ALEXANDRIA, Va.—NCUA has issued a Letter to Federal Credit Unions (22-FCU-02) on the final rule amending the definition of “service facility” for multiple common-bond credit unions.
The final rule, which amends the definition of “service facility” for multiple common-bond federal credit unions became effective Dec. 27, 2021.
The final rule provides that shared locations are service facilities for purposes of multiple common-bond federal credit union additions of groups, regardless of whether the federal credit union has an ownership interest in the shared branching network providing the locations.
In addition, shared locations, including electronic facilities offering required services such as video teller machines, are also service facilities for purposes of multiple common-bond federal credit union additions of underserved areas, regardless of whether the federal credit union has an ownership interest, the agency explained in the letter.
‘Be Aware’
“If your multiple common-bond federal credit unions plans to add groups or underserved areas, you should be aware that the final rule only changes the ownership requirement related to shared locations,” NCUA stated. “All other requirements related to service facilities, eligibility of groups, and the qualification of underserved areas remain unchanged.”
“For multiple common-bond federal credit unions adding occupational or associational groups, a service facility must allow a member to deposit shares, submit loan applications, or receive loan proceeds,” the letter continued. “For multiple common-bond federal credit unions adding an underserved area, a service facility in the underserved area must allow a member to deposit shares, submit loan applications, and receive loan proceeds. While various types of facilities could meet these requirements, including some electronic facilities, all three services must be available through the facility for it to qualify as a service facility in an underserved area. Accordingly, automated teller machines are not service facilities for purposes of underserved area additions.”
What Must be Demonstrated
NCUA also emphasized the process for establishing that an area qualifies as an underserved area remains the same. That is, according to the agency, multiple common-bond federal credit unions must demonstrate that the area is:
- A local community, neighborhood, or rural district under the Chartering Manual’s definition
- An investment area, which means either that the area is (1) an empowerment zone or enterprise community or (2) that it meets quantitative economic distress criteria and also has a significant unmet need for financial services
- Underserved by other depository institutions, based on objective data from the federal banking agencies