Compliance Blog

Categories: Board and Governance

NCUA Issues Q&As on FOM, Says More Guidance Coming in May

Over the past few months, we have heard from many federal credit unions with questions about recent changes to NCUA's Field of Membership and Chartering Manual . On February 6, 2017 NCUA held a webinar that provided an overview of the new field of membership rule. Yesterday, the agency issued over 70 Q&As from this event on a variety of topics:

  • General
  • Community charters (general, processing time, combined statistical areas, rural area, adjacent area, mergers, previously approved communities)
  • Multiple common bond charters (general, Select Employer Group contractors, office & industrial park tenants, underserved areas, honorably discharged veterans)
  • Trade, Industry, or Profession (TIP) charters

NAFCU has received questions on some of the issues addressed in the Q&As so I selected a few to highlight this morning.

Community Charters – Adjacent Area. The field of membership rule allows a community charter to add adjacent areas to a community consisting of a Single Political Jurisdiction, Core Based Statistical Area (CBSA), CSA, or Rural District by submitting a narrative, based on subjective evidence, that the residents interact or share common interests. The FCU would also need to show its ability to serve the entire expanded community through a business and marketing plan. Here are a few of the Q&As on this particular provision:

  1. Does the rule allow a credit union serving one MSA to expand to a separate MSA if it can demonstrate common interests, particularly if the MSA is adjacent to our existing FOM?

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.

  1. As a community chartered credit union, does our service area have to be adjacent to a MSA that is under 2.5 million people to serve it? 

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.


  1. Is there a limit of one adjacent area to a defined area?

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.

Multiple common bond charters – the FOM rule also allows multiple common bond charters to make a variety of changes such as allowing the inclusion of the employees of certain SEG contractors,  clarifies how to allow office or industrial park tenants join,

  1. Is a shared branch considered an acceptable ability to serve members as a means for a credit union to expand its field of membership?

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.


  1. What do we need to submit for a housekeeping amendment to add SEG contractors?

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.”

  1. What is meant by “strong dependency relationship” in the new Inclusion of SEG Contractor Rules?

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.

There are several Q&As specific to multiple common bond FCUs adding certain office or industrial park tenants, here's a few to note:

  1. Do you need to list each business and the number of employees at the sites?

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


  1. In a strip mall, if a tenant leaves and another tenant moves in, do we need to submit another application to add the new tenant that moved in?

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.


  1. Would an authorized representative of an industrial park include a property management company?

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.

In yesterday's press release, NCUA also said that "by May" it "expects to have new guidance, including examples and resources" to help federal credit unions "prepare requests" to amend their fields of membership.  In the meantime, these Q&As are a helpful start in the interim for FCUs who are evaluating how the FOM rule change might create opportunities for growth. NAFCU will keep members posted but in the meantime, feel free to send us specific questions so we can help.

The "Great Blizzard" of 2017. Last week, we had a bit of a snow event in the DC metro area. While weather reports indicated that we could receive a decent snowfall, we ended up with about 4 inches or so. I took Nolan to one of our local grocery stores after work that day, and it was badly picked over. As a native of Ohio, I just had to laugh – and take pictures to share so that some of you further north can chuckle at our region's expense.

Empty Store 2

Empty Store 3

Empty Store 1

About the Author

Brandy Bruyere, NCCO, Vice President of Regulatory Compliance, NAFCU

Brandy Bruyere, NCCO, Vice President of Regulatory ComplianceBrandy Bruyere, NCCO was named vice president of regulatory compliance in February 2017. In her role, Bruyere oversees NAFCU's regulatory compliance team who help credit unions with a variety of compliance issues. She also writes articles for NAFCU publications, such as the NAFCU Compliance Blog.

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