Tuesday, November 29, 2016

First African Baptist FCU Closed, American Heritage FCU Assumes Members and Deposits

The National Credit Union Administration liquidated First African Baptist Church Federal Credit Union of Sharon Hill, Pennsylvania.

American Heritage Federal Credit Union of Philadelphia immediately assumed First African Baptist’s members and deposits.

NCUA made the decision to liquidate First African Baptist Church Federal Credit Union after determining the credit union was insolvent with no prospect of restoring viable operations.

This low-income designated credit union was seriously undercapitalized with a net worth ratio of 2.09 percent as of September 30.

At the time of its liquidation and subsequent purchase and assumption by American Heritage Federal Credit Union, First African Baptist Church Federal Credit Union had assets of $76,188 and served 261 members, according to its most recent Call Report.

First African Baptist Church Federal Credit Union is the eleventh federally insured credit union liquidation of 2016 and the seventh credit union in Pennsylvania to be liquidated this year..

Read the press release.

Monday, November 28, 2016

IBM Southeast Employee Credit Union to Acquire Florida Bank

Another small bank is being acquired by a large credit union.

It is being reported that IBM Southeast Employee Credit Union (Delray Beach, FL) has filed an application to acquire Boynton Beach-based Mackinac Savings Bank.

IBM Southeast Employee Credit Union has $947 million in assets and 16 branches, according to its most recent call report.

In comparison, Mackinac Savings Bank reported 3 branches and $109.5 million in assets as of September 30.

The deal still requires regulatory approval and the transaction price was not disclosed.

Read the story.

Bankruptcy Filing Affidavit Claims the Price of NYC Taxi Medallions As Low As $250,000

A recent Chapter 11 bankruptcy filing of a taxi medallion owner placed the value for New York City (NYC) taxi medallions as low as $250,000.

Evgeny Freidman on November 14 filed for bankruptcy protection regarding three New York City taxi medallions.

According to the affidavit, the entry of Uber and Lyft into the New York market has caused taxi revenues to fall by 45 percentt,

As a result, "Medallion owners ... can no longer demand the $2,000 or $2,500 per month rent per Medallion lease." The going lease rate is now about $1,500 per month.

This decline in revenues has caused taxi medallion values to plummet precipitously.

According to the affidavit,

The current value of the Medallions is based on sales, and is difficult to determine, but without question it has fallen precipitously since the February 2014 TLC auction prices. Based on some recent auction results, the value is perhaps as low as $250,000 each, but certainly, in my opinion, no more than $500,000 each.

If the price of taxi medallions is $250,000, this could signify large potential losses to the National Credit Union Share Insurance Fund from undercapitalized taxi medallion lending credit unions.

Read the court filing.

Wednesday, November 23, 2016

Rep. Mulvaney Troubled by $1 Billion in Legal Fees Paid by NCUA

Representative Mick Mulvaney (R - SC) wrote National Credit Union Administration (NCUA) Chairman Metsger on November 21 that he was troubled by the $1 billion in legal fees paid by the agency on $4.3 billion in recoveries associated with lawsuits over the sale of faulty mortgage-backed securities to five failed corporate credit unions.

Rep. Mulvaney wrote that "[m]ore prudent action in this matter may have saved the credit union industry millions of dollars."

Rep. Mulvaney has requested answers from the agency to three questions within 30 days:
  • Why did the agency pursue these cases under contingency fee arrangements?
  • What was the original analysis of why this was the better approach?
  • Has there been a post-settlement analysis to see if this was actually the best approach financially given the outcomes?
I will be very interested in the agency's response.

Read the letter below (click on image to enlarge).

Tuesday, November 22, 2016

Regional and Community Banks Top CUs in Customer Satisfaction

The American Customer Satisfaction Index (ACSI) reported that regional and community banks topped credit unions in customer satisfaction.

Regional and community banks had a combined score of 83, up 3.8 percent from a year ago. When super-regional banks and money center banks are included the industry's combined score was 80 -- up 5.3 percent from a year ago.

In comparison, credit unions edge up 1.2 percent to 82, slightly below the industry’s long-term average.

The report noted that strong membership growth at credit unions was putting a strain on the customer experience at credit unions.

Areas experiencing deterioration at credit unions were call centers, variety of financial services, and convenience.

The score for call centers fell 2 percent to 83.

