NCUA’s latest Letter to Federal Credit Unions (18-FCU-02) features guidance on how credit unions can prepare a successful narrative application when using this option to apply for serving a well-defined local community (WDLC). Changes to the field-of-membership rule became effective Sept. 1, providing federal credit unions with more flexibility on applications for community charter approvals, expansions, or conversions.
In addition to a presumptive community based on a single political jurisdiction or core based statistical area, the final rule provides federal credit unions with another option when submitting their community related applications. The federal credit union can use a written narrative, with sufficient supporting documentation, to establish the existence of a well-defined local community (WLDC).
A written narrative, with sufficient supporting documentation, may allow a federal credit union to establish a WDLC for an area that may not otherwise qualify as a presumptive community based on a single political jurisdiction or core based statistical area. Federal credit unions must demonstrate the ability to serve the requested community and its intent to serve the entire community and all its segments.
According to NCUA, the most persuasive way for a credit union to show that the area qualifies as a WDLC is to use statistical and third-party data to illustrate how the area’s residents interact or share common interests.
Third party data evidence includes:
According to the guidance, the larger the geographic or population area, the more difficult it is to show the area qualifies as an WDLC and will likely require even more supporting evidence to support the credit union’s request that the area is in fact a WDLC.
Less persuasive types of evidence for illustrating that an area is an WDLC, includes things such as: