Question and Answers from Field of Membership Webinar

The new rule became effective February 6, 2017. You can submit your request now.

The new rule does not directly apply to state-chartered credit unions. However, some states have parity provisions in their laws which could result in changes based on NCUA’s new rule. We recommend state-chartered credit unions discuss this matter with their respective state regulators.

The new rule posted in the Federal Register is available at: https://www.ncua.gov/regulation-supervision/Documents/Regulations/final-rule-charteringfield-membership-manual.pdf (opens new window). The new rule will also be posted shortly on NCUA’s Field of Membership-Chartering site at: https://www.ncua.gov/services/Pages/field-of-membership-chartering.aspx

Yes. The presentation is now available on NCUA's Chartering and Field of Membership Resource website at: https://www.ncua.gov/services/Pages/field-of-membership-chartering.aspx. A press release will be issued to announce availability of the archived FOM Webinar.

NCUA is implementing the final rule. It is NCUA policy not to comment or speculate on the pending litigation.

https://www.ncua.gov/regulation-supervision/Pages/policy-compliance/communications/letters-to-federal-credit-unions/2011/03.aspx

There is no population limit for a single political jurisdiction. However, a single political jurisdiction can be no larger than one county or its political equivalent. Therefore, if your credit union is currently serving two counties, the rules for a single political jurisdiction would not apply, because you are serving multiple political jurisdictions. As such, the 2.5 million population limit applies to any expansion you may request.

A political jurisdiction is defined as a city, county, or their political equivalent, or any individual portion thereof.

The population of a proposed community charter conversion or expansion request is only assessed at the time an application is submitted for review. NCUA does not reassess the area for compliance with the population limits established in Appendix B to Part 701 of its rules and regulations.

Although state boundaries are well-defined and the state may have a population of less than 2.5 million; our policy only recognizes political jurisdictions at the county level or below. An entire state does not qualify as a well-defined local community.

On November 9, 2016, the NCUA Board published in the Federal Register a proposed rule to increase the population limit up to 10 million and also requested comment on whether there should be a population limit at all. The comment period ended on December 9, 2016, and the NCUA is currently reviewing the comments. 81 FR 78748 (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).)

A federal credit union's field of membership can cross a state line under various scenarios. Statistical areas, rural districts, and adjacent areas can all cross state lines. Under the new rule, a rural district may only cross into state immediately adjacent to the state where the credit union’s headquarters are located. The credit union must show it has both the ability and intent to serve the area and that it qualifies as a well-defined local community or rural district.

No. There is no requirement that you have a specific number of branches or service facilities in order to the serve the community area. The credit union is required to submit a two-year business and marketing plan with its community charter application. Management must demonstrate the credit union has both the ability and intent to serve the requested area. NCUA will review and assess the credit union's business and marketing plan as a whole and its ability to effectively serve the community with the current and planned branch.

Yes. NCUA permits community credit unions to overlap any other charters without performing an overlap analysis. There is no overlap protection provided to community credit unions from another community charter. More than one credit union can serve the same geographic area.

There are many successful credit unions serving the same or similar fields of membership. This has occurred in an environment where credit unions have faced ongoing competition from both traditional and nontraditional financial service providers.

No. Our community field of membership rules do not permit those who shop in a community to qualify for credit union membership. However, if a federal credit union’s community wording contains “or regularly conduct business in” this language pertains to persons with regular ties to an area based on their employment and they therefore would be eligible for membership

The total time depends on the complexity of the expansion request and if the application submitted contains all required information. Our goal is to process all community charter applications within 90 days from receipt of a complete application. However, requests to serve a large Metropolitan Statistical Area, Core-Based Statistical Area, a Combined Statistical Area, or a rural district may take longer, depending upon the size and complexity.

https://obamawhitehouse.archives.gov/omb/bulletins_default/ (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) .

We do not use the Census Bureau to determine if an area qualifies as a Combined Statistical Area. The Office of Management and Budget makes that determination. Refer to the OMB Bulletin No. 15-01 discussed above.

No. A multiple common bond credit union that converts to a community credit union will no longer have any of its occupational or associational groups listed in its charter. For any group located outside the boundaries of the community, the credit union must notify the groups that they are unable to accept new members from the groups following the conversion. A credit union will be able to continue to serve members of record that were obtained from its occupational or associational groups added prior to the community conversion.

NCUA will review and assess the credit union's business plan as a whole and its intent and ability to effectively serve the community with the current and planned branch structured outlined in the business plan. There is no requirement that you have a specific number of branches or service facilities in order to the serve a rural district. See the guidance outlined in NCUA Letter to Federal Credit Unions 11-FCU-03, available at: https://www.ncua.gov/regulation-supervision/Pages/policy-compliance/communications/letters-to-federal-credit-unions/2011/03.aspx.

No. However, a credit union requesting a charter for a sparsely populated area must show how it will serve the area. The ability and intent to serve can be supported in a variety of ways beyond a branch office, including remote services, ATM network participation, mobile branches, shared branching, and how the nearest city housing a credit union service facility can serve and provide services to the sparsely populated areas of the rural community.

A credit union requesting a charter for a sparsely populated area must show how it will serve the area. It is often difficult to demonstrate the ability to serve without a physical presence throughout the area unless there are unique local factors, such as residents traveling long distances to a central trade area within your service area.

Yes. A copy of the CFPB rural counties is available on CFPB’s website, at consumerfinance.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) . NCUA also plans to post a listing of such counties on the Chartering and Field of Membership Resources page of its website. In the meantime, you can email DCAmail@ncua.gov or call 703- 518-1150.

Yes, if both Metropolitan Statistical Areas are part of the same Combined Statistical Area. A proposed community may also include an immediately adjacent area falling outside of the CSA. To include the adjacent area, the credit union must submit a narrative providing compelling evidence of interaction or common interest. NCUA will issue guidance to help credit unions develop a written narrative.

Yes, the adjacent area must be contiguous to your existing community area, and the population as a whole must not exceed 2.5 million. A credit union can add an immediately adjacent area falling outside a Single Political Jurisdiction, Core-Based Statistical Area or Combined Statistical Area. To add the adjacent area, the credit union must develop a written narrative showing compelling evidence of interaction or common interests.

No. You cannot expand a community obtained through an emergency merger.

An economic hub is a geographically compact locale within an area where evidence shows residents commonly travel for work and major commerce needs. An isolated area is an area geographically isolated by such barriers as mountains, bodies of water, or other prominent features.

No. A proposed community may include the addition of more than one immediately adjacent area falling outside of a Single Political Jurisdiction, Core-Based Statistical Area or Combined Statistical Area, as long as the proposed community meets the other statutory requirements of being a well-defined local community.

No. There is no impact. The adjacent area, Core-Based Statistical Area or Combined Statistical Area can cross state borders. The only requirement is the proposed community as a whole meets the statutory requirements of being a well-defined local community.

A credit union can serve an area adjacent to a Core-Based Statistical Area, but the adjacent area must be contiguous to the credit union’s proposed community (whether an entire CBSA or a portion of it), and the population as a whole must not exceed 2.5 million.

No. If your community area's population is greater than 2.5 million, you are unable to expand.

Yes, your understanding is correct, as the community population cannot exceed 2.5 million.

No. A federal credit union cannot submit a request to serve a community that includes both a well-defined local community and a rural district. A community area can consist of either a "well-defined local community" or a "rural district." However, an adjacent area can be added to a Core-Based Statistical Area if it qualifies as a well-defined local community supported by a narrative evidencing interaction or common interests.

You must provide a written narrative demonstrating there is interaction or common interests among the residents in the adjacent area and the area being added to it. You must also submit a two-year business and marketing plan in support of the request.

No, it does not. In a federal charter, a "group" is either an occupational or associational entity; it does not include a geographical area. However, a multiple common bond federal credit union can have geographic areas in its field of membership that qualify as an underserved area. If a state chartered credit union has an undeserved area within its field of membership, it could potentially transfer to the continuing federal credit union’s field of membership. The state chartered credit union’s underserved area would have to, when it was approved, have met NCUA’s underserved area requirements, and if not, currently meet NCUA’s undeserved area requirements.

Yes. There has been no change to the rule in this regard. A previously approved local community can be requested without reestablishing the area as a community, but the area must be exactly the same as previously approved by NCUA and the application must note NCUA previously approved it. A list of NCUA’s previously approved community will be posted to its Chartering and Field of Membership Resources webpage. An area that is not exactly the same must comply with the current criteria for determining a well-defined local community or rural district.

No. State field of membership rules often differ from NCUA's rules. Therefore, you cannot use the community portion of the field of membership of a state-chartered credit union to support an application for a federal field of membership. As a multiple common bond credit union, your ability to serve a community is limited to adding an underserved area or converting to a community chartered credit union.

There is no population limit applicable to a community that was previously approved by NCUA. As such, if an NCUA previously approved community currently exceeds 2.5 million in population, it can still be requested to be served by a federal credit union.