In addition, members reported a slight drop in the availability of a variety of financial services, which fell from a score of 84 to 83.

Also, credit union members' assessment of the number and location of branches fell 3 percent to 68. The report further noted that credit union members wanted greater access to ATMs, as this benchmark fell 7 percent from a year ago to 67.

The report further noted that there was no change in customer experience in six areas, including courtesy and helpfulness of staff, satisfaction with website, and the speed in which transactions were completed.

Read the press release.

Monday, November 21, 2016

Summit CU Seeks to Build New 130,000 Square Foot Headquarters Building

Summit Credit Union is negotiating with Cottage Grove Planning Commission and other agencies to build its new corporate headquarters in Cottage Grove, Wisconsin.

The proposed 130,000 square foot building would be on 11 acres and would house 250 employees.

The preliminary plan includes underground parking for 90 vehicles and surface parking for another 400.

If the building is approved, it will be designed in 2017, built in 2018 and opened no later than 2020.

Read the story.

Saturday, November 19, 2016

Meritrust CU Signs Letter of Intent to Buy 10-Story Building

Meritrust Credit Union has signed a letter of intent to purchase the Cargill Protein building in downtown Wichita.

Meritrust expects to move roughly 150 administrative and support positions to the 10-story, 110,000-square-foot building.

The credit union stated that it has grown rapidly in recent years and its administrative office has become too small to support its staff.

Details on the offer for the building have not been disclosed.

Read the story.

Friday, November 18, 2016

Mountain America CU Breaks Ground on 11-Story, 327,000 Square Foot Corporate HQ Building

Mountain America Credit Union (West Jordan, UT) announced the ground breaking of its new corporate headquarters in Sandy, Utah.

The building will span 11 stories and 327,000 square feet and can accommodate up to 1,700 employees.

An adjacent parking structure will include 1,800 parking stalls and will be shared by Mountain America and Hale Centre Theatre. Employees will enjoy features including a fitness center, outdoor amenities, access to a one-acre park/outdoor amphitheater maintained by Sandy City.

The cost of the corporate headquarter's project was not disclosed.

Mountain America Credit Union has more than $5.9 billion in assets.

Read the story.

Thursday, November 17, 2016

The Number of Problem CUs Fell During Q3 2016; 2017 NCUSIF Premiums Estimated Between 3 and 6 Basis Points

The National Credit Union Administration (NCUA) reported today that the number of problem credit unions fell during the third quarter; but shares (deposits) and assets at problem credit unions edged higher during the quarter.

At the end of the third quarter, there were 201 problem credit unions. In comparison, there were 209 problem credit unions at the end of the second quarter of 2016 and 233 credit unions at the end of the third quarter of 2015.

A problem credit union has a composite CAMEL rating of 4 or 5.

During the third quarter both total shares (deposits) and assets in problem credit unions rose. Shares in problem credit unions increased from $8.4 billion as of June 30, 2016 to $8.6 billion as of September 30. Over the same time period, assets in problem credit unions rose from $9.5 billion to $9.7 billion. A year earlier, problem credit unions held $7.6 billion in shares and $8.5 billion in assets.

According to NCUA, 0.86 percent of total insured shares and 0.8 percent of industry assets were in problem credit unions at the end of the second quarter.

Ninety percent of problem credit unions have less than $100 million in assets and approximately 1 percent have assets in excess of $500 million.

In addition, National Credit Union Share Insurance Fund (NCUSIF) reported an increase in reserves from $178.9 million at the end of August to $182.6 million as of September 30.

A presentation by the NCUA staff to the NCUA Board estimated that 2017 NCUSIF premiums would likely range between 3 basis points to 6 basis points, as the projected NCUSIF equity ratio next year will be between 1.24 percent to 1.27 percent -- below the Normal Operating Level of 1.30 percent of insured deposits. Staff stated that these estimates are for budgetary planning purposes of credit unions. Staff further stated that credit unions should not accrue for this expense until future action by the NCUA Board to actually charge a premium in 2017.

According to staff analysis, a premium of 3 basis points would cause an additional 110 credit unions to report negative net income after the premium. If the premium is 6 basis points, an additional 219 credit unions would report a loss after the premium.

Wednesday, November 16, 2016

Guardian CU Buys Two Bank Branches and Deposits

Guardian Credit Union (Montgomery, AL) announced that it has reached an agreement with SouthCrest Financial Group to purchase its two Alabama offices and all related deposits and assets.

