Part 701 – Federal Credit Union Chartering & Field of Membership
Final Rule

Prepared by NASCUS Legislative & Regulatory Affairs Department
June 2018

NCUA has issued a final rule amending federal credit union (FCU) chartering and field of membership rules with respect to applicants for a community charter approval, expansion or conversion. At-A-Glance, the final will:
  • allow FCU to submit a narrative to establish the existence of a well-defined local community (WDLC) instead of limiting FCUs to pre-designated presumptive communities
  • establish a process for the holding of a public hearing and invite public comment on FCU applications for a WDLC that would exceed 2.5 million people
  • permit FCUs to designate a portions of a community that is subdivided into metropolitan divisions as its WDLC without regard to division boundaries

NCUA notes that it believes the final rule is compatible with the recent District Court opinion regarding its 2017 final FCU field of membership (FOM) rule. (See NASCUS’ summary of the court’s ruling here.)

The final FCU FOM rule is available here. The rule will take effect on September 1, 2018.

The rule applies only to FCUs.

NCUA’s FOM rules for FCUs (the Chartering Manual) are incorporated in Appendix B to part 701 of the NCUA’s regulations as prescribed by Section 1759 (§109) of the Federal Credit Union Act (FCUA). In general, FCUs may choose one of three charter types:

  • a single group sharing a single occupational or associational common bond;
  • a multiple common bond of groups that each have a distinct occupational or associational common bond among group members; or
  • a community common bond among persons or organizations within a WDLC, neighborhood, or rural district

With respect to the community FOM, the FCUA does not define a WDLC, neighborhood, or rural district. Those definitions are provided by regulation. To qualify as a WDLC, neighborhood, or rural district, NCUA requires the area being sought by the FCU to have specific geographic boundaries.

  • Pre – 2010 Community FOM Requirements

Until 2010, NCUA required FCUs to submit a narrative identifying common interests and interactions among residents of the proposed area IF the proposed area was larger than a single political jurisdiction. The regulation also required the community to be contiguous.

  • 2010 Narrative Approach Replaced by 2 Presumptive Community Models

In 2010, NCUA abandoned the narrative approach and instead established 2 presumptive communities that were regulatory defined as WDLC for purposes of FOM. One of the presumptive communities is any single political jurisdiction (regardless of the population), defined by the Chartering Manual as a city, county, or the political equivalent of those, or a portion of one of the former. The other presumptive WDLC is Core Based Statistical Area (or portion of one) as designated by the US Census Bureau and limited to a population cap of 2.5 million. If the FCU was seeking a portion of the Core Based Statistical Area, the proposed FOM had to conform to existing political boundaries within that area. For both presumptive communities, a FCU was required to demonstrate an ability to serve the proposed area.

Note that although NCUA continued to require contiguous communities, the word “contiguous” was inadvertently dropped from the regulatory text with the 2010 changes.

NCUA Proposed 3 Changes in 2016
In October, 2016, NCUA proposed 3 changes to the community FOM:

  • A return to use of narrative to establish a community as an alternative to the 2 presumptive communities
  • Increasing from 2.5 million to 10 million the cap on the population of a presumptive community
  • Permitting an FCU to designate a portion of a statistical area as its community without regard to metropolitan division boundaries

Final Rule: Changes to FCU Communities
As noted above, NCUA has finalized several changes to the FCU community charter. The changes are as follows:

  • Communities must be contiguous – NCUA has re-inserted the word “contiguous” in the regulatory text to reflect NCUA’s longstanding interpretation that a community must be contiguous.
  • Narrative Approach – NCUA will re-introduce the narrative approach as an option for a FCU to define a custom drawn community. To assist FCUs seeking to use the narrative approach, NCUA has articulated 13 criteria that characterize a commonality among residents that a FCU should address in its narrative. NCUA notes that a FFCU need not demonstrate in totality all 13 criteria, but rather a totality of the circumstances within the criteria a FCU addresses must indicate a sufficient presence of common interests or interaction among the area’s residents.


Most Persuasive


Least Persuasive

  • Presence of a Central Economic Hub

An economic hub is evident when 1 political jurisdiction within a proposed community has a large percentage of the population or is the primary location for employment. Major employers and their locations within the proposed community should be identified.


At least 25% of the workers living in the proposed community commute to work in the central economic hub.


Over 15% of the workers living in the proposed community commute to work in the central economic hub.


Less than 15% of the workers living in the proposed community commute to work in the central economic hub.

  • Quasi-Governmental Agencies (QGAs)

The existence of organizations such as economic development commissions, regional planning boards, & labor or transportation districts can be important factors. The more closely their service area matches the proposed FOM, the greater the showing of interaction/common interests.

The QGA covers the entire community exclusively, derives leadership from the area, & represents collaboration that transcends traditional county boundaries. Has meaningful objectives that advance residents' common interests in economic development and quality of life.


The QGA substantially matches the proposed community and carries out objectives that affect the relevant common interests for the entire area's residents.


The QGA does not match the proposed community and carries out only incidentally relevant objectives or carries out meaningful objectives in only localized sections of the proposed community.

  • Governmental Designations

Designation of the community by a government agency as a region or district (such as a regional water, transportation, or tourism district) is a factor that can be considered in determining whether the area is a local community.


A division of a state or federal agency designates the proposed area as it service area or target area for specific programs.


A division of a state or federal agency designates a regional area that includes the proposed community, but offers special programs tailored to the interests of the
residents of the proposed community


A division of a state or federal agency designates an area that includes several communities.

