Opinion finds network CUs permissible;
summary details points for FISCUs

March 7, 2016 – NCUA has issued its first legal opinion of the year, finding that a “network credit union” is permissible for federal credit unions under the Federal Credit Union Act (FCUA).

A “network credit union” is one that results from the merger of two FCUs, and one “merged” (non-surviving) FCU becomes subsumed by the “continuing” (surviving) FCU. Under the scenario, the merged FCU continues to operate and serve its former members under the name of “merged FCU’s name, a division of continuing FCU.” The continuing FCU appoints an advisory committee comprised of officials of the merged FCU to serve in an advisory role. Further, the continuing FCU reserves one seat on its nominating committee for a representative of the merged FCU.

NASCUS has developed a summary (members only) of the opinion letter, which outlines some special considerations for federally insured state-chartered CUs (FISCUs) under the opinion letter.

LINKS:
NCUA OGC Legal Opinion 16-0227
NASCUS summary of legal opinion letter on ‘network CUs’ (members only)