The two branches are located in Chilton County.

Guardian will pay a 5 percent deposit premium on the total deposits transferred, which are expected to be about $45 million, and purchase more than $6 million worth of loans.

The sale is subject to regulatory approval and is expected to close in early 2017.

Read the story.

Logix FCU Breaks Ground on New $100 Million Corporate Campus

Logix Federal Credit Union (Burbank, CA) broke ground on its new corporate headquarters to Santa Clarita, California.

The estimated total cost of the project is at roughly $100 million. This includes the price of the land, the building, the technical equipment, furnishings and landscaping.

The company will start out with a 170,000-square-foot building and will have the capability of adding another 85,000 square feet over time.

The $4.8 billion credit union expects to move to it new corporate campus in the third quarter of 2018.

Read the story.

Tuesday, November 15, 2016

Survey Shows Drop in Compliance and Risk Management Concerns

Despite a persistently stringent regulatory environment, banks and credit unions are becoming more confident in their compliance and risk management programs, according to the Regulatory and Risk Management study by Wolters Kluwer.

Overall, levels of concern among the 846 respondents collectively declined for the first time in the survey’s four-year history. A majority of the respondents -- 59 percent -- said that their compliance department now plays a collaborative role in major business decisions within their organization, and 39 percent are using an integrated or strategic risk management program.

While confidence is growing, respondents still noted several key obstacles to implementing an effective compliance program, including inadequate staffing (33 percent), manual processes (26 percent) and too many priorities (21 percent). Preparing for the new Home Mortgage Disclosure Act rules was also a central point of concern, with most respondents worried about being able to accurately capture the data required by the rule and training bank employees.

On the risk management side, 70 percent of respondents fingered cybersecurity as the top risk their institutions will face over the next year, up from 66 percent in the 2015 survey.

Read the press release.

Read the survey.

Monday, November 14, 2016

NCUA: No CUs Fined for Mortgage-Related Violations Between January 2012 and April 2016

Last week the Government Accountability Office (GAO) released a report reviewing the collection and use of funds from financial institutions for mortgage-related violations.

According to the GAO, "National Credit Union Administration (NCUA) ... had not assessed any penalties against financial institutions for mortgage-related violations from January 2012 through April 2016."

While NCUA did not assess any monetary penalties against credit unions for mortgage-related violations, this should not be interpreted to mean that credit unions had not had mortgage-related violations. Instead, NCUA may have addressed mortgage-related violations via the supervisory process.

Read the report.

Friday, November 11, 2016

Evansville Teachers FCU Buys Regional Mortgage Company

CU Today is reporting that Evansville Teachers FCU (Evansville, IN) plans to purchase First Liberty Financial Mortgage, a regional mortgage company headquartered in Owensboro, KY.

With the acquisition, First Liberty Financial Mortgage will become a division of Evansville Teachers FCU.

The $1.3 billion credit union expects this acquisition to double its monthly mortgage production.

The deal is expected to become effective November 15 and will expand the credit union’s mortgage lending presence to 12 new markets in the states of Kentucky, Tennessee, Alabama, and Mississippi.

Read the story.

Thursday, November 10, 2016

Population Limit for Rural District Increases to 1 Million People

The National Credit Union Administration (NCUA) Board on October 27th quadrupled the population limit for a Rural District.

The final rule increased the population limit for a so-called “Rural District” to 1 million people from 250,000. At the same time, NCUA dropped the alternate population limit of 3 percent of the population of the state in which the majority of the Rural District's residents would be located.

But as I pointed out previously, the final rule will allow an FCU to arbitrarily cobble together densely populated urban areas with sparsely populated counties. In fact, NCUA’s Rural District definition could define a region as rural, despite having more than half of the population living in urban areas.

Also, while NCUA states that a state does not meet the requirement of being a well-defined local community, the Rural District population expansion provides a backdoor for an FCU to have a state-wide field of membership.

Potentially, the states of Alaska, North Dakota, South Dakota, Vermont and Wyoming in their entirety could be designated as rural districts.

However, more than half of the residents in the states of Alaska, North Dakota, South Dakota, and Wyoming live in urban areas.

If this occurs, this would represent an abuse of the agency’s discretion.

Read the final rule.

