12 CFR 713.6 – What is the permissible deductible?
(a)(1) The maximum amount of allowable deductible is computed based on a federally insured credit union’s asset size and capital level, as follows:
Terms Used In 12 CFR 713.6
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
| Assets | Maximum deductible |
|---|---|
| $0 to $100,000 | No deductible allowed. |
| $100,001 to $250,000 | $1,000. |
| $250,000 to $1,000,000 | $2,000. |
| Over $1,000,000 | $2,000 plus 1/1000 of total assets up to a maximum of $200,000; for credit unions that have received a composite CAMELS rating of “1” or “2” for the last two (2) full examinations and maintained a capital classification of “well capitalized” under part 702 of this chapter for the six (6) immediately preceding quarters the maximum deductible is $1,000,000. |
(2) The deductibles may apply to one or more insurance clauses in a policy. Any deductibles in excess of the above amounts must receive the prior written permission of the NCUA Board.
(b) A deductible may not exceed 10 percent of a federally insured credit union’s Regular Reserve unless a separate Contingency Reserve is set up for the excess. In computing the maximum deductible, valuation accounts such as the allowance for loan losses cannot be considered.
(c) A federally insured credit union that has received a composite CAMELS rating of “1” or “2” for the last two (2) full examinations and maintained a capital classification of “well capitalized” under part 702 of this chapter for the six (6) immediately preceding quarters is eligible to qualify for a deductible in excess of $200,000. The federally insured credit union’s eligibility is determined based on it having assets in excess of $1 million as reflected in its most recent year-end 5300 call report. A federally insured credit union that previously qualified for a deductible in excess of $200,000, but that subsequently fails to qualify based on its most recent year-end 5300 call report because either its assets have decreased or it no longer meets the capital requirements of this paragraph or fails to meet the CAMELS rating requirements of this paragraph as determined by its most recent examination report, must obtain the coverage otherwise required by paragraph (b) of this section within 30 days of filing its year-end call report and must notify the appropriate NCUA regional office in writing of its changed status and confirm that it has obtained the required coverage.