Final Rule Summary

NCUA 12 CFR Part 701 & 721; FCU Occupancy

Prepared by NASCUS Legislative and Regulatory Affairs Department

December 2016


NCUA has finalized changes to its rule for federal credit unions (FCUs) to occupy a premise they own. Formerly, NCUA rules required FCUs to partially occupy a premises acquired for expansion with plans to eventually fully occupy the premises. The new final rule generally retains the current regulatory timeframes for FCU partial occupancy, however it modifies the definition of "'partially occupy” to mean occupation and use of 50% of the space.

This rule applies only to FCUs. State charters look to state law and regulation for any requirements regarding

The final rule may be read in its entirety here

The Final Rule

  1. Occupation of Premises Acquired for Future Expansion

    Partial occupancy – the final rule will require an FCU to partially occupy premises acquired for future expansion, within a reasonable period, no later than six years alter the date of acquisition. “Partially occupy" is defined as occupation and use, on a full-time basis, of at least 50% of the premises by the FCU, or by a combination of the FCU and a CUSO in which the FCU has a controlling interest in accordance with GAAP.

    The final rule provides a waiver for FCUs to request forbearance of either the 50% threshold or the 6 year timeframe to partially occupy.

    FCUs are no longer required to eventually fully occupy a premise.

  2. CUSOs

    As noted above, FCUs may meet the partial occupancy (50%) threshold in combination with a CUSO in which the FCU has a controlling interest. NCUA defines controlling interest using the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) # 805: “the ability of an entity to direct the policies and management that guide the ongoing activities or another entity so as to increase its benefits and limit its losses from that other entity's activities.”

  3. FCU Incidental Powers

    Finally, NCUA amended its incidental powers rule for FCUs to make clear that FCUs may sell or lease excess space in their facilities indefinitely without the caveat of eventual full occupancy.