Wednesday, November 9, 2016

NCUA Appointed Conservator of Valley State CU

The Director of the Michigan Department of Insurance and Financial Services appointed the National Credit Union Administration conservator of Valley State Credit Union, of Saginaw, Michigan.

The Michigan Department of Insurance and Financial Services placed Valley State Credit Union into conservatorship on August 17, 2016 because of unsafe and unsound practices at the credit union.

The credit union reported that 15.76 percent of its loans were 60 days past due. In addition, the credit union had a loss of almost $458 thousand through the first 3 quarters of 2016.

Valley State Credit Union is a federally insured, state-chartered credit union with 2,925 members and assets of $22.3 million, according to the credit union’s most recent Call Report.

Read NCUA press release.

Tuesday, November 8, 2016

Westerra CU Receives Naming Rights to Infinity Park's Sports Plaza

Westerra Credit Union (Denver, CO) has entered into a three-year sponsorship with Infinity Park, home of the Glendale Raptors Rugby Football Club.

The sponsorship gives Westerra Credit Union the naming rights to the stadium’s sports plaza, which will be called Westerra Credit Union Sports Plaza.

In addition to the Westerra Sports Plaza, Westerra Credit Union’s logo will be displayed on the men’s jerseys for the 2017 and 2018 seasons. The $1.4 billion credit union also receives signage throughout the stadium and the opportunity to have an on-site presence at all Infinity Park events.

The price of the sponsorship deal was not disclosed.

Read more.

Credit Union Sued after Sharing Woman's Credit Report with High School Class

A South Dakota woman is suing Consumer's Federal Credit Union (Gregory, SD) after copies of her credit report were shared with a class of 26 high school students.

The plaintiff, Terri McFayden, alleges that the credit union CEO, Sara Zimbelman, shared a partially redacted copy of the plaintiff's credit report with a class of 26 high school students and made derogatory remarks about her credit history.

The lawsuit claims that McFayden's name, address, partial Social Security number and a "substantial amount of credit information" was still visible on the report.

The plaintiff also claims that the entire community now knows about her financial problems and she is experiencing emotional distress.

McFayden is suing for violations of the Fair Credit Reporting Act and intentional infliction of emotional distress. She also seeks punitive damages.

Read the story.

Monday, November 7, 2016

Consumer Credit at CUs Grew in September by $3.9 Billion

The Federal Reserve reported that outstanding consumer credit at credit unions grew by approximately $3.9 billion for September 2016 to $373.5 billion.

Revolving credit at credit unions edged higher by almost $100 million to $50.9 billion in September.

Nonrevolving credit increased by nearly $3.9 billion during the month of September to $322.7 billion.

Read the G.19 Report.

Losses Surge on Higher Provisioning for Bad Taxi Medallion Loans at Progressive CU

Taxi medallion lender Progressive Credit Union (New York, NY) reported a loss of almost $52.4 million through the first three quarter of 2016 on higher provisioning charges.

For the third quarter, the loss was $32.98 million.

Provisions for loan and lease losses were $60.3 million at the end of the third quarter, up from $25.1 million as of June 2016.

The credit union's net worth fell from $233 million as of June 2016 to $200 million as of September 2016. Progressive's net worth ratio dropped from 36.71 percent to 33.95 percent over the same time period.

Delinquent loans increased by 45.2 percent during the quarter to approximately $70.6 million at the end of the third quarter. As a result, 11.62 percent of all loans were 60 days or more past due. In addition, delinquent loans were 35.29 percent of net worth.

Early delinquencies (30 to 59 days past due) were $14.2 million as of September 30, 2016.

Progressive reported net charge-offs of $10.8 million as of September 2016, up from $4.3 million from the previous quarter.

Troubled Debt Restructured (TDR) loans were $123.4 million at the end of the third quarter. TDR loans were 20.32 percent of loans and 61.7 percent of net worth.

Allowances for loan and lease losses (ALLL) were $91.1 million as of September 2016, up from $62.3 million as of June 2016. The credit union's coverage ratio (ALLL divided by delinquent loans) was 129.11 percent. However, its coverage ratio is overstated as $38.1 million was allocated to cover TDR loans.

The credit union is reporting a buffer of net worth and ALLL of $291.1 million, which is able to absorb expected and unexpected losses.

Sunday, November 6, 2016

SIU CU Adds 13 Counties to Its Field of Membership

SIU Credit Union (Carbondale, IL) has received approval from the Illinois Department of Financial and Professional Regulation to add 13 counties to its field of membership.

