Proposed Rule Summary

NCUA 12 CFR Part 701; FCU Field of Membership # 2

Prepared by NASCUS Legislative and Regulatory Affairs Department

December 2016

Having just finalized its Field of Membership (FOM) rule for federal credit unions (FCUs), NCUA is proposing a second round of amendments to its rules related to FCU community charters. Specifically, NCUA is proposing:

  • In lieu of a presumptive community to allow FCUs to use a narrative approach to establish “common interests or interaction”  among residents of the area it proposes defining as a local community for FOM purposes
  • To increase up to 10 million the population limit on a community consisting of a statistical area or a portion thereof
  • To permit a credit union to designate a portion of an area as its community without regard to division boundaries when such an area is subdivided into metropolitan divisions

You can read NCUA’s second proposed FOM rule in its entirety here.


NCUA’s rules for FCU FOM are incorporated as Appendix B to part 701 of its Rules and Regulations. FCUs may choose from among 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
  • A community common bond among ‘‘persons or organizations within a well-defined local community, neighborhood, or rural district.’’

The FCUA authorizes the NCUA Board to define a local community (a.k.a. “well defined local community” or WDLC). NCUA requires a WDLC to have ‘‘specific geographic boundaries,’’ such as those of ‘‘a city, township, county (single or multiple portions of a county) or their political equivalent, school districts or a clearly identifiable neighborhood.’’ NCUA used to allow a narrative approach for a FCU seeking a community that did not have political boundaries, but discontinued that practice in 2010.

Citing the limiting nature of prohibiting the narrative approach, NCUA now proposes to reinstate it. In evaluating a request for designation of a WDLC based on the narrative approach, NCUA proposes to consider the following 13 criteria and supporting documentation:

  • Presence of a Central Economic Hub
  • Community-Wide Quasi-Governmental Agency Services
  • Governmental Designations with Community
  • Shared Public Services and Facilities
  • Hospitals and Major Medical Facility
  • College and University Enrollment
  • Multi-Jurisdictional Mutual Aid Agreements
  • Organizations’ and Clubs’ Membership and Services
  • Newspaper Subscriptions
  • Attendance at Entertainment and Sporting Events
  • Local Television and Radio Audiences
  • Community-Wide Shopping Patterns
  • Geographic Isolation

The proposed rule would also increase to 10 million the 2.5 million population limit that presently applies to a community consisting of a Combined Statistical Area (each a ‘‘statistical area’’) or other area an FCU designates, subject to an FCU’s ability and commitment to adequately serve the area. NCUA cites 3 justifications for the expansion:

  1. That is the size of the largest single political jurisdiction (SPJ) approved by NCUA (Los Angeles County)
  2. It reduces the disparity between a community based on a statistical area and that of a community compromised of an SPJ
  3. It narrows the inherent imbalance between the population cap that applies to FCUs and the uncapped state credit unions in at least the nine states with a population between 2.5 and 10 million

In noting point #3, NCUA specifically cites 9 states where state credit unions may seek state-wide FOM.