The maximum amounts of permissible deductibles, based on the credit unions assets, are:
Assets Deductible allowed:
Assets of $1 to $100,000 No deductible allowed
Assets of $100,001 to $250,000 $1,000 deductible
Assets of $250,001 to $1,000,000 $2,000 deductible
Assets over $1,000,001 $2,000 plus 1/1,000 of total assets up to a maximum deductible of $200,000
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.021(7)(a) FS. HistoryNew 10-13-81, Formerly 3C-30.33, 3C-30.033, Amended 10-8-95,____________.
69U-110.0212 Policies.
The board of directors shall establish appropriate written policies and operating strategies to conduct prudent credit union operations based on the complexity of the credit union. Policies shall be reviewed and approved/reaffirmed per a schedule adopted by the Board, but no less than once every two years from the previous adoption or reaffirmation of each policy. The board is encouraged to consider published industry guidance provided by regulatory agencies in the development of policies, if available. The policies shall ensure that the credit union complies with all applicable state and federal requirements with respect to all operations and activities.
Specific Authority 120.54, 655.012 FS. Law Implemented 657.021 FS. HistoryNew________.
69U-110.026 Supervisory/Audit Committee; Audit.
(1) The supervisory committee of each state chartered credit union shall perform, or cause to be performed, an audit of the credit union to include every general ledger control account and related internal control procedures within each calendar year and within 15 months of the previous audit. Such audit shall be in compliance with the Comprehensive Annual Audit Minimum Audit - Procedures Report and shall be filed on Form OFR-U-63 (revised 3/2003), which is hereby incorporated by reference. No audit performed to satisfy this requirement shall be made within six (6) months of the previous audit, unless prior written consent has been obtained from OFR.
(1) Audit Committee.
(2) In lieu of establishing a supervisory committee, a credit union may elect or appoint an audit committee in compliance with the following conditions:
(a) The credit unions bylaws must be amended to provide for an audit committee, to set forth the membership of the audit committee, and to establish whether the members of the audit committee are appointed or elected to such position;
(b) Directors Any director which participates on the audit committee shall not perform or participate in any audits an audit for the audit committee; and
(c) No change.
(2) The supervisory or audit committee of each state chartered credit union shall perform, or cause to be performed, an annual audit of the credit union in each calendar year and within 15 months of the previous audit. The complete audit, including all summaries, reports, drafts, work papers, and similar documents, shall be made available upon request to the OFR for examination, copying, and review at the credit unions principal place of business. The annual audit shall be performed in such a manner as to ensure the maintenance of account insurance as required by Section 657.033, F.S., as provided in National Credit Union Administration Rule 741.202 (codified at 12 C.F.R. § 741.202 (2006)), which is hereby incorporated by reference.
(3) Persons Qualified to Perform Audits. Any person which performs audits for a credit union must qualify pursuant to one of the following classes:
(a) The supervisory committee which has been duly elected by the membership or appointed by the board of directors. The supervisory committee must complete all the requirements contained in the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, including preparing supporting work papers;
(b) Any person with a minimum of two (2) years of experience in auditing or examining financial institutions and which person has been duly appointed by the supervisory committee to perform such audit. Such person shall complete all the requirements of the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, including all supporting work papers.
(c) Certified public accountants which are licensed to practice in the State of
(3)(4) Content, Submission and Review of Audit Reports.
(a) Within 90 days after the completion of the audit, and within 45 days of acceptance by the board of directors, the board of directors shall submit with the report or shall be included in the report the following to the OFR: The audit report submitted to OFR shall include the following:
1. The date or dates on which the audit was conducted and the completion date;
2. A statement indicating that all of the procedures in the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, were performed, or specific reasons why required procedures were not included in the audit. Additionally, a completed copy of Form OFR-U-63 shall also be included. If an opinion audit prepared by a certified public accountant is submitted, the opinion audit must include a statement that certifies that the minimum audit procedures required by the AICPAs Audit and Accounting Guide Audits of Credit Unions (dated May 1, 1994), which is hereby incorporated by reference, have been performed;
2.3. A statement of condition as of the audit date;
3.4. A statement of income and expense for the calendar period year-to-date;
5. A schedule of verifications;
6. A summary schedule of delinquent accounts;
4.7. A statement describing the audit findings and recommendations; and
5.8. The A statement of the credit unions response to the audit findings and recommendations.
(4) OFR shall review each audit and, if it finds that the audit does not comprehensively address all relevant areas of concern or accurately reflect the condition of the credit union, OFR shall require an audit pursuant to paragraph 655.045(3)(a), F.S.
