Definitions of a Qualifying Credit Union Service Facility

Learn how the NCUA definition of a qualifying service facility differs for adding select groups or underserved areas.

Defining Qualifying Service Facilities

When it comes to field of membership (FOM) expansions, the National Credit Union Administration (NCUA) has multiple definitions of a service facility. Most notably, the Chartering and FOM Manual defines a “service facility” differently relating to additions of select groups than it does for additions of underserved areas.

It is important to know and understand how these definitions vary to ensure you have a qualifying service facility for a planned field of membership expansion, whether it is the addition of a new select group or an underserved area.

Below is a comprehensive look at the two definitions:

Qualifying Service Facilities for Adding Select Groups

For group additions, a qualifying service facility is defined by the NCUA as:

A place where shares are accepted for members’ accounts, loan applications are accepted or loans are disbursed. This definition includes a credit union-owned branch, a mobile branch, an office operated on a regularly scheduled weekly basis, a credit union-owned ATM, or a credit union-owned electronic facility that meets, at a minimum, these requirements. A service facility also includes a shared branch or a shared branch network location, including a shared ATM or other electronic facility, if a credit union participates in a shared branching network.

The credit union’s Internet Web site is not a service facility.

NB: This definition was amended by the NCUA in November of 2021. Previously, an ownership stake in a shared location was necessary; now a credit union must simply "participate" to meet the requirement.

Qualifying Service Facilities for Adding Underserved Areas

For underserved areas, the definition is the same as above, however with the following modifications:

For purposes of serving an underserved area: (1) a service facility is a place where shares are accepted for members’ accounts, loan applications are accepted, and loans are disbursed; and (2) a service facility does not include an ATM or shared ATM.

How the Definitions Differ

There are two main distinctions between the definitions:

1) An ATM qualifies as a service facility for group additions, but does not qualify as such for undeserved areas; and

2) For the purpose of adding underserved areas, a service facility must offer all three of the services noted above (accept deposits, take loan applications, and disburse loan proceeds), while for adding groups only one of these criteria need be met (accept deposits, take loan applications, or disburse loan proceeds).

These more stringent requirements in underserved areas are designed to ensure the credit union maintains a higher degree of presence in the community because, by its very nature, an underserved area will have a higher concentration of members with greater needs.

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