[Federal Register Volume 67, Number 79 (Wednesday, April 24, 2002)]
[Rules and Regulations]
[Pages 20013-20018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9971]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701


Organization and Operations of Federal Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board is amending its chartering and field of 
membership manual to make four changes to ease regulatory burden. 
First, applicants need not submit documentation to establish a 
community area that is the same as one the NCUA has previously 
determined to be a well-defined local community, neighborhood or rural 
district. Second, the Board is deleting the category of common 
characteristics and background of residents from the examples of 
acceptable documentation because this category has proven to generate 
documentation of limited relevance. Third, an existing community 
charter need not document in writing how it plans on serving the entire 
community. Fourth, the Board is updating the definition of an 
investment area because of the release of new census data and updated 
Community Development Financial Institution Fund standards.

EFFECTIVE DATE: May 24, 2002.

ADDRESSES: National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.

FOR FURTHER INFORMATION CONTACT: Michael J. McKenna, Chairman, Field of 
Membership Task Force, 1775 Duke Street, Alexandria, Virginia 22314 or 
telephone (703) 518-6540 or Regina Metz, Staff Attorney, Office of 
General Counsel, 1775 Duke Street, Alexandria, Virginia 22314 or 
telephone (703) 518-6540 or Lynn Markgraf, Program Officer, Office of 
Examination and Insurance, 1775 Duke Street, Alexandria, Virginia 22314 
or telephone (703) 518-6396.

SUPPLEMENTARY INFORMATION:   

Background

    NCUA's chartering and field of membership policy is set out in 
Interpretive Ruling and Policy Statement 99-1, Chartering and Field of 
Membership Policy (IRPS 99-1), as amended by IRPS 00-01. The policy is 
incorporated by reference in NCUA's regulations at 12 CFR 701.1. It is 
also published as NCUA's Chartering and Field of Membership Manual 
(Chartering Manual), which is the document most interested parties use 
and to which references in the following discussion are made.
    In 2001, the NCUA Board issued two interim final rules on 
chartering and field of membership. In this document the Board is 
finalizing both rules as IRPS 02-2. Each rule and each amendment is 
discussed separately below.

March Interim Final Rule

    On March 8, 2001, the NCUA Board issued IRPS 01-1, an interim final 
rule with a sixty-day comment period, amending the Chartering Manual. 
66 FR 15619 (March 20, 2001). The comment period ended on May 21, 2001. 
Nine comments were received. Comments were received from two Federal 
credit unions, four state credit union leagues, one national credit 
union trade association and two bank trade associations. Almost all of 
the commenters supported both of the interim final rule's field of 
membership changes. Most of these commenters believe these amendments 
will reduce documentation requirements and save Federal credit unions 
time and funds in converting to a community charter.

1. Previously Established Communities

    The Chartering Manual requires community charter applicants to 
establish that an area is a ``well-defined local community, 
neighborhood, or rural district.'' Chartering Manual, Chapter 2, V.A.1. 
It provides that an applicant may submit

[[Page 20014]]

a letter describing how the area meets the standards for interaction or 
common interest for certain geographic and population sizes, namely, a 
single political jurisdiction such as a county with 300,000 or fewer 
people, or multiple, contiguous political jurisdictions with 200,000 or 
fewer people. Applicants must submit maps and information about the 
area's population and political jurisdiction.
    For larger areas in terms of population and geographic size, the 
Chartering Manual provides for applicants to submit a narrative summary 
and documentation supporting the finding of interaction and common 
interests in the proposed community. The Chartering Manual provides 
examples of the type of documentation that an applicant may submit but 
does not require or specify particular documentation.
    In the interim final rule, the NCUA Board stated that applicants 
need not submit documentation to establish a community area that is the 
same as one the NCUA has previously determined to be a well-defined 
local community, neighborhood or rural district. Eight commenters fully 
supported this amendment. One commenter did not understand the 
amendment. The Board believes this amendment provides a common sense 
approach for documentation requirements by eliminating redundant proof 
by subsequent applicants for the same geographic area that either it or 
a regional director has already addressed. Therefore, the NCUA Board is 
adopting this interim final amendment without change.
    Applicants need only identify in their applications the fact of the 
prior approval and their reliance on the summary and documentation 
already part of the agency's records. The community area must be 
identical to a previously approved application. No variance is allowed. 
Nevertheless, applicants may be required to submit their own summary 
and documents if the agency has reason to believe that the documents on 
file from previous applications are no longer accurate or are 
insufficient.
    Two commenters stated that this policy should be revisited 
periodically since the community aspect of a geographic area may change 
over time. One commenter suggested five years and another suggested ten 
years. Another commenter asked that the agency provide further guidance 
on when the agency might require applicants to submit their own summary 
and other documents if the agency has reason to believe the documents 
on file from previous applicants are no longer accurate or are 
insufficient. Basically, the agency will require more information if 
there has been a significant and quantifiable change in a community's 
characteristics. The NCUA Board believes that communities may change 
over time and will revisit the time frame for action when necessary.
    One commenter requested that NCUA consider permitting a credit 
union converting to a community charter to add new members from their 
groups that are located outside the community boundaries. This comment 
is unrelated to the interim final rule but the NCUA Board has decided 
to continue its current policy on groups outside the community.