(b) The completed audit report shall be submitted to the board of directors within thirty (30) days of the completion date of the audit report. Within forty-five (45) days of the acceptance date of the audit report by the board of directors, the completed audit report, including all the requirements of paragraph (4)(a), and a notice of acceptance and consideration by the board of directors shall be submitted to OFR.
(c) Each audit report and supporting work papers shall be subject to review by OFR. Upon completion of OFRs review, an acknowledgment will be furnished to the credit union noting acceptance of the audit report or indicating specific areas of inadequate compliance with the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63.
(5) Minimum Audit Requirements.
(a) To be acceptable, every audit of a credit union must be made in accordance with the Comprehensive Annual Audit Minimum Audit Procedures Report, Form OFR-U-63, and supported by work papers. An opinion audit by an independent certified public accountant together with the management letter comments and the credit unions response thereto, can be accepted as satisfaction of the minimum audit requirements.
(b) OFR shall determine whether an audit is acceptable. OFR shall reject any audit which does not materially conform with the minimum prescribed requirements. OFR shall reject any audit if OFR finds that any person who has performed such audit has not followed recognized rules of ethics or conduct, or has not met the minimum standards of this section. Any material misstatement of facts or circumstances or any misrepresentation of any kind knowingly made shall also cause the audit to be rejected. If the audit is rejected, OFR shall have the option of requiring an acceptable audit to be made at the expense of the credit union.
(c) The scope of the audit, the extent to which accounts must be tested and the audit comments required, will vary according to the adequacy of the internal control procedures. Credit unions having sound established internal control procedures may find these minimum requirements sufficient. However, the minimum procedures should not be construed as restrictive. Circumstances may make it necessary or desirable to expand certain procedures, apply alternative procedures, or extend the audit procedures to additional areas. The audit shall include a general review of the credit unions operating procedures and system of internal controls and the audit report shall include comments and recommendations resulting from this review. Unless otherwise stated, all test check procedures are to be performed from the previous audit date.
(d) Verification of accounts.
1. The verification of accounts required by section 115 of the Federal Credit Union Act (12 U.S.C. §1761d) and section 741.2 of the National Credit Union Administration Rules and Regulations (12 C.F.R. §741.2), which are hereby incorporated by reference, as such provisions existed on 10/95 could be substituted for the verification required in conjunction with the minimum audit requirements if performed using the same as of date as the audit.
2. Loans.
a. Commercial or Business Loans 20 percent of the total dollar volume provided that at least 5 percent of the total number of loans outstanding are represented, exclusive of past due loans, by positive verification.
b. Installment Loans 10 percent of the total number of outstanding loans (unless warranted, such confirmations need not exceed 250 accounts), exclusive of past due loans, by positive or negative verification.
c. Credit Card Accounts 5% of the total number of loans outstanding, exclusive of past due credit card accounts, by positive or negative verification.
d. Past Due Loans and Credit Card Accounts 100 percent, by positive or negative verification.
3. Shares, Share Drafts and Deposits.
a. Shares 10 percent of the total number of accounts provided that 10 percent of the total dollar volume is represented, by positive or negative verification.
b. Term Share and Deposits 100 percent of all accounts with a balance of $100,000 or more and 10 percent of the total number of remaining accounts, by positive or negative verification.
