NCUA Board Approves Proposal to Streamline FOM Applications

The NCUA board has approved a rule intended to simplify the FOM expansion application process for community credit unions. Learn why.

David Baumann


Feb 17



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David Baumann

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David Baumann

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Rule aims to simplify requirements for community credit unions, address impact and growth of remote work.

The NCUA board on Thursday approved a proposed rule designed to streamline field of membership expansion applications and to clarify how credit unions may use criteria from other agencies related to underserved areas.

Approved unanimously, the rule is intended to simplify application requirements for community-based federal credit unions by providing a standard form for both business and marketing plans.

The rule also would expand community-based FOM affinities—relationships between a person and the geographic area—in an effort to recognize the growth of telecommuting and remote work for companies headquartered in a community.

Further, it would simplify the process of allowing immediate family members to join a credit union in the event of a member’s death.

Additionally, the rule also would amend the agency’s FOM manual to cross-reference the CDFI Fund’s economic distress criteria. The change states that the NCUA will defer to the CDFI on such measures, given the fund may soon be updating them.

The CDFI Fund currently is overhauling its application and certification process.

The proposed FOM rule will be open for comment for 90 days after it is published in the Federal Register.

Reaction from NCUA Board

Board Chairman Todd Harper noted that the federal credit union charter lags behind state charters when it comes to FOM options.

He explained that one of the changes eliminates business and marketing plan requirements for certain federally insured, state-chartered credit unions that seek to convert to a federal charter while serving the exact same community field of membership.

“If a credit union is already serving the community and won’t be changing the boundaries of that community, we shouldn’t have to make that credit union jump through an unnecessary paperwork hoop,” he said.

Board member Rodney Hood commented that while the proposed rule attempts to capture remote-working employees as affinity groups for community charters, he would still like to see that rule expanded.

“Personally, I believe the best way to do this is to allow mobile phones to serve as service facilities,” he said. “For us to continue to use an antiquated definition of service facility is not responsible in my view.”

Cyber Security, Third-Party Vendor Authority

In other business at its monthly meeting, the board approved a final rule that requires federally insured credit unions to notify the NCUA as soon as possible—but no later than 72 hours—after they believe a cyber incident has occurred.

Harper used the occasion to again request Congress to provide the NCUA with examination powers over third-party servicers used by credit unions. He reiterated that other banking regulators have that power, while adding that the Government Accountability Office, the Financial Stability Oversight Council and the agency’s Inspector General have all recommended congressional action “to fix this blind spot.”

Agency Financial Health

During the meeting, agency CFO Eugene Scheid reported that the NCUA equity ratio stood at 1.30% at the end of 2022. This was up from 1.26% at the end of 2021, but still below the agency’s Normal Operating Level of 1.33%.

Scheid also revealed that there were six credit union liquidations in 2022 that together cost the Share Insurance Fund a total of $9.8 million, with fraud a factor in five of the six instances.

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