Section 713.5 of the NCUA’s Regulations (opens new window) requires minimum bond coverage, currently as shown below.
Total Assets: $0 to $4,000,000
Minimum Bond: Lesser of total assets or $250,000.
Total Assets: $4,000,001 to $50,000,000
Minimum Bond: $100,000 plus $50,000 for each million or fraction thereof over $1,000,000.
Total Assets: $50,000,001 to $500,000,000
Minimum Bond: $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000, to a maximum of $5,000,000.
Total Assets: Over $500,000,000
Minimum Bond: One percent of assets, rounded to the nearest hundred million, to a maximum of $9,000,000.
A PFCU would need to purchase additional or enhanced coverage when circumstances warrant. The organizing group should perform an internal risk assessment and consider factors such as the amount of cash on hand, cash in transit, and the nature and risks inherent in any services offered, such as automated clearing house, wire transfer, and remittance services. Evaluate whether insurance coverage is needed for credit union operations not covered by your surety bond.
The associated costs for the surety bond and other coverage must be incorporated into the pro forma financial statements and evidence of the proposed coverage submitted to the NCUA.