ALEXANDRIA, Va.–NCUA has sent separate letters to credit unions urging expansion of fields of membership to serve underserved areas and addressing revisions to chartering and its FOM manual, respectively.
In Letter to Credit Unions 21-FCU-03, NCUA reminded that any federal credit union with a multiple common bond field of membership may include in its field of membership, without regard to location, underserved communities as defined by the Federal Credit Union Act.
“To promote greater financial inclusion and strengthen communities, the NCUA encourages such credit unions to expand their service to underserved areas,” the letter, signed by Chairman Rodney Hood, reads. “Expanding into underserved areas can also help diversify membership and increase a credit union’s lending opportunities. Adding an underserved area to a federal credit union’s field of membership does not change the nature of a credit union’s charter.”
NCUA noted a multiple common bond federal credit union may add additional groups under the NCUA’s multiple common bond expansion options after being approved to expand service to an underserved area.
NCUA told credit unions its Chartering and Field of Membership Manual(opens new window) describes how a federal credit union can apply for approval to provide service to an underserved community and provides detailed guidance on how to create a business plan, and a pro forma financial statement template.
“The underserved area expansion option for multiple common bond federal charters has enabled millions of consumers to gain access to affordable financial services,” Hood wrote. “In view of the challenging environment we are all facing due to the pandemic, it is more important than ever to continue making credit union access available to the greatest extent possible.”
NAFCU Response
In response to the NCUA letter, NAFCU EVP/General Counsel Carrie Hunt issued a statement saying, “NAFCU appreciates the NCUA encouraging multiple common bond credit unions to expand their fields of membership to provide greater financial support to underserved communities as well as providing guidance for such expansions. NAFCU believes all credit unions should have the ability to add underserved areas to their fields of membership and we will continue to advocate for Congress to make the legislative changes to do so.”
Letter on Chartering, FOM
Separately, NCUA has also sent a Letter to Federal Credit Unions addressing revisions in its chartering and field of membership manual and also provides revised guidance and templates.
NCUA said the guidance included in letter 21-FCU-01 replaces the guidance contained previously in 2011 (through letter 11-FCU-03).
According to NCUA, the revisions to the chartering/FOM manual since its earlier issuance of guidance in 2011 provides more flexibility to federal credit unions, including a streamlined business plan for use when applying to expanded services to an area that borders a community already served by a credit union.
The letter also includes:
- Links to templates used for the business and marketing plan an FCU must include with its request to convert from a multiple-common-bond or other type of field of membership to a community field of membership
- A streamlined business marketing plan of a current community chartered credit union to seek expansion to a bordering area
- Pro forma financial statements used to document financial projections when seeking conversion to a community charter
- Guidance on when a credit union is required to demonstrate common interests or interaction
- Guidance needed to document decisions not to include the “core” (the most populated county or named municipality) of a core-based statistical area proposed for inclusion in the credit union’s proposed community
The full letter can be found here.