4. Information required: The number of accounts, dollar amounts, customer response and reconcilement information will be included in the audit report in tabular form showing percentages in each case. Other sampling methods, used in an opinion audit, will be permitted if such methods meet the minimum requirements of minimum auditing standards which are generally recognized industry wide. In such a case, however, a schedule of confirmations showing the percentage of each type of account performed shall be included in the audit report in tabular form.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.045(3), 657.026 FS. HistoryNew 7-25-66, Renumbered from 3-5.08 to 3D-10.10 on 7-18-75, Amended 10-21-75, Formerly 3D-10.10, Amended 10-13-81, Formerly 3C-30.10, 3C-30.010, Amended 10-8-95, Formerly 3C-110.026, Amended_________.
69U-110.031 Powers.
(1) Definitions. As used in Chapter 69U-110, F.A.C., and the Financial Institutions Codes, Title 38, Florida Statutes, as applicable to credit unions, and unless the context otherwise indicates a different meaning was intended, the term:
(a) General Powers means the same powers as an individual to do all things necessary, convenient, or useful to carry out its business and affairs as a financial institution, consistent with the Financial Institutions Codes, in providing financial services and benefits to its members.
(b) Incidental Powers means those powers necessary to conduct business activities that may only indirectly or coincidentally benefit or serve the credit unions members, mission, or business, or are the functional equivalent or logical outgrowth of activities that are part of the mission or business of credit unions and involves risks similar in nature to those already assumed as part of the business of credit unions.
(2) General Powers Activities. Credit unions are authorized to engage in those general powers activities to provide financial services and benefits to their members without prior approval of the OFR, unless such approval is otherwise specifically required by law or is necessary to achieve competitive equality per Section 655.061, F.S. The following general powers activities are so authorized for competitive equality:
(a) Credit unions exempted from significant events reporting per Section 655.948(4)(a), F.S., and meeting the net worth and Capital, Asset, Management, Earnings and Liquidity (CAMEL) rating eligibility criteria for the National Credit Union Administrations Regulatory Flexibility Program, as specified in 12 C.F.R Part 742 (2006), which is hereby incorporated by reference, may:
1. Establish and maintain Federal public unit and nonmember accounts in accordance with National Credit Union Administration (NCUA) Rule 701.32 (codified at 12 C.F.R. § 701.32 (2006)), which is hereby incorporated by reference, and the exemption of NCUA Rule 742.4(a) (codified at 12 C.F.R. § 742.4(a)(2006)), which is hereby incorporated by reference, consistent with the limitations of Chapter 280, F.S.;
2. Invest in real estate and equipment for the credit union as provided in Section 657.042(5), F.S., that may exceed five percent of the capital of the credit union, without prior notice or approval of the OFR; and
3. Invest in commercial mortgage related securities as may be permitted by NCUA Rule 703.16 (codified at 12 C.F.R. § 703.16 (2006)), which is hereby incorporated by reference, and the exemption, limitations and restrictions of NCUA Rule 742.4(b) (codified at 12 C.F.R. § 742.4(b) (2006)), which is hereby incorporated by reference.
(b) Credit unions may serve as a United States Treasury Department tax and loan depository, a depository of Federal taxes, and a financial agent of the United States Government, in accordance with NCUA Rules (codified at 12 C.F.R. Chapter VII (2006)), which is hereby incorporated by reference.
(3) Incidental Powers Activities. Credit unions are authorized to engage in such incidental powers activities as authorized by law or approved by the OFR. The following category of activities is pre-approved as incidental to carrying on credit union business:
Trustee or custodial services. Trustee or custodial services are services in which the credit union is authorized to act under any written trust instrument or custodial agreement created or organized in the United States and forming part of a tax-advantaged savings plan, as authorized under the Internal Revenue Code. These services may include acting as a trustee or custodian for member retirement, education and health savings accounts.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.061, 657.031, 657.042 FS. HistoryNew________.
69U-110.038 Applications for Credit.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.038(12) FS. HistoryNew 7-25-66, Renumbered from 3-5.01 to 3D-10.11 on 7-18-75, Amended 10-21-75, Formerly 3D-10.11, Amended 10-13-81, Formerly 3C-30.11, 3C-30.011, Amended 10-8-95, Formerly 3C-110.038, Repealed________.
69U-110.0381 Loans Secured by Real Estate Minimum Requirements for Certain Types.
