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The NCUA sent a Letter to Credit Unions Wednesday with updated guidance and templates to assist federal credit unions seeking to convert to a community field of membership or expand their existing community field of membership.

The changes stem from the NCUA's final rule to resolve litigation surrounding its 2016 field of membership (FOM) rule by:

• readopting a provision from the 2016 rule to allow applicants to designate a Combined Statistical Area (CSA) as a well-defined local community if the population is 2.5 million or less;
• providing additional explanation to support the elimination of a requirement to serve the core area of a Core-Based Statistical Area (CBSA); and
• adding an explicit provision regarding potential discrimination in the FOM selection for a CSA and CBSA.

The changes were proposed following the D.C. Court of Appeals' decision largely in favor of the NCUA in the ABA lawsuit in August 2019, which sought additional explanation of the NCUA's decision to eliminate the urban-core requirement for local communities based on core based statistical areas. Putting an end to the litigation, the U.S. Supreme Court in June declined ABA's petition to hear the lawsuit after the appeals court declined to rehear the case en banc.

In the Letter to Credit Unions, the NCUA provides templates and descriptions of use for business and marketing plans, streamlined business and marketing plans, and pro forma financial statements. Of note, the financial statement template includes an optional column that extends financial projections by an additional 12 months – for a total of three years – from the previous guidance on the issue.

The letter also further details requirements related to demonstrating common interests or interaction and excluding a core area from a proposed community. NAFCU has been engaged with the NCUA on these issues as several credit unions have had questions following the Supreme Court's decision to decline ABA's petition.

Relatedly, the NCUA last month issued a proposed rule to modernize the definition of a "service facility" for multiple common bond federal credit unions.

NAFCU will continue to support the NCUA's efforts to modernize FOM rules and allow credit unions to better serve their communities.