VIENNA, Va.–After winning the contract last year, Navy Federal Credit Union said it has officially started operating the Military Banking Facilities (MBF) overseas, better known as "Community Bank."
The MBFs are part of the Department of Defense (DoD) Overseas Military Banking Program. MBFs overseas will now be co-branded as "Community Bank, Operated by Navy Federal Credit Union.”
The $170.8-billion Navy Federal Credit Union is now operating 60 MBFs and 272 ATMs already in existence on designated DoD military installations in Europe and the Pacific. MBFs provide access to foreign currency, local ATMs, bill pay, savings, checking and other financial services to installation personnel and commands, the credit union said.
The institutions will remain as separate entities from Navy Federal.
ESI Providing Deposit Coverage
After being unable to obtain deposit coverage from the National Credit Union Share Insurance Fund (NCUSIF), Navy FCU is insuring the deposits through coverage from Excess Share Insurance (ESI), the Dublin, Ohio-based company known for providing deposit insurance for deposits above the $250,000 NCUSIF cap.
In a statement on its website, ESI said, “ESI developed a unique solution — when no other organization could — that empowers Community Bank to succeed in its mission while protecting the deposits of the overseas military service members it serves.”
CUToday.info has also reached out to ESI for additional comment.
As CUToday.info reported here, Navy FCU won the contract to operate the Community Bank branches on military bases in Europe and in the Pacific in September of 2023 after Bank of America, which had held the contract, chose not to bid on it. Navy Federal has not disclosed the size of the contract, which will begin with a one-year transition period, followed by a base year and then eight additional one-year options.
Unable to Obtain NCUSIF Coverage
Navy Federal turned to the private deposit insurance option after it became apparent the Federal Credit Union Act would not be changed to allow the NCUSIF to cover the non-member deposits of customers of Community Bank. As CUToday.info reported, representatives of the credit union met with members of Congress over amending the FCU Act, but they were not successful.
In October of 2023, CUToday.info obtained a copy of a letter regarding the issue that Navy Federal sent to Sen. Jack Reed (D-RI), chairman of the Senate Committee on Armed Services, in which the credit union stated an “issue” with NCUA that it said “threatens to undermine our ability to provide deposit insurance to servicemembers’ accounts in the Overseas Military Banking Program.”
Pushback From Defense CUs
The news Navy FCU had won the contract also met with strong pushback from other military credit unions, especially those already operating branches on military bases.
“(Defense Credit Union Council) has heard loud and clear about opposition from the defense credit union community directed at the DoD decision to step away from the ‘one credit union/one bank’ policy that has worked well for decades,” the DCUC told CUToday.info in a statement at the time.
‘Fits Core Values’
“The Overseas Military Banking Program fits our core values at Navy Federal and is consistent with our primary mission of supporting Active Duty military members and their families,” Kara Cardona, COO of Navy Federal, said in a statement. “Serving these families through this important DoD program is directly aligned with our mission.”
Navy FCU, which has more than 350 branches, has more than 13-million members.
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