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NCUA Board Proposes Expanding Field of Membership Rules

Mon, Nov 23, 2015

Columbia , Maryland

On Thursday, Nov. 19, the advocacy team attended the NCUA Board Meeting which took a number of actions that will impact credit unions. The Board voted unanimously to put out for comment proposed Field of Membership (FOM) regulations that would give federally chartered credit unions the ability to expand their membership in a number of significant ways.

For credit unions that attended our CEO Roundtable at the NCUA in late October, we had the opportunity to discuss in detail and get a preview of the proposed rule during our meeting with Chairman Matz and Vice Chair Metsger. It’s worth noting that in his prepared remarks, Metsger thanked Marsha King, CEO of the Library of Congress FCU, for bringing to his attention the issue of longtime contractors currently being excluded from membership.

We are reviewing details of the proposed FOM rules which run approximately 170 pages. The rule changes include:

  • “Core area” service requirement - under the proposal, FCUs will be able to apply to convert to a community charter or expand an existing community charter without having to serve the core area if electing to serve a portion of a Core Based Statistical Area.
  • The 2.5 million population limit will now be applied to a well-defined portion of a metropolitan statistical area; it will no longer simply be a ceiling.  Combined statistical areas as designated by the OMB, such as Baltimore and Washington, will also be able to be served. 
  • Under the proposal, NCUA would recognize an individual Congressional district as a Well-Defined Local Community (WDLC) and permit a federal credit union to serve an area consisting of the geographic boundaries of an individual Congressional district.
  • Allow the rural district population to be comprised of up to 1 million residents from the current standard of 250,000 (or 3% of a state’s population).
  • Regarding underserved areas, NCUA will exclude non-depository institutions and non-community credit unions when calculating the “Concentration of Facilities” ratio. NCUA will also rely on other federal data to determine whether an area is underserved.   
  • The definition of a TIP (trade, industry, professional) charter expanded to include employees of entities that have a strong dependency relationship with employees who work directly with employees of other entities with the same industry.
  • Regarding multiple common bond credit unions, the “reasonable proximity” requirement is relaxed to include a website or mobile platform that will be defined as a service facility.
  • SEG contractors will be eligible for membership in a multiple common bond credit union. Tenants in office and industrial parks will also be eligible. 

In additional actions, the Board approved a 2-Year Budget with a 2-1 vote. Also, Chairman Matz and the NCUA CFO both said there would be no more stabilization assessments, “for the foreseeable future,” the NCUSIF assessment range is 0-6, but will most likely be 0 next year.

Overall, the FOM rule changes should be seen as a positive and ambitious albeit controversial updating of the rules. The banking industry has already begun to raise objections. The team will be work with members to draft comments to the agency, once the 60 day comment period kicks in shortly.

For more Information: Glen Cooney, VP, Advocacy & Legislative Affairs, 443-325-0775, gcooney@mddccua.org