SIU Credit Union can now offer credit union membership to individuals that live or work in Alexander, Clinton, Edwards, Gallatin, Hamilton, Hardin, Monroe, Pope, Pulaski, Wabash, Washington, Wayne, or White counties, according to a news release from the credit union.

Read the story.

New Convention Center to Be Named for American 1 Credit Union

A new convention center being built at the Jackson County (Michigan) Fairgrounds will be named for American 1 Credit Union.

The $300 million credit union contributed $4 million for the construction of the $6 million convention center.

The new building will feature a large expo space that can be sectioned off for smaller events. Additional rooms will be able accommodate conferences with multiple sessions. The facility will also include a full kitchen for catering services.

The new convention center will compliment the existing American 1 Event Center at the Fairgrounds.

The $4 million contribution to the convention center is approximately equal to total dividend payments to members for the years of 2013, 2014, and 2015, as reported by the credit union's Call Report.

Read more.

Saturday, November 5, 2016

Taxi Medallion Lender LOMTO Is Undercapitalized

According to Call Report data, LOMTO Federal Credit Union (Woodside, NY) is now undercapitalized.

The credit union reported net worth of $20.5 million. Its net worth ratio was 8.40 percent as of September 2016. However, its minimum risk based net worth requirement was 10.04 percent.

The credit union reported a loss of almost $11.75 million through the first three quarters of 2016. The credit union reported $9.9 million in loan loss provisions during the first nine months of 2016.

The credit union reported an increase in delinquent loans during 2016. At the end of 2015, delinquent loans were $6.4 million. By the end of the third quarter, delinquent loans were $30.4 million.

This means that as of September 2016, the delinquent loan rate was 13.43 percent. This is up from 2.65 percent at the end of 2015.

Also, delinquent loans were 148.38 percent of the credit union's net worth.

The credit union further reported that approximately $33.8 million in Troubled Debt Restructured (TDR) loans, of which $14.8 million is in non-accrual status. TDR loans were 14.91 percent of loans and 164.72 percent of net worth, respectively.

LOMTO recorded $3.4 million in charge-offs through the first 3 quarters of 2016. The net charge-off rate was 1.94 percent.

LOMTO reported that $25.75 million in allowances for loan and lease losses. The credit union's coverage ratio was 84.64 percent at the end of the third quarter. However, the coverage ratio is overstated as $15 million was allocated to cover TDR loans.

In aggregate, LOMTO has a buffer of net worth plus allowances for loan and lease losses of $46.25 million to absorb expected and unexpected losses.

On other interesting fact is that uninsured deposits at LOMTO have fallen by 47 percent over the last year to $11.4 million.

Friday, November 4, 2016

Net Charge-Offs of Taxi Medallion Loans at Melrose CU Surge in the Q3

According to Call Report data, net charge-offs at Melrose Credit Union (Briarwood, NY) were almost $191 million, as of September 2016. This is up from $22.7 million at the end of the second quarter, as the credit union wrote down defaulted taxi medallion loans.

Delinquent loans fell by approximately $14 million during the third quarter to $421.4 million. As of September 2016, 24.12 percent of its loans were 60 days or more past due. Delinquent loans as a percent of net worth were 290.45 percent.

The credit union's allowance loan and lease loss (ALLL) accounts plummeted from $270.5 million in the second quarter to $102.2 million in the third quarter.

The combination of higher net charge-offs and the failure to increase provisions for loan and lease losses between June 2016 and September 2016 contributed to the decline in the ALLL line item.

The decline in allowance for loan and lease losses resulted in the coverage ratio (ALLL divided by Delinquent Loans) dropping to 24.24 percent from 62.14 percent during the quarter.

This would indicate that Melrose is seriously under-reserved and will need to increase provisions to rebuild its allowance for loan and lease losses accounts. The anticipated increase in future provisions for loan and lease losses will negatively impact earnings and the credit union's net worth.

Melrose also reported that Troubled Debt Restructured (TDR) loans fell during the quarter from $358.8 million to $242.9 million. The vast majority of TDR loans ($235 million) were in non-accrual status. As of September 2016, TDR loans represented 13.90 percent of loans and 167.39 percent of net worth.

The credit union reported that it was undercapitalized as of September 2016. The credit union had a net worth ratio of 7.52 percent; but needed a risk based net worth requirement of 9.14 percent.

