Phase 1 – Field of Membership and Phase 2 – New Charter Application
A Phase 1 field of membership (FOM) submission or a Phase 2 new charter application must be complete and sufficient. If a FOM submission or a new charter application is not complete or sufficient, NCUA may defer the application. Details on a complete and sufficient application can be found in Appendix B to part 701 Chapter 1, Section VII.
During the chartering process, you are expected to submit a valid field of membership that meets statutory and regulatory requirements. Additionally, you must provide a complete and sufficient new charter application, which includes:
- Pre-planning documentation,
- A business plan with financial projections,
- Proposed bylaws, and
- Required policies.
If the FOM submission or new charter application is found to be incomplete or insufficient, it may be deferred.
Deferral Process
NCUA will defer an application when the FOM submission or new charter application is missing components or when the information provided is inadequate for assessing the viability of the proposed credit union. If your application is deferred, NCUA will send a deferral letter outlining the deficiencies and providing guidance for resubmission. This process provides transparency and allows you to address missing or incomplete information in your submission.
An FOM submission or new charter application may be deferred twice. If your application is still incomplete or insufficient after the third submission, it will be denied.
Incomplete Submissions
The FOM submission or new charter application must comply with the chartering and field of membership policies outlined in Appendix B to Part 701, Chartering and Field of Membership Manual.
For example, NCUA will consider a submission incomplete if it lacks the necessary documentation, like the association’s bylaws, or if a new charter application does not include commitment letters for donated funds or third-party vendor contracts for the type of planned recordkeeping and data processing system.
Insufficient Submissions
NCUA will deem an FOM submission or new charter application insufficient if the submission lacks enough information to determine a valid FOM or the financial viability to serve its members.
For example, if commitment letters for donated funds require repayment, or if the recordkeeping and data processing vendor contract lacks details about the terms and conditions of the agreement, NCUA will consider a new charter application insufficient.
Denial
A denial occurs when an FOM submission or new charter application is materially incomplete, insufficient, or presents NCUA concerns that cannot be overcome. When NCUA’s Office of Credit Union Resources and Expansion (CURE) disapproves any FOM submission and charter application, in whole or in part, you will be informed in writing of the specific reasons for the disapproval.
If an FOM submission or new charter application is denied, you have the right to request reconsideration from CURE (see Appendix B to Part 701, Chapter 1, Section VII. D) or to seek an appeal of the decision directly to the NCUA Board, pursuant to 12 CFR 746.
Deferral Timeframes
- Phase 1 – FOM Submissions: NCUA will decide whether to defer the request within 60 days of receipt.
- Phase 2 – New Charter Applications: If NCUA deems a new charter application incomplete or insufficient, we will notify you of our decision to defer the application within 75 days of receiving the submission.
Please note that the Phase 2 application will not be reviewed until NCUA issues the preliminary approval of the FOM. Therefore, it is not necessary to submit both the FOM and new charter application simultaneously.
Only resubmit your FOM request or new charter application after addressing all the identified deficiencies. The applicable timeframe will restart when you resubmit the FOM request or new charter application.
Rather than submitting additional materials to address the identified deficiencies detailed in the deferral letter, you may request a determination from NCUA for approval or denial. You can request this determination by responding to the deferral letter in writing within 10 business days. NCUA will approve or deny the FOM submission or new charter application within 30 business days of your request. If NCUA denies the FOM submission or new charter application, the letter of denial will include the procedures for appealing the determination.
Inactive Status
A deferral allows the organizer to address the incomplete or insufficient components of the submission. If the organizer does not respond to the deferral letter within 12 months of the date of the letter, NCUA will consider the FOM submission or new charter application inactive. The organizer can reapply at any time after receiving a notification of inactive status.
Transition to Phase 3 – Final Chartering Process
When NCUA determines an application is complete and sufficient, it moves to Phase 3 for final NCUA approval. Barring extenuating circumstances, your complete and sufficient applications will enter the final chartering phase within 180 days of receipt of a complete and sufficient application.