2. Documentation Requirements

    The Chartering Manual provides examples of documentation that 
applicants may consider using to support the area as a community, 
neighborhood, or rural district. One of these examples was: ``common 
characteristics and background of residents (for example, income, 
religious beliefs, primary ethnic groups, similarity of occupations, 
household types, primary age, group, etc.).'' Id. at 2-46. This 
documentation has proven to be of limited relevance in determining 
whether the area meets the community requirements. Therefore, in the 
interim final rule the Board deleted the category of common 
characteristics and background of residents from the examples of 
acceptable documentation because it has proven to generate 
documentation of limited relevance. Eight commenters approved of this 
amendment, although one commenter believes this type of information can 
be useful in showing interaction or common interests. For the reasons 
stated above, the Board is adopting this amendment in final.
    These two final amendments will help reduce the time involved in 
the community application process, reduce costs for credit unions 
seeking to serve a previously approved community, and reduce regional 
and Board staff time and preparation.
    The Board wants to note that these amendments only apply to 
required documentation to support the proposed area as a community. 
They do not eliminate any of the remaining requirements necessary to 
process a community application, such as addressing safety and 
soundness concerns and the requirement for business and marketing 
plans.

December Interim Final Rule

    On December 13, 2001, the NCUA Board issued an interim final rule 
with a sixty-day comment period amending the Chartering Manual. 66 FR 
65625 (December 20, 2001). The comment period ended on February 19, 
2002.
    Although the Board actually received 494 comment letters or e-mail 
messages, NCUA staff has credited multiple comment letters from the 
same credit union or the same source as one comment, for a total of 428 
comments. Comments were received from 260 Federal credit unions, 120 
state chartered credit unions, 4 national credit union trade 
associations, 23 state credit union leagues, 2 bank trade associations, 
2 community groups, 1 financial group and 16 members or otherwise 
unidentified persons.

1. The Provision Commonly Referred to as the Community Action Plan 
(CAP)

    In October 2000, the NCUA Board required an existing community 
charter to address, in either its marketing or business plan or other 
appropriate separate documentation, how it plans on serving the entire 
community, including how the credit union will market to the community 
and what products and services the credit union will offer to assist 
underserved members in the communities. Some in the credit union 
community refer to this as the ``community action plan'' requirement or 
as ``CAP'', though the final rule did not use that term. The NCUA Board 
stated in the preamble to the final rule that ``existing credit unions 
will have until December 31, 2001, to have a plan in place addressing 
how the credit union will serve the entire community.'' 65 FR 64512, 
64518 (October 27, 2000). The Board implemented this rule even while 
recognizing that there was no tangible evidence that credit unions were 
not planning on serving their entire community. In fact, the NCUA Board 
stated that, based ``on the comments of community credit unions and the 
submissions some of them provided, many community credit unions already 
have adopted plans and offer products and services designed to serve 
the entire community.'' 65 FR 64512, 64517 (October 27, 2000).
    The NCUA Board issued an interim final rule on December 13, 2001, 
eliminating this regulatory requirement, known as CAP. Four hundred and 
fifteen commenters supported the elimination of the regulatory 
requirement. Most of the commenters applauded the Board's decision to 
repeal this unnecessary regulatory burden because they believe it is