The board of directors shall adopt and maintain written policies that establish appropriate limits and standards for loans that are secured by liens on or interests in real estate. Real estate lending policies must be: consistent with safe and sound industry practices; appropriate for the size of the credit union and scope of its operations; and reviewed and approved by the board of directors in accordance with Rule 69U-110.0212, F.A.C. The lending policies must establish: loan portfolio diversification standards; prudent underwriting standards; loan administration procedures for the credit union's real estate portfolio; and documentation, approval, and reporting requirements to monitor compliance with the credit union's real estate lending policies.
(1) Loans secured by real estate. The board of directors must establish a mortgage loan policy which specifies the types of mortgage loans that can be made, the dollar limit on such loans, and the maximum maturity and minimum documentation requirements. An asset/liability management policy must also be established which limits the total percentage amount of all mortgage loans and the type of individual mortgage loans offered. The maximum amount (or credit limit) of a mortgage plus the outstanding balances (or credit limits) of any outstanding prior liens may not exceed appraised or documented property value. The minimum documentation required for all loans primarily secured by real estate includes:
(a) Appraisal or determination of property value as required by Rule 69U-100.600, F.A.C., Appraisal Standards;
(b) Mortgagee title insurance or an attorneys opinion of title. However, in the case of a home equity loan, mortgagee title insurance or an attorneys opinion of title is not required.
(c) Hazard insurance, including fire and extended coverage, in an amount of at least the outstanding mortgage balance or value of any improvements used to determine value, whichever is less, with the credit union named as loss payee.
(d) Flood insurance, if the property is located in a special flood hazard area, in an amount of at least the value of the improvements or the maximum amount obtainable under standard flood insurance policies.
(e) Mortgage recorded in the public records of the county or counties wherein the property is located.
(f) Closing statement reflecting the allocation/disbursement of the mortgage loan proceeds.
(2) The minimum documentation requirements for loans based on the collateral consisting of motor vehicles, mobile homes, airplanes or boats include:
(a) Evidence of a properly recorded lien in favor of the credit union, including the original title certificate where available, retained in the files of the credit union.
(b) Security agreement.
(c) Evidence of hazard insurance insuring against fire, theft, comprehensive and collision coverage with a loss payee clause in favor of the credit union; provided, however, in lieu of hazard insurance purchased by the borrower, the credit union may purchase vendors single interest insurance; the credit committee, or credit manager, may waive comprehensive and collision coverage by executing a statement of justification thereof, which statement shall be kept in the loan file.
(3) The provisions of this rule are not all inclusive and all credit unions shall comply with all state and federal requirements with respect to all loans.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.60, 657.038(5)(6), (11)(12) FS. HistoryNew 7-25-66, Amended 10-26-67, 3-9-70, Renumbered from 3-5.01 to 3D-10.13 on 7-18-75, Amended 10-21-75, Formerly 3D-10.13, Amended 10-13-81, Formerly 3C-30.13, 3C-30.013, Amended 10-8-95, Formerly 3C-110.0381, Amended_________.
69U-110.0382 Credit Cards.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.954(1), 657.031(27), 657.038 FS. HistoryNew 2-1-78, Amended 10-13-81, Formerly 3C-30.28, 3C-30.028, Amended 10-8-95, Formerly 3C-110.0382, Repealed________.
69U-110.042 Investments.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.042(2), (6) FS. HistoryNew 10-13-81, Amended 12-16-85, Formerly 3C-30.34, 3C-30.034, Amended 10-8-95, Formerly 3C-110.042, Repealed________.
69U-110.043 Reserves Allowance for Loan Losses.
(1) Allowance for Loan Losses. The board of directors must establish procedures to verify that the allowance for loan losses account methodology is valid and conforms to generally accepted accounting principles and supervisory guidance. At a minimum, the board shall require an annual review through the annual audit or otherwise, by an independent party, as to the validity of, conformance to, and effectiveness of the established methodology and allowances. The allowance for loan loss account (allowance account) is a contra-asset account to the loan accounts on the financial statement of a credit union. Each state chartered credit union must establish an allowance account within the records of the credit union. A credit union must thereafter maintain a reasonable balance in the account through periodic charges to the operating expense account (provision for loan loss account) of the credit union.
