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FOM & 2-Year Budget on Agenda for NCUA November Board Meeting

Mon, Nov 2, 2015

Columbia, Maryland

NCUA will take up a field of membership (FOM) proposal and vote on a 2-year budget, along with other highly-anticipated items, at its November 19 board meeting.

Recent defections by large credit unions from a federal charter to a state charter are helping to drive the Board to “push the envelope” with FOM changes. Vice Chairman Rick Metsger has been out front on FOM enhancements for some time now. 

A March 2015 NCUA report noted that over the past four years federal-to-state conversions are running nearly 3-to-1 and the pace is accelerating. Recent defections from the federal charter include $6.5 billion Suncoast CU (Tampa, FL), $1.4 billion American Eagle Financial CU (East Hartford, CT), $1 billion Rogue CU (Medford, OR), and $947 million Oregon State CU (Corvallis, OR).

In addition, there are other defections expected. For example, $4.2 billion Ent FCU (Colorado Springs, CO) is in the process of voting to switch to a state charter. United FCU with $1.9 billion in assets (St. Joseph, MI) is merging with Lake Michigan CU (Grand Rapids, MI) and will opt for a state charter. In response to these defections, the NCUA formed a FOM Working Group to develop recommendations to enhance the federal charter and make it more competitive with state charters.

The Advocacy Committee wants to keep you updated on FOM as well as other actions and tidbits from NCUA board offices and senior staff regarding Thursday’s meeting:

  • The proposed FOM rule appears to be fairly ambitious in scope (more below) and should be expected to stir up our friends in the banking industry. 
  • The new Overhead Transfer Rate (OTR) will be approved along with a Two-Year NCUA budget, and will exceed this year’s rate of 71.8%.  It’s not yet clear how much larger the new OTR will be, but since last year’s OTR was a record high, it’s safe to say that this one will set a new record as well.
  • A Two Year Strategic Plan will also be on the agenda. This is unusual, as in past years the Strategic Plan was usually offered in January.  We have been told that the Plan will contain the same legislative recommendations proposed by NCUA this year during Congressional testimony, including Third Party Vendor Authority and a premium-based NCUSIF

If you would like to watch the action as it unfolds, the November 19 board meeting will be streamed live on the NCUA’s website at 10 a.m. Look for a link on the NCUA’s website just prior to the meeting commencing.

Additional actions on FOM:  

FOM reform has been a top issue for CUNA, and as such CUNA has urged the agency to refrain from imposing any FOM restrictions beyond what is required in the Federal Credit Union Act. In a letter to the NCUA, CUNA outlined a number of principles for reform, suggestions within the agency’s authority and some that would require a rule change. Specific changes requested include:

  • Allow any federal credit union to serve a combination of contiguous communities and single political jurisdictions that do not exceed in population size or land area of the largest community that NCUA has already approved which means 10 million people or a land area of 20,000 square miles;
  • Allow any government definition of community to be used as a credit union’s option to define Well-Defined Local Community (WDLC);
  • Increase the population limit used for Core Based Statistical Areas (CBSA) from 2.5 million to 10 million; Eliminate the requirement that a CBSA contain a “core”; 
  • Include Combined Statistical Area in the definition of WDLC; 
  • Expand affinity groups for community chartered credit unions beyond those who live in, worship in, attend school in or work in a community. This should be expanded to include those who work for a business headquartered or are paid from a business located in a community; 
  • Redefine “rural district” by eliminating a population test and using a test similar to that of the U.S. Census Bureau as an area that does not contain a majority of land area in an Urbanized Area or Urbanized Cluster;
  • Allow a Congressional district to be considered a WDLC. A Congressional district inherently defines a community with shared interests;
  • Reinstate the narrative approach for defining a community;
  • Eliminate the geographic limitation on trade, industry or profession (TIP) for federal cu’s; Allow a TIP to add vendors and employees that support the trade, industry or profession;
  • Allow a professional-based TIP to include co-workers who support the professional’s day-to-day delivery of services and to include recipients of the professional’s services when those recipients are not customers or clients;
  • Streamline the paperwork and process to allow groups with 3,000 or more potential members to easily be added to a multiple group federal credit union;
  • Permit federal credit unions that convert to a community charter to keep approved groups in their FOMs that are outside the boundaries of their new community; and
  • Permit a state credit union converting to a federal credit union to keep its current field of membership and expand based on NCUA’s field of membership policies.

For additional information: Glen Cooney, VP, Advocacy & Legislative Affairs, 443-325-0775,

NCUA will take up a field of membership (FOM) proposal and vote on a 2-year budget, along with other highly-anticipated items, at its November 19 board meeting.