[[Page 20015]]

something credit unions are already doing. The commenters who supported 
the Board's action primarily made the following points: (1) Credit 
unions do not need a regulation requiring them to serve their members; 
(2) credit unions are serving low-income people by adding underserved 
areas to their fields of membership; (3) community charters naturally 
serve their entire communities; (4) Congress specifically rejected 
similar requirements in the Credit Union Membership Access Act; (5) 
there is no evidence that community credit unions are not serving their 
entire fields of membership adequately; (6) the rule is not directly 
related to safety and soundness; (7) the rule was costly and burdensome 
to implement; (8) the rule was similar to Community Reinvestment Act 
requirements.
    Many commenters discussed how credit unions reach out and serve 
low-income members. Many commenters stated that ``continued 
improvements in NCUA's membership application process are more 
appropriate than a CAP rule and will do more to ensure all individuals, 
including disadvantaged groups, are eligible for credit union 
service.'' The Board believes this comment addresses the fact that the 
agency has streamlined its SEG approval process and underserved area 
approval process. The Board will continue to study methods to 
streamline the field of membership process.
    Twelve commenters opposed the repeal of CAP and requested that it 
be reinstated. One additional commenter, a credit union, was not sure 
of its position on this issue. The primary contentions of commenters 
opposing the repeal of CAP were that CAP is good for credit unions and 
its burden is minimal. They believe CAP is a simple requirement to help 
ensure that credit unions serve their entire communities. A few 
commenters objected to the process of using an interim final rule to 
repeal CAP. A few commenters did not understand the rule and believe 
that, under CAP, a credit union would make its written plan available 
to the public.
    In general, the Board agrees with the commenters who supported the 
repeal of CAP. Therefore, the Board is adopting this amendment as a 
final rule because the Board continues to believe that it is an 
unreasonable practice to require only certain credit unions to adopt 
specific written policies addressing service to the entire community, 
without any evidence these credit unions are failing to serve their 
entire communities. In addition, this regulatory requirement addresses 
few, if any, safety and soundness concerns.
    This Board believes that a regulation that does not address a 
substantiated safety and soundness concern or a potential problem is 
unnecessary. In this case, the Board believes it is prudent to 
eliminate this regulatory requirement because there is no evidence that 
community charters are not marketing their services to their entire 
communities.

2. Underserved Areas

    The addition of underserved areas, as defined in Chapter 3 of the 
Chartering Manual, to the field of membership of operating credit 
unions is a continuing priority of the NCUA Board. A Federal credit 
union seeking to add to its field of membership an underserved area 
first must meet a three-prong test. First, the area must be a local 
community. Second, the area must also be classified as an investment 
area as defined in section 103(16) of the Community Development Banking 
and Financial Institutions Act of 1994, 12 U.S.C. 4703(16). Third, the 
credit union adding the underserved area must establish and maintain an 
office or facility in the area, or have a preexisting office within 
close proximity.
    In October 2000, the NCUA Board made it less burdensome for federal 
credit unions to add underserved areas. 65 FR 64512 (October 27, 2000). 
Because of these changes and the credit union community's greater 
interest, the number of underserved areas added to Federal credit 
union's field of membership increased from 50 in the year 2000 to 281 
in 2001.
    The Chartering Manual provides examples of an ``investment area'' 
for the purpose of adding an underserved area. The Federal Credit Union 
Act defines an ``underserved area'' as a ``local community, 
neighborhood, or rural district'' that is an ``investment area'' as 
defined in Section 103(16) of the Community Development Banking and 
Financial Institutions Act of 1994. The 1994 law permits the Community 
Development Financial Institutions Fund of the United States Department 
of the Treasury (CDFI Fund) to further define investment areas. In the 
interim final rule, the Board updated the definition of an investment 
area in chapter three of the Chartering Manual by incorporating 2000 
census data and the CDFI Fund's updated definition of an investment 
area.
    Fifty-nine commenters generally favored NCUA's underserved area 
policies. Twelve additional commenters specifically favored updating 
the definition of an investment area. Most of these commenters believe 
this amendment will promote greater participation in serving 
underserved areas. Two commenters opposed the amendment. Both of these 
commenters appeared to misunderstand the statutory authority of NCUA to 
allow credit unions to serve underserved areas.
    The NCUA Board is adopting the interim final rule in final with a 
minor modification. This final rule makes the Chartering Manual 
consistent with 2000 census data and the CDFI Fund's modifications. If 
the 2000 census data is not readily available for a particular 
category, the latest information from the Census Bureau may be used. In 
addition, the Board is permitting credit unions to submit other 
government data to demonstrate that an area is an investment area if 
this information is more readily available than census data. This 
alternative data must be issued after the year 2000. This one 
additional change along with the original amendments will ultimately 
make it easier for credit unions to add underserved areas and thus 
serve more members of modest means.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a regulation may have on a 
substantial number of small credit unions (those under one million 
dollars in assets). These final amendments will not have a significant 
economic impact on a substantial number of small credit unions and, 
therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The NCUA Board has determined that this interim final rule does not 
increase, and will in fact reduce, paperwork requirements under the 
Paperwork Reduction Act and regulations of the Office of Management and 
Budget.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Public Law 104-121) provides generally for congressional review of 
agency rules. A reporting requirement is triggered in instances where 
NCUA issues a final rule as defined by Section 551 of the 
Administrative Procedures Act. 5 U.S.C. 551. The Office of Management 
and Budget has determined that the provisions contained in IRPS 02-1 do 
not constitute a major rule.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to

