Rule 80-2-4-.01 - Investment of Credit Union Funds in Other Financial Institutions(1) No credit union shall deposit its funds in an amount exceeding twenty-five (25) percent of the net worth of the credit union in any one bank, savings and loan association, or other credit union that is less than adequately capitalized as defined by 12 CFR § 324.403, 12 CFR § 702.102, or 12 CFR § 704.4 as applicable, unless the credit union obtains prior written approval from the Department.(2) A credit union's policies and procedures shall take into account credit and liquidity risks, including operational risks, in selecting financial institutions in which to deposit funds and terminating those relationships.(3) Where deposits at a financial institution exceed twenty-five percent of the credit union's net worth, the credit union's policies and procedures shall require periodic reviews of the financial condition of the financial institution and shall take into account actions to be taken in the event of any deterioration in the financial condition of the financial institution. Factors bearing on the financial condition of the financial institution include the capital level, level of nonaccrual and past due loans and leases, level of earnings, and other factors affecting its financial condition. Where public information on the financial condition of the financial institution is available, a credit union may base its review of the financial condition of the financial institution on such information and is not required to obtain non-public information for its review.(4) Where the deposits at a financial institution exceed twenty-five percent of the credit union's net worth or the financial condition of the financial institution creates a significant risk that the financial institution may not be able to honor a withdrawal of the credit union's deposits, a credit union's policies and procedures shall limit the credit union's exposure to the financial institution, either by the establishment of internal limits or by other means. Limits shall be consistent with the risk undertaken, considering the financial condition of the credit union as well as the financial condition of the financial institution holding the credit union's deposits. Limits may be fixed as to amount or flexible, based on such factors as the financial condition of the credit union or the financial institution. A credit union shall monitor its deposits at a financial institution to ensure that its deposits ordinarily do not exceed the credit union's internal limits except for occasional excesses resulting from unusual market disturbances, market movements favorable to the credit union, increases in activity, operational problems, or other unusual circumstances. Generally, monitoring may be done on a retrospective basis. The level of monitoring required depends on the extent to which the amount of the deposits approaches the credit union's internal limits and the financial condition of the financial institution. A credit union shall establish appropriate procedures to promptly address deposits in excess of its internal limits.(5) The policies and procedures established under this rule shall be reviewed and approved by the credit union's board of directors at least annually.(6) If the funds a credit union has deposited in a financial institution are fully and continuously insured by federal deposit insurance, then the credit union does not have to develop the policies and procedures required by this rule. Ga. Comp. R. & Regs. R. 80-2-4-.01
O.C.G.A. §§ 7-1-61, 7-1-663.
Original Rule entitled "Investment of Credit Union Funds" adopted. F. May 10, 1976; eff. May 30, 1976.Repealed: New Rule entitled "Investment of Credit Union Funds in Other Financial Institutions" adopted. F. Oct. 22, 2001; eff. Nov. 11, 2001.Amended: F. June 20, 2016; eff. July 10, 2016.Amended: New title, "Deposit of Credit Union Funds in Other Financial Institutions." F. July 7, 2023; eff. July 27, 2023.