Newsroom

Back to the Newsroom
June 29, 2018

NAFCU provides CUs in-depth look at new FOM, voluntary mergers rules

NAFCU issued Final Regulations Thursday to provide credit unions with an in-depth look at NCUA's recently finalized field-of-membership (FOM) and voluntary mergers rules. The Final Regulations provide a summary, section-by-section analysis and effective date for the rules to help credit unions prepare for the changes.

Field-of-Membership

The rule will:

  • allow credit unions seeking approval to form, expand or convert to a community charter the option to submit a narrative application to document their field of membership;

  • maintain the population limit of statistical areas at 2.5 million, while providing that narrative applications subject to a public hearing may exceed the limit; and

  • allow the board to permit a credit union to designate an individual portion of a Core-Based Statistical Area as its community no matter the metropolitan division boundaries within the area.

Effective date: Sept. 1

NAFCU has pushed NCUA's efforts to modernize FOM in order to allow credit unions to serve more consumers. The association continues to support NCUA as its first FOM rule continues to be challenged by the American Bankers Association (ABA); NAFCU believes NCUA's FOM rules are well within the agency's legal authority.

Voluntary Mergers

The rule will:

  • extend the required member notice in advance of a merger vote to a minimum of 45 days;

  • require merging credit unions to disclose merger-related compensation increases above $10,000 or 15 percent of compensation, whichever is greater, for certain employees and officials of the merging credit union;

  • clarify the contents and format of members' notices; and

  • establish a portal for members of the merging credit unions to provide comments about the proposed merger to the NCUA on its website.

Effective date: Oct. 1

NAFCU had expressed concerns about the proposed rule, but NCUA made certain positive changes to the final rule that were responsive to NAFCU’s recommendations. The association is supportive of increased transparency and disclosure, but cautions the NCUA against creating unnecessary barriers for responsible credit union mergers.