Credit Union Committees: Required or Optional?

We have received a great deal of feedback about the usefulness of some of our older blogs.  We plan to re-publish previously posted blogs each Thursday, providing necessary updates to ensure you have the most recent information to address recurring compliance challenges.   

As I am sure you are all aware, NCUA's model bylaws provide for the formation of several committees to assist the board in carrying out its duties. While committees can be effective in getting tasks accomplished or overseeing a particular project, they can also sometimes feel like a duplication of effort – especially when the same people sit on multiple committees.

Not all committees are formed to meet a regulatory requirement.  Committees are sometimes formed to address a particular project and get disbanded once the project has been completed. Other committees are formed to address an immediate need and continue to live on despite the need being met. And some committees were formed so long ago no one can remember why they exist. So, what committees are actually required?

Under the NCUA's model bylaws, the only standing committee that every federal credit union must maintain is the supervisory committee. Under Article IX , the supervisory committee is responsible for ensuring the annual audit is completed and for verifying member accounts. The supervisory committee has the authority to suspend directors, board officers, and members of the credit committee. The supervisory committee may also assume the role of the board of directors in the event all director positions become vacant simultaneously. Members of the credit committee (if applicable) and employees of the credit union cannot serve on the supervisory committee.

Below is a list of other committees referenced in the model bylaws with a brief description of their responsibilities and authority.

Nominating Committee . Under Article V , the model bylaws provide for a nominating committee as part of the election process. However, it is not a standing committee that always exists. The nominating committee is responsible for nominating at least one member for each vacancy, including any unexpired term vacancy. It must also determine that the members nominated are agreeable and will accept office if elected. The nominating committee must consist of at least three members.

Credit Committee . Federal credit unions must make a decision on whether or not to have a credit committee. According to Article VIII , the credit committee reviews and acts upon loan applications. The credit committee may delegate this responsibility to appointed loan officers. Under Article VI, Section 6 , the credit committee may be elected or appointed.

Executive Committee . Article VII, Section 10 explains that the board may appoint an executive committee of three or more directors. The executive committee is responsible for carrying out the specifically delegated functions of the board. When delegating tasks to the executive committee, the board must be specific in stating the committee's authority and limitations with regard to the delegated task. 

Investment Committee . The board may appoint an investment committee under Article VII, Section 11 . It must consist of at least two directors. The investment committee is responsible for making investments in accordance with the rules and procedures established by the board.

That said, your credit union's bylaws may actually require a certain committee to exist. Accordingly, it is important to carefully review the current version of your bylaws before disbanding any committee. As the model bylaws apply only to federal credit unions, state-chartered credit unions will need to look to their state law and bylaws to determine which committees they are required to have.