NCUA said last week it has cleared the way for Navy Federal Credit Union to erase several exclusionary clauses preventing field of membership (FOM) overlaps which will provide as many as 1.4 million potential new members to the nation's largest credit union.
As a result, the $19.9-billion credit union will be able to reduce its FOM from an eight-page document to a single page explaining eligibility to join as any individual or group, including civilian contractors, or direct dependents, who work for the Department of the Navy, which includes the U.S. Marine Corp., as well as portions of the Coast Guard.
The new FOM will eliminate numerous overlap clauses which prevented Navy Fed from serving Navy personnel on certain military bases that were already being served by a credit union.
The new policy was made possible by NCUA's amended FOM rules allowing single common bond credit unions to eliminate their exclusionary clauses, according to Brian McDonnell, president of Navy Fed.
"It's always been a sore point with me that while we had the ability to serve all officers in the Department of the Navy, we didn't have the ability to serve all enlisted personnel," he said, recounting incidents when a sailor had sought to join the credit union but was told he was ineligible because of an existing exclusionary clause.
He said Navy Fed has always been careful to respect the exclusionary clauses and had sought to verify membership eligibility.
"It's also economically very important to us because there's nothing like knowing your customer. We feel it's our niche," McDonnell said of the continued focus on Navy personnel.
Several other military-sponsored credit unions have expanded their FOMs in recent years, most by adding select groups or converting to community charters.
McDonnell said the credit union giant, which continues to grow by leaps and bonds-an average of 12,000 new members a month-had discussed expanding to other branches of the military but dismissed the idea.
"We looked at serving all of the (military) but we're not interested in it," McDonnell commented. "We know our niche; we've been very successful in serving it, and that's what we want to do."
To accommodate for the expanded FOM, Navy Fed expects to add new branches and ATMs over the next few years but those plans have not been finalized, according to McDonnell.