  • Shared Public Services/Facilities

The existence of shared services & facilities, such as police, fire protection, park districts, public transportation, airports, or public utilities, can demonstrate an area is a community. The more closely the service area matches the geographic boundaries of the community, and the higher the percentage of residents throughout the community using those services or facilities, the more valuable the data.


Data documents that residents from entire proposed community benefit from a public facility. Formal agreements exist across political boundaries to provide for a common need such as shared police and fire protection.


Public facilities exist that cross county lines and cover the majority of the proposed community’s population but does not cover the area in its entirety.


Public facilities serve areas that do not correspond to the proposed community.

  • Hospitals and Major Medical Facilities

Medical facility data should include admittance/discharge statistics showing use by residents throughout the proposed community. Data may also show the importance of an area hospital to the proposed community, that the hospital specifically targets the community or the distribution of hospitals over a larger area.


Narrative presents evidence that residents throughout the proposed community use hospitals in the major population or employment center.


Statistical data may not be available, but narrative demonstrates by other sources that a medical facility is the only viable option for a significant portion of the proposed community’s residents.


The proposed community has multiple medical facilities that are geographically dispersed but offer duplicative services.

  • Colleges & Universities

Enrollment data can be a useful factor in establishing a WDLC. The higher the percentages of student enrollment at a given campus by residents throughout each part of the community, the greater the value in showing interaction. Additionally, the greater the participation by the college in community initiatives the stronger the value of this factor.


Institutions of higher learning identified in the narrative attract significant numbers on enrollees from throughout the proposed community.


Statistical data on student origin is inconclusive or unavailable. However information exists that demonstrates the institutions’ relevance to the entire proposed community (such as partnerships with businesses or local schools).


Statistical data indicates the institutions’ recruit and draw students from a broad area transcending the proposed community.

  • Mutual Aid Agreements

 The existence of written agreements among law enforcement & fire protection agencies in the area to provide services across multiple jurisdictions can be an important factor.


Mutual aid agreements covers the proposed community exclusively and in its entirety.


Mutual aid agreements substantially match the proposed community.


Mutual aid agreements do not match the proposed community.

  • Organizations & Clubs

 The more closely the service area of an organization or club matches the proposed community, & the greater the percentage of membership and services throughout the community, the more relevant the data.


Statistical data supports that organizations with meaningful objectives serve the entire proposed community.


Other qualitative documentation shows that organizations with meaningful objectives serve the entire proposed community.


Applicant lists organizations that either do not cover the entire proposed community or have objectives too limited to have meaningful impact on residents’ common interest

  • Community Newspaper

 A newspaper’s subscription base in the proposed FOM can be an indication of common interests or interaction. Subscription data may include print copies as well as on-line access.


Statistical evidence indicates the community’s residents read the local newspaper which carries local stories & has a marketing area consistent with the community.  


Local newspapers and periodicals specifically cater to the proposed community.


The area lacks a general newspaper that covers the proposed community. There is no specialized publications catering to the entire proposed community.

  •  Entertainment & Sporting Events

 Data showing residents from the proposed community attend the same events might indicate commonality. For sporting events, as well as some entertainment events, data on season ticket holders and memberships may be available.


Statistical data exists demonstrating that the venue(s) attracts residents from throughout the community.


Statistical data is not available, but other qualitative information demonstrates the importance of the venue(s) for the residents of the proposed community.


The applicant lists local venues w/o discussing where users originate from or otherwise documenting relevance to the proposed community.

  • Local TV & Radio Stations

 A television or radio station broadcasting in an area can be an indication of common interests or interaction. Data on viewer and listener audiences in the proposed community can support the existence of a community.


Statistical evidence indicates a significant portion of residents from throughout the proposed community watch/listen to local stations. The media has local stories and a marketing area matching the proposed community.


The television and radio stations provide news and sports coverage specifically catering to the proposed community.


The area lacks television or radio stations serving the proposed community.

  • Shopping

The narrative must identify the location of the major shopping centers & include the percentage of shoppers coming from each part of the community. Identification of the shopping center’s target area can be of value.


The narrative provides reliable statistics demonstrating the shopping facility is the major facility for residents from the entire proposed community.


Narrative demonstrates how area’s shopping facilities are clustered in community’s hub and residents do not have practical alternatives to meet shopping needs.


Applicant lists large shopping facilities without providing statistics or other documentation demonstrating relevance to proposed community.

  • Geography

Some communities face varying degrees of geographic isolation, with travel outside the community limited by mountain ranges, forests, national parks, deserts, bodies of waters, etc. This factor, and the relative degree of isolation, may contribute to a finding of common interests or interaction.


Area is geographically distinct or isolated from immediate surrounding areas.


Area has geographic commonalities that influence other aspects of residents’ lives.


The area’s geographic features do not appear to influence other social or economic characteristics of the area.

  • Public Hearing - NCUA’s office of Credit Union Resources and Expansion (CURE) will hold public hearings to consider any narrative community charter application that includes an area with greater than 2.5 million people. CURE will publish notice in the Federal Register setting the date, time, and location for the hearing. The public hearings will be capped at 4 hours in length with no more than 8 participants, to include the FCU applicant, the first 6 entities to contact NCUA in writing and one participant at NCUA’s discretion.

In addition to the presentations at the public hearing, statements in writing may be submitted to CURE at least twenty business days prior to the hearing. NCUA’s CURE will approve, deny, or make modifications to the application based on the information presented at the hearing and in writing, as well as based on the FCU’s application.

  • Portion of CBSA as a WDLC – An FCU may now also designate a portion of a CBSA as its community without regard to metropolitan division boundaries. To be a presumptive community, the area must have a population of 2.5 million or less.