The credit union has a combined buffer of net worth plus ALLL to absorb expected and unexpected losses of almost $247.3 million.

Tomorrow I will report on LOMTO Federal Credit Union.

Thursday, November 3, 2016

Nomura Agrees to Settlement of More Than $3 Million over the Sale of Faulty Securities

Nomura Asset Acceptance Corporation and Nomura Home Equity Loan, Inc. have jointly agreed to pay more than $3 million to settle claims by the National Credit Union Administration (NCUA) alleging the sale of faulty residential mortgage-backed securities to two corporate credit unions.

With this settlement, NCUA will dismiss pending suits against both firms. Neither firm admits fault as part of the settlement agreement.

NCUA still has litigation pending against other financial institutions, including Credit Suisse and UBS Securities, alleging they sold faulty residential mortgage-backed securities to corporate credit unions. NCUA also has pending litigation against various residential mortgage-backed securities trustees and LIBOR banks related to corporate credit union losses.

Read the press release.

Metsger: NCUA Has Not Engaged in Broad De-Risking

The National Credit Union Administration (NCUA) Chairman Metsger wrote Senator Flake (R-AZ) and Representative Luetkemeyer (R-MO) on October 31 that the agency "has not engaged in broad de-risking initiatives or activities with an individual institution or broadly through the credit union system."

Metsger stated that NCUA did not participate in the Justice Department's Operation Choke Point.

Metsger assured them that the agency is dedicated to ensuring public access to financial services.

Rather than cutting off entire categories of customers to banking services, the agency encourages credit unions to take a risk-based approach in assessing individual customer relationships.

Moreover, NCUA sent a memorandum to all field staff in August 2014 stating that it is the agency's policy that the decision to open, close, or decline an account or relationship is generally made by the credit union without NCUA's involvement.

Metsger concludes that NCUA does not dictate to credit unions, which businesses credit unions can serve, as long as the businesses are legal and within the credit union's field of membership.

Wednesday, November 2, 2016

Failed Auction on Foreclosed Medallions of First Jersey CU

ValueSquared, a short seller, reported in Seeking Alpha about last week's failed public auction for 3 foreclosed New York City yellow cab medallions.

These 3 medallions were collateral for defaulted loans possessed by First Jersey Credit Union. None of the 3 medallions was sold.

For the 2 unrestricted medallions, 2 people were willing to bid $400,000 to $410,000. It is reported that First Jersey Credit Union had $700,000 to 800,000 in outstanding balance on each defaulted loan.

In rejecting the bids, First Jersey Credit Union thought that the taxi medallions were worth more. The credit union believed it can lease out the medallions and would be better off than selling now at discounted prices.

However, do you believe New York City taxi medallions will go higher or lower in value?

Read the commentary.

Tuesday, November 1, 2016

Legal Redlining of Minority, Low-Income and Underserved Communities

The National Credit Union Administration (NCUA) on October 27 repealed the "core area" requirement when a federal credit union (FCU) applies for a community charter consisting of a portion of a Core Based Statistical Area (CBSA). This could result in the redlining of low-income or minority communities by community chartered credit unions.

When the NCUA Board implemented the core area requirement, it noted the primary purpose of this requirement was to acknowledge the "core area" of a Core Based Statistical Area as the typical focal point for common interests and interaction among residents. An additional purpose was to extend FCU services to low-income persons and underserved areas, both typically located in the "core area" of a Core Based Statistical Area.

However, the NCUA Board reversed its position by stating correctly that the Federal Credit Union Act does not require a community charter based upon a CBSA to serve a "core area."

In justifying the abolition of the "core area" requirement, NCUA stated it "has in place a supervisory process to assess management’s efforts to offer service to the entire community an FCU seeks to serve. NCUA holds credit union management accountable for the results of an annual evaluation that encompasses a community FCU’s implementation of its business and marketing plans, extending for three years after the credit union either is chartered, converts or expands."

But this supervisory argument is a red herring.

The final rule allows an FCU to now draw its boundaries so as to restrict service to low-income, minority, and underserved communities. The agency's supervisory process will not address this issue; because the "core area" is not part of the credit union's community charter.

When this field of membership rule goes into effect, community charters should be examined to see if FCUs exclude core areas.

If FCUs exclude core areas from their community charters, this should raise questions about preserving the credit union tax exemption.

Read the final rule.


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