Federal credit unions have new growth opportunities thanks to a recent appeals court decision on field of membership and the National Credit Union Administration’s new definition of a “member in good standing.” These regulatory changes will make it easier for federal credit unions to grow by attracting new members as well as by taking action against problem members.
D.C. Circuit Ruling Primes Federal Credit Unions for Membership Growth
The most important recent regulatory development affecting credit union growth is the U.S. Court of Appeals for the D.C. Circuit’s August 2019 decision in American Bankers Association v. NCUA, which upheld virtually all aspects of NCUA’s 2016 update to its Field of Membership and Chartering Manual.
In 2016, NCUA updated its field of membership rules to allow federal credit unions to have more flexibility to decide which parts of a U.S. Office of Management and Budget “core-based statistical area” with a population up to a 2.5 million individuals that they wanted to serve. The 2016 revisions also removed a requirement that the federal credit union had to serve the urban “core” of the CBSA and allowed a federal credit union to add areas adjacent to the CBSA if real-world evidence—such as commuting patterns—showed that the adjacent area was part of the same local community. In addition, the 2016 final rule raised the population limit on “rural districts” to a million people.
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