Impermissibility of Free Safe Deposit Boxes for Board and Committee Members

Richard M. Lingle, Esq.
Lingle, Griffis & Southern, PLLC
1400 Lakeover Road, Suite 110
Jackson, Mississippi 39213

Re: Impermissibility of Free Safe Deposit Boxes for Board and Committee Members.

Dear Mr. Lingle:

You have asked whether a federal credit union (FCU) may provide free safe deposit boxes to its board of directors and supervisory committee while members are charged an annual rental fee for use of these boxes. No, it may not. The provision of free services, such as the use of a safe deposit box, is a form of prohibited compensation. 12 U.S.C. §§1761(c), 1761a.

The Federal Credit Union Act provides that “no member of the board or of any other committee shall, as such, be compensated, except that reasonable health, accident, similar insurance protection, and the reimbursement of reasonable health expenses incurred in the execution of duties of the position shall not be considered compensation.” 12 U.S.C. §1761(c). FCUs are generally prohibited from providing their boards of directors and supervisory committee members with free services, not offered to members, because this benefit is considered compensation for the execution of their duties on the board or committee. However, an FCU may compensate one director as an officer of the board, if authorized by the FCU’s bylaws. 12 C.F.R. §701.33(b).

For additional discussion of the issue of the permissibility of benefits for directors and committee members, you may find it helpful to review previous legal opinion letters available on NCUA’s web site, www.ncua.gov, including the following letters from Hattie Ulan to Adrienne Strurm, dated March 12, 1993 (monetary gifts to credit and supervisory committee members); from me to Al Beltran, dated February 4, 1998 (an annuity plan for board members); and from me to Ben Roth, dated August 25, 1998 (reimbursement of travel expenses).