North Carolina § 54-109 - 11. Duties of Administrator.

§ 54-109. 11. Duties of Administrator.

The duties of the Administrator of Credit Unions shall be as follows: To organize and conduct in the State Department of Commerce, a bureau of information in regard to cooperative associations and rural and industrial credits. Upon request, to furnish, without cost, such printed information and blank forms as, in his discretion, may be necessary for the formation and establishment of any local credit union in the State. To maintain an educational campaign in the State looking to the promotion and organization of credit unions. Upon the written request of 12 bona fide residents of any particular locality in this State expressing a desire to form a local credit union at or in such locality, the Administrator of Credit Unions, or one of his assistants, shall proceed as promptly as may be convenient to such locality and make an investigation in order that the Administrator may determine whether or not a local credit union should be established according to the standards set forth and provided in this Article. The Administrator shall notify the applicants of his decision within 30 days after receipt of the written request. Before refusing the establishment of a credit union, the Administrator shall afford the applicants an opportunity to be heard therewith in person or by counsel and at least 60 days prior to the date set for a hearing on any such matter shall notify in writing the applicants of the date of said hearing and assign therein the grounds for the action contemplated to be taken and as to which inquiry shall be made on the date of such hearing. The determination of the Administrator shall be subject to judicial review in all respects according to the provisions and procedures set forth in Chapter 150B of the General Statutes of North Carolina, as amended. To examine at least once every 18 months, or more often if an examination is deemed necessary by the Administrator or the Administrator's assistant, the credit unions formed under Article 14A of this Chapter. A report of the examination shall be filed with the State Department of Commerce, and a copy mailed to the credit union at its proper address. The Administrator of Credit Unions is authorized, empowered, and directed to fix the amount of a blanket surety bond which shall be required of each credit union official, committee member and employee, irrespective of whether such official, committee member and employee receives, pays or has custody of money or other personal property owned by a credit union or in the custody or control of the credit union as collateral or otherwise. The surety on the bond shall be a surety company authorized to do business in North Carolina. Any such bond or bonds shall be in a form approved by the Administrator of Credit Unions with a view to providing surety coverage to the credit union with reference to loss by reason of acts of fraud or dishonesty including forgery, theft, embezzlement, wrongful abstraction or misapplication on the part of the person, directly or through connivance with others, and such other surety coverages as the Administrator of Credit Unions may determine to be reasonably appropriate or as elsewhere required by the Chapter. Any such bond or bonds shall be in an amount in relation to the money or other personal property involved or in relation to the assets of the credit union as the Administrator may from time to time prescribe by regulation for the purpose of requiring reasonable coverage. The Administrator may also approve the use of a form of excess coverage bond whereby a credit union may obtain an amount of coverage in excess of the basic surety coverage. No agreement, compromise or settlement of any claim or claims filed by a credit union with any surety or any surety company for less than the full amount of said claim or claims shall be entered into or made by the board of directors of any credit union unless and until the said claim or claims shall have been submitted to the Administrator of Credit Unions and his advice thereon given or transmitted to the board of directors of said credit union. The following schedule shall be deemed as the minimum fidelity and faithful performance bond requirements only: Assets Minimum Coverage $ 0,000 to $ 5,000 $ 1,000 5,001 to 10,000 2,000 10,001 to 20,000 4,000 20,001 to 30,000 6,000 30,001 to 40,000 8,000 40,001 to 50,000 10,000 50,001 to 75,000 15,000 75,001 to 100,000 20,000 100,001 to 200,000 30,000 200,001 to 300,000 40,000 300,001 to 400,000 50,000 400,001 to 500,000 70,000 500,001 to 750,000 85,000 750,001 to 1,000,000 100,000 1,000,001 to 50,000,000 $100,000 plus $50,000 for each million or frac- tion thereof of assets over $1,000,000 $50,000,001 to $150,000,000 $2,500,000 plus $25,000 for each million or frac- tion thereof of assets over $50,000,000 Over $150,000,000 $5,000,000 It shall be the duty of the board of directors of each credit union to provide proper protection to meet any circumstances by obtaining adequate bond (an insurance) coverage in excess of the above minimum schedule. The treasurer and all other persons handling credit union funds or records before entering upon his or their duties shall give a proper bond with good and sufficient surety, in an amount and character to be determined by the board in compliance with regulations conditioned upon the faithful performance of his or their trust. The Administrator may require additional coverage for any credit union when, in his opinion, the surety bonds in force are insufficient to provide adequate surety coverage, and it shall be the duty of the board of directors of any credit union to obtain such additional coverage within 60 days after the date of written notice by the Administrator to such board of directors. For good cause shown, the Administrator may extend the time to obtain additional coverage. History (1915, c. 115, s. 1; C.S., s. 5209; 1925, c. 73, ss. 2, 3, 5, 6; 1935, c. 87; 1957, c. 989, s. 1; 1965, c. 956, ss. 1-3; 1971, c. 864, s. 17; 1973, c. 199, ss. 1-3; c. 1331, s. 3; 1975, c. 538, s. 1; 1977, c. 559, s. 1; 1987, c. 827, s. 1; 1989, c. 751, s. 7(2); 1991 (Reg. Sess., 1992), c. 959, ss. 4, 4.1; 2017-25, s. 4(a).) Effect of Amendments. - Session Laws 2017-25, s. 4(a), effective June 2, 2017, in subdivision (4), in the first sentence, substituted "every 18 months, or more often if an examination is" for "a year, and oftener such examination be" in the beginning, substituted "the Administrator's" for "his", and substituted "under Article 14A of this Chapter" for "under this Article" and substituted "the examination" for "such examination" in the second sentence. Opinions of Attorney General Performance Bonds. - A State-chartered credit union, acting pursuant to 4 N.C.A.C. 06C.0311, must provide a performance bond for not only its chief executive officer but for other officers, employees, or agents. See opinion of Attorney General to Mr. Stanley W. Brown, Jr., Deputy Administrator, Credit Union Div., Department of Commerce, 59 N.C.A.G. 8 (1989). The language of subdivision (5) of this section and of G.S. 54-109.44(2) relating to blanket surety bonds is mandatory and extends to all state-chartered credit union officers, employees, agents, and others in a position of trust. See opinion of Attorney General to Mr. Stanley W. Brown, Jr., Deputy Administrator, Credit Union Division, Department of Commerce, 59 N.C.A.G. 8 (1989). Conflicting Administrative Rule Was Void. - To the extent that an administrative rule purported to permit an individual's bond to be substituted for the blanket bond or to permit an individual's bond to cover persons other than those specified in subdivision (5) of this section, it was in conflict with controlling law and was void. See opinion of Attorney General to Mr. Stanley W. Brown, Jr., Deputy Administrator, Credit Union Division, Department of Commerce, 59 N.C.A.G. 8 (1989). Discretion of Administrator and Board. - The provision of subdivision (5) of this section requiring a surety bond of the "treasurer and all other persons handling credit union funds or records" means that the board of directors may require, consistent with administrative rules promulgated by the administrator, an additional surety bond for those having actual possession of or control over credit union funds or financial records. Since the administrator has broad discretion and authority under G.S. 54-109.12 to prescribe rules "relating to financial records, business practices and the conduct and management of credit unions," the administrator can promulgate reasonable guidelines for boards of directors to follow in determining the "amount and character" of the bond to be required. However, it is not within the discretion of a board of directors or the administrator to determine who shall be covered by the bond, other than to identify "persons handling credit union funds or records." See opinion of Attorney General to Mr. Stanley W. Brown, Jr., Deputy Administrator, Credit Union Division, Department of Commerce, 59 N.C.A.G. 8 (1989). The additional bond provided for in subdivision (5) of this section, must cover "the treasurer and all other persons handling credit union funds or records." Nothing in the statutes permits the chief financial officer or the chief executive officer of a state-chartered credit union to be substituted for the persons specified. See opinion of Attorney General to Mr. Stanley W. Brown, Jr., Deputy Administrator, Credit Union Division, Department of Commerce, 59 N.C.A.G. 8 (1989).