It depends. If the shared branch meets the definition of a “service facility,” which is defined as a place where shares are accepted for members’ accounts, loan applications are accepted or loans are disbursed, it would qualify. This definition includes a credit union owned branch, a mobile branch, an office operated on a regularly scheduled weekly basis, a credit union owned ATM, a video teller machine, or a credit union owned electronic facility that meets, at a minimum, these requirements. A service facility also includes a shared branch or a shared branch network if either: (1) the credit union has an ownership interest in the service facility either directly or through a CUSO or similar organization; or (2) the service facility is local to the credit union and the credit union is an authorized participant in the service center.

https://www.ncua.gov/regulation-supervision/Documents/Regulations/final-rule-chartering-field-membership-manual.pdf (opens new window)

No. The group must address why the formation of a separate credit union for the group is not practical. A credit union cannot address or document this requirement for the group. If the group size is between 3,000 and 4,999, the group's letter needs to state it does not have a desire or an interest in forming its own credit union. If the group size is 5,000 or more, the group’s letter needs to continue to address the criteria outlined in Chapter 2, Section IV.B.2 of NCUA’s Chartering and Field of Membership Manual.

Yes. Subject to any limitations in the clause describing the group (i.e. who work in or paid from city, state). A federal credit union can now request to serve: persons who work regularly for an entity under contract whereby the entity possesses a strong dependency relationship with the group. For groups added prior to February 6, 2017, only a housekeeping amendment needs to be submitted that will apply to all groups added prior to February 6, 2017. If a group is being added after February 6, 2017, the group’s letter needs to identify its desire for credit union service for those persons working for entities under contract possessing a strong dependency relationship with them. The group’s total potential credit union member count should include all persons working for entities under contract possessing a strong dependency relation with the group.

No. This only applies to entities working under contract possessing a strong dependency relationship with the group, not to any of the group’s subsidiaries.

Yes, if the security company is under contract with your SEG and it meets the definition of possessing a “strong dependency relationship” with that SEG.

A letter, email, or fax requesting the following wording be added to your field of membership: “Persons who work regularly for entities under contract possessing a strong dependency relationship with any occupational group added to this charter before February 6, 2017, subject to any limitations in the clause describing the group.”

The rule defines a “strong dependency relationship” between a SEG sponsor and the sponsor’s contractor to mean that both rely on each other as measured by a pattern of regularly doing business with each other. This can be demonstrated, for example, as documented by the number, the term length and the dollar volume of prior and pending contracts between them. The “strong dependency” standard is to be established by credit unions themselves, so as to create a rebuttable presumption that the sponsor's employees and those of the contractor share a single common bond, as the Federal Credit Union Act requires.

One example of a potential qualifying SEG contractor would be when a company (your SEG) has individuals working beside its own employees but are another entity’s employees. These individuals typically do much of the same or similar work that a company’s employee would do, but these individuals are not considered employees of the company. Rather they are contract employees who are employed by an entity that is under contract with the company and meets the definition of possesses a strong dependency relationship with that company.

No. However, NCUA Form 4015-EZ should identify the total number of tenant employees being requested. In addition, the letter from the Office or Industrial Park representative needs to address the below three conditions.

• The request is only including the tenants forming an occupational (i.e. employer-based) group;
• Each tenant has fewer than 3,000 employees working at the office or industrial park site; and
• Only those employees working at the office or industrial park’s location (city and state) are being included in the request.

No. The residents of an apartment (or similar buildings such as a condominium or a town home) would not qualify as the building tenants are not an occupational (employer-based) common bond group.

No. However, the employees of the new tenant that moved in are only eligible to join the credit union if the above three tenant conditions are met. If an entity is no longer a tenant of the strip mall, the tenant’s employees would also no longer be eligible to join the credit union. Members of record who joined the credit union while working at the facility for former tenant may continue to be served.

No. A credit union does not have to have a service facility located in the strip mall. However, as with any other group a multiple common bond credit union desires adding, the office or industrial park group must be within reasonable proximity of the credit union's service facility.

Yes. Each individual tenant located in the office or industrial park must employee fewer than 3,000 employees that work at that location. Any tenant employing 3,000 or more at that location would have to be requested as an individual group, and would not be eligible to join the credit union through this specific process.

Yes. Either the owner of the office or industrial park, or an authorized representative for the leasing agent or property management company could be an authorized representative for the office or industrial park.

No. Each tenant does not have to sign a letter. Only the office or industrial park authorized representative must sign the group’s letter.

No. However, as a multiple common bond credit union, you can add an area as underserved if it meets all of the qualifications for being and underserved area. See Section III, Chapter 3 of NCUA’s Chartering and Field of Membership Manual.

Yes. A list of the CFPB underserved counties is available on CFPB’s website at consumerfinance.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) . NCUA will also post a listing of these counties on its Chartering and Field of Membership Resources webpage. In the meantime, you can email DCAmail@ncua.gov or call 703-518-1150.