[[Page 20016]]

consider the impact of their regulatory actions on state and local 
interests. In adherence to fundamental federalism principles, NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order. This rule does not apply 
to state-chartered credit unions and will not have substantial direct 
effect on the states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this final rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

List of Subjects in 12 CFR Part 701

    Credit, Credit unions, Reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on April 18, 
2002.
Becky Baker,
Secretary of the Board.

    Accordingly, NCUA amends 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

    1. The authority citation for part 701 continues to read as 
follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 
1761b, 1766, 1767, 1782, 1784, 1787, 1789. Section 701.6 is also 
authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 
15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. Section 701.35 
is also authorized by 42 U.S.C. 4311-4312.


    2. Section 701.1 is revised to read as follows:


Sec. 701.1  Federal credit union chartering, field of membership 
modifications, and conversions.

    National Credit Union Administration policies concerning 
chartering, field of membership modifications, and conversions are set 
forth in Interpretive Ruling and Policy Statement 99-1, Chartering and 
Field of Membership Policy (IRPS 99-1), as amended by IRPS 00-1 and 
IRPS 02-2. Copies may be obtained by contacting NCUA at the address 
found in Sec. 792.2(g)(1) of this chapter. The combined IRPS are 
incorporated into this section.


(Approved by the Office of Management and Budget under control number 
3133-0015.)

    Note: The text of the Interpretive Ruling and Policy Statement 
(IRPS 99-1) does not, and the following amendments will not, appear 
in the Code of Federal Regulations.


