Washington State Department of Financial Institutions

DIVISION OF CREDIT UNIONS

OPINION LETTERS 1999

 

Opinion Number O-99-1 Redacted Version

March 16, 1999

"A"

Subject: Board Member Health Insurance

From:    Linda K. Jekel, Program Manager

Dear "A":

You asked whether a Washington state chartered credit union (WSCCU) can provide health, accident, and related types of personal insurance (insurance) to its board members.

The Washington State Credit Union Act does not prohibit a credit union's directors or committee members from receiving incidental services which are available to the credit union's employees generally. RCW 31.12.365 (1)

Therefore, we do not object to a WSCCU purchasing insurance for its board members or committee members with the following conditions:

  1. The insurance is reasonable in coverage and amount,
  2. The insurance is the same as offered to its employees, and
  3. The insurance ceases immediately upon the insured person's leaving office, except for any residual claims pending at the time the insured person leaves office. Of course, if the insured person continues as an employee of the credit union, he or she may still be eligible as other employees on such insurance.

Let me know if you have any other questions.


Opinion Number O-99-2 Redacted Version

October 4, 1999

"A"

Subject: Approval of CUMIS Corporate Credit Union Bond 150

From: ZIDREXCAXZOWCONEUQZAAFXISHJEXX

Dear "A":

This letter is in response to your August 6, 1999 letter concerning approval of the CUMIS Corporate Credit Union Bond 150, a copy of which was enclosed with your letter. I understand that the NCUA has approved the Bond 150 form for use by federally insured corporate credit unions, by letter dated November 7, 1997.

The Division of Credit Unions hereby approves the use, by Washington State-chartered corporate credit unions, of the CUMIS Corporate Credit Union Bond 150. The form of the bond satisfies the requirements of the Washington State Credit Union Act. Section 31.13.020 of the Revised Code of Washington (RCW); RCW 31.12.367(1); 404. Use of the bond by Washington corporate credit unions is subject to all applicable statutory and regulatory requirements concerning such use, including but not limited to NCUA rules at 12 C.F.R. Sections 741.201(b) and 704.17, and RCW 31.12.367. Of course, sale of the bond is subject to all applicable statutory and regulatory requirements concerning such sales.


DCU Opinion Number 99-3

Date: November 30, 1999

From: IMQZUIVOTQNQEMSFDULHPQQWOYIYZUNNYCGPKY

Subject: Once a member, always a member

Issue

Does the "once a member, always a member" principle apply to Washington State-chartered credit unions? That is, if an individual who has joined a credit union ceases to be part of a group in the credit union's field of membership (FOM), can the individual continue to be a member of the credit union?

Analysis

An example will help illustrate the issue here. The following steps are in chronological order:
  1. Joe becomes an employee of ABC Company, and consequently is eligible to join Friendly Credit Union. The credit Union's FOM bylaws permit certain family members to join, including siblings. Consequently, Joe's sister Jane is also eligible to join the credit union
  2. Joe joins the credit union. Joe is considered to be the primary member in this example.
  3. Some time later, Joe resigns from ABC Company, but retains his membership in the credit union. The credit union's bylaws do not require Joe to terminate his membership because he left ABC.

The issue here is: Can Joe continue to be a member of the credit union? The Division has previously taken the position that the "once a member, always a member" principle applies, unless the credit union's bylaws provide otherwise. That is, once a person joins the credit union, the person can retain credit union membership, even though the person is no longer part of one of the credit union's FOM groups. (Of course, the person is subject to expulsion by the credit union in accordance with applicable law and the credit union's bylaws.) In our hypothetical, that means Joe can continue his membership in the credit union even though he is no longer employed by ABC.

The NCUA staff also reached the same conclusion for federal credit unions. See, e.g., NCUA Opinion Letter No. 95-0214, dated August 1, 1995, by Richard S. Schulman.

Conclusion

Yes, the "once a member, always a member" principle applies to Washington State-chartered credit unions, unless the credit union's bylaws provide otherwise.


DCU Opinion Number 99-4

Date: November 30, 1999

From: LEJGDGVCJVTLBXFGGMEPYOQKEDOTWFAOBUZXUW

Subject: Family Members Of Primary Member May Join Credit Union Even Though Primary Member Ceases To Be Part Of FOM Group

Issue

A credit union’s bylaws allow certain family members of primary members to join the credit union. Are the family members eligible to join the credit union, even if the primary member ceases to be part of an FOM group of the credit union?

Analysis

An example will help illustrate the issue here. The following steps are in chronological order:
  1. Joe becomes an employee of ABC Company, and consequently is eligible to join Friendly Credit Union. The credit Union’s FOM bylaws permit certain family members to join, including siblings. Consequently, Joe’s sister Jane is also eligible to join the credit Union.
  2. Joe joins the credit Union. Joe is considered to be the primary member in this example.
  3. Some time later, Joe resigns from ABC Company, but retains his membership in the credit Union. The credit Union’s Bylaws do not require Joe to terminate his membership because he left ABC.
  4. Jane wants to join the credit Union.

The issue here is: Can Jane join the credit Union, because of Joe’s continuing membership in the credit Union, even though he has left ABC Company? We understand that as a matter of practice, credit unions commonly admit family members in Jane’s situation.

Credit unions may include occupational groups in their FOM bylaws, including employees and certain other individuals, "and their family members." See RCW 31.12.382; WAC 208-472-015(3). Credit unions may also include members of associational groups and persons who live or work in communities in their FOM bylaws. See RCW 31.12.382; WAC 208-472-015(2) and (4). In addition, by Division interpretation, credit unions may include in their FOM bylaws:

The Division has left it to each credit union to reasonably define "family members" in its FOM Bylaws.

In the hypothetical, although Joe would no longer be eligible to re-join the credit union if he terminated his membership after leaving employment at ABC Company, Joe may retain his membership in the credit union, under the "once a member, always a member" principle.

The Washington Credit Union Act and the Division’s rules do not expressly cover the issue presented by our hypothetical. However, we believe that the legislature did not intend such a narrow or literal interpretation of field of membership eligibility. As a member, Joe clearly enjoys a common bond with other credit union members and is part of the credit union’s field of membership. In a sense, his eligibility to join has merged with his membership. We believe that it is reasonable for the primary member’s family to continue to be eligible to join the credit union, even though the primary member ceases to be part of a FOM group of the credit union. Consequently, in our hypothetical, Jane would continue to be eligible to join the credit union. However, this would not be the case if Joe had terminated his membership with the credit union before Jane decided to join the credit union.

The NCUA staff has reached the same conclusion for federal credit unions. See NCUA Opinion Letter No. 95-0214, dated August 1, 1995, by Richard S. Schulman.

Conclusion

Yes, credit unions that include family members in their FOM bylaws may allow family members to join the credit union, even though the primary member ceases to be part of an FOM group, as long as the primary member continues his or her membership in the credit union.