No. If the requested underserved area has recently passed the Depository Institution Test, no other action is needed. A county listed as a CFPB underserved county can be used in lieu of the Depository Institution Test – not for determining if the area qualifies as underserved.

In order for a multiple common bond charter to add an undeserved area, the following five underserved area requirements must be met:

1. Community: the requested area is either a well-defined local community or a rural district.
2. Investment Area: the requested area qualifies as an “investment area” per the Community Development Financial Institution Fund, also known as CDFI Fund.
3. Other Depository Institutions: the requested area has to meet one of the below:
   • Concentration of Facilities Ratio (or Depository Institution Test) is met, or
   • Falls within a CFPB “underserved county,” or
   • Alternative method supports the requested area is underserved by other financial institutions and the analysis relies on NCUA or another federal banking agency's data.
4. Service Facility: a service facility must either be located within the requested area, or the credit union’s business plans outline a service facility will be established within two years of the underserved area being approved. A service facility for an underserved area is defined as a place where shares are accepted for members’ accounts, loans applications are accepted and loans are disbursed.
5. Significant Unmet Needs Analysis: a one-page narrative indicating a pattern of unmet needs in the proposed area for loans or one or more credit union services.

Also, a complete two-year business and marketing plan with financial projections needs to be submitted. You can email DCAmail@ncua.gov or call 703-518-1150 if you have questions on this process.

Yes. NCUA will perform a Concentration of Facilities Ratio (or Depository Institution Test), if requested by the state supervisory authority. As some state laws for field of membership have parity with NCUA’s field of membership rules, a state-chartered credit unions may also need a Concentration of Facilities Ratio analysis completed (or Depository Institution test).

Most requests can be processed within 30 days. However, more complex requests may take longer.

Yes. A CFPB-designated "underserved county" can be used in lieu of the Depository Institutions Test. Also, NCUA will consider alternative methods a federal credit union can rely on to determine whether a proposed area is underserved by other financial institutions, provided the analysis relies on NCUA or another federal banking agency's data

A non-depository institution is an entity that does not accept deposits. For example, an established FDIC-insured bank may have a branch or office that only handles commercial lending transactions, and does not accept deposits or disburse funds.

The credit union does not need to provide specific information on depository and non-depository facilities in the area. NCUA has resources to identify these institutions and will use that information to perform the Depository Facilities Test. You can email DCAmail@ncua.gov or call 703-518-1150 if you have questions on this process.

To address situations like this, the new rule now provides two alternative methods, as outlined below.

• CFPB-designated “underserved county,” and
• An analysis that relies on NCUA or another federal banking agency’s data to reflect the proposed area is underserved by other financial institutions

We assume you are a low-income community charter wishing to remain low-income designated. Adding an adjacent area that, in its entirety, is a well-defined local community could impact whether the expanded community still qualifies as a low-income community charter. To clarify the difference between underserved and low-income, only multiple common bond credit unions can add an underserved area. Adding an underserved area however does not automatically result in either an “underserved” or “low income” designation. For NCUA to designate a credit union as a low-income community chartered credit union, more than 50 percent of the population within the geographic borders of the community must meet the low income thresholds. As an alternative, any credit union serving a simple majority of qualifying members, including one with a community charter can obtain a low-income designation.

Yes, but it will only apply to that branch of the armed forces listed in the federal credit union’s field of membership.

For a single or multiple common bond charter, not already serving a branch of the armed forces, to add active duty members of any armed forces to its field of membership, a request from the branch of the armed forces stating they want to join your credit union would be required along with submitting the appropriate NCUA 4015 Form. Once a military group has been added, the honorably discharged affinity clause can be added to your field of membership through a housekeeping amendment.

We need to make a distinction between honorably discharged and retired military personnel. The new rule only expands access to individuals honorably discharged versus those retiring from the military. However, you likely have been able to serve retirees based the pensioners and annuitants affinity clause appearing at the bottom of your field of membership, as most single and multiple common bond charters include this clause.

No. This authority only applies to military groups already named within a federal credit union’s field of membership. It is not available if a credit union serves governmental groups or if military persons reside or work within your service area.

It depends. It may include, on a case-by-case basis, employees of types of entities that have a "strong dependency relationship" and work directly with other types of entities within the industry. A "strong dependency relationship" between a TIP entity and its supplier/vendor must be demonstrated by the reliance on each other as measured by the presence of indicators of a likelihood that the absence of one would cause the other to suffer a material decline in either revenue, functionality, or productivity. A credit union seeking to include “vendors/suppliers” to an Industry type TIP must provide a narrative identifying indicators that support the existence of the strong dependency relationship between the TIP entity and its individual supplier/vendors.