When it comes to field of membership expansions, the National Credit Union Administration (NCUA) has multiple different definitions of a service facility. The Chartering Manual defines a “service facility” differently for additions of select groups than for additions of underserved areas.
It is important to know and understand these different definitions so you can always ensure that you have a qualifying service facility for a planned field of membership expansion, whether it is the addition of a new select group or an underserved area. Below is a comprehensive list of the different definitions of a qualifying service facility:
Adding Select Groups
For group additions, Federal Credit Union (FCU)-owned electronic facilities that accept deposits, take loan applications, or disburse loans are service facilities. Credit union-owned branches, mobile branches, and offices operated on a regularly scheduled weekly basis also meet the criteria for service facilities. Finally, interests in shared branching networks, automated teller machines (ATMs), and video-teller machines also meet the criteria for service facilities for group additions. A website, however, does not qualify as a service facility.
For underserved areas, the definition of a “service facility” is more limited and allows fewer kinds of facilities to qualify as a service facility as contemplated by the Chartering Manual. More specifically, for underserved areas, a service facility includes credit union-owned electronic facilities that take deposits, accept loan applications, or disburse loans. Credit union branches, video-teller machines, shared branches, mobile branches, and offices operated on a regularly scheduled weekly basis also meet the criteria for a service facility in an underserved area. *However, unlike a qualifying service facility for the addition of a select group, an interest in a shared branching network and ATMs do not meet the criteria for a service facility in an underserved area. Again, a website also does not qualify as a service facility.
These more stringent requirements in underserved areas are designed to ensure the credit union maintains a higher degree of presence in the area because, by its very nature, an underserved area will have a higher concentration of members with greater needs.
*The NCUA Board is considering a change to this rule that would make it so there is only one definition of a qualifying service facility. The proposed rule change would bring the definition for underserved areas more in line with the definition for adding select groups.