Charter Comment Time Extended
Credit unions will have six additional weeks to submit comment letters on the NCUA's proposed rule to revamp the application process for community charters.
The agency moved the deadline to April 15 from March 1 because credit unions already face a March 9 deadline for commenting on the proposed corporate credit union rule.
As of Feb. 10, the Missouri Credit Union Association was the only organization to file a comment letter on the charter rule.
Association President/CEO Roshara Holub wrote that the proposed rule's definitions of what constitutes a geographic area would exclude Missouri's two biggest cities-Kansas City and St. Louis-from being considered hubs for purposes of granting a community charter. She added that the proposed limit of 100,000 residents for a population area to be classified as "rural" is too low and should be expanded to 300,0000.
In addition, she urged the agency not to base its decision on whether a community is underserved on the basis of calculating whether there is a "concentration of [financial institution] facilities." She suggested, instead, that the decision should be based on whether "significant consumer economic needs" are being met.
CUNA and NAFCU are both reviewing the rule and have committees looking at the proposed rule and working on the associations' positions on it.
NCUA Chairman Debbie Matz has said the changes will make the application process shorter and less arbitrary. When presenting the rule to the board in November, Deputy General Counsel Michael McKenna predicted that the application process would be reduced from an average of 18 months to a few months.
Under the proposed rule, for purposes of whether to grant a community charter, a well-defined local community would have to have 2.5 million or fewer people and have a core area within the community that contains 50% of the jobs and 33% of the population.
Those criteria would indicate to the agency that individuals in those communities have "sufficient interaction and/or common interests."
Once approved, the NCUA would regularly check to be sure the credit union is following through with its marketing plan to serve the area. It must file a three-year marketing plan when it applies for the community charter. Holub wrote that the agency should provide additional guidance about the desired contents of those plans.
Hubert Hoosman, president/CEO of Vantage Credit Union in St. Louis, said in an interview that the three-year marketing plan is too long.
"You can't know what market conditions are three years out. There should be more flexibility," he said.
The proposed rule also defines a credit union as "in danger of insolvency," and, therefore, subject to an emergency merger if it has any or all of these criteria: a net worth declining at a rate that will render it insolvent within 24 months or under 2% in 12 months or a net worth that is undercapitalized with no reasonable prospect of becoming adequately capitalized in the next 36 months.