NASCUS Cooperative Interstate Agreement - What’s the Deal?

Have you ever heard of the Cooperative Interstate Agreement for the Supervision of State-Chartered Credit Unions (“Interstate Agreement”)?  Developed in conjunction with National Association of State Credit Union Supervisors (NASCUS), its main goal is to facilitate and streamline the oversight of state-chartered credit unions that operate across multiple states.

In practical terms, the Interstate Agreement facilitates collaboration and coordination between supervisors in participating “Home States” (that is, where a credit union is chartered) and “Host States” (any other state where the credit union operates or seeks to operate) in overseeing and examining credit unions involved in interstate activities. The good news for state-chartered credit unions is that this cooperation leads to clearer guidance from regulators on what to expect when expanding fields of membership (FOM) or opening new branches in participating states.

The most recent Interstate Agreement (2023) follows similar agreements signed by several state regulators in 2015 (Cooperative Interstate Agreement for the Supervision of State-Chartered Credit Unions) and 2009 (Southeastern Regional Cooperative Interstate Agreement). See the map of signatories for all three agreements. Note that, while some states are actively engaged in this area, they may not have signed the agreement due to variances between the agreement's language and their own statutes.

One important thing to note: the agreement does not override state laws. Multistate credit unions still have to follow the laws of both their Home and Host States when operating across state lines. In addition, the Agreement addresses the following key areas:

FOM Expansion and Multistate Branching

Host States agree that out-of-state credit unions may add new members from pre-existing fields of membership, add new groups to their membership, open branches and offer a full range of services, provided all activities remain consistent with both Home and Host State law. Note, however, that the Interstate Agreement does not apply to credit union service organizations (CUSOs).

Exam and Supervision

A credit union’s Home State Supervisor remains the primary regulator responsible for the supervision and examination of the credit union. In addition, any requests for information from a share/deposit insurer will be directed to the Home State Supervisor for a response.

Enforcement Actions

Home and Host State supervisors promptly inform one another of any material enforcement actions taken against a multistate credit union, its officials or employees; and/or any material regulatory concerns a supervisor has about the credit union, such as those that may cause a downgrade of a credit union’s composite CAMELS rating to a 4 or 5. Examiners engage in on-going communication regarding these matters until they are resolved.

Sharing Supervisory Information

Participating state credit union regulators can share supervisory information about credit unions operating in their respective states. “Supervisory information” includes all information, documents and reports compiled or drafted by a state supervisor in the ordinary course of examining and supervising a credit union. Shared information remains confidential, and the property of the originating supervisor. It cannot be disclosed by a recipient supervisor without the originating supervisor’s written permission, unless required by applicable law or a court order.

Home/Host Joint Examinations

When a Host State Supervisor joins a Home State Supervisor in an exam, the Host State Supervisor’s work papers and findings are treated as confidential supervisory information belonging to the Home State. Even though Host State Supervisors may participate in joint examinations and share supervisory information, the Home State retains primary oversight over the credit union.

As you can see, there are a lot of moving parts to this agreement. A blog post can only provide a snapshot of the Interstate Agreement’s provisions. For more information, click here to read the document in its entirety or contact NASCUS directly at www.nascus.org/contact-us/.

Questions? Ideas for future blog posts? Please reach out to the Compliance Team at compliance@americascreditunions.org.