The National Credit Union Administration (NCUA) board has approved a proposed rule to revise the agency's community chartering policies and clearly define what constitutes a community charter.
The NCUA says its proposal recommends objective, quantifiable criteria to determine a local community and defines the term ‘rural district.’ The proposal also clarifies the NCUA's marketing-plan requirements for credit unions converting to or expanding community charters, and defines the term ‘in danger of insolvency’ for emergency merger purposes.
Under the proposed rule, the NCUA would evaluate applications for creating or adding a community based on objective criteria. Depending on whether the new area is urban, suburban or rural, specific numerical standards would be applied.
Applicants would also continue to have the ability to serve areas the NCUA had previously determined were local communities, the agency says.
"This proposed rule would dramatically improve the future process for credit unions to apply for community charters – and improve the standards for NCUA to evaluate them," says NCUA Chairwoman Debbie Matz.
"Rather than trying to evaluate whether a community exists, NCUA could focus on evaluating the credit union's ability to serve that community," Matz adds. "And in the process, this proposed rule would save credit unions, and, ultimately, their members, time and money."
Board member Michael Fryzel calls the proposals "long overdue."
"In particular, the objective criteria proposed for chartering applications will allow the process to be more effective and efficient, and will ultimately mean that credit unions can move forward with a clearer understanding of how to extend service to consumers," Fryzel says. "I strongly encourage all stakeholders to submit comments on the proposed rule."
The proposal was issued with a 60-day comment period. Preceding the effective date of the final rule, the NCUA will accept community charter applications based only on single political jurisdictions and other areas NCUA previously determined are local communities. The NCUA will accept all community charter applications based on any permitted criteria after the final rule becomes effective.Â Â Â