Colorado Regulator Gives SCCUs Incidental Powers Parity with FCUs

DENVER – The Colorado Financial Services Board approved the adoption of several new regulations for state-chartered credit unions, effective Jan. 10, including granting SCCUs incidental powers parity with federal credit unions granted them by NCUA’s Rules and Regulations Part 721. Under the state’s new rule, a state-chartered credit union can apply for specific approval from the State Commissioner of Financial Institutions for activities not included in the specific categories listed in the federal rule. Other promulgated regulations concerned: * sale of loans – SCCUs can sell all or parts of member loans without prior approval of the Commissioner, to any entity the CU considers appropriate provided the CU’s board has adopted written policies that authorize the loan sales and the CU retains a written agreement and schedule of the loans sold; * small groups – groups of less than 1,000 people who have a common bond of employment or association but who lack the potential membership to organize their own credit union, can be accepted into the field-of-membership of an existing SCCU. For groups larger than 1,000, the CU has to apply for and receive the Commissioner’s approval before accepting the group into its membership. The Commissioner can also limit or prohibit a particular credit unions from accepting small groups of any size into its membership; * investments – a CU can invest in deposit accounts in federally-insured financial institutions and in the shares and deposits of a central CU; * the establishment and maintenance of credit union books and records – a CU can use the NCUA’s Accounting Manual for Federal Credit Unions in effect as of Jan. 10, 2003, as guidance in the maintenance of its accounting records. All books, records, and papers of a credit union shall be available for inspection and examination by the Commissioner or his designee. * reserves – credit unions have to establish and maintain a regular reserve account. Among the requirements of this account, the CU must set aside 10% of gross income at the end of each accounting period until the regular reserve equals 3% of the total of loans outstanding and risk assets, then 5% of gross income until the regular reserve equals 4% of the total outstanding loans and risk assets. When the regular reserve falls below this percentage, it will be replenished by regular transfers. The allowance for loan loss account requirement will be computed and adjusted, through the provision for loan loss account, before the payment of dividends.