    3. In IRPS 99-1, Chapter 2, Section V.A.2 is revised to read as 
follows:
    In addition to the documentation requirements set forth in Chapter 
1 to charter a credit union, a community credit union applicant must 
provide additional documentation addressing the proposed area to be 
served and community service policies.
    A community credit union is unique in that it must meet the 
statutory requirements that the proposed community area is (1) well-
defined, and (2) a local community, neighborhood, or rural district.
    ``Well-defined'' means the proposed area has specific geographic 
boundaries. Geographic boundaries may include a city, township, county 
(or its political equivalent), or clearly identifiable neighborhood. 
Although congressional districts or other political boundaries which 
are subject to occasional change, and state boundaries are well-defined 
areas, they do not meet the second requirement that the proposed area 
be a local community, neighborhood, or rural district.
    The meaning of local community, neighborhood, or rural district 
includes a variety of factors. Most prominent is the requirement that 
the residents of the proposed community area interact or have common 
interests. In determining interaction and/or common interests, a number 
of factors become relevant. For example, the existence of a single 
major trade area, shared governmental or civic facilities, or area 
newspaper is significant evidence of community interaction and/or 
common interests. Conversely, numerous trade areas, multiple taxing 
authorities, and multiple political jurisdictions, tend to diminish the 
characteristics of a local area.
    Population and geographic size are also significant factors in 
determining whether the area is local in nature. A large population in 
a small geographic area or a small population in a large geographic 
area may meet NCUA community chartering requirements. For example, an 
ethnic neighborhood, a rural area, a city, and a county with 300,000 or 
less residents will generally have sufficient interaction and/or common 
interests to meet community charter requirements. While this may most 
often be true, it does not preclude community charters consisting of 
multiple counties or local areas with populations of any size from 
meeting community charter requirements.
    Conversely, a larger population in a large geographic area may not 
meet NCUA community chartering requirements. It is more difficult for a 
major metropolitan city, a densely populated county, or an area 
covering multiple counties with significant population to have 
sufficient interaction and/or common interests, and to therefore 
demonstrate that these areas meet the requirement of being ``local.'' 
In such cases, documentation supporting the interaction and/or common 
interests will be greater than the evidence necessary for a smaller and 
less densely populated area.
    In most cases, the ``well-defined local community, neighborhood, or 
rural district'' requirement will be met if (1) the area to be served 
is in a recognized single political jurisdiction, i.e., a county or its 
political equivalent or any contiguous political subdivisions contained 
therein, and if the population of the requested well-defined area does 
not exceed 300,000, or (2) the area to be served is in multiple 
contiguous political jurisdictions, i.e. a county or its political 
equivalent or any political subdivisions contained therein and if the 
population of the requested well-defined area does not exceed 200,000. 
If the proposed area meets either of these criteria, the credit union 
must only submit a letter describing how the area meets the standards 
for community interaction or common interests.
    If NCUA does not find sufficient evidence of community interaction 
or common interests, more detailed documentation will be necessary to 
support that the proposed area is a well-defined community. The credit 
union must also provide evidence of the political jurisdiction(s) and 
population. Evidence of the political jurisdiction(s) should include 
maps designating the area to be served. One map must be a regional or 
state map with the proposed community outlined. The other map must 
outline the proposed community and the identifying geographic 
characteristics of the surrounding areas.
    If the area to be served does not meet the political 
jurisdiction(s) and population requirements of the preceding paragraph, 
or if required by NCUA, the application must include documentation to 
support that it is a well-defined local community, neighborhood, or 
rural district. It is the applicant's responsibility to demonstrate the 
relevance of the documentation provided in support of the application. 
This must be provided in a narrative summary. The narrative summary 
must explain how the documentation demonstrates interaction or common 
interests. For example, simply listing newspapers and organizations in 
the area is not sufficient to demonstrate that the area is a local 
community, neighborhood, or rural district.

[[Page 20017]]

    Examples of acceptable documentation may include:
     The defined political jurisdictions;
     Major trade areas (shopping patterns and traffic flows);
     Shared/common facilities (for example, educational, 
medical, police and fire protection, school district, water, etc.);
     Organizations and clubs within the community area;
     Newspapers or other periodicals published for and about 
the area;
     Maps designating the area to be served. One map must be a 
regional or state map with the proposed community outlined. The other 
map must outline the proposed community and the identifying geographic 
characteristics of the surrounding areas;
     Other documentation that demonstrates that the area is a 
community where individuals have common interests or interact.
    An applicant need not submit a narrative summary or documentation 
to support a proposed community charter, amendment or conversion as a 
well-defined local community, neighborhood, or rural district if the 
NCUA has previously determined that the same exact geographic area 
meets that requirement in connection with consideration of a prior 
application. Applicants may contact the appropriate regional office to 
find out if the area they are interested in has already been determined 
to meet the community requirements. If the area is the same as a 
previously approved area, an applicant need only include a statement to 
that effect in the application. Applicants may be required to submit 
their own summary and documentation regarding the community 
requirements if NCUA has reason to believe that prior submissions are 
not sufficient or are no longer accurate.
    A community credit union is frequently more susceptible to 
competition from other local financial institutions and generally does 
not have substantial support from any single sponsoring company or 
association. As a result, a community credit union will often encounter 
financial and operational factors that differ from an occupational or 
associational charter. Its diverse membership may require special 
marketing programs targeted to different segments of the community. For 
example, the lack of payroll deduction creates special challenges in 
the development of savings promotional programs and in the collection 
of loans.
    Accordingly, it is essential for the proposed community credit 
union to develop a detailed and practical business and marketing plan 
to serve the entire community for at least the first two years of 
operation. The proposed credit union must not only address the 
documentation requirements set forth in Chapter 1, but also focus on 
the accomplishment of the unique financial and operational factors of a 
community charter.
    Community credit unions will be expected to regularly review and to 
follow, to the fullest extent economically possible, the marketing and 
business plan submitted with their application.

