DFI-CU 72.10(4)
(4) Appraisal requirements under section 722.3 of NCUA rules.
DFI-CU 72.10 Note
Note: A copy of NCUA rules may be obtained by writing to the Office of Credit Unions, P.O. Box 14137, Madison, WI 53714-0137.
DFI-CU 72.10 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.11(1)(1) To obtain a waiver under
s. DFI-CU 72.10, a credit union shall submit a request to the director. The request shall contain all of the following:
DFI-CU 72.11(1)(d)
(d) Documentation supporting the credit union's ability to manage this activity.
DFI-CU 72.11(1)(e)
(e) An analysis of the credit union's prior experience making member business loans, including each of the following:
DFI-CU 72.11(1)(e)4.
4. Concentrations of credit to a member and associated members in excess of 15% of net worth.
DFI-CU 72.11(1)(e)7.
7. The qualifications of personnel responsible for underwriting and administering member business loans.
DFI-CU 72.11(2)
(2) Upon receipt of the request for waiver, the director shall do all of the following:
DFI-CU 72.11(2)(c)
(c) Consider the credit union's historical capital, asset, quality, management, earnings and liquidity ("CAMEL") composite and component ratings.
DFI-CU 72.11(2)(d)
(d) Notify the credit union when the waiver request is deemed complete.
DFI-CU 72.11(2)(e)
(e) Notify the credit union of the action taken within 45 calendar days of receiving a complete request.
DFI-CU 72.11(3)(a)
(a) The director shall provide a copy of the waiver request to the applicable regional director of the NCUA, and shall consult and seek to work cooperatively with the applicable regional director in deciding upon the request.
DFI-CU 72.11(3)(c)
(c) If the credit union requesting the waiver does not receive notification within 45 calendar days of the date the complete request was received by the director, the waiver request shall be deemed approved by the director.
DFI-CU 72.11(3)(d)
(d) The director shall promptly notify the applicable regional director of NCUA of his or her decision on the request.
DFI-CU 72.11(4)(a)
(a) If the director approves the request, the director shall promptly forward the request to the applicable regional director of the NCUA for decision under
12 CFR 723.12.
DFI-CU 72.11 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.12
DFI-CU 72.12
Classifying non-delinquent member business loans to reserve for potential loss. Non-delinquent member business loans shall be classified based on factors such as the adequacy of analysis and supporting documentation. A credit union shall classify potential loss loans as either substandard, doubtful or loss. The criteria for determining the classification of loans shall be as follows:
DFI-CU 72.12(1)
(1) Substandard. A loan classified substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. The loan must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The loan is characterized by the distinct possibility that the credit union will sustain some loss if the deficiency is not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.
DFI-CU 72.12(2)
(2) Doubtful. A loan classified as doubtful has all the weaknesses inherent in one classified substandard, with the added characteristic that the weakness or weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation actions; capital injection; perfecting liens on collateral; and refinancing plans.
DFI-CU 72.12(3)
(3) Loss. A loan classified loss is considered uncollectible and of such little value that its continuance as a loan is not warranted. This classification does not necessarily mean that the loan has absolutely no recovery or salvage value, but rather, that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may occur in the future.
DFI-CU 72.12 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.13
DFI-CU 72.13
Schedule of reserves. The following schedule sets the minimum amount a credit union shall reserve for classified member business loans:
-
See PDF for table 
DFI-CU 72.13 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.14
DFI-CU 72.14
Aggregate member business loan limit. The aggregate limit on the amount of a credit union's member business loans is the lesser of 1.75 times the credit union's net worth or 12.25% of the credit union's total assets.
DFI-CU 72.14 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.15
DFI-CU 72.15
Exceptions to the aggregate business loan limit. Credit unions that meet any one of the following criteria qualify for an exception from the aggregate member business loan limit:
DFI-CU 72.15(2)
(2) Credit unions that participate in the Community Development Financial Institutions program.
DFI-CU 72.15(3)
(3) Credit unions that are chartered for the purpose of making member business loans, as supported by documentary evidence.
DFI-CU 72.15 Note
Example: The credit union's charter, bylaws, business plan, field of membership, board minutes and loan portfolio.
DFI-CU 72.15 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.16(2)
(2) To obtain an exception under
s. DFI-CU 72.15 (3), a credit union shall submit its request to the director. An exception shall not be effective until approved by the director. The exception request shall include documentation demonstrating that the credit union meets the criteria for the exception. The exception shall not expire unless revoked for safety and soundness reasons by the director.
DFI-CU 72.16(3)
(3) The director shall promptly notify the applicable region of the NCUA of his or her decision on the request.
DFI-CU 72.16 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.17
DFI-CU 72.17
Record keeping requirements. A credit union shall separately identify member business loans in its records. On its financial reports, a credit union shall identify member business loans in the aggregate.
DFI-CU 72.17 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