(2) All loan and negative balance share or deposit balances charged-off shall be reported to the board of directors in accordance with a policy adopted by the board wherein parameters are set when to report individual amounts or aggregate amounts by classification, or both. The report shall be approved by the board. The amount of the allowance account must be adequate to cover specifically identified loans, as well as estimated losses inherent in the loan portfolio, such as loans and pools of loans for which losses are probable but not identifiable on a specific loan-by-loan basis. At a minimum, the following formula shall be used to determine the adequacy of the allowance account:
(a) 100% of classified loans; plus
(b) The outstanding principal balance of all loans, less those which are classified, times the five year average loan loss ratio.
(c) Classified loans include all loans that are delinquent or nonperforming and which have been determined by the board of directors to be worthless or doubtful of collection. To determine the dollar value of classified loans, the credit union management shall regularly review and report to the board of directors all delinquent or nonperforming loans. Nonperforming loans shall include all loans which have been refinanced or extended without adequate payment history.
(d) The five year average loan loss ratio, as determined by the credit union, may be changed by OFR or the National Credit Union Administration if it is determined through an examination or visitation that the required amount is not representative of the losses inherent in the loan portfolio.
(e) Credit unions which maintain sufficient detail to compute a loan loss ratio for each loan category or loans acquired through merger may establish a loan loss ratio for each category of loan.
(f) The board of directors shall review the allowance account and direct any necessary adjustments to the account balance. If, at any time, the actual allowance account balance falls below the required balance, the board of directors shall increase the balance to the required amount before paying dividends.
(3) Each credit union shall establish a monthly accrual based on estimated losses. The monthly accrual shall be credited to the allowance account and debited to the expense account.
(4) The board of directors shall approve all charge-offs of loans prior to such charge-off. To record the charge-off of a loan, the allowance account will be debited for the net amount charged off and the loan account will be credited. Any note or other obligation, either secured or unsecured, which is past due for 12 months or longer, is deemed to be worthless, or upon which no interest has been paid for 12 months or longer shall be charged off against the allowance account, except that:
(a) Any such note or other obligation which is secured by a lien or other collateral may be carried as an asset of the credit union at the current fair market value of the collateral securing the note or obligation.
(b) Any note or other obligation upon which payments are being made in a manner which will retire the debt may be carried as an asset of the credit union to the extent of its reasonable or market value as determined by the board.
(c) Any such note or other obligation may be refinanced if a new note or obligation is executed and:
1. All past due interest is paid;
2. The loan is collateralized fully and such collateral amply secures the obligation; or
3. The member meets the underwriting criteria established in the loan and credit policy. The new note or obligation may then be carried as an asset of the credit union at full face value. Refinancing of a note or obligation, either secured or unsecured, which is past due for 12 months or longer or upon which no interest has been paid for 12 months or longer will be permitted only one time.
(5) To record a recovery the allowance account will be credited and the cash account debited. If interest is collected, the amount will be credited to income.
(6) When setting aside the required transfer to the regular reserve the amount previously credited to the allowance account for loan losses in the form of monthly or special transfers during the period will be deducted from the required transfer first, then the regular reserve account.
(7) For the purpose of determining the regular reserve to risk asset ratio, the total regular reserve will equal the sum of regular reserve plus allowance for loan losses.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.044, 657.043(2) FS. HistoryNew 10-13-81, Formerly 3C-30.32, 3C-30.032, Amended 10-8-95, Formerly 3C-110.043, Amended________.
69U-110.0431 Depletion of Regular Reserves.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.043(3) FS. HistoryNew 2-4-85, Formerly 3C-30.38, 3C-30.038, Amended 10-8-95, Formerly 3C-110.0431, Repealed_________.
69U-110.0432 Equity Plan Requirements.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.043(8) FS. HistoryNew 10-8-95, Formerly 3C-110.0432, Repealed_________.
69U-110.044 Accounting Practices.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.044(1) FS. HistoryNew 2-4-85, Formerly 3C-30.40, 3C-30.040, Amended 10-8-95, Formerly 3C-110.044, Repealed_________.