    4. In IRPS 99-1, Chapter 3, Section III is revised to read as 
follows:
    All federal credit unions may include in their fields of 
membership, without regard to location, communities satisfying the 
definition for serving underserved areas in the Federal Credit Union 
Act. More than one federal credit union can serve the same underserved 
area. The Federal Credit Union Act defines an underserved area as a 
local community, neighborhood, or rural district that is an 
``investment area'' as defined in Section 103(16) of the Community 
Development Banking and Financial Institutions Act of 1994.
    The ``well-defined local community, neighborhood, or rural 
district'' requirement will be met if (1) the area to be served is in a 
recognized single political jurisdiction, i.e., a county or its 
political equivalent or any contiguous political subdivisions contained 
therein, and if the population of the requested well-defined area does 
not exceed 300,000 or (2) the area to be served is in multiple 
contiguous political jurisdictions, i.e., a county or its political 
equivalent or any political subdivisions contained therein and if the 
population of the requested well-defined area does not exceed 200,000. 
If the proposed area meets either of these criteria and meets the 
definition of an investment area that is underserved, then it is 
presumed to be a local community, neighborhood, or rural district.
    An investment area includes any of the following (as reported in 
the most recently completed decennial census or equivalent government 
data):
     An area encompassed or located in an Empowerment Zone or 
Enterprise Community designated under section 1391 of the Internal 
Revenue Code of 1996 (26 U.S.C. 1391);
      An area where the percentage of the population living in 
poverty is at least 20 percent;
      An area in a Metropolitan Area where the median family 
income is at or below 80 percent of the Metropolitan Area median family 
income or the national Metropolitan Area median family income, 
whichever is greater;
      An area outside of a Metropolitan Area, where the median 
family income is at or below 80 percent of the statewide non-
Metropolitan Area median family income or the national non-Metropolitan 
Area median family income, whichever is greater;
      An area where the unemployment rate is at least 1.5 times 
the national average;
      An area where the percentage of occupied distressed 
housing (as indicated by lack of complete plumbing and occupancy of 
more than one person per room) is at least 20 percent;
      An area located outside of a Metropolitan Area with a 
county population loss between the most recent decennial census and the 
previous decennial census of at least 10 percent;
      An area located outside of a Metropolitan Area with a 
county net migration loss (out-migration minus in-migration) over the 
five-year period preceding the most recent decennial census of at least 
5 percent;
      An area meeting the criteria for economic distress that 
may be established by the Community Development Financial Institutions 
Fund (CDFI) of the United States Department of the Treasury.
    In addition, the local community, neighborhood, or rural district 
must be underserved, based on data considered by the NCUA Board and the 
Federal banking agencies.
    Once an underserved area has been added to a federal credit union's 
field of membership, the credit union must establish and maintain an 
office or facility in the community within two years. A service 
facility is defined as a place where shares are accepted for members' 
accounts, loan applications are accepted and loans are disbursed. This 
definition includes a credit union owned branch, a shared branch, a 
mobile branch, an office operated on a regularly scheduled weekly 
basis, or a credit union owned electronic facility that meets, at a 
minimum, these requirements. This definition does not include an ATM.
    If a credit union has a preexisting office within close proximity 
to the underserved area, then it will not be required to maintain an 
office or facility within the underserved area. Close proximity will be 
determined on a case-by-case basis, but the office must be readily 
accessible to the residents and the distance from the underserved area 
will not be an impediment to a majority of the residents to transact 
credit union business.

[[Page 20018]]

    The federal credit union adding the underserved community must 
document that the community meets the definition for serving 
underserved areas in the Federal Credit Union Act. The charter type of 
a federal credit union adding such a community will not change and 
therefore the credit union will not be able to receive the benefits 
afforded to low-income designated credit unions, such as expanded use 
of non member deposits and access to the Community Development 
Revolving Loan Program for Credit Unions.
    A federal credit union that desires to include an underserved 
community in its field of membership must first develop a business plan 
specifying how it will serve the community. The business plan, at a 
minimum, must identify the credit and depository needs of the community 
and detail how the credit union plans to serve those needs. The credit 
union will be expected to regularly review the business plan, to 
determine if the community is being adequately served. The regional 
director may require periodic service status reports from a credit 
union about the underserved area to ensure that the needs of the 
underserved area are being met as well as requiring such reports before 
NCUA allows a federal credit union to add an additional underserved 
area.

[FR Doc. 02-9971 Filed 4-23-02; 8:45 am]
BILLING CODE 7535-01-U