NCUA Requirements - 4 - Field of Membership Flashcards
Field of Membership: Single occupational common bond
a credit union that serves a single occupational sponsor (Page 4-4)
Field of Membership: Single associational common bond
a credit union that serves a single associational sponsor (Page 4-4)
Field of Membership: Multiple common bond
a credit union that serves more than one group,
each of which has a common bond of occupation and/or association
Field of Membership: Multiple common bond
a credit union that serves more than one group,
each of which has a common bond of occupation and/or association (Page 4-4)
A federal credit union’s charter reads as follows: “Employees of the Newman Widget Co. and its partially-owned subsidiary, Widget’s Toyworks Inc., who work in, or are paid from, the Portland, Ore., headquarters and their immediate family.” What type of federal credit union charter does it operate under?
Single occupational common bond FCU. (Page 4-4)
Can corporations, partnerships, associations, and other nonnatural-person legal entities qualify for membership in a federal credit union? Yes or No
Yes, but business entities have to be specifically listed in the credit unions’ charter. (Page 4-4)
Membership eligibility is extended to individuals who are members of an immediate family or household. What is NCUA’s definition of “immediate family”?
NCUA defines “immediate family” as spouse, child, sibling, parent, grandparent, or grandchild. For purposes of this definition, “immediate family member” includes stepparents, stepchildren, stepsiblings, and adoptive
relationships. (Page 4-6)
Kathy joins the ABC Federal Credit Union. Which of the following people will NOT qualify to join the credit union based on the definitions of “immediate family” and “household” in IRPS 99-1? Will these people qualify if Kathy does not join the credit union even though she qualifies for membership?
a. Kathy’s housemate who has been sharing a townhouse with her for three years. Yes or No
b. Kathy’s sister Elaine. Yes or No
c. Kathy’s nephew John. Yes or No
d. Kathy’s stepson Alex. Yes or No
Kathy’s nephew John. The nephew can only join if his mother or father, Kathy’s sibling, first joins the credit union. There must be an unbroken chain of membership based on NCUA’s definition. (Page 4-8)
Yes, eligible immediate family members can join even if the potential primary member does not. Unless the FCU has a policy to require the primary potential member (Kathy) to join first. (Page 4-8)
Once a person becomes a member of the credit union, that person may remain a member until choosing to withdraw or is expelled from membership. However, the credit union may limit the services provided to that member. What is this policy commonly known as?
“Once a member, always a member.” (Page 4-9 to 4-10)
A multiple-group federal credit union has both flexibility and restrictions in adding groups. List at least one key flexibility and one key restriction of the multiple-group charter compared to single common bond FCUs.
The multiple group FCU has the flexibility to mix both employee and associational groups. Although each group has to have a common bond, the groups don’t have to have anything in common with one another. A key restriction for a multiple-group FCU is the geographic restriction. Each added group has to be located within the service area of the credit union and within “reasonable proximity of a service facility of the FCU. Single common bond
federal credit unions typically do not have geographic restrictions, so two plants in different parts of the U.S. can be served by the same single common bond occupational FCU. (Page 4-2 to 4-21)
NCUA has changed its policy on overlaps and exclusionary clauses. What does this mean?
NCUA doesn’t think that a credit union can be protected from competing with other financial institutions, including other credit unions. Overlaps involving groups of less than 3,000 potential primary members will be classified as an
incidental overlap and NCUA will not conduct an overlap analysis. The Federal Credit Union Act requires NCUA to conduct an overlap analysis on a select group expansion for a multiple group credit union when the group consists of 3,000 or more people. If an FCU wants an existing exclusionary clause removed, it can apply to the regional office and the clause will be removed. For many years,
NCUA has authorized more than one community federal credit union to serve the same community, so community credit unions have never been protected from overlaps by any type of credit union. (Page 4-13)
A community federal credit union must serve a “well-defined local community, neighborhood, or rural district.” Why does NCUA’s field of membership manual include population limits?
The population limits determine how much documentation the credit union will have to provide to NCUA with its application seeking to expand or to convert from another type of charter (or how much documentation a chartering group will have to present with its charter application). NCUA makes certain presumptions that there is a well-defined local community, so the applicant doesn’t have to
prove that fact. For instance, NCUA will assume that any area recognized as a single political jurisdiction, such as a city, will be a community, regardless of population. There is no maximum population limitation that a community credit
union might serve, but above certain population sizes, the credit union has to convince NCUA that the area is a “community” by providing evidence that there is community interaction and/or common interests. (Page 4-25)
All requests for adding new groups to an FCU’s single- or multiple-group charter must be made using official NCUA forms. What are these two forms, and to which credit unions do they apply?
Since late 2005, only multiple group FCUs are authorized to add new underserved areas. If an FCU wants to add an underserved area, it must: (1) develop a business plan specifying how it will serve the community and (2)
maintain an office or facility in the area or have a pre-existing service facility within close proximity to the area (determined on a case-by-case basis.) (Page 4-28)
Is a federal credit union serving one company subject to any geographic restrictions?
No, the single common-bond credit union will list in its charter who it serves, but it can serve, for instance, the company’s plants throughout the country. (Page 4-18)
Can a single common-bond credit union that serves a manufacturing company’s employees add as a “select group” the employees of the local pizza parlor?
No, it generally can’t add any select groups, except ones that it can convince NCUA are very closely related to the company’s operations. (Page 4-19)