69U-110.045 Reports to OFR.
Each credit union shall prepare and submit an accurate and complete OFR shall require a quarterly report of financial condition to the OFR. The reports shall reflect the credit unions condition to be prepared as of the close of business on March 31, June 30, September 30, and December 31. Each credit union shall file its report electronically with the OFR and National Credit Union Administration (NCUA). The credit union shall provide the report required to maintain insurance of accounts by the National Credit Union Share Insurance Fund, as provided in NCUA Rule 741.6 (codified at 12. C.F.R. § 741.6 (2006)), which is hereby incorporated by reference. Form NCUA 5300 (revised 12/01), which is hereby incorporated by reference. Such reports shall be due no later than April 22, July 22, October 22, and January 22, respectively, of each year. If any due date falls on a weekend or holiday, a quarterly report is timely filed if it is postmarked or electronically transmitted no later than the next business day. An administrative late fee of $100.00 per day shall be levied against a credit union pursuant to Section 655.045(2)(b), F.S., for reports not timely filed unless the administrative fine is waived by OFR for good cause, such as incidental and isolated clerical errors or omissions.
Specific Authority 655.012(2) FS. Law Implemented 655.045(2) FS. HistoryNew 10-31-81, Formerly 3C-30.31, 3C-30.031, Amended 10-8-95, 3-20-02, Formerly 3C-110.045, Amended________.
69U-110.050 Currency Reporting Compliance Requirements.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655.50, 657.021(7) FS. HistoryNew 2-24-88, Formerly 3C-30.041, Amended 10-8-95, Formerly 3C-110.050, Repealed__________.
69U-110.062 Capitalization Criteria for Conservatorship or Involuntary Liquidation Actions.
The office may take action to have a credit union placed into a conservatorship or involuntary liquidation upon finding that, among other reasons, the credit union is significantly undercapitalized or undercapitalized, and has no reasonable prospect of becoming adequately capitalized. The criteria for such determination of capitalization shall be as defined in the net worth categories contained in s. 216, the Federal Credit Union Act, codified at 12 U.S.C. 1790d(c), and the regulations promulgated thereunder in 12 C.F.R. Part 702 (2006), which are incorporated by reference.
Specific Authority 655.012, 657.062, 657.063 FS. Law Implemented 657.062, 657.063 FS. HistoryNew_________.
69U-110.063 Credit Unions Liquidation Certificate and Maintenance of Records.
(1) No change.
(2) OFR itself shall be authorized to receive and maintain the books and records of a credit union upon dissolution or it shall be authorized to appoint as custodian the National Credit Union Administration to keep and maintain the books and records of such dissolved credit union.
(3) No change.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 655-057, 657.062, 657.063, 657.064 FS. HistoryNew 11-7-84, Formerly 3C-30.39, Amended 1-25-87, Formerly 3C-30.039, Amended 10-8-95, Formerly 3C-110.063, Amended _________.
69U-110.065 Merger.
In conjunction with the requirements of Section 657.065, F.S., if the proposed surviving credit union is state chartered, it shall submit a nonrefundable application fee of $500 to OFR, along with an Application for Approval of Merger on Form OFR-U-64, (revised 3/2003), which is hereby incorporated by reference. If the proposed surviving credit union is federally chartered, the credit union shall submit a copy of the federal merger application to OFR. The Credit union shall notify OFR, NCUA and other regulatory agencies, as applicable, upon consummation of the merger.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.065 FS. HistoryNew 7-25-66, Renumbered from 3-5.12 to 3D-10.23 on 7-18-75, Amended 10-21-75, Formerly 3D-10.23, Amended 10-13-81, Formerly 3C-30.23, 3C-30.023, Amended 10-8-95, Formerly 3C-110.065, Amended_________.
69U-110.068 Central Credit Unions.
Specific Authority 120.54, 655.012(2) FS. Law Implemented 657.068(2)(d), (e) FS. HistoryNew 10-13-81, Formerly 3C-30.36, 3C-30.036, Amended 10-8-95, Formerly 3C-110.068, Repealed __________.
