Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part IX - Credit Unions › Chapter 5 - Criteria to Organize within Residential Groups, and Add Associational Groups › Section IX-505 - Residential Group Common Bond

Current through Register Vol. 50, No. 6, June 20, 2024
A.
				The applying credit union must demonstrate by the weight and accumulation of
				facts presented that a residential group common bond has unifying
				characteristics that clearly meet the applicable definition(s). The
				commissioner will consider the volume and value of evidence in establishing the
				commonality criteria to meet the definitions for a well-defined neighborhood,
				small community, or rural district common bond.
B. Safety and Soundness Criteria
1. Credit unions are subject to safety and
				soundness criteria based on the financial and managerial capacity of the credit
				union to serve the proposed field of membership. The commissioner will not
				approve any application unless the credit union can meet the criteria set forth
				in this rule.
2. The following
				criteria may be considered in determining the financial and managerial capacity
				of a credit union to support a request for a residential group common bond.
a. A composite CAMEL rating of "1" or "2" was
				assigned at the most recent examination.
b. Any credit union receiving a CAMEL rating
				of "3" in any component area at its most recent examination shall be considered
				only after review of the following additional factors:
i. the underlying reasons for ratings outside
				the criteria in Subparagraph a above;
ii. the overall condition of the credit union
				and ability to support expanded activities;
iii. management's progress and commitment to
				improve such ratings; and
iv. the
				prospects for improving performance and ratings in the near term.
c. Credit unions with any CAMEL
				component rating more severe than a "3" in its most recent report of
				examination may not apply for a residential group common bond based on
				residence in a well defined neighborhood, small community, or rural
				district.
d. Credit Unions with a
				Composite CAMEL rating of "3", or more severe, may not apply for a residential
				group common bond until the overall condition of the credit union is restored
				to a satisfactory level.
e. The
				credit union must demonstrate in its application for a residential group common
				bond that it has a sufficient level and depth of management to meet the
				requirements of the residential common bond proposed.
f. The credit union must demonstrate in its
				application for a residential group common bond that it has sufficient data
				processing resources and capacity to serve the residential group that is being
				proposed.
g. If the commissioner
				deems it appropriate, he may require the credit union to submit a comprehensive
				business/strategic plan that addresses the following:
i. how the credit union intends to service
				the targeted well-defined neighborhood, small community, or rural
				district;
ii. a list of the
				financial services that will be provided to the targeted well-defined
				neighborhood, small community, or rural district;
iii. a projection of the expected size and
				penetration into the target market over a three year period, including an
				analysis of the market's current financial service providers;
iv. the impact of the proposed expansion upon
				the credit union's capital, property and equipment (including technology
				resources), and personnel resources;
v. the adequacy and sufficiency of fixed
				assets and data processing facilities to meet the expected levels of
				growth;
vi. the effect upon
				management's ability to recognize, monitor, and control all types of risks
				including, but not limited to, the following: audit, interest rate, liquidity,
				transaction, compliance, strategic, and reputation.
vii. a comprehensive income statement budget
				and proforma balance sheet reflecting realistic financial, capital, and
				operating goals for the next three calendar years beyond the year in which the
				field of membership expansion is requested.
3. If the commissioner deems it appropriate,
				he may require that the credit union submit revised loan and collection
				policies and procedures that recognize the additional complexities of a
				residential group common bond.
4.
				If the commissioner deems it appropriate, he may require that the credit union
				provide adequate policies related to asset/liability management, recognizing
				the additional complexities that could result from expanded lending and deposit
				taking activities.