UNITED STATES OF AMERICA
BEFORE THE NATIONAL CREDIT UNION ADMINISTRATION
In the Matter of [redacted]
Insurance Claim
Bartow Employees Federal Credit Union
Docket 96-010
Decision and Order on Appeal
Decision
This matter comes before the National Credit Union Administration Board (Board) pursuant to 12 CFR 745.202 as an administrative appeal of the determination by the Liquidating Agent of Bartow Employees Federal Credit Union denying the [redacted] insurance claim in the amount of [redacted]. The April 15, 1996 appeal follows a reconsideration by the Liquidating Agent.
Summary of Claim
Originally, this appeal was for uninsured funds in the amount of [redacted] and involved the following accounts:
Accounts [redacted] -- Appellants claim the accounts should be treated as individual accounts. The Liquidating Agent treated the accounts as joint accounts for the same combination of individuals, aggregating the accounts for insurance purposes. The ALMC1 paid Appellants [redacted] -- Account [redacted] plus account [redacted] -- and issued an uninsured share certificate for [redacted].
Account [redacted] -- Appellants claim the account should be paid to [redacted] as an individual account. The Liquidating Agent paid the account in full [redacted] as individual funds of [redacted].
The Asset Liquidation Management Center (ALMC) continued to review and reconstruct the Appellants’ claims during the pendency of the appeal. Such review was based on declaration of unposted dividends by the Board and new information provided by the Appellants.2 As a result of the review, the ALMC made additional payments on Appellants’ claims, reducing the amount subject to appeal.3 Thus, for purposes of this appeal, the Board is limiting its consideration to the remaining uninsured shares of [redacted] as follows:
[redacted]
General Background
Bartow Employees Center Federal Credit Union, located in Cartersville, Georgia, was an occupational credit union chartered to serve teachers in Cartersville county. It had approximately 1200 members. The Board placed the credit union into involuntary liquidation due to insolvency, effective November 27, 1995.
Facts
[redacted], husband and wife, had three accounts at the credit union.
According to the signature cards, accounts [redacted] were joint accounts for [redacted]. Accounts [redacted] were treated as individual accounts of [redacted], respectively, from April 1988 until the credit union was liquidated. The third signature card (for account [redacted]) was in the name of [redacted] However, [redacted] did not sign the signature card. It was signed by [redacted] as joint account holders. The funds in account [redacted] consisted of funds transferred from accounts [redacted] and [redacted].
Analysis
Part 745 of NCUA’s Regulations addresses share insurance coverage. Section 745.2 states in part:
(a)This Part provides for determination by the [NCUA] Board of the amount of members’ insured accounts. The rules for determining the insurance coverage of accounts maintained by members in the same or different rights and capacities in the same insured credit union are set forth in the following provisions of this Part. The Appendix provides examples of the application of these rules to various factual situations. . . ... (c)(4) The interests of the co-owners of a joint account shall be deemed equal…
Section 745.3 addresses single ownership accounts. The relevant provisions follow:
(a) Funds owned by an individual and deposited in the manner set forth below shall be added together and insured up to $100,000 in the aggregate.
(1) Individual accounts. Funds owned by an individual ... and deposited in one or more accounts in the individual’s own name shall be insured up to $100,000 in the aggregate.
Section 745.8 addresses joint accounts. The relevant provisions follow:
(a) Separate insurance coverage. Accounts owned jointly… shall be insured separately from accounts individually owned by any of the co-owners. (b) Qualifying joint accounts. Joint accounts are insured separately from individual accounts up to a maximum of $100,000 provided that each of the co-owners has personally signed an account signature card and has a right of withdrawal on the same basis as the other co-owners. (c) Failure to qualify. An account owned jointly which does not qualify as a joint account for purposes of insurance of accounts shall be treated as owned by the named persons as individuals and the actual ownership interest of each such person in such account shall be added to any other accounts individually owned by such person and insured up to $100,000 in the aggregate...
The NCUA Regulations state that single ownership accounts are insured up to $100,000 for each individual and that joint accounts shall be separately insured if certain qualifications are met. Accounts [redacted] were originally set up as joint accounts for [redacted]. The Liquidating Agent originally insured these accounts pursuant to §745.8(d) of the Regulations for a total of [redacted]. Upon appeal, the [redacted] submitted evidence to show that funds from these two joint accounts were transferred into two individual accounts, one for [redacted] and the other for [redacted]. The credit union treated these accounts as individual single ownership accounts from the time of the transfer until the credit union liquidated. Therefore, the accounts should be insured as individual ownership accounts pursuant to §745.3(a) of the Regulations. The Liquidating Agent made the adjustment and paid additional proceeds to the [redacted].
[redacted] was a non-qualifying joint account because it lacked the signature of [redacted]. The Liquidating Agent insured Account [redacted] as individually owned funds of [redacted] pursuant to §745.8(c) of the Regulations.
The [redacted] are entitled to [redacted] each in insurance coverage for their respective interests in the three accounts. The [redacted] have been paid the appropriate amounts according to the NCUA insurance regulations.
[redacted] present no further argument or evidence to provide for additional insurance coverage. There is no basis for any additional payout.
Order
For the reasons set forth above, it is ORDERED as follows:
The Board upholds the Liquidating Agent’s decision to deny [redacted] claim in the amount of [redacted] and denies the [redacted] appeal.
The Board’s decision constitutes a final agency determination. Pursuant to 12 CFR 745.203(c), this final determination is reviewable in accordance with the provisions of Chapter 7, Title 5, United States Code, by the United States Court of Appeals for the District of Columbia or the court of appeals for the Federal judicial circuit where the credit union’s principal place of business was located. Such action must be filed not later than 60 days after the date of this final determination.
So ORDERED this 16th day of October, 1996 by the National Credit Union Administration Board.
Becky Baker
Secretary of the Board
1 The ALMC is the NCUA component responsible for, inter alia, the liquidation of federally-insured credit unions. The Liquidating Agent is an NCUA employee responsible for conducting ALMC liquidation functions. The terms “ALMC” and “Liquidating Agent” may be used interchangeable herein.
2 On March 13, 1996, the Board approved the payment of unaccrued and unposted dividends for credit union members through September 1995. In addition, new evidence submitted by the Appellants established that accounts [redacted] should be treated as individual accounts rather than joint accounts for the same combination of individuals.
3 The Liquidating Agent determined that accounts [redacted] should be insured individually rather than as joint accounts for the same combination of individuals. It paid additional proceeds and issued a new certificate of uninsured shares for accounts [redacted] based on the Board’s approval of unposted dividends and the new evidence submitted. It also increased the verified balance of account [redacted] to account for unposted dividends approved by the Board. [redacted] was paid a total of [redacted] for his interest in accounts [redacted] and [redacted] was paid a total of [redacted] for her interest in accounts [redacted]. The Liquidating Agent originally determined that [redacted] each owned equal shares of account [redacted]. However, on June 13, 1996, the Liquidating Agent set forth the flow of shares from accounts [redacted] into account [redacted] based on credit union records of transfers made in August 1992. The Liquidating Agent determined that 49% of the proceeds of account [redacted] came from [redacted] account [redacted] and 51% of the proceeds came from [